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Green Supply Chain Management: A  Key Differentiator That Can Drive Your Bottom Line

Wed, 12/26/2018 - 12:04


As the world grows more conscientious of environmental issues and global warming, companies are adopting greener and more sustainable business practices. Companies are reevaluating their supply chains, from purchasing, manufacturing processes, managing the use of materials, logistics, and distribution of final products. Green Supply Chain Management drives value creation across a supply chain to reduce environmental effects. Improved environmental performance means lower waste disposal and lower overhead costs.

Companies like IKEA, Target, Tesla, and Walmart are pouring billions into sustainable initiatives, making public announcements, while investors and consumers keep a close watch. Many assume that low-cost supply chain options are incompatible with a green supply chain. However, it’s not always the case. Green initiatives can be cost savers. For example:

  • Packaging optimization results in reduction of packing materials
  • Eliminating hazardous materials reduces handling, disposal and regulatory costs
  • Alternative, sustainable or reusable, materials reduce cost of production
  • Eliminating waste reduces the cost of disposal
  • Reduced shipments lead to less fossil fuel consumption

Walmart has been recognized as one of the revolutionary companies implementing a green supply chain. The company has dedicated time and effort into investing in on-site solar systems and additional partners with suppliers and governments to improve access to renewable energy. All in all, the company has committed to reducing its emissions by 18% by the year 2025.

Caterpillar is one of the leading re-manufacturing companies in the world that brings back end of life products to usable conditions, thereby significantly reducing its environment impact through their sustainable business model.

Figure 1. Implementing a Green Supply Chain

Challenges of implementing a Green Supply Chain

  • Cost to "go green": companies must encourage green products/services, green technology and green supply chain management (SCM) requires significant funding to be funneled into research and development
  • Initially, any resulting profits will be minimal since recyclable and renewable products are costly. However, green supply chains tend to be profitable in the long run
  • Consumers may not be willing to pay a higher price for eco-friendly products, which would result in a downturn in profits
  • Lack of available technology to support companies in their efforts to go green
  • Companies may not have the capability to collect and analyze appropriate data in their supply chains to make use of existing technology
  • There will always be an existing trade-off between efforts to go green versus lean supply chain practices

We at CGN have uncovered green and sustainable supply chain opportunities for Fortune 100 companies, using our proven approach to overcome their key challenges.

CGN offers end-to-end supply chain solutions from strategy to execution. To learn more please contact us.

Metrics Management: You are What You Measure

Fri, 12/21/2018 - 16:23

What is the Big Deal with Metrics?

What are metrics? Metrics are the driving force behind key decisions that businesses must make to adapt to the ever-changing marketplace, in today’s modern business world.

For any business, success and survival sometimes depends on making critical decisions, which metrics can drive. From a newly opened startup to large corporate enterprises, the path to success is dependent on companies being knowledgeable and up-to-date on how their own business is performing.

Because business is constantly evolving, new metrics are being developed every day, while current ones are continuously being improved and updated. Developing and continuing to utilize and drive effective metrics is a key to telling leadership:

  • Where the business has been
  • Where the business is heading
  • If important targets and goals are being met
  • If there is an issue or process that needs to be addressed or fixed

Utilizing metrics and Key Performance Indicators (KPI) helps team members and management discover operations in need of improvement, discuss how they may be improved upon, and convey this information to those in a position to affect progress in those areas.

Obstacles Companies Encounter Implementing New Metrics

From simple metric ideation to driving implementation, businesses face several challenges they must overcome in order to successfully and more effectively use metrics to make critical decisions affecting how they adopt to today’s ever-changing industries and marketplace.

There are many obstacles and challenges businesses face when trying to implement and drive new metrics. Here are some of the more prominent ones:

  1. Developing Metrics That Are Too Complicated & Complex. One of the best things about Metrics is that you, as a company, get to design and implement them. To leverage & benefit from your metrics it is important to keep them as simple as possible. The more complicated they become they easier it becomes to stop measuring it. Employees and management need to be able to fundamentally understand the metrics and what they can do to directly influence its change and improvement.
  2. Having a Clear Purpose Established for Each Metric. While having lots of metrics helps to measure things in different ways it is also important that businesses don’t get “Metric Happy”. Businesses want a successful balance in what metrics they track and measure, so they can still focus on achieving their goals and other opportunities.
  3. Moving from Ideation to Implementation. One of the most difficult and challenging aspects of establishing new metrics, either brand new or improving existing ones, is moving from ideation to implementation.

Metrics: Are They That Important?

Metrics are a critical part of any business. With the correct processes and metrics in place, any business has the potential and opportunity to become successful.

