NewBusinessModelsinSupplyChain

HarryE.SalzbergMemorialProgram

SyracuseUniversityApril6,2001?AndersenConsulting2000NewBusinessModelsinSupplySupplyChaincapabilitycontinuestobethedifferencebetweeneCommercesuccessandfailure"TheInternetisn'tthefirstcommerceplatform,butitcertainlyholdsmorepotentialthananythathavecomebeforeit.Thatpotentialisparticularlyevidentinsupplychainmanagement.HoweffectivelyorganizationscanintegratetheInternetintotheircoresupplychainstrategywillinlargemeasuredeterminetheirfuturebusinesssuccess."

--GoldmanSachs"Atrulyintegratedsupplychaindoesmorethanreducecosts.Italsocreatesvalueforthecompany,itssupplychainpartners,anditsshareholders...Theindustryleadershavemadeonethingclear:Thepayoffsfromsuccessfulsupplychainintegrationcanbehandsomeindeed."

--HauL.Lee(StanfordUniversity)"Onlinesupply-chainmanagementwillstayoneofthehottestB2Btechnologyfields…CompaniesareonlynowstartingtofigureouttheefficienciesandcostsavingstheycanrealizewithWebsystemsthatallowbuyersandsellerstoaccessthesameinformationonline."

--JupiterResearch

1?AndersenConsulting2000SupplyChaincapabilitycontinAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits2?AndersenConsulting2000AgendaNewBusinessModelsinAAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits3?AndersenConsulting2000AgendaNewBusinessModelsinAWhatisabusinessmodel,anyway?It’sanorganization’scorelogicforcreatingvalueWhataretheCompany’sRevenueStreams?OperatingRevenueWhatdoesitsell?Towhom?Whydocustomerschoosethiscompanyoverothers?Howdoesthecompanycommunicatedistinctivelywithcustomers?Howdoesitpricedistinctively?WhataretheCompany’svaluepropositions?Non-OperatingRevenueHowdoesitattractfinancialresources?Howdoesitmaximizethevalueofitsfinancialassets?HowdoestheCompanymanageitsfinancesdistinctively?Howdoesthecompanymakeaprofit?Whatroledoesitplayinthevaluechain?Howisitscoststructuredistinctive?Whatdistinctiveresources,assets,andcapabilitiesdoesitleverage?Whatdistinctiverelationshipsdoesitenjoy?Howdoesitstructureandleadsitsorganizationtoachieveworldclassperformance?4?AndersenConsulting2000Whatisabusinessmodel,anywSuccessfulbusinessmodelsaredrivenbytwokeyconcepts–revenueandprofitabilityBusinessModelDesignConceptsDesignConceptsThinkGlobal;ActLocalCustomerRevenueandProfitabilityCustomer

ServiceRequirementsChannelAssetLeverageCollaborativeValueCreationRevenue/ProfitabilityServiceGlobalOptimaCustomer(1)Customer(2)Customer(3)5?AndersenConsulting2000SuccessfulbusinessmodelsareFocusingonrevenue/profitabilityorientedbusinessmodelshavesignificantimplicationsforsupplychaindesignTraditionalSupplyChainDesignsSupplyChainDesignInnovationsOveralllogisticscostsChannelservicelevelsDoityourself

