Supply Chain Excellence from Production to Retail

Transcription

1 Supply Chain Excellence from Production to Retail Thomas Stuchly Porsche Consulting GmbH World Sports Forum Munich, January 25 th 2014

2 Agenda How did Supplier Integration become such an important factor in the Porsche success story? What are the key elements of a Lean Supply Chain, and how can they be applied in the textile industry? Source: Porsche Consulting; Photo: Porsche AG 2

3 Agenda How did Supplier Integration become such an important factor in the Porsche success story? What are the key elements of a Lean Supply Chain, and how can they be applied in the textile industry? Source: Porsche Consulting; Photo: Porsche AG 3

4 Dynamic growth of Porsche 1992/ Vehicles produced 15, ,999 Employees 7,133 17,502 Turnover ( millions) ,865 Profit before Tax ( millions) ,648 Source: Porsche AG, Annual Reports 4 INT1301_130417_06_OID_Campinas.pptx

5 Porsche at a glance 911 The product ~ 10,000 parts Supplier base* 650 suppliers 22,000 active part numbers Boxster/ Cayman Cayenne ,000 units per year per model 10 7 variants (all profitable) Ramp-up in 3 months ~ 750 dealers ~ 125 markets 3 year lifecycle** Panamera ~151,999 cars in 2012 * Excluding spare parts, excluding Macan ** Including facelifts Source: Porsche Consulting; Photo: Porsche AG 5

6 In the early nineties Porsche faced a severe crisis Profit before tax millions /73 77/78 82/83 87/88 92/93 97/98 05/06 Fiscal year Source: Porsche AG, Annual Report, Press Release November 7,

7 Porsche vehicle assembly 1992 Source: Porsche AG 7 Porsche Consulting

8 Support from Japanese lean experts A terrible plant, but there is hope. Nakao 1992 Source: Porsche AG 8 Porsche Consulting

9 Porsche vehicle assembly 2010 Source: Porsche AG 9 Porsche Consulting

10 But which part of value creation can be really affected in the end Logo Switches Base Blinds Leather Airbag Wood/ Carbon Source: Porsche AG 10

11 taking into consideration 34 different companies / locations that participate in the overall value chain? Crest Blind cover Paint finish Simplified illustration Role of Porsche Specification Integration Quality Management Leather Leather covering Sports cover Leather Casting, Foamfilling Leather covering Basic cover Paint finish Installation Airbag Cartridges Container Assembly Assembly Y trim Magnet ring Light guide Scroll wheel Printed circuit board Assembly Shift mat Trim Button Rocker Paint finish Installation Veneer PU milling Veneering Cover Painting Polishing Assembly Source: Porsche AG 11

12 Consequently, an excellent supply chain is crucial for a successful product Suppliers Delivery 1. Production Delivery Customers Supply Chain 2. Purchasing 3. Supply chain 4. Research & development 5. Administration Supplier integration and development is a cross-functional task that originates at production! Source: Porsche Consulting; Photo: Fotolia 12

13 Employed excellent supply chain processes start at product development processes and have to be continuously improved Example Porsche AG Start of production Product Development Process (PDP) (Definition and concept phase) Serial Production Supplier Integration Program (LIP) Supplier Development Program (POLE**-Position) Focus: Ensuring design targets, meeting of deadlines and cost targets Focus: Cost reduction and optimization of quality and delivery service * PDP (Product Development Process) ** POLE = Porsche Optimierung Lieferanten Einbindung Source: Porsche Consulting, Photo: Porsche AG 13

14 Japanese industry serves us as a shining example for Lean logistics processes and the benefits brought to suppliers and customers Example: Fresh fish delivery from sea to table In only 11,25 hours from being caught to being served 20:15 22:30 05:00 05:30 06:00 07:00 07:30 Fish caught and stored dock Fish auction Fish market Fish wholesaler Preparation at restaurant Sushi breakfast We want to become like a fruit seller or fish monger....we want to drastically reduce throughput times, to become more flexible through delivery of only the minimal lot sizes, and offer customers the best quality products in the shortest delivery times... Hiromi Saito, OMCD Toyota* * OMCD Operations Manufacturing Consulting Division Source: Japan-Seminar Porsche Consulting Juni

