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Tax-efficient supply chain for a leading consumer products company

Engagement: SKP was engaged to develop a tax-efficient supply chain for a leading company in the consumer products industry. Due to their inefficient supply chain management, the client incurred excessive tax and other costs resulting in low profit margins.

Thus, the key challenges included:

  • Understanding the deficiencies in the current operating model from an indirect taxation perspective
  • Reviewing and streamlining the existing supply chain to achieve minimal tax costs, higher profit margins and an efficient and simple supply chain
  • Identifying and eliminating various hindrances in the current as well as proposed models
  • Assisting with restructuring costs, risks and the cash flow


SKP assisted the client as follows:

  • Analysed the supply chain thoroughly – evaluated each transaction to understand the tax implications and to identify if any leg of the transaction could be removed to eliminate double taxation
  • Provided a comparative analysis of various operating models by way of a detailed cost sheet (cost analysis and cash flows of the present model compared with alternatives designed to reduce tax cost)
  • Analysed the pros and cons of each model to ascertain the most tax-efficient model
  • Evaluated various tax benefits available to minimise tax cost
  • Evaluated various options for sourcing material, etc. in order to mitigate other costs such as transportation cost, etc.
  • Opportunities identified included new markets, elimination of certain legs of transaction, new sourcing options, change in the method of operation, and tax benefits
  • Various threats in the current as well as proposed models were also identified, which included an increase in regulation i.e. more compliances, maintenance of records, etc.
  • Suggested the best alternatives keeping in mind industry practice, tax benefits, the client’s product-specific needs, product demand and supply, sourcing options, etc.
  • Designed an operating model that helped them get the maximum tax benefits possible 


Value Delivered
Based on SKP’s solution, the client was able to enhance operational efficiency and enjoy savings in tax costs. The tax-efficient supply chain model resulted in higher profits, while keeping the product’s market price constant.