Metrics make processes measurable. When processes are designed they are built to meet specific customer demands. Metrics help to measure the sometimes “vague” customer requirements by using numbers that can be utilized to measure the efficiency of the process.

Improvement Goals are communicated and measured though the use of metrics. Metrics play a vital role in eliminating any personal opinions or biases of progress and improvements that have been made.

Metrics help drive the feedback loop to management & supervisors in a position to affect change. What is being measured, ultimately, gets managed. Once benchmarks and goals are determined, it can be measured against metrics that are studied and analyzed at daily, weekly, or monthly intervals. As a result, metrics are the foundation for control and incremental change in any business.

Ensuring Implementation and Buy-In: CGN Framework and Approach:

For any business, implementing and establishing new metrics can seem like a daunting and challenging task. Typically, to succeed and to ensure long term sustainability, a business must have a detailed approach and plan for execution. At CGN Global, we have dedicated teams that work and collaborate directly with management to ensure alignment and assist our clients in achieving their future state goals.

Multi-tier Supply Chain Visibility

Fri, 12/21/2018 - 15:52

Enabling cost reduction opportunities, exposing hidden risk, and the CGN methodology for success.

A supply chain links upstream suppliers and downstream customers with the flow of products and services between a set of facilities, companies, supply points, and service providers.

Multi-tier supply chains are multiple single-level collaborations, meaning multiple supplier to buyer relationships, within one supply chain.

Multi-tier supply chains are becoming a key strategic driver, to lower costs, reduce capital assets, and get products to market more efficiently than the competition. At the same time, multi-tier strategies have led to increased complexity, as well as less visibility and control over the manufacturing process, as the key planning and execution data resides outside the four walls of the enterprise.

Challenges of multi tier supply chain visibility

Most companies have structured supply chain tools that provide visibility to their tier 1 suppliers. In fact, getting this tier 1 level visibility is tough, because supply chain data is spread across multiple systems, locations, departments and need long data sync times. Undoubtedly, breaking the visibility barrier beyond the Tier-1 is even more challenging.  Though some companies manage to multi-tier visibility, they do it as one-time activity that gets obsolete as quickly as suppliers change any of the upstream chain.

Identifying all risk areas in a supply chain is nearly impossible. Suppliers may be unwilling to share information that would put a relationship at risk. However, if your high performing neighborhood supplier has a critical source of supply in a country with human rights issues, frequent commercial disruptions, and geo-political uncertainties, that too should be flagged as a potential risk.

Text conversations between buyer and procurement managers may assist greater understanding of the impact behind not having multi-tier visibility.

For example, if a procurement team has dual sourced part numbers and were thinking that if they diversified their supply base well enough to mitigate any supply risk, the team may have not analyzed the "tier-n" risk with respect to global trade wars. In fact they may not even know where "tier-n" was located.

Company financial risk levels, regarding unclear visibility to their supply base, are as high as an investor investing in mutual funds, without knowing diversity in his/her investment portfolio.

However, in investment banking, there are tools available in the investment market that show true diversification of investment portfolios. What if similar tools existed for supply chain?

Great news! We call it n-tier visibility. Now it is tiers, not tears.

Thanks to developments in total electronic contract manufacturing across an entire supply chain, multi-tier supply chain visibility is now fully achievable. Multi-tier visibility may provide many benefits, including fast and seamless product launches and changes, reduced planning cycles, better visibility to supplier supply chains for better negotiation, higher supplier performance or less risk in supply chains.

Multi-tier visibility benefits

Improving Multi-tier Supply Chain Visibility – CGN Methodology

Achieving better supply chain visibility can be done through a variety of means. CGN has developed a methodology to improve multi tier supply chain visibility that consists of:

  • Defining visibility
  • Managing and measuring data
  • Developing a tier mapping platform that integrates with your supply chain tools
  • Improving internal cross - departmental visibility and integration into supply chain transactions
  • Streamlining processes for easier monitoring and enhanced usability
  • Improving data sync timelines and accuracy of data exchange
  • Increasing B2B connectivity/ visibility into suppler side processes

Additive Manufacturing 'Destined for a Niche Role in Aftermarket Supply Chain'

Fri, 11/30/2018 - 12:45

Understanding the Challenges of Spare Parts Business

Today’s spare parts businesses face increasing complexity and competition. OEMs deal with low volume and high part variants. The growing list of variants leads to massive warehousing, a large inventory of obsolete parts. Additionally, intricate logistical efforts are needed, because products must be distributed and transported over long distances with high requirements, in terms of delivery and date reliability. It is becoming critical for companies to focus on supply chain integration, including internal constituents (allied functions) and external trading partners (contract manufacturers, suppliers, transportation carriers, and logistics providers).