FocusongettingstuffoutthedoorCustomer-levelrevenue/profitabilityCustomer-levelservicestandardsCollaboratewithsupplychainpartnersFocusoncreatingcustomervalue6?AndersenConsulting2000Focusingonrevenue/profitabilLet’slookatthetrackrecordfornewbusinessmodelsinsupplychain,especiallythe“neweconomy”entrantsEvolutionaryMasters–constantlyimprovingonprovendesignsNew,NewEntrants–web-enabledentrantsseekinglong-termcompetitiveadvantageSpectacularFailures–the$100millionspaceexplorers7?AndersenConsulting2000Let’slookatthetrackrecordOurEvolutionaryMastershavedeftlymanagedsupplychaincomplexityandrelationshipsoverthelastdecade…ManagingRelationshipsIntegratetechnologiestoextendintosuppliersandcustomersBuy,build&borrownewcapabilitiesfromthebestcompaniesSupplychainhumanperformance-engagingyourpeopleBuilddemandchainsynchronizationcapabilitiesManagingComplexityIntegrateandcontinuouslyimprove:operationalexcellenceCompressthesupplychaintoeliminatewastedtimeandinventoryCreatenewreservestoallowflexibleresponsetotheunexpectedAbilitytoManageSupplyChainRelationshipsIntegrationCollaborationSynchronizationValueCreatorPositioningFunctionalComplexityEnterpriseComplexityValueChainNetworkComplexityAbilitytoManageSupplyChainComplexity=B2Bwebbasedworld8?AndersenConsulting2000OurEvolutionaryMastershave…andtheyhavebeenrewardedbyWallStreetPricetoEarningsRatio(AnnualizedGrowth1995-1999)MarketCapitalization(AnnualizedGrowth1995-1999)ShareholderValueCreation1995-1999Source:AccentureFinancialAnalysis(43%,27%)(152%,57%)(38%,30%)(57%,36%)(11%,-13%)(6%,4%)9?AndersenConsulting2000…andtheyhavebeenrewardedbReportCardSupplyChainInnovationThejuryremainsoutonthenew,newentrantswith“innovative”supplychainsNew,NewEntrantsMoreproducts,nostores,efficientconsumerdirectdeliverysystemComments:earlyoutsourcingmodelabust.Volumegrowthkeytoloweringsupplychaincosts.Servicelevelleaderwithconsumers.ProbabilityofSuccess:ModeratetoHighChallenge:B+MretailersdevelopmodelswithmoresupplychainefficiencyCoolMove:PartnershipwithToysRUsConciergeforthehome,backedbyastate-of-the-art“l(fā)astmile”deliverysystemComments:HugeinvestmentinaUPS/FedEx–likedeliverymodel.Key3PLplayershavemuchbettercostprofilesProbabilityofSuccess:LowChallenge:ExistingsupermarketsenteringthebusinessatafractionofthecostCoolMove:B+MPartnership/Takeover?ReallyCoolMove?:AmazonbuysWebvan10?AndersenConsulting2000ReportCardSupplyChainInnovaOurspectacularfailuresallviolatedbasicbusinessandsupplychainrules11AugustWantedtobeThePriceCluboftheWeb.Plaguedbybilling/fulfillmentproblemsTheReasonsDOD6NovemberNosit,nobuy.Manufacturerscouldnotmeetdeliverytimessitepromisedconsumers7NovemberDogsreallydonothavewallets.Soldlowmarginproductswithhighdeliverycosts11DecemberIllogicalbrandextension.InfrastructuredidnotexisttomeetconsumerdeliveryneedsPWebHouseClub11?AndersenConsulting2000OurspectacularfailuresallvWebelievethatsuccessintheneweconomyliesinaseamlesscombinationofcapabilitiesacrosstheextendedsupplychainTheSupplyChainContinuumRelationshipsalongtheSupplyChainScopeofImpactIncreasingCapabilities,IncreasingBenefitsWithinBusinessActivitiesTraditionalOptimizationIntegrationIntegratedStep1: Integratefunctionsofthe existingsupplychainBetweenBusinessFunctionsWithCustomers&SuppliersCollaborationCollaborativeStep2: Improvecollaborationandcontrolwithvendors,customersAcrossAlliancePartnersSynchronizationeSynchronizationStep3: VirtuallySynchronizethesupplychainacrossplayersintoonelogicalenterpriseWeb-BasedEntrantsLeaderintheNewEconomy12?AndersenConsulting2000WebelievethatsuccessintheOurvisionofwinningnewbusinessmodelsinsupplychainleveragetheemergingexchangespace,integratedwithinnovativesupplychainplanningandexecutioncapabilitiesProcurementSupplyChainPlanning3rdPartyPartners/Alliances/VentureseFulfillmentCollaborativeManufacturing

