Dean Gauthier General Manager KLB Group Canada

Transcription

1 Productivity in the Supply Chain Application in a manufacturing environment Dean Gauthier General Manager KLB Group Canada

2 About me DEAN GAUTHIER General Manager KLB Group Canada Over 25 years of experience in the telecom industry, including 20 years in Supply Management for major OEM such as Nortel Networks managing portfolios up to 3.6b$. Dean is a supply management expert specialized in contracting, supply chain design optimization and business processes development. Dean has been involved in the design of business management tools and supply chain partnership programs, which has lead him to design and implement leading edge ecommerceapplications as well as designing business processes and new types of supply agreements enabling the full potential of ecommerceinitiatives. Dean has also participated in several research papers regarding Supply Management and ecommerce. Dean is now the General Manager and co-founder of KLB Group Canada. KLB specializes in improving supply chain performance. 2

3 KLB The leader in procurement services Company Profile Founded in 1995 Sales: $ 56M in 2010 Consulting services: Strategy /organisation /processes /tools Purchasing cost reduction Temporary staffing solutions Training/ Coaching Staff: 320+ consultants and partners Offices in Canada, France, Germany, Spain, UK Partners in China, India, Mexico Key strengths International presence Expertise of 350 purchasing families Best-in-class Knowledge Management database Proprietary e-solutions fully adapted to procurement needs 3

4 KLB is working with clients around the world Electronics & High-Tech Telecom Media & leisure Equipment Goods Retail Consumer Goods Pharmaceutical industry Automotive Transportation & tourism Public Sector Financial Services Metal & Mining Training organizations 4

5 Top 5 Supply Management challenges ** COST CONTAINMENT 55% SUPPLY CHAIN VISIBILITY 70% RISK MANAGEMENT 60% INCREASING CUSTOMER DEMANDS 56% GLOBALIZATION 43% **Source IBM 2008 study «THE SMARTER SUPPLY CHAIN OF THE FUTURE» 5

6 HOW IS MY SUPPLY CHAIN DOING? " AREAS FOR IMPROVEMENTS " 9

7 Good news: There s always some fat! Tools and Processes Over-consumption Overstocking Over-specification Underperform Safety stocks Habits & Immobilism Brand profusion 6

8 2/3 of the gains are from inside the organization Reducing consumption Eliminating over-specification Redesign to cost Standardization Brand Streamlining INTERNAL SUPPLIERS Buy vs Make Pertinent supplier solution Supplier Competiveness Volume aggregation Visibility / Forecasts Negotiation 7

9 Improving the Supply Chain HERE ARE SOME KEY ELEMENTS INFORMATION TOOLS SUPPLIER RELATIONSHIP MANAGEMENT REPORTING / DASHBOARDS / KPI s GOAL ALIGNMENT 8

10 UNDERSTAND THE NEEDS " GATHERING THE INFORMATION " 9

11 Information is divided in 3 categories Level 3: Strategic Level 2: Tactical Level 1: Operational La pyramide des niveaux de tableaux de bord achats (source : KLB Group) 10

12 The 3 categories of information Their roles Level 1 : Operational and data mapping Getting a global vision of the nature, frequency, evolution and usage patterns such as; An accurate image of expenses or usage by nature, typology, entity or by suppliers, etc. Compare expenses and usage ratios (by employee, product, % of sales, etc.) between the various entities. To know the market shares of a given supplier. To have reliable data necessary for the elaboration of level 2 and 3 dashboards. Level 2 : Tactical information Getting an operational vision of the supply chain and its suppliers. Find indicators such as volumes of purchases and theoretical savings realized per month categorized by buyers, entities, line of business, etc. Gathering additional indicators related to quality, logistics, etc. Level 3 : Strategic information Incorporating high level view of the contribution from the supply chain group and the suppliers to the company strategy. Collect Information about other key indicators such as ROI (Return On Investment) of the supply chain function and results forecasts (profits) to the shareholders, etc. This level is critical because it will be the factual support of the direct impact of the supply chain manager during board meetings. The orientation of the strategic reporting is much more financial than operational reporting. 11

