F&B / Catering
This is one of the largest catering companies in Hong Kong over the past few years, expanding its scope of operations in the retail and production. However, the rapid expansion of their scale and complexity, effective supply-chain management becomes an issue for the company.
The findings show a rapid increase
- Number of Suppliers and SKUs
- Intercompany Transactions
- Inventory quantity
- Supply Chain Costs
In response to this situation our client engaged LMM Consultants to review the above areas and implement a program to improve procurement process and reduce related supply chain costs. The project focus was on three areas: Materials, Transactions and Inventory.
Materials - together with the client we reviewed the supplier base management strategy and size. Through the identification of a number of strategic partners, the day-to-day supplier handling costs were reduced and the increased aggregate procurement scale allowed for better pricing. This consolidation was supplemented by a communication program which encouraged internal clients to consistently consider the strategic partner supplier group for their portfolio.
Transactions - we looked for redundancies in the processes and identified causes of errors and unexpected order requests that led to an increased workload. With the client we strengthened communication channels and improved joint planning between their back office and frontline teams to reduce the errors and impromptu requests. New measurements were set up to allow the client to proactively manage in future.
Inventory costs - we refined the measuring mechanism on inventory days and devised a management policy to eliminate unnecessary warehousing costs..
Specifically the following benefits were realized;
- Reduce Material Unit Price by 10% through SKU & Suppliers consolidation
- Order Transaction Errors reduced by 20%
- Inventory Days of Cover reduced by 9%
- Project ROI was 150%