From rationalization to growth SCM 2.0 at Hempel. Mette Boysen, 13. October 2010
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1 From rationalization to growth SCM 2.0 at Hempel Mette Boysen, 13. October 2010
2 What is Hempel? The Hempel Group produces and sells protective coatings that increase the long-term value of customers investments. We: Extend product lifetimes Reduce maintenance and application costs Improve fuel performance Train coating application staff
3 What we help you to protect Protective Steel structures, civil construction, offshore structures and wind turbines Marine newbuilding and maintenance Any vessel type Container Refurbishments and new construction Yacht Leisure boats, competition boats, luxury yachts & superyachts Decorative Houses, offices and factories
4 Hempel in numbers ,562 Sales offices Stock points Factories R&D Centres Coating advisors Employees
5 SC Europe focus Change of organization from country based to functional structure Optimization of supply chain set-up in Europe Closure of 2 factories (Germany 2004, Germany 2008) Closure of approx. 40 stock points Outsourcing of smaller stocks Transformation from local to focused factories resulting in considerable capacity increase Service and capacity increase Production and logistics costs decrease
6 (Pre-crisis) strategy In April 2008 we decided to close the factory in Denmark and build in Poland Decrease costs Increase capacity Implementation May 2010 New ERP platform implementation 2010 and 2011
7 The crisis reached Hempel in October 2008 The forecasts did not foresee the drop
8 Cut cut and cut Less top-line and volume Flexibility - shorter lead times Small order quantities Inventory increases Cost pressure production and logistics Freight costs increased
9 The readiness to grow vs. the need for savings We did cut a lot and when we realized the seriousness we even cut more than the forecasts suggested We continued the new factory project in Poland and the planned closure in DK unchanged project We continued the ERP strategy Sticked to the overall strategy with adjustments We met the business case for Denmark/Poland in July 2010 The power of the supply chain function gets crucial for the readyness And so does the alignment
10 Next step capacity = short term overcapacity (?) Short term reactions: Investment avoidance (Too) strict hiring policy Very strict cost controlling Revised strategy Setup changes again Even tighter alignment between demand and supply S&OP
11 S&OP before during and after the crisis We implemented S&OP in order to improve communication and interaction The Functional Organisation has separated Demand and Supply The need for S&OP became very visible in the functional structure Demand S&OP Supply The process was implemented on local and regional level The S&OP process is a business process that provides insight and buy in S&OP is the link between SC and Sales And not the least a structured forum for discussions
12 The S&OP Process is a 5 step integrated approach Marketing and R&D/ R&D input to new/outgoing products Assortment Mgt Review Financial impact of changed plans Sales forecasts & plans Demand Plan Review Integrated Reconciliation Management Review Supply Chain supply plan, capacity plan & inventory planning Supply Plan Review Decisions and actions plans on S&OP meeting 12
13 But even with all the processes in place... We did not foresee the crisis but some places reacted faster and better than others We were not able to reduce the costs as fast and as much as required We struggled in the spring to supply as fast and as precise as we wanted
14 It is all about people... and power Where you have the best people - we see the best results Act as a team Power to/in Supply Chain (local & regional) Solve their problems and they will listen to you Listen & understand before you try to get understood
15 Supply Chain 2.0: nothing new just more... Changes: Customer demands: Cost and cash focus: Coordination: Supply Chains have shelf lives Eg for speed and flexibility - We and our customers learned a lot during the crisis we will not go back Strict cost control until we know where we are Supply Chain and sales coordination via S&OP - we do not yet really know what to expect Slim organization
16 Don t look at the waves look at the current Old chinese proverb
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