When compared with preceding industrial revolutions, the Industry 4.0 is unfolding at an exponential pace. One of the key risks of the modern supply chain is handling disruptions where technological, social, environmental, economic, and general market trends converge. However, many aftermarket supply chains are neither equipped nor orchestrated to cope effectively with the challenges.

To conquer these fundamental challenges, OEMs are adopting Additive Manufacturing (AM) in actual production across different industry verticals.

Additive Manufacturing – The Future

Additive manufacturing (AM) is a unified term for a range of digital manufacturing technologies and processes, which build a component based on adding material, layer by layer, and binding powders, resins, metals or fluids into a component. As opposed to subtractive manufacturing methodologies, such as traditional machining, specific advantages of AM, compared to conventional manufacturing technologies, include:

  • AM process produces very little waste compared to traditional manufacturing
  • No special tooling is required, which reduces tooling cost and setup time, and allows design freedom for parts
  • Complex parts can be produced faster and cheaper by changing the CAD file
  • Potential to simplify supply chains by shortening lead times and lower inventories
  • Potential to produce small batches or batches of one economically, enabling mass customization

By extension, AM has the potential to impact global logistics and has implications for supply chain management. Due to these characteristics, AM has been labeled as ‘disruptive,’ due to its potential to affect the global economy, by changing the way products are designed and manufactured. Production of spare parts has been appointed as a highly interesting area for AM, as the technology presents opportunities for substantial gains, due to the spare parts supply chain significance and complexity.

Traditional Supply Chain vs Additive Manufacturing Supply Chain

AM has the potential to become the biggest single disruptive phenomenon to impact the industry globally since mass production lines were introduced in the early twentieth century. The technology has the potential to eliminate the need for high volume production facilities and low-level assembly workers, drastically reducing supply chain costs.

AM does not need high level production facilities, since it can take place almost anywhere at the same cost. Therefore, it may no longer be financially efficient to transport products across the globe to get to the customer. With the potential to support re-shoring and local sourcing, the technology has the potential to tear established global supply chain structures apart and re-assemble it as a new, local system.

Furthermore, AM streamlines the close relationship between design, manufacturing and marketing. By manufacturing items closer to their end destination, there is a greater potential to reduce logistics costs and environmental impact. As a result, the use of AM influences the potential for moving manufacturing activities away from low-cost countries and closer to the consumers. This technology could also transform a global supply chain and drive local supply chain integration.

Shrinking the Supply Chain – AM impact

Accelerating the Additive Manufacturing Journey – CGN Framework

The race is on to use AM to produce spare parts on demand, and on location. To succeed in this journey, a detailed road map and dedicated execution team is required. At CGN Global, we collaborate with OEMs to transform and capitalize on the AM opportunities and help our clients embrace new opportunities, by creating scenarios and future-proofing supply chains for AM disruptions in using the CGN framework, as shown below.

Digital Trends: Time for Change

Fri, 11/30/2018 - 08:27

“The greatest danger in times of turbulence is not the turbulence — it is to act with yesterday’s logic.” - Peter Drucker


By Akshay Balachandran



According to Forbes:

  • 1% of data is currently being used effectively
  • Data usage will grow to 4% with use of artificial intelligence (AI)
  • years for blockchain to be easily implemented in applications beyond cryptocurrency
  • 40% of businesses will adopt "chat-bots," with enhanced capabilities by the end of 2019 


Embracing change does require an exploratory mindset and willingness to learn. Organizations need to adapt to new technologies to grow. Digital applications provide an opportunity to transform a business and its core operations in-flight. Based on research conducted at MIT, there is a huge scope for companies to integrate business functions using digital technologies, such as analytics and cloud services, rather than solving discrete siloed business problems. Whether it be your watch turning digital or your car, digital technologies and applications help drive business and society, making them more productive. Embrace and drive digital change to transform your business.




Industry 1.0

  • Mechanical mass production – steam and water driven technology
  • New socio-economic structure introduced
  • Iron production increased by 30X


Industry 2.0

  • Use of electricity as a primary source of power - making machines portable
  • Mass production of goods, using assembly lines
  • Car production increased by 8X

Industry 3.0

  • High speed internet access and mobile connectivity
  • Development of software systems, capitalizing on existing hardware
  • Cost reduction in operations, using programmable controllers


Industry 4.0

  • IoT applications and AI, used to analyze data and optimize decisions
  • Development of smart factories – systems that talk to each other



Digital technologies such as data analytics, cloud storage, IoT applications, and blockchain can help businesses grow by automating functions and enhancing decision making. Understanding multiple scenarios, and looking ahead for the next cyclic change in business, helps decision makers make pro-active decisions. It is vitally important to gain clarity of the business and technological impact that the technology provides before implementing.



