Shareholder Value is Inextricably Linked to Supply Chain Performance in Univ of Tennessee White Paper

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This white paper provides practical and actionable insights for CEOs to help them unlock value and transform their supply chain into a competitive weapon. It is a must-read for any c-suite executive who does not come from a supply chain background

Global supply chain and operations consulting firm Maine Pointe is featured prominently in a white paper published by the University of Tennessee’s Global Supply Chain Institute (GSCI), titled “Driving shareholder value with your supply chain.” The paper shows the inextricable link between shareholder value and supply chain performance, exploring specific areas where many organizations fall short, and highlighting success factors and an actual case study of how an organization was able to add $600 million of cash flow through supply chain optimization.

“Many CEOs come from a finance, commercial or marketing background and may not have a formal process in place for managing the global supply chain,” said Steven Bowen, Chairman & CEO of Maine Pointe. “This white paper provides practical and actionable insights for CEOs to help them unlock value and transform their supply chain into a competitive weapon. It is a must-read for any c-suite executive who does not come from a supply chain background.”

The research white paper redefines the traditional goals of supply chain by noting while cost reduction is often a result of optimization, it is not always the main goal. The paper describes the process of Total Value Optimization (TVO) ™, a methodology which delivers the greatest value to all parties in the end-to-end supply chain at the lowest cost to business.

“Total Value Optimization goes beyond the traditional cost drivers of supply chain management,” said Simon Knowles, CMO of Maine Pointe. “Rather, it focuses on finding and accelerating the value drivers for cost, cash and growth across the entire buy-make-move-fulfill supply chain.”

Through an in-depth look at the supply chain, the paper reveals how the supply chain can serve as a valuable lever to unlock capital and drive shareholder value, improve cash flow, and yield greater economic profits. Specifically, the white paper revealed:

  • Few companies have a formal process for managing risk in their global supply chains despite the fact a catastrophic supply chain event can have a major negative impact on shareholder value.
  • Only 16 percent of firms surveyed have a multi-year, documented strategy for achieving supply chain excellence.
  • After the credit markets froze in 2008, some firms realized they could free up cash internally without having to go to banks by using the supply chain as a lever.
  • Total Value Optimization (TVO)TM finds value drivers for cost, cash and growth, then creates an action plan to achieve them by leveraging the end-to-end supply chain.
  • Some business-to-business (B2B) CEOs may have a blind spot to how the supply chain impacts share price performance and may be falling behind progressive competitors.

The white paper illustrates the TVO framework being used to find value drivers for cost, cash and growth to produce the highest availability with the minimum cost and capital investment. In one example, a global manufacturer achieved 80 percent growth in volume, a 22 percent margin enhancement, and a working capital reduction of $30 million by reconfiguring the distribution network, building a more collaborative relationship with transportation providers, and facilitating negotiations between the company and short-list service providers.

“Understanding how all the pieces fit together as a whole is essential to supply chain success,” said J. Paul Dittmann, PhD, author of the white paper. “Supply chain integration is an increasingly essential component of shareholder value, and to achieve that, supply chain leaders need to speak the language of the Board of Directors and the executive suite and show how supply chain excellence enables revenue generation and generates new cash flow.”

The “Driving shareholder value with your supply chain” white paper is authored by J. Paul Dittmann, PhD, University of Tennessee, and Dan Pellathy, PhD, Grand Valley State University, with contributing editor Ted Stank, PhD, University of Tennessee. It is the third white paper in the GSCI’s Supply Chain Strategies Series. The first white paper, “End-to-end supply chain collaboration best practices,” focuses on cross-functional collaboration, identifying collaboration as a key element in creating a competitive advantage. The second paper, “Supply chain integration strategy: Best practices,” described how to derive value from a supply chain integration initiative.

About Maine Pointe
Maine Pointe is a global supply chain and operations consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in EBITDA, cash and growth across their procurement, logistics and operations. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the buy-make-move-fulfill supply chain to deliver the greatest value to customers and investors at the lowest cost to business. We call this Total Value Optimization (TVO)™.

Maine Pointe’s engagements are results-driven and deliver between 4:1-8:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. http://www.mainepointe.com

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