15 The vision for Lean logistics is simple: Smaller quantities, more frequently Example: Delivery of production parts to assembly line at Porsche In only 5,33 hours from receipt at supplier warehouse to use in car assembly 09:00 09:05 09:10 09:15 14:15 14:20 14:30 Pick-up from supplier WH Transit / Transfer Delivery at Porsche plant Placement in commissio-ning area Picking Delivery to the line Use in car assembly Source: Porsche AG 15

16 Lean production and its extension to its suppliers helped Porsche to become the most profitable car company in the world Profit before tax millions Continuous growth Start of Lean Journey /73 77/78 82/83 87/88 92/93 97/98 Fiscal year Source: Porsche AG, Annual Report, Press Release November 7,

17 Agenda How did Supplier Integration become such an important factor in the Porsche success story? What are the key elements of a Lean Supply Chain, and how can they be applied in the textile industry? Source: Porsche Consulting; Photo: Porsche AG 17

18 How robust and flexible is our Supply Chain? Source: Porsche Consulting 18 Porsche Consulting

19 Do high inventories guarantee high delivery service? Source: Porsche Consulting 19 Porsche Consulting

20 In contrast to traditional thinking, Lean production starts by looking at throughput times Traditional thinking Lean production High inventory levels Short throughput times Maximum ability to deliver Maximum ability to react Perceived customer orientation Real customer orientation Unflexible & cost-intensive Flexible & cost-efficient Source: Porsche Consulting 20

21 The underlying problem: The Bullwhip Effect Supply Chain Inventories Customer Demand Source: Porsche Consulting 21

22 The bullwhip effect lays is originated in isolated information flows between silos Isolated forecasting Supplier Production Wholesale. Retail Customer Source: Porsche Consulting, Photo: Fotolia 22

23 Key success factor is to produce real demand at point of sale Client example Insight: Sales to Customer vs. Consumer Off-take +/ - 40% P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 Demand at point of sale Finished goods produced Source: Client example Porsche Consulting real figures 23

24 The solution is to break up silos and implement an end to end, demand driven pull throughout the whole supply chain Central forecasting Supplier Production Wholesale. Retail Customer Pull Pull Pull Pull Pull Source: Porsche Consulting, Photo: Fotolia 24

25 Through the step-by-step upstream implementation of a Pull system in the supply chain, inventory can be reduced or eliminated Status Quo Push approach Retail store/ Consumer Warehouse Warehouse Supplier Steps toward a lean supply chain Retail store/ Consumer Supermarket Warehouse Supplier 1. Step First step Pull 2. Step Systemwide Pull 3. Step Just in time 4. Step Just in sequence Source: Porsche Consulting, Photo: Fotolia 25

26 Push vs. Pull Approach to End-to-End Textile Supply Chain Traditional Supply Chain Lean Supply Chain 1 Pushed sales High Inventory per item 2 8 Fewer involuntary promotions 1 Pull sales 2 Right sized inventory Less Shelf Space Req d 3 5 Reduced sales margins P U S H High shelf space needed per item 3 7 Fewer markdows P U L L Released cash 4 News Run promotions 4 Sales increase 6 Higher product portfolio 5 Source: Porsche Consulting 26

27 Benefits for Textile Producers and Retailers through Pull implementation Example: Pull implementation for Food Industry Benefits (excerpt) Reduction of out of stock by 50% Reduction of replenishment time from 21 to 10 days Reduction of lead time from 31 to 6 weeks Increase order fill rate to > 98% Source: Porsche Consulting, Photo: Fotolia 27

28 What approach should you in the textile industry take to begin your Lean journey to a faster and more efficient supply chain? 1 Create a Vision! 5 Make overall costs transparent at each step in the Supply Chain! 2 Break up Silos, make information available internally and externally! 6 Optimize inventory levels and number of inventory build-up points! 3 Implement PULL downstream through the whole value chain! 7 Your business is not the exception! 4 Stabilize processes through defined responsibilities and standards! 8 Start small, but in any case get started on your own Lean journey! Source: Porsche Consulting, Photo: Fotolia, Istockphoto, Panthermedia 28

29 100% Performance, 0% Fat Should also apply to firms in the textile industry.