13 A BIT OF HISORY " THE SUPPLY CHAIN TOOLBOX" 12

14 Tools that have revolutionized the Supply Chain THE INTRODUCTION OF ERP S Many tools and technologies have contributed to the evolution of the supply chain, from fax and to spreadsheets and EDI. ERPs(Enterprise Resource Planning) were introduced in late 1980s. They were not solely dedicated to supply chain but have been considered the starting point of the Intelligent supply chain. They were considered as the precursors of the transformation of the purchasing function. Particularly the implementation of more formalized relationships and the first electronic approval routing. The main objective of ERP swas to put on a network and on the same database all the information related to the different functions of the company, especially the purchases. Therefore, by using ERPs, companies had a theoretical dashboard of their activities and their purchases, almost in real-time. Specifically designed supply chain ERPswill allow the user to distinguish between purchasing and replenishing functions. Reality is a little different because certain numbers of companies have encountered difficulties setting up an ERP, a project which is very often expensive, takes longer than planned, with many customization difficulties. It is sometimes difficult to implement customizations as staff is often resistant to change. For the purchasing function, the ERP smainly allowed the improvement of the procurement processes, particularly for the production related purchases which were more formalized than the expenses or non recurrent purchases. By using ERPs, businesses better planned their activities, but did not necessarily had better purchasing habits. 13

15 Tools that have revolutionized the Supply Chain THE ARRIVAL OF E-PROCUREMENT It is in the middle of the 1990s, with the development of the Internet that things have again changed, the new method of communication allowed to reduce distances. The e-procurement, which allows to make online and electronic transactions is announced as a real revolution. If the relationship between the suppliers and buyers is now changed, it becomes a potential tool to ensure application of negotiated supply agreement by purchasing, especially to have a track record of all transactions realized internally or by other entities of the company. While time and administrative savings are important, the e-procurement often demands a difficult internal reorganization. Companies, which are too much focused on the technical aspect, are looking for quick quantitative results, while the e-procurement brings mostly qualitative gains and represents an excellent tool for buyers to ensure application of supply agreements and gather critical data to manage the supply chain. So, while they show a certain enthusiasm, companies soon realized that the e-procurement did not apply to all types of purchases. Only a portion of the purchases could easily be done via electronic catalogues. The more repetitive was the purchase, the more it could be automated. The e-procurement enabled companies to realize additional savings, but again only to the applicable purchases which were unfortunately overestimated by many companies. After a period of wavering, companies now begin to benefit and better anticipate problems related to the e-procurement. Necessary adjustments have been made for a more efficient usage. 14

16 Tools that have revolutionized the Supply Chain THE STRATEGIC POSITIONING OF THE E-SOURCING Contrary to e-procurement, e-sourcing was immediately adopted by companies and especially by buyers who wanted to find the best available suppliers. E-sourcing is not a very complex solution, it is only facilitating what the buyers already know in theory, however if the e-sourcing structures the way of working and ensures application of best practices, it will never turn a bad buyer into good buyer. E-sourcing allowed the purchasing services to move at a faster pace and began to take a strategic dimension in the company. E-sourcing participates to the standardization of the purchasing process and allows the buyers to be more coherent and more effective. Before, the negotiation was a long process. Today, there is an automatic competition. E-sourcing allows the buyer to dedicate more time to create fully complete RFQs, and to follow the supplier market. Nevertheless, everything is not so simple. If the notions of RFI and RFQ were rather well received by the purchasing team of large companies, the reverse auction tool on the other hand was not well perceived at first by suppliers, and then by purchasing teams. Today, the advantages of e-sourcing do not need to be demonstrated. The market still has to better understand this tool. Too many people are still only experiencing the reverse auction tool. The foremost objective is to structure the whole process. While those tools have completely changed the relation with the suppliers in the final phase of the negotiation, the preparation work is still essential before launching a reverse auction. 15

17 Tools that have revolutionized the Supply Chain MEASURING THE SUPPLY CHAIN PERFORMANCE To be recognized as a strategic function, the buyers, and more particularly the supply chain managers, require a set of tools capable of offering a better visibility of the company expenses. Surprisingly, very few supply chain groups are capable today to provide a precise and real time picture of their spending, particularly in regards to set objectives. To answer this recurring problem, there are new solutions capable of measuring in real time the performance level of buyers and supply chain agility. Of course, this new generation of tools would not have been available ten years ago. They are a direct consequence of the introduction of ERPs and other supply chain e-tools. The challenge is to quantify the supply chain needs by using information provided by the ERP and e- tools and to measure performance versus contracts. These measures can only be obtained if all purchasing, products, contracts and supplier information are entered and available. This is where the supply chain really become a strategic function and its performance will no longer be only a question of costs, but it will also be based on criteria such as quality, lead-time, etc. Specifically, these new tools are going to allow the supply chain managers to better identify the weak areas of their services and to adjust them accordingly. 16

