Home: Issue 1 2011 › Make or break

Make or break

Make or break

01/02/2011 | Channel: Logistics / Packaging, E-Business / IT, Business, Manufacturing

In this Q&A, Richard Nixon and Andrew Underwood, business effectiveness partners at KPMG Performance & Technology, speak about issues and trends in supply chain

As 2011 advances, there are bumpy times ahead for businesses in Britain. Uncertainty about what the New Year might bring reigns supreme and the VAT increase is tightening the squeeze. Add to this a background of continuing turmoil in the Eurozone and the first six months of this year look likely to be a challenging and tough environment in which to do business.

Thankfully there is help out there, not only in the form of business groups and advisory services, but also from consultants, who often can bring a wide range of experience to the table and offer insights into how you can get your business running more effectively.

Tell me a little about your work experience:

Andrew Underwood:
I joined KPMG in 2006, following a consultancy career with Ernst & Young and then Capgemini after EY divested. Prior to that, I worked in industry, managing operations for an oil distribution company.

Richard Nixon:
I have now spent nine years with KPMG, focusing initially on middle market clients and then Fortune 500 companies as we rapidly rebuilt our consulting arm. I also worked at EY and Capgemini with Andrew. Prior to that I was in industry, working for Rover Group in procurement.

Could you explain what KPMG do as a company and elaborate a little on the company’s history?


AU: The KPMG Business Effectiveness team sits within the Performance & Technology (consulting) practice, and advises on procurement, supply chain, tax efficient supply chain, sourcing (including outsourcing, shared services, off-shoring etc.), project & programme management, and operational & process efficiency.

Who are your customers?

AU:
Our current clients include a top ten FTSE global telco, a FTSE 100 tobacco company and a Fortune 50 agribusiness whose European headquarters we’ve been helping to restructure.

RN:
My clients include major retailers, technology companies, and one of the world’s biggest brewers.

How do you believe KPMG has helped its clients, especially over the recent economic turmoil?


AU:
The supply chain is reflective of the recession and indeed any economic movement. All businesses are striving for a lean utopia where, the supply chain reaches optimum levels of agility, efficiency and responsiveness.

However, the global financial downturn creates a difficult equation for businesses to solve as they try to take cost out of the supply chain, while the organisation simultaneously tries to produce better products and achieve higher levels of customer satisfaction.

The questions on everyone’s lips are – how do you do better for less? How do you cut cost without cutting corners? Businesses need to respond to recession, and respond to demand at the same time.

RN:
In no other situation will you learn as much about supply chain as you do working for a stressed organisation where margins are excruciatingly tight. For one of my transport clients we advised on supply chain transformation after a major transatlantic deal, the biggest in their history. The impact of the supply chain can make or break a merger or acquisition. In this case it drove 50 per cent of the post-deal synergies.

What feedback are you getting about the current market from your customers?

AU: One of the big issues we are seeing is the impact of tax legislation on UK Plc. Both corporate and personal tax is a threat to UK growth and competitiveness.
Over the last 12 to 18 months companies looked to move operations overseas but, when it came down to it, people weren’t prepared to move themselves and their families. However, we are starting to see a change in that attitude as business exits the UK for real.

If you could pass any word of advice / piece of wisdom to my readers, what would it be?

RN:
The advice I would give is never underestimate the power of your network. Some supply chain experts are fantastic at network design but do not relate it to people. Supply chain and procurement professionals must learn to sell their story internally and promote the value of what they are doing for the business.

When we work with a client to transform its business, it is not the design of the future state operating model, but taking people with you that is the greatest challenge. To guarantee success they must interact well with the rest of the organisation, and work hard to demonstrate that they understand not only their own area, but also broader business issues.

What developments / issues do you anticipate for the market over the next five years?

RN: There are currently some big issues in the supply chain world. Firstly, technology is advancing and being snapped up by companies. However, many companies are failing, or neglecting, to train staff to cope with, and get the best out of, new systems. In fact, when they do invest in training, those who have been trained tend to get headhunted.

‘UK Supply Chain Plc’ needs to focus on retaining technically trained and highly competent staff, developing their soft skills and offering them an attractive career path. Companies are still thinking about low-cost sourcing, still struggling with it, and are, in fact, turning back to near-shoring for convenience and access.

Over the next decade Africa will fully emerge as the low cost location for outsourcing and off-shoring. If you look at the growth of the BRIC economies and the demand they will create over the next 15 years, and combine that with the potential for raw materials and resources in Africa, there is little doubt that Africa-China will be one of the big supply chains of the future.


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Richard Nixon and Andrew Underwood are Partners in Business Effectiveness at
KPMG Performance & Technology, the consultancy arm of the Big 4 accountancy,
audit and advisory firm.

For more information please call +44 121 232 3886,
email richard.nixon@kpmg.co.uk or andrew.underwood@kpmg.co.uk or visit
www.kpmg.co.uk