eCRMVirtualSynchronizationeSupportService/Support/MaintenanceMaterial/procurementexchanges/auctionsIP/productdevelopmentexchangesCapability/serviceexchangesSupplyChainEcosystemeDesigneCommerceCapabilities13?AndersenConsulting2000OurvisionofwinningnewbusiAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits14?AndersenConsulting2000AgendaNewBusinessModelsinAWewillnowhighlighthownewbusinessmodelsareemerginginkeysupplychainfunctions,aswellasacrossmultipleenterprisesSupplyChainPlanning3rdPartyPartners/Alliances/VentureseFulfillment

eCRMVirtualSynchronizationeSupportService/Support/MaintenanceMaterial/ProcurementExchanges/AuctionsIP/ProductDevelopmentExchangesCapability/ServiceExchangesSupplyChainEcosystemeDesigneCommerceCapabilitiesCollaborativeManufacturingProcurement15?AndersenConsulting2000WewillnowhighlighthownewNewBusinessModel: Creatingacross-companycollaborative productdesignprocess

Revenue/ProfitDrivers:Fasterproductrollout/simplerdesignsProductspeoplewant(TimetoMarket)Enhancedsupplier/channelrelation

Lowersupplychaincosts(TimetoVolume)Higherrevenue/marginsfromnewproducts(TimetoProfits)KeyConcepts:

+=eDesignCustomer-drivendesignDesignforsupplychainSharingR&Dassets16?AndersenConsulting2000NewBusinessModel: CreatingeDesignCaseStudy:Rule-BreakersRule!

ZararedefinesretailingwithacollaborativedesignprocessHowTheyDoIt(“DesignonDemand”Retailing)Challenge:Effectivelymanageexplosivegrowthinvolatileretailsectorofthis$2billionSpanishclothingretailerwith400Storesin25countriesResults:25+%same-storesalesincrease34+%yearlyincreaseinprofitsinaweakretailsectorDailyevaluationofstoresell-thruCollaborativestoremanager/centralplanning/supplierdesigndecisionsviatheinternetLessthan15daymanufacturingcycleTwice-a-weekstorereplenishment17?AndersenConsulting2000eDesignCaseStudy:Rule-BreakNewBusinessModel:Usingweb-basedvirtualmarketplacesasafast-trackmechanismforcreatingatightlysynchronizedsupply/customerbase

Revenue/ProfitDrivers:NewsourceofbuyersandsellersState-of-theartauction/exchange/delivery/managementprocessesCheapersourcesNewcustomersLoweradmincostsImprovedefficienciesKeyConcepts:

+=eMarketplacesIndustryverticaleMarketplacesPrivatevirtualeMarketplacesHorizontaleMarketplaces18?AndersenConsulting2000NewBusinessModel:UsingwebeMarketplaceCaseStudy:SixSigmaExcellence!

GEimplementsnetworktostreamlinepurchasingprocessesandcompresscycletimeHowTheyDoIt(“GlobaleXchange”Procurement)Leveragewebtechnologiesandbusinessscaletocreate“TradingProcessNetwork”Streamlineprocurementprocessbyextending“TradingProcessNetwork”purchasingtechnologiestobuyersandsellersCompressedpurchasingcycletimesby50%Reducedlaborcostsby30%andmaterialcostsby5%-20%“TradingProcessNetwork”Challenge:Drivebottomlinepurchasingbenefitsbytransformingtraditionalbusinessprocessestoadotbricks-and-mortar(.bam)operatingmodelResults:Reducedoverallprocurementcostsby$600million(~30%)overthreeyears19?AndersenConsulting2000eMarketplaceCaseStudy:SixSeMarketplaceCaseStudy:CollaborativeLogistics!