18 Tools that have revolutionized the Supply Chain APPREHENSION OF THE NEXT TECHNOLOGY Similar to e-procurement, all these new tools are forcing the buyers to change their habits and their workflows. This is met with strong resistance. As for the schools and training centers that now have modules dedicated to these solutions, they are still very theoretical. This is why companies resort to train internal staff instead of hiring newcomers. Today, there are good buyers but it remains difficult to find workers with solid experience and a excellent understanding of these tools. Be aware that before mastering these new e-tools, buyers should at least know how to use the classic office automation tools, beginning with Microsoft Excel. It is a fact that many buyers do not master basic tools such as this one. Having said that, in companies where these new tools are in place and strong it is safe to bet that the purchasing manager will occupy a more strategic place inside the organization. Nowadays, a buyer is not only in charge of replenishing the supply chain, he is also in charge of its full management. 17

19 INCREASING SUPPLIERS INVOLVMENT " VMR PROGRAMS " 18

20 Supplier Relationships Management Value Statements CUSTOMER Supply Assurance (Stocking Programs) Shared Risk Technology Access Optimized Total Cost Geographic Support Shortest Time-To-Market Highest Quality and Reliability Capacity Planning SUPPLIER Design Involvement Communications Long Term Commitment Broad-Line Procurements Industry Specific Knowledge Reasonable Margins Combining Each Other s Value Needs to Create a Win-Win Relationship Customer Satisfaction / Profitable Growth 19

21 Supplier Relationships Management Understand the value it can bring What are your key competences / yourknow-how? Where do you want to focus? What are your needs as a manufacturer? What are the factors (internal and external) that influence what you buy? What is your market / strategic positioning? What are your suppliers strengths and expertise? What are your suppliers technical and technological positioning? 20

22 Supplier Relationships Management Categories benefits and segmentation Strategic Preferred Technology/Process Approved Product/Service Vision Supplier s Business Proposition Competitive Advantage Value Performance Quality Price/Cost Delivery Account Mgmt. Business Strength Velocity Agility & Flexibility Alignment Time-to-Market Geographical Reach Innovation Organizational Integration Strategic Fit Systems Knowledge Customer / Industry Knowledge Relationship Interaction Transactional Collaborative Fully Integrated Supplier Quality Strategy /Technology Strategy 21

23 AM I ON TRACK? " MEASURING PROGRESS " 22

24 The dashboards We can only improve what we measure Dashboards are visual tools which group the essential KPI that we decided to follow. There can be various levels of dashboards according to the readers and their objectives: Operational dashboards: for the management of supply chain team. Strategic dashboards: for the communication with upper management. Cartographic dashboards: to allow expenses analysis from real data for the use of buyers, managers and internal customers. The benefits of dashboards are only achieved if the leaders or decision makers follow them regularly and measure projected, preventive and corrective actions if necessary 23

25 The 3 categories of information Examples of dashboard metrics Level 1 : Operational and data mapping Execution Clerical Level 2 : Tactical information Sources of supplies Price / agreements Service levels Level 3 : Strategic information Partnerships Global supply chain vision Inventory reduction vs cashflow Quality improvement vs costs 24

26 What s important in measuring progress The information as to make sense Coherence Continuous and cumulative addition of information Coherence of the whole calendar of updates and broadcasting Relevance Reduced number of indicators reflecting the management priorities that are perceived by the owner as reliable and indisputable Efficiency Dynamic, to direct the performance towards one or several references, separately or simultaneously. The tool will have to result in the implementation of corrective actions Control Instrument of dialogue and coordination Coherent with the organization chart and the scope of responsibilities Savings The time and effort savings in obtaining the data has to be predominant The data must be easily accessible and usable As-is Flexibility of the Dashboard The awareness that we will never have the ideal dashboard. 25

27 HOW GOOD ARE WE? " HAVING PERTINENT KPI S " 26

28 KPI (Key Performance Indicator) A KPI is an indicator that allows to estimate and to follow the performance of a business industry. It is a value, an indication or a rating. A KPI has to been monitored regularly (weekly, monthly, yearly or bi-annually) A good KPI has to be : Reliable Of good quality Pertinent Clear Meaningful Up to date Complete Precise 27

29 DRIVING FOR THE SAME GOALS? " OBJECTIVES ALIGNMENT" 28

30 Goal alignment is essential This is what happens when people (Top & Middle Management, Operation, and Consultants) are not align towards the same goals 29

31 Thank you for your participation Dean Gauthier 30