Value-Chain Optimisation

• The Moot team was challenged to help a leading footwear company to save €20m in supply-chain costs by 2020
• An investigation by Moot subject-matter experts identified multiple small improvements to a long-established, vertically integrated “cost-plus” value-chain
• To date €14.5m value-chain savings have been identified and realised.

The aggregation of small margins can deliver big results. Smarter working yields hidden benefits.

Savings can be driven through value-chain improvement. Moot used its deep understanding of the footwear and apparel value-chain to identify multiple marginal improvements, culminating in aggregate as a significant, multi-million euro saving.

What was the problem?
The cost of bringing goods to market had been consistently increasing for this international  market-leader in casual footwear. Market pressures created little scope for a corresponding increase in consumer prices and margins were being squeezed as a consequence.  The Managing Board wanted to find €20m of savings through the value chain and Moot was selected to lead a “Cost of Goods Sold “programme.

What did Moot do?
Breaking down the value chain of the business and examining each component in close detail enabled processes to be challenged, modified and improved. Within a vertically-integrated company some improvements were achieved by simple negotiation on matters of pricing, or accounting methodology. Other improvements required more significant structural changes in process and geography. A deep understanding of the footwear supply-chain meant that no stone was left unturned, while regular communication of the benefits, as they were discovered, ensured maximum buy-in and continuing support from the executive team.

What were the results?
Any business achieving multi-million euro savings in its cost-of-goods, sees improved margins. But other benefits also included reduced development overheads and significant reductions in wastage, both in time and materials. Ultimately the consumer benefited from more competitively priced products, leading to an increase in sales volume without loss of margin. By providing the link across vertically-integrated profit-centres, Moot was able to challenge the orthodoxy of a cost-plus approach and deliver real benefit to both the business and consumer.