When one thinks of the premiere Supply Chain Management (SCM) consulting organizations, one thinks of IBM, PRTM, and AT Kearney for procurement, perhaps Accenture. It is time to add Satyam to that list. While Satyam’s supply chain practice is not as broad, if your focus is improving profitability and you are a manufacturer with expensive production assets, Satyam should absolutely be on your short list.
Satyam’s newfound strength is based on the acquisition of the Belgium based S&V Management, a company we identified last year as one of the best boutique SCM consultants in the world. The practice will be branded as “S&V Management, a Satyam company” for the foreseeable future.
S&V has created a tool called Equazion that their consultants use, and it really is at the heart of their philosophy of how to improve Return on Net Assets (RONA). Equazion is an analytic tool with prebuilt data acquisition templates that allows consultants to pull the pertinent data from ERP and other systems quickly. The tool creates an analysis of the true, granular profitability of customers and products. A customer’s profitability is dependant not just upon price and production costs, but also on their volume discounts, payment terms, freight allowances, and the promotional deals they received. This is the traditional price waterfall analysis that consultants like McKinsey have longed use in their consulting practice.
They combine it with a cost to serve waterfall. Which products do customers buy? Are they buying a high proportion of low profit products? How much inventory do we have to carry for particular customers? How long does it takes that customer to pay their bills? Are there special Value Added Services required for that customer? Does it cost more to ship to them? Do our sales reps and account management teams have to spend more time on these customers than others?
By combining these two forms of analysis you can: drill down and see which customers are profitable or not, and why; how your sales reps stack up against each other on profitability and why; and which SKUs are neither profitable nor ordered by important customers. Describing this tool does not do it justice. Few experienced executives would see this tool demonstrated and not experience an epiphany on how this tool could be used in Sales & Operations Planning meetings to drive more profitable decision making.
Additionally, and as a logical adjunct to the form of consulting described above, S&V consults in the areas of multi-echelon inventory optimization – should this be a make to stock or a make to order SKU? Where in our network of factory warehouses and Distribution Centers should this SKU be stocked? What should the safety stock quantities be? What should the production batch sizes be?
The key challenge for Satyam will be scaling this practice. S&V has about 50-60 consultants located in Europe. They need to grow their presence in North America. However, S&V has been very picky about who gets hired. They typically hire engineers with MBAs. Only 4 percent of the applicants make it through all the steps involved in the hiring process, with the key gate being a case study where applicants are presented with reams of data and then given two hours to crunch some of the data and present their results. They have made the decision that as they expand in North America, Latin America, and Asia these high standards will not only be maintained, but enhanced.