Document number Enrico Camerinelli- Sr. Analyst, Europe Efficient Supply Chain Management New Trends upon Supply Chain Management with Financial Perspective.

Document number

Enrico Camerinelli- Sr. Analyst, Europe

Efficient Supply Chain Management

New Trends upon Supply Chain Management with Financial Perspective

A member of the Oliver Wyman Group

2© 2008 Oliver Wyman www.oliverwyman.com

Supply Chain Management

What is Supply Chain Management?

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SCM_ The Operational perspective

Manufacturing

Distribution

X-Dock/Retail DC

Sales Channel

Component AssemblyMaterial Suppliers

International Transport

OutboundTrans

Client

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Integration of the physical and financial supply chains

Receive Goods and Invoice

Send Payment

Reconcile and Account

Send Purchase Order

Credit Application

Negotiate Sales Terms

Select Supplier and Goods

Source Suppliers

Supply Chain of the Buyer

Receive Order

ProduceGoods

ManageInventory

Distribute Goods

Physical Supply Chain

Supply Chain of the Seller

Physical Supply Chain

Source: SWIFT

Evaluate Credit ReconcileSettle

& PayIssue

InvoiceForecast

Cash

Finance Working Capital

Resolve Disputes

Financial Supply Chain

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Why should all this matter to us?

Answer: LIQUIDITY

Why should this matter?

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Net Sales

28232

Gross Profit

5368 COGS

22864

Direct Sales Expenses

Net ProfitTotal

Expenses 2631936 3952

Net Profit Margin

Indirect Sales Expenses

3.3% Taxes 1321480

ROA Sales

6.09% 28232

28232 Inventory

1.84 Sales 4638Asset

TurnoverCurrent Assets

divided by 13749Accounts

Receivable

15364 3809

Other Current Assets

53021615Fixed

Assets

Decomposing metrics

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Decomposing metrics

Material

16005

Direct Costs

18291Labor

2286COGS

228641829

4573 LaborIndirect Costs

2744Overhead

Material

15605

Direct Costs

17891Labor

2286COGS22407

18294516 Labor

Indirect Costs

2687Overhead

16005 - 400

2744 - 57

CURRENT

AFTER

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Decomposing metricsNet Sales

28232

Gross Profit

5825 COGS

22407

Direct Sales Expenses

Net ProfitTotal

Expenses 26311393 3952

Net Profit Margin

Indirect Sales Expenses

4.9% Taxes 1321480

ROA Sales9.07% 28232

28232 Inventory

1.84 Sales 4638Asset

TurnoverCurrent Assets

divided by 13749Accounts

Receivable

15364 3809

Other Current Assets

53021615Fixed

Assets

48.8% increase

2.0% reduction

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The challenge…

…link physical activities with working capital ratios

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Performance ManagementSCM metrics impact on Income Statement

Source: iCognitive

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Performance ManagementSCM metrics impact on Balance Sheet

Source: iCognitive

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ToolsSCM practices that impact Working Capital (freeing liquidity_ Real cases

InventoriesAccounts receivable

Cash and cash

equivalents

Property, plant and

equipment

Accounts payable

BEST PRACTICE (Operational)

x x xBlanket Purchase Orders Cover Period Requirements

x x x Carrier Agreement

x x xChangeover Reduction / Continuous Improvement Program

x x x x xCollaborative Planning, Forecasting, Replenishment (CPFR)

x x Comparative Analysis of Supplier Performance is Used in Sourcing Decisions

xConsolidate Shipments Through Cross Docking - Coordinate with Other Shipments

x x x x x Continuous Improvementx Vendor Managed Inventory (VMI)

PERFORMANCE REVIEW

Note: Diagram only includes Supply Chain Functions Note: Example Figures

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Banks: Current state of art

Financial Supply Chain - ABN AMRO

JPMorgan Treasury Services introduces supply chain outsourcing service

06 August 2002 - 11:13

Supply chain business

Deutsche Bank introduces financial supply chain management solutions in AsiaMay 24, 2007

Abbey and 0B10 in e-invoicing supply chain financing partnershipThursday, July 26, 2007

Supply Chain Management

BNPP makes key Global Trade Services appointments

15

Supplier Finance Solutions

• Supplier Finance Programs– With recourse structures: receivables’ financing– Without recourse structures: purchase of receivables

• Factoring– Financing of open account export receivables guaranteed by

Yapı Kredi Factoring

• Credit Insurance by Euler Hermes– Financing of insured export receivables

• Forfaiting– For negotiable instruments

Document number

Enrico Camerinelli

[email protected]

+39.335.52.96.042