CGN Global is uniquely positioned to recognize and address opportunities where a business can grow and diversify through digital transformation. CGN transforms organizations worldwide to improve performance and global competitiveness. We use our diverse experience, and broad knowledge, to provide strategic insights, actionable recommendations, and focused execution to drive results.

Creating Lean Supply Chain & Logistics

Tue, 11/27/2018 - 13:29

Understanding Lean Supply Chain & Logistics

Many clients, and organizations that CGN Global works with, are in a constant cycle that pushes them to improve their business to gain a competitive advantage.  Organizations consistently feel stress to reduce costs, time, and staggering inventory levels.  One way proven to improve an organization substantially is a supply chain process known as Lean Supply Chain & Logistics.

What is the importance of Lean Supply Chain & Logistics.

Lean Supply Chain & Logistics can be described as an efficient and effective way to recognize and eliminate wasteful (non-value added) activities from a supply chain to increase product flow and speed. To achieve leaner logistics, organizations need to implement leaner thinking.  Organizations that incorporate lean thinking into their supply chain can benefit from improved customer service, by reducing waste and overall corporate citizenship. 

What is Lean Thinking?

Lean Thinking originated over fifty years ago, from manufacturing methods (developed by an American W. Edward Deming) used by Japanese automotive manufacturers. Due to minimal resources and shortages, Japanese manufacturers employed a production process that worked with identifying and minimizing waste (or “MUDA”). Lean Thinking soon spread to all manufacturing areas, new product development and supply chain management.


Lean Thinking involves a dynamic cycle of identification, isolation, and elimination of waste and maximizing product value. This process means that end-customers don’t pay for an organization’s inefficiency and waste.  Five principles are involved in achieving minimal waste:

  1. Value Specification: Customer value is identified and added along the supply chain network.
  2. Map Out Value Stream: Identifying all processes along the supply chain network, in order to eliminate the processes that do not create value to the overall product.  Value Stream Mapping helps one understand how value is created within the product, from the customer’s perspective. 
  3. Identify Waste & Create Product Flow: Apply the outlined factors to make valuable processes, occurring in a smooth system; minimizing interruptions, inventories and downtime.
  4. Manage and Reduce Waste to Establish Customer Pull: Production is like a rope; you pull (ropes are “pulled”, not “pushed”). Finished Goods Inventory(FGI): designed as a control point.  Demand Driven Replenishment:  Product that is manufactured only in response to the customer where needed; implying that demand information is made available across the supply chain.
  5. New opportunities: Drive a culture of “improve the improvement”

Each of these five processes seeks perfection to progressively improve every process; minimizing waste and maximizing value. 


  • Lean Supply Chain Management represents a modern way of thinking about supplier networks.
  • Successful firms need to develop “lean supply chain relations” with key and strategic customers, and create an environment of “mutual dependencies”
  • Right quantities, at the right time, delivered to the right location.
  • Lean principles require collaborative supplier relationships, while balancing cooperation and competition. The goal is to minimize waste, reduce costs, improve quality, and strive for service.
  • Cooperation involves a spectrum of collaborative relationships & coordination mechanisms
  • Supplier partnerships & strategic alliances represent a key feature of Lean Supply Chain Management

Future of Lean in the Digital Age

How organizations embrace the digital economy, in conjunction with lean, will emerge as a key business driver, as consumer “pull” replaces industry “push".

Lean can be a prerequisite, a booster, and a catalyst to the digital economy and not mutually exclusive. Organizations that are already engaged in lean transformation should not stop their efforts and skip to digital transformation. Bottom-line is, one can find increased value in using lean methodologies, by synchronizing them to new digital platforms.

CGN is a leader in transforming businesses through the described lean methodologies.  We see ourselves as collaborative innovators, at the forefront of the digital age, developing new digital solutions, designed with lean supply chain methodologies in mind, to drive maximum ROI faster, helping our clients win in the long run.

A Deeper Understanding of A Customer's Habitat

Mon, 11/19/2018 - 16:00

A customer is an integral part of any business, and developing a long-term relationship is paramount for any business. The sustainability of a business, through its highs and lows, is deeply impacted by its ability to maintain a healthy relationship with the customers. This has resulted in many businesses developing an exceptional customer relationship strategy.

