Het nut van world class Supply Chain Reinier Remmelink 20 februari 2014 20 februari 2014 Reinier Remmelink 1
Programma 18:00-19:15 deel 1 Introduction Context & Content Supply Chain Challenges Why assessing Supply chains How to assess Supply Chains 19:30-20:30 deel 2 Example / case study Challenge Approach Result 20 februari 2014 Reinier Remmelink 2
U bevindt zich hier 20 februari 2014 Reinier Remmelink 3
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What are today s Supply Chain Challenges? 20 februari 2014 Reinier Remmelink 5
Is Supply Chain a Strategic Asset? 20 februari 2014 Reinier Remmelink 6
Are all Supply Chains generic? 20 februari 2014 Reinier Remmelink 7
Process Survey 20 februari 2014 Reinier Remmelink 8
What is your ambition? 20 februari 2014 Reinier Remmelink 9
Supply-Chain configuration 20 februari 2014 Reinier Remmelink 10
Plan Align Supply Chain Unit Plan with Financial Plan Cycle Time Plan Supply Chain (S&OP) Plan Plan Source (Forecast to Suppliers) Plan Make (Master Production Schedule) Plan Deliver (Forecast from customers) Schedule Product Deliveries Schedule Production Activities Reserve Inventory and Determine Delivery Date Execute 20 februari 2014 Reinier Remmelink 11
Plan Bullwhip effect 20 februari 2014 Reinier Remmelink 12
Source Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment Executed by vendor RFID Vendor certification Ship to line Self billing Pull signals JIT delivery self-filling VMI HUB consignment stocks Company Suppliers 20 februari 2014 Reinier Remmelink 13
Make Schedule Production Activities Issue Material Produce and Test Package Stage Product Release Product to Deliver Waste Disposal Production Line Sequencing Kanban Automated Lot Tracking 360 Degree Perfect Pick Data Capture Closure Put away (ADC) Lot Tracking Vendor Company Customer Production Schedule Visibility Production Schedule Visibility Production Schedule Tact time station 1 station 2 station 3 Pull signals Vendor delivery to line C y c l e t i m e 20 februari 2014 Reinier Remmelink 14
Deliver Inventory Financing Evaluation Transportation Optimization cross docking Available to promise Order Quotation System Distribution preparation Sales order handling Select Carriers and Rate Shipments Route Shipments Build Loads Consolidate Orders Reserve Inventory and Determine Delivery Date Receive, Enter and Validate Order Process Inquiry and Quote Warehousing Physical distribution Receive Product from Source or Make Pick Product Pack Product Load Vehicle & Generate Shipping Docs Ship Product Receive and Verify Product by Customer Install Product Invoice Bar coding/rfid Integral inventories Lot Tracking Freight Carrier Delivery Performance Evaluation Mobile Access of Information Self Billing 20 februari 2014 Advanced ship note Ship-To-Line Reinier Remmelink 15
Return Maintenance, Repair and Overhaul (MRO) Defective product Manufacturers Repair Centre National Collection Point Retailers Customers Excess product RDC Retailers 20 februari 2014 Reinier Remmelink 16
Performance Measurement and Benchmarking 20 februari 2014 Reinier Remmelink 17
Competence management Business Strategy Competence Road Map Supply-Chain partners Education plan people-performance measurement 20 februari 2014 Reinier Remmelink 18
Risk Management Identify Monitor Assess Mitigate 20 februari 2014 Reinier Remmelink 19
Pauze 20 februari 2014 Reinier Remmelink 20
Industry Consulting: our approach Assessment Bench marking Best Practice analysis Results Capture As-Is Quantify the Characterize the Implement the state (Current operational management new way of Maturity level) performance of practices and working Derive the to-be similar software desired future companies and solutions that state (Ambition establish result in best-in- level) internal targets class based on best- performances in-class results Process Survey SCOR / APQC SCOR Change Tool Management 20 februari 2014 Reinier Remmelink 21
Case Study Suppliers Company Subcontractor Customers Plan Supply Chain Make to Stock CODP Make to Order Plan Source Plan Make Plan Deliver (financial) forecast Plan Source Plan Make Plan Deliver order components Deliver Source Make Deliver Source Make Deliver Source (1 to >10 weeks) (1 week) ( weeks) (72 hr ) 20 februari 2014 Reinier Remmelink 22
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Supply Chain Maturity( ) and Ambition( ) 1: SC Configuration 2: Supply-Chain planning 3: Source Plan 4: Source Execute 5: Make Plan 6: Make Execute 7: Deliver Plan 8: Deliver Execute (N/A) 9: Return Plan 10: Return Execute 11: Perf measurement 12: Competence management 13: Risk Management Informal Functional Integrated Supply Chain Extended Enterprise 20 februari 2014 Reinier Remmelink 24
Supply-Chain configuration Maturity Level