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Logistics can be the least cost-effective link within your supply chain. Often, the need to meet demanding customer delivery schedules contradicts the drive for cost effectiveness. Facility layout, inventory, and supplier management also play crucial roles in the success of on-time services. Tefen's logistics programs employ some of the leading experts in supply chain consulting. By treating the logistics function as a crucial element to streamlining the supply chain, Tefen unleashes our clients' business potential while improving profitability.

Procurement Optimization

Managing efficient cost structures will always be critical to the success of retail organizations; especially in the post-recession environment in which consumers are constantly seeking more value for their spending. Procurement optimization projects present an easy and swift opportunity to reduce cost. These cost reductions have a direct impact on EBITDA with projects delivering a 10-12% decrease in the annual spend on goods and services. In comparison to process re-engineering and headcount reduction efforts, procurement optimization projects are popular with retailers for their quick implementations.
Tefen recognizes two main opportunities to optimize procurement efforts in retail organizations. The first one relates to the existing network of store locations and headquarters, where we review the total list of expenditures from COGS and supplies, to third party service providers. The outcome is lean, centralized and transparent purchasing that reduces overhead spending, as well as COGS. Both the retailer and the final consumer receive more value for every dollar spent. The second improvement opportunity relates to growth strategy. For retailers expanding their reach/market, the procurement of new store materials and services is an area often neglected by management, but presents a significant opportunity for cost reduction. For rapidly growing retailers, 3 – 4 months of intense procurement support could mean significant savings on materials and services.

Our Approach

Tefen employs a two-phase approach to optimizing retailers' procurement efforts. In Phase I, consultants focus on identifying and realizing ‘quick wins’ in order to bring immediate cost savings to the bottom line. Phase II seeks to sustain these ‘quick wins’ by addressing the underlying causes of these inflated costs. Tefen analyzes and re-designs procurement processes and procedures and works with internal project management teams to implement optimized procurement standard operating procedures.

 

Main Activities and Deliverables:

  • Detailed analysis of primary spending buckets
    • Implementation of ‘quick wins’ such as…
    • Cancelling unnecessary contracts
    • Re-negotiating contracts
    • Adjusting budgets
    • A-Z tender management
    • Analyze and optimize tender strategy
    • Document tendering procedures
    • Deploy tender strategy and re-negotiate where necessary
    • Re-organized vendor list
    • Test and implement new supplier strategy
    • Align budget with optimized supplier strategy
    • Create and deploy a multi-year efficiency plan with key suppliers
    • Define new procurement activities and responsibilities
    • Design and implement tools, procedures, manuals, etc. to support new procedures
    • Integrate the procurement strategy with key supply chain, budgeting, and cost control processes

Benefits

Typical procurement optimization projects yield annual savings of 10-12% and, in some cases, up to 20-25%. Implementing the optimized strategy will align every-day operating practices with the newly optimized processes resulting in a more lean and agile organization. Internal teams will be empowered with the tools to continually seek, recognize and act upon improvement opportunities.

Store Operations Improvement

Supply Chain and Logistics

Supply Chain and Logistics improvement projects are at the core of Tefen's culture and track record. With years of experience and knowledge, Tefen prides itself on the success it achieves for clients in these areas. Across a variety of industries, and in particular, the retail sector, Supply Chain and Logistics engagements yield such benefits as increased visibility, reduced costs, and improved sales & service. Of course, each organization has different goals and consultants are mindful to approach each project with a broad set of tools and methodologies.

Sample Goals

  • Increase Logistics Visibility – clients will gain a complete understanding and ability to track full landed costs of goods.
  • Reduce Cost of Logistics – clients can reduce costs in a variety of areas.
    • Inventory holding costs
    • Transportation (shipping) costs (on average, 20-25% of current costs)
    • Labor costs (store, distribution, corporate, warehouse, etc…)
    • Cost of late/unreliable deliveries
  • Increase Revenue – clients will better be able to forecast when a product is needed, where the product is needed and how much of the product is needed. Understanding the answers to these questions and achieving increased communication between vendors, shippers, stores, buyers, etc. will reduce the lead time for a product to reach the consumer.
  • Improve Service – clients will be able to reduce the number of late/missed shipments and be able to accommodate the needs of consumers by optimizing both forward and reverse logistics.

Deliverables and Methodologies

Deliverable 1: Current State Logistics Model – Model of the current supply chain state and benchmark of current costs

  1. Review Current Logistics Model
  • Interview stakeholders
  • Complete process mapping exercise with teams of stakeholders
  • Perform cost analysis
  • Analyze current model

Deliverable 2: Identify Potential Solutions – including potential new supply chain models, shipping strategies, partners, constraints, and ways to reduce lost sale opportunities

  1. Evaluate Potential Solutions
  • Cost-benefit analysis of different models
  • Evaluate relevant shipping strategies
  • Analyze internal demand management practices and quantify improvement opportunities
  • Assess lost sale opportunities
  • Define KPIs
  • Research 3PL, procurement solutions and viability

Deliverable 3: Mixed Model Logistics Optimization and Implementation Plan – customized future state supply chain model with an implementation plan

  1. Develop Best Fit Supply Chain Model

Determine optimal mix-model logistics solution
Calculate ROI based on actual costs and expected benefits

  1. Deploy and Support Implementation
  • Define roles, responsibilities, and reporting structure
  • Update KPIs per future state supply chain model
  • Prioritize low hanging fruit and quick wins
  • Run competitive tender for transportation and supply chain services; test and implement new service providers (where applicable)
  • Collaborate on a change management program with PMO representative

Progressive Technologies

Technology implementations are becoming even more common in the retail industry, and even more troublesome for retailers to successfully complete. The biggest challenge for retailers is assigning the necessary resources to the project and being able to communicate business needs to a technology provider. Tefen has the resources and experience to understand the needs of the client, in particular retail clients, and translate those needs into detailed instructions for technology providers to execute. Whether at the onset of a technology venture, or in the midst of struggling with the implementation of a project, Tefen consultants can quickly come in and act as an intermediary between the technology provider and the business, ensuring both parties’ needs are met.
Often overlooked by clients are the necessary plans and changes that must accompany implementation in order to achieve success. With the deep understanding of current and future business processes, Tefen can identify organizational gaps that must be addressed in order to achieve success. These gaps might be filled with such plans and changes as: process and procedure re-design, updated role and responsibility definition, change management programs, user support resources, communication plans, consumer education plans, etc… Tefen helps design and deploy these programs, ensuring that the client's day-to-day business requirements are met without disruption and the implementation effort will achieve the desired ROI.

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