Given the rise in customer expectations, and because every product, service or expertise is hive-minded or reviewed, the room for error that existed before the digital revolution no longer exists. Instant vilification and instant gratification has changed the way businesses are looking at customer experience.

Stated below are a few points highlighting the significance of customer relationships:

  • In the current competitive market space, the relationship you have with your customer will serve as a key differentiator with your competitors. In a scenario of similar product offerings, a company that offers greater customer experience ensures better satisfaction and holds a competitive edge.
  • Strong relationships increase the possibility of repeat business. Retaining a customer is more affordable than acquiring a new customer, due to investments surrounding business development being very expensive including - generating lead costs and making a sale. Acquisition budgets can be kept in check if a healthy relationship is maintained with the customer and made to count in the long run.
  • Healthy relationships increase our visibility with customers. Deep diving into a customer ensures exposure to both sides and improves the ways in which they can relate to your company.

We, at CGN, thrive on building and optimizing customer experiences to maintain customer relationships and attract new customers. The biggest barrier to this is a lack of a deep understanding of the customer and the associated market. Gaining a deeper understanding of the customer is not easy and requires investment, time, dedication, and well-defined strategies. We believe in working towards a comprehensive understanding of our customers and knowing them better than they do, to initiate and maintain a healthy customer relationship.

CGN has a proven methodology to leverage competitive and market intelligence,  as well as pricing and segmentation; to formulate a customer-driven strategy and transform performance through profitable growth.

We triangulate, analyze and synthesize information from multiple sources, such as customers, dealers, businesses, competitors, subject matter experts, existing historical data, and market research to develop an iterative segmentation hypothesis. Further, CGN will develop strategies and support the execution of developed plans to drive bottom-line benefits for your business.

CGN’s Segmentation Service is uniquely positioned to recognize and address shifts in customer expectations, market, and competition. It can help transform organizations worldwide to improve performance, profitability, and global competitiveness. We use our diverse experience, and broad knowledge to provide strategic insights, actionable recommendations, and focused execution to drive results.

Digital Windshield: Safeguarding Supply Chains from Natural Disasters

Wed, 10/31/2018 - 12:15


The recent natural disaster that occurred in the United States, Hurricane Michael, left destruction throughout the state of Florida. Michael is one of the strongest hurricanes to hit, based on the wind speed and barometric pressure. The damage has been immense, both in terms of lives lost and infrastructure impairment. Some of the statistics (US) are as follows:

$billion worth in economic damage.

4000 homes destroyed or substantially suffered damage.

10% increased transit times during the storm’s presence.


Preparing for a natural disaster helps reduce the impact of disruptions caused in a supply chain. Using digital technology and creating an ecosystem, by using IoT devices, can help mitigate risks and provide a platform for speedy recovery. Business decisions, such as supplier risk assessment and  logistics networks, can be optimized by incorporating big-data analysis. Listed below are 4 vital aspects to consider while dealing with a possible disaster ahead.

Impact Quantification

Identifying and quantifying potential risk, running simulations and generating optimal mitigation plans for stores, factories, warehouses and trucking routes.

Inventory Management

Building a digital framework of a supply chain and optimizing decisions based on big-data analysis to meet customer demand, while transferring existing inventory in the network to particular stores in disrupted regions.


Using automated systems, which analyze the data, and communicates to customers, regarding delays and supplier reduction in volumes. Analysis and automated replies can be programmed in the system in case of natural disasters.

Business Continuity

Develop a systematic process to back up records to a digital cloud, and retrieve data post-disruption. Identify key members who will activate the plan and  deploy a crisis management team for inter-operability among business lines.


Using multiple variants of “digital," listed above, one can guarantee that the pre-disaster predictions are received well in advance. As a continuum, better damage control measures are conceived and implemented. By preserving every bit of intelligence related to a supply chain on a digital platform, the revival becomes smooth; similar to re-attaching a node to the system.


CGN Global is uniquely positioned to recognize and address issues when a supply chain network is disrupted. We use our diverse experience and broad knowledge in that domain to provide strategic insights, actionable recommendations, and focused execution to drive results. We identify challenges faced when a natural disaster comes to play and help organizations mitigate the damage, by quantifying the impact, well in advance, building robust communication channels, planning inventory shipments, and finally ensuring that business continuity is preserved immediately following the disaster.

Collaborative Supply Chain Management

Wed, 10/31/2018 - 10:58

Collaborating with partners across the extended supply chain, on demand forecasting and real time demand sensing, helps stock outs in volatile market cycles

Aftermarket services are a high-margin business, and they account for a large portion of profits, especially in heavy equipment manufacturing. The biggest problem in the present-day world is the high competition and volatility of market fluctuations, causing downturns and upturns. No matter what the causes are, the effect is either going to have high backorders from customers or end with huge unsold inventory lying on the shelf. There is not a one-size-fits-all answer to solve this problem.