Nistevocoordinatestruckingoperationswithsixteenpartnerstosavemoney,timeandenergyHowTheyDoIt(“ManagingforProfits”Transportation)Challenge:DeliveraneMarketplacetransportationsolutiontoindustryleadingcustomers-includingGeneralMills,Nabisco,Pillsbury,FortJamesandothersResults:

GeneralMillsalreadyreportsa7%reductionintransportationcostsWeb-enabledsystemsincludeprivatefleetandcommoncarrierschedulingsitesAccesssystemanytime,anywherewithanywebbrowserPostinbound/outboundtruckspaceneededoravailableReal-timeupdateswhenandwhereallpartnershipmentsaregoingNextgenerationofferingincludesshipmentandrouteoptimizationsoftware20?AndersenConsulting2000eMarketplaceCaseStudy:CollaNewBusinessModel:Revenue/ProfitDrivers:KeyConcepts: LowHighStrategicValueBasicAdvancedCumulativeCapabilitiesStableManufacturerReactiveManufacturerEfficientReactiveManufacturerEfficientProactiveManufacturerMaximizesRevenueandProfitTraditionalManufacturingStrategyCollaborativeManufacturingStrategyCollaborativeManufacturingTransactionalintegrationCollaborativeintegrationNetworkedoperationsRedistributingproductionassetsandformingtightcollaborativepartnershipstogiveflexibilityindecidingtheoptimalmixofinternalandexternalmanufacturingoptions21?AndersenConsulting2000NewBusinessModel:Revenue/ProCollaborativeManufacturingCaseStudy:GlobalManagement!

TIintegratesplantplanningacrossitsmulti-billiondollarmanufacturingoperationsHowTheyDoIt(“OrderAnywhere/ShipAnywhere”O(jiān)perations)Challenge:Providecommonfinancial,procurement,logistics,planning,fieldsalesandmarketingsystemsin30countriestotransformamulti-productcomponentmanufacturerintoaDSPsolutionsproviderResults:

Factoryutilizationincreasedby2%DeliverycycletimesreducedbytwoweeksGlobalsupply/demandmatchevery50hours45,000products56factoriesCustomerintegrationwithover70%ofordersonlineandreal-timeorderstatusviacustomercustomizedwebsitesFactory-levelplanningoptimizationGlobalinventoryvisibility22?AndersenConsulting2000CollaborativeManufacturingCaNewBusinessModel: Takeaholisticandcustomer-centricapproachto managingthefastexpandingvarietyoffulfillment channels–traditional,web-based&exchange/eMarkets

Revenue/ProfitDrivers: CustomerProduct/ServiceRequirementsOptimalchannelsandoperationsKeyConcepts:

+=Customerrevenue/profitmaximizationeFulfillmentB2CfulfillmentchannelsB2Bfulfillmentchannels23?AndersenConsulting2000NewBusinessModel: TakeahoeFulfillmentCaseStudy:UsetheTools!

buildseFulfillmentsolutiontomeetexplosivegrowthHowTheyDoIt(“State-of-the-ArtSystemsateSpeed”)Challenge:Immediatelyimplementacustomerserviceandproductdelivery(e.g.,samedayshipping)capabilityforinternetbusinesswithexplosivegrowthandhighlyseasonaldemandResults:

Increasedwarehouse&shippingcapacityby40%inexistingfacilityPositionedbusinessforadditionalgrowthinnewfacilityIntegratedeFulfillmentsystemswithbusinessoperatingrulesandprocessesSupportednewprocesseswithstate-of-the-artWMStoolstomanagewarehouseoperationsProvidecustomerservicewithreal-timeinventoryvisibilitytodetailedproductandlocationDesignedandinstallednewsystemsineightweeks24?AndersenConsulting2000eFulfillmentCaseStudy:UseNewBusinessModel: Synchronizethesupplychainacrossplayersintoone logicalenterprise

Revenue/ProfitDrivers: eSynchronizationImprovements(Examples)Deliveryperformance 16–28%Inventoryreduction 25–60%Capacityimprovements 10–20%Forecastaccuracy 25–80%Lowersupplychaincost 25–50%KeyConcepts: Multi-channelorderflowmanagementCollaborativesupplychaindesignCross-partneroptimizationVirtualSynchronization25?AndersenConsulting2000NewBusinessModel: SynchroniVirtualSynchronizationCaseStudy:CustomerSatisfaction!

EricssonaddressescompetitivepressureswithsynchronizedsupplychainprogramHowTheyDoIt(“ANetworkofCapabilities”)Challenge:Addressslowingdemand,increasedcompetitionandtighteningmarginsthroughagreateremphasisoncustomerservice.Results:

Numberof”verysatisfied”customerstripledDeliveryaccuracyimprovedtonearly100%;supplieraccuracyincreasedby30%Ordersdeliveredinlessthanaweekincreasedby50%Work-in-progresslevelsreducedupto85%;FinishedgoodsinventorydropsbyafactorseveninsomemarketsDefineandimplementsupplychainstrategies,businessmodelsandsystemsDevelopnewbuild-to-ordermanufacturing,supplier-managedinventoryandstreamlinedlogisticscapabilitiesCreateglobal,procurementorganizationImprovemanufacturingyieldsdramaticallyImplementSAPR/3systemtooptimizeandintegratesupplychainprocessesandtechnologies26?AndersenConsulting2000VirtualSynchronizationCaseSAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits27?AndersenConsulting2000AgendaNewBusinessModelsinAHowdoIgetstarted?SupplyChainInformationSharingPlanContinuousRelationshipManagementProcess/activityCollaborationChannelOwnership/RationalizationeSynchStrategyVirtuousCircleofeSynchronization28?AndersenConsulting2000HowdoIgetstarted?SupplyCAsuccessfulbusinessmodelforsupplychainsynchronizationrequiresacold,hardlookatwhomandhowtodefinepartnershiprelationsWhom?How?StrategicPartnersKeyCapabilitiesRevenue/ProfitOpportunitiesOptimalSupplyChainStructureNatureofRelationshipProductLinesProcessIntegrationSupplyVendorsCustomerPrioritiesChannelPriorities29?AndersenConsulting2000AsuccessfulbusinessmodelfoFivekeytrapstoavoidasyoudefineyournewsupplychainbusinessmodels…BeingdevotedtothewrongcustomersStuckwiththewrongsupplychainpartnersChokingonphysicalassetsCreatingfalsesynergyLookingtoofarahead30?AndersenConsulting2000FivekeytrapstoavoidasyouPitfall#1:BeingdevotedtothewrongcustomersOver50%ofcurrentsupplychaindesignscatertoleastprofitablecustomersIssueTop10–20%ofcustomersgenerateover80%ofrevenueandprofitabilityRealityAdjustyoursupplychaintocatertothecustomersyouwantDefinelesscostly(web-based,distributor)solutionsforleastprofitablecustomersMakeallcustomerscontinuetofeeltheyaregettingagooddealActionPlan31?AndersenConsulting2000Pitfall#1:BeingdevotedtotPitfall#2:StuckwiththewrongsupplychainpartnersConsumerspreferadirect-to-customerdistributionmodelLong-termchannelpartnercontracts,relationships,ownershipcreatedifficultconflictscenariosDispassionatelyevaluatelong-termindustrytrendsIdentifyrightpartnersandrightrelationshipsthatmatchbusinessplansDefinewin-winexitstrategieswithloserpartners;executecautiousdealswithwinnersIssueRealityActionPlan32?AndersenConsulting2000Pitfall#2:StuckwiththewroPitfall#3:ChokingonphysicalassetsSignificant,duplicativesupplychainassetsclogexistingdistributionchannelsCollaboratingonoptimallevelsofwarehouses,inventoryandtransportwithsupplychainpartnerswillyieldsignificantbenefitsIdentifyoptimaldistributionstrategiesforkey/non-keycustomersWorkwithpartnerstocollectivelylowercostsandimproverevenue/profitsthroughenhancedavailabilitySeriouslyconsideroutsourcingchannellogisticsoperationsIssueRealityActionPlan33?AndersenConsulting2000Pitfall#3:ChokingonphysicaPitfall#4:CreatingfalsesynergyAddingnewsupplychaincapabilitiesinthehopesofcreatingadistinctivepositioncanbetrulytreacherousIssueMakesureyouknowifnewcapabilitiesreallycontributetovaluecreationforcustomersRealityDevelopproductdesign,manufacturing,logistics,sales,andserviceteamstocollectivelyassesswhatcustomerswantDefinerevenue/profitenhancingsynergisticofferingsPilot/implementinrealworldclientsituationsActionPlan34?AndersenConsulting2000Pitfall#4:CreatingfalsesynPitfall#5:LookingtoofaraheadMisguidedproductanddeliverystrategiesfocusedonmarketshareratherthanprofitabilityIssueConsumersunderstandtheyneedtopayrealisticpricesandgetrationaldeliveriesRealityEnsureproductstrategistsunderstandtotalcostofservicemodelsClearlydocumentcustomerexpectationsonserviceneeds;userevenuebasedmodelstoassessimpactsDonotfallvictimtodot-comfeverActionPlan35?AndersenConsulting2000Pitfall#5:LookingtoofarahEmergingsupplychainbusinessmodelswilldrivenewcompetitiveadvantagesbyenablingforward-thinkingcompaniestoimpactrevenueandprofitability"Whethermakingenhancementstoexistingprocessesordesigningnewprocessessupportingentirelynewbusinessmodels,newwaysofexecutingsupplychainactivitiescontinuetoabound."

"Thesupplychainise-commerceifproperlydone.Andcollaborationisthedefiningfactorofthesupplychaininthee-commerceworld."

"TheInternethasfinallyarrivedforthebusiness-to-businessmarket.Theinfrastructurehasbeenbuilt,companiesareinterested,andtheeconomicenvironmentisrobust.Technologyischangingfromacostofdoingbusinesstoawayofdoingbusiness."-- AchievingSupplyChainExcellenceThroughTechnology(ASCET)-- MorganStanleyDeanWitterfromTheB2BInternetReport-- GaryForger(ExecutiveEditorofModernMaterialsHandling)fromCollaboration-TheSupplyChain'sDefiningFactor?36?AndersenConsulting2000EmergingsupplychainbusinessNewBusinessModelsinSupplyChain

HarryE.SalzbergMemorialProgram

SyracuseUniversityApril6,2001?AndersenConsulting2000NewBusinessModelsinSupplySupplyChaincapabilitycontinuestobethedifferencebetweeneCommercesuccessandfailure"TheInternetisn'tthefirstcommerceplatform,butitcertainlyholdsmorepotentialthananythathavecomebeforeit.Thatpotentialisparticularlyevidentinsupplychainmanagement.HoweffectivelyorganizationscanintegratetheInternetintotheircoresupplychainstrategywillinlargemeasuredeterminetheirfuturebusinesssuccess."

--GoldmanSachs"Atrulyintegratedsupplychaindoesmorethanreducecosts.Italsocreatesvalueforthecompany,itssupplychainpartners,anditsshareholders...Theindustryleadershavemadeonethingclear:Thepayoffsfromsuccessfulsupplychainintegrationcanbehandsomeindeed."

--HauL.Lee(StanfordUniversity)"Onlinesupply-chainmanagementwillstayoneofthehottestB2Btechnologyfields…CompaniesareonlynowstartingtofigureouttheefficienciesandcostsavingstheycanrealizewithWebsystemsthatallowbuyersandsellerstoaccessthesameinformationonline."

--JupiterResearch

38?AndersenConsulting2000SupplyChaincapabilitycontinAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits39?AndersenConsulting2000AgendaNewBusinessModelsinAAgendaNewBusinessModelsinAction:SelectedCaseStudiesMakingitHappeninYourCompanyRedefiningSupplyChainstoDriveRevenueandProfits40?AndersenConsulting2000AgendaNewBusinessModelsinAWhatisabusinessmodel,anyway?It’sanorganization’scorelogicforcreatingvalueWhataretheCompany’sRevenueStreams?OperatingRevenueWhatdoesitsell?Towhom?Whydocustomerschoosethiscompanyoverothers?Howdoesthecompanycommunicatedistinctivelywithcustomers?Howdoesitpricedistinctively?WhataretheCompany’svaluepropositions?Non-OperatingRevenueHowdoesitattractfinancialresources?Howdoesitmaximizethevalueofitsfinancialassets?HowdoestheCompanymanageitsfinancesdistinctively?Howdoesthecompanymakeaprofit?Whatroledoesitplayinthevaluechain?Howisitscoststructuredistinctive?Whatdistinctiveresources,assets,andcapabilitiesdoesitleverage?Whatdistinctiverelationshipsdoesitenjoy?Howdoesitstructureandleadsitsorganizationtoachieveworldclassperformance?41?AndersenConsulting2000Whatisabusinessmodel,anywSuccessfulbusinessmodelsaredrivenbytwokeyconcepts–revenueandprofitabilityBusinessModelDesignConceptsDesignConceptsThinkGlobal;ActLocalCustomerRevenueandProfitabilityCustomer

ServiceRequirementsChannelAssetLeverageCollaborativeValueCreationRevenue/ProfitabilityServiceGlobalOptimaCustomer(1)Customer(2)Customer(3)42?AndersenConsulting2000SuccessfulbusinessmodelsareFocusingonrevenue/profitabilityorientedbusinessmodelshavesignificantimplicationsforsupplychaindesignTraditionalSupplyChainDesignsSupplyChainDesignInnovationsOveralllogisticscostsChannelservicelevelsDoityourself

FocusongettingstuffoutthedoorCustomer-levelrevenue/profitabilityCustomer-levelservicestandardsCollaboratewithsupplychainpartnersFocusoncreatingcustomervalue43?AndersenConsulting2000Focusingonrevenue/profitabilLet’slookatthetrackrecordfornewbusinessmodelsinsupplychain,especiallythe“neweconomy”entrantsEvolutionaryMasters–constantlyimprovingonprovendesignsNew,NewEntrants–web-enabledentrantsseekinglong-termcompetitiveadvantageSpectacularFailures–the$100millionspaceexplorers44?AndersenConsulting2000Let’slookatthetrackrecordOurEvolutionaryMastershavedeftlymanagedsupplychaincomplexityandrelationshipsoverthelastdecade…ManagingRelationshipsIntegratetechnologiestoextendintosuppliersandcustomersBuy,build&borrownewcapabilitiesfromthebestcompaniesSupplychainhumanperformance-engagingyourpeopleBuilddemandchainsynchronizationcapabilitiesManagingComplexityIntegrateandcontinuouslyimprove:operationalexcellenceCompressthesupplychaintoeliminatewastedtimeandinventoryCreatenewreservestoallowflexibleresponsetotheunexpectedAbilitytoManageSupplyChainRelationshipsIntegrationCollaborationSynchronizationValueCreatorPositioningFunctionalComplexityEnterpriseComplexityValueChainNetworkComplexityAbilitytoManageSupplyChainComplexity=B2Bwebbasedworld45?AndersenConsulting2000OurEvolutionaryMastershave…andtheyhavebeenrewardedbyWallStreetPricetoEarningsRatio(AnnualizedGrowth1995-1999)MarketCapitalization(AnnualizedGrowth1995-1999)ShareholderValueCreation1995-1999Source:AccentureFinancialAnalysis(43%,27%)(152%,57%)(38%,30%)(57%,36%)(11%,-13%)(6%,4%)46?AndersenConsulting2000…andtheyhavebeenrewardedbReportCardSupplyChainInnovationThejuryremainsoutonthenew,newentrantswith“innovative”supplychainsNew,NewEntrantsMoreproducts,nostores,efficientconsumerdirectdeliverysystemComments:earlyoutsourcingmodelabust.Volumegrowthkeytoloweringsupplychaincosts.Servicelevelleaderwithconsumers.ProbabilityofSuccess:ModeratetoHighChallenge:B+MretailersdevelopmodelswithmoresupplychainefficiencyCoolMove:PartnershipwithToysRUsConciergeforthehome,backedbyastate-of-the-art“l(fā)astmile”deliverysystemComments:HugeinvestmentinaUPS/FedEx–likedeliverymodel.Key3PLplayershavemuchbettercostprofilesProbabilityofSuccess:LowChallenge:Existingsupermarketsenteringthebusinessatafra