Problem Statement

In recent years, many large heavy equipment OEMs experienced excess inventory levels in a downturn and stock outs in an upturn. To carry the right inventory at the right time, in the right regions, for the right customers has always been a challenge, especially during volatile market situations. Recently, one of CGNs clients had gone through a severe downturn, and as a result launched initiatives, reducing material costs and inventory, across the organization. Even before the recovery was seen, the company experienced a sudden growth in demand, which resulted in back orders.

CGN’s extended collaborative supply chain management solution, which encompasses concepts of collaboration planning, forecasting and replenishment (CPFR), as well as CGN's digital strategies have helped clients understand customer behavior, provided correct upstream forecasting signals, established end-to-end supply chain connectivity and reduced back orders, while improving service levels.

Overview of CPFR Approach

Collaborative planning, forecasting, and, replenishment (CPFR) extends vendor managed inventory principles and is the latest stage in the evolution of supply chain collaboration. Older supply chain initiatives have gaps in their practices. As in many operations, financial plans take precedence over forecasting, resulting in high inventory levels, lower order fill rates, and increased expedited activities. CPFR is a set of business processes that help eliminate supply and demand uncertainty through improved communication and collaboration between supply chain trading partners.

It also facilitates the reengineering of replenishment between trading partners. An important promise of CPFR is that accuracy of the forecast (demand, order, sales) can improve by having the customer, dealers and suppliers participate in the forecast. In general terms, buyers and sellers work together to satisfy the demands of an end customer, who is at the center of the model. Figure 1. (below) illustrates this model, which is applicable to many industries. If a discrepancy occurs, the trading partners can get together and decide on the replenishment quantity to rectify the problem. This type of collaboration offers great potential for drastically improving supply chain performance

Fig 1. Components of CPFR Model 

CGN Solution

Below are the steps taken to set a stable CPFR platform

  1. Develop front end agreement with trading partners
  2. Create joint business plan
  3. Create sales forecast
  4. Identify exceptions for sales forecast
  5. Resolve/collaborate on exception and critical items
  6. Create order forecast
  7. Identify exceptions for order forecast
  8. Resolve/collaborate on exception items
  9. Order generation

CPFR is not considered a technical standard. The CPFR process does not fundamentally depend upon technology. CGN’s extended solution combines process with use of technology. It advocates using common tools and processes to improve supply chain planning through accurate and timely information flow. Powering up the CPFR process with technology can make the process more scalable. The following are examples that have been developed to facilitate the process:

  • Sharing of historical data and forecasts
  • Automating the collaboration process and joint business plan
  • Enabling revisions
  • Evaluating exception situations

Collaboration is the crux of CGN’s supply chain management. Ongoing and long-term collaboration and partnership between manufacturers and dealers delivers value to customers and profitability to all collaborating partners.

Some of the critical success factors that could influence adoption of this process are:

  1. Top management involvement
  2. Trust between collaborating partners
  3. Continuous measurement of performance
  4. Innovative IT strategy
  5. Up-to-date cost accounting methods
  6. Emphasis on customer satisfaction
  7. Flexible organizational structure
  8. Proper staff training

Our experience suggests that, for the CPRF model to be successful, it is more important to align supply chain goals with digital strategies. CGN has years of experience delivering these unique solutions, helping clients achieve high performance results.  At CGN Global, we transform businesses globally, by delivering the unexpected. It is through years of service and outstanding transformative solutions provided, that we believe adopting a highly automated digital operating model can establish end-to-end processes, data connectivity and improved visibility, across the board. 

CGN. Good thinking. Globally.

Impact of Technology on Sourcing & Procurement

Thu, 10/18/2018 - 12:37

From early attempts to make data more manageable in the 1960s with IBM’s Bill of Material Processor (BOMP), to the current software suites and other analytical tools, the procurement practice has gone through half a century of immense transformation.

Transformation journey:

  1960 BOMP & DBOMP      1970s MRP          1980 MRP II           1990 ERP


With the introduction of procurement suites, sourcing and procurement professionals gained access to powerful applications and web-based tools that greatly increased their efficiency; by improving the processes, capabilities and impact on the organization. Sourcing and procurement organizations were able to move away from fax machines and phones to an automated environment that could be managed either within the application or web portal with additional integration with email tools.

Key features of these newly developed software packages included:

  • Electronic RFx (RFI, RFQ, RFP)
  • Reverse auction or e-auction capability
  • Supplier and buyer portals facilitating the exchange of documents
  • Procure to Pay (P2P)
  • Internal catalogs for buying organizations
  • Business intelligence and spend analysis tools

Advantage: Reduced timing RFP approach from a month to handful of weeks

While the introduction of these tools brought about a revolution, the sourcing and procurement space is evolving with the latest phase, (just as significant and impactful as the application revolution) integration.

The integration of enterprise data, procurement tools, supply base and supply chain have closed the gap enabling stakeholders, procurement and suppliers to collaborate more efficiently, becoming more strategic in all fronts.

CGN has vast cross-industry experience in strategic sourcing and procurement, as well as full systems integration. From new product introduction, to the final invoice transaction and warranty management, our work in the manufacturing, retail, insurance and finance sectors has allowed us to refine our approach, gaining unparalleled insight into best practices for best results, delivering maximum ROI faster.

While selecting the tools is an important step in the process, it does not resolve the human aspect of having the appropriate levers applied to deploy a strategy. Addressing the operational and procurement practices are critical to achieving sustainable objectives.

Once there is an in-depth understanding of the current state, the future/desired state can be developed, along with the sourcing strategy and future state supplier relationship management. After defining the desired state, a tool can be easily selected to incrementally improve organizational efficiencies and its strategic organizational posture.

Our approach to achieving our client’s objectives is proven, bold, collaborative, nimble, procurement tool agnostic and delivers the unexpected. Let us show you what the future looks like.

Private Equity Firms: Buy-Forever Strategy to Buy-to-Sell Strategy

Tue, 10/16/2018 - 15:20

With roots in the early 1950s and 1960s, private equity (PE) and venture capital (VC) engagements in the U.S. and global economies in the mergers and acquisitions arena, specifically acquisitions, have steadily increased and evolved. Private equity (PE) activity took hold in the 1980s, as the U.S. and global economies accelerated, spreading itself across the globe with a significant proportion of it focused on U.S. and European markets.

PE institutions' primary objectives are focused on profitability, yield, growth and performance, where they have a proven track record. The only slowdown in the industry has been during economic downturns.  Even the 2008 crisis only temporarily slowed PE investment. However, the event demonstrated a turning point and a shift in fundamental strategies incorporated by PE institutions since the 1980s.

Acquisition strategies of PE firms have evolved in a multitude of ways; in their nature as acquisitions through partnerships or as individual investment firms or other factors like the financial status, size or specialization of the acquisition under consideration. A more significant strategic change in the last couple of decades has been in the fundamental length of their acquisition ‘hold’. Initially acquisition exits, or transitions, were not common. Over 50% of acquisitions today are exited within 3 to 5 years. Until recent shifts, exits were often seen as quick as 1 to 3 years; a trend that has since subsided. The shorter time frame not only means that up front acquisition analysis must be concise and rigorous, but strategies and execution must be agile, deliberate and rapid.

As the global economy changes, some of the key reasons for change in hold periods include:

Available capital and demand for quick yield and return on investments

In comparison to the late 20th century, the volume of capital available in today’s growing economy is significantly higher (except for the 2008 crisis). Sources of capital availability include, the banking sector that has reconfigured itself to serve transaction heavy acquisitions, large pension schemes, as well as private family funds, all playing an active role in the PE space demanding strong, quick returns.

With this availability of capital and market competition with technology and health care giants, the demand for a strong and rapid return on PE firm investments has increased.

Until recently, lower interest rates have been available, allowing PE firms to take advantage of the propagation of capital availability.

Transition Arms for Corporate Spin-offs

As the public sector moves away from ‘diversified’ business models, and chooses to rapidly spin off segments, due to profitability or the need to raise capital, PE acquisitions and short-term holds have increased (e.g. J.M. Smucker, G.E. Industrial Engines). This facilitates short term PE ownership of these assets as they ‘flip’ them and transition them to another entity, or PE firm.

Strong Performance of Initial Public Offering

Whether private companies, start-ups or PE firms, the continued growth of the global economy has resulted in the strong performance of initial public offerings (IPOs). The opportunity has been taken advantage of by PE firms, as they quickly spin off well-developed assets they are invested in via a complete or partial exit.

Public Sector Strategic Acquisitions

While some public companies have spun off diversified assets, some have trended towards specialization of their core businesses; purchasing assets managed by PE firms for rapid growth (Xylem, Unilever, Crown Castle), resulting in shorter hold periods for PE firms, as these opportunities arise.

The changes in the global economy, along with these reasons, envelope some of the key factors that have created strong conditions for PE firms. As regulations and investor requirements change, the last few years have demonstrated new shifts in strategies. Additionally, increases in valuations, interest rates, concerns surrounding potential bear markets and regulatory tax code changes have resulted in PE firms focusing in on medium term acquisition hold periods. These changes often result in PE firms relying on additional resources, support and expertise, to achieve the outcomes envisioned. 

CGN's expertise:

Transforming businesses globally by delivering the unexpected.

PE firms move through a multi-step approach, starting with initial evaluations and planning periods prior to an acquisition, following which they move into change management, implementation, and a planned exit transition.

CGN’s capabilities align extremely well with the needs of PE firms, post-acquisition to transition or exit, especially with CGN’s core strength in rapid, agile transformations. The firm's expertise in operational analysis and improvement, execution, and value creation can play a critical role in supporting PE firm acquisitions. CGN’s core abilities, practiced solutions can support the most pressing needs that PE firms seek support in; maximizing returns, faster, making CGN the ideal strategic partner.

A Unique Approach to Optimizing Rental Supply Chain: A Network Study

Fri, 09/28/2018 - 09:32

In current economic times, where economic cycles are shorter and volatile, companies within all industries are looking for every competitive edge. Financially, companies are looking into all aspects of the business to improve their bottom-line.  Costs of renting or leasing equipment outweighs the benefit-to-expense ratio of buying and owning equipment. Business trends show an increase in equipment rental, as part of their business strategy, allowing them to conserve capital.

Looking at this trend, heavy equipment manufacturers and dealers are leaning towards rental services as a part of their product and service offerings.

According to the American Rental Association, the equipment rental market has witnessed outstanding growth in recent years. From 2016 to 2017, heavy equipment rentals increased 75%. By 2023, the total revenue is expected to be $90 billion.  This poses a supply chain challenge to manage the rental fleet network.

Key challenges for rental supply chain:

  1. Optimize rental network: Having right set of rental locations/hubs to serve customers
  2. Rental fleet management: Carrying right types and quantities of rental fleet at the right locations/hubs
  3. Maximizing rental fleet utilization
  4. Increase availability to customers
  5. Maximize profits & minimize total costs

The Solution

To be able to arrive at a solution for the challenges above, it is imperative to map and model entire rental operations and associated costs, flow of inventory (rental fleet), and customer arrivals to rental locations. This allows businesses to have a more holistic view of the problem and helps identify bottlenecks and constraints across the rental supply chain. CGN's unique methodology simulates and optimizes rental supply chain networks. One can design alternatives and explore the service, performance, costs and risks associated with change, all within a single integrated software platform.

A holistic solution, leveragin CGN's expertise and Llamasoft's Supply Chain Guru platform, helped a major rental dealer identify opportunities to consolidate its rental facilities resulting in bottom line improvement. This approach helped make decisions surrounding rental fleet management that resulted in increasing availability to customers, while maximizing the fleet utilization and minimizing idle inventory.

Below are two approaches that addressed the client's rental business challenges.  These approaches identified opportunities to increase service levels by 6% and sales revenue by 7%.

Greenfield analysis to identify the right number of rental locations to serve the existing customer base.

This analysis considers the center of gravity or weight center technique, which is a quantitative method for locating a facility at the center of movement in a geographic area, based on weight and distance. In this case, total operating costs were considered as weights, where distance is physical distance from rental locations to customer locations. This analysis aided decision making around location consolidation, as well as new location additions within the rental network. These strategic decisions allowed rental locations to position themselves closer to the customer base, while minimizing the total cost of business.

Current State

Future State

Total Cost Evaluation

Fig 1. Greenfield analysis recommending optimal number of rental facilities


CGN's rental network modelling and optimization approach for better fleet management.

From a supply chain standpoint, there is a distinct difference in the way inventory flows in a rental network, compared to the flow of inventory in a manufacturing network. In a typical manufacturing supply chain, inventory is generated in a raw material form, at the upstream, and gets consumed as a finished product at the end customer point of use; a relatively straight forward flow where the model variables have a linear or a step function.  However, in a rental network, there is a return loop and an average rental period, which dictates the fleet inventory and availability.  It is imperative to make quantitative decisions, like how much inventory the network should hold; while minimizing total costs and improving availability. Managing the rental fleet by positioning the right inventory at the right location in a return-loop cyclic environment, is key. Deriving an appropriate objective function that considers the business objectives, including all of the above-mentioned rental constraints, is critical.

Manufacturing Supply Chain

Rental Supply Chain

Fig 2. Modeled vs. Actual Rental Inventory - recommendation on right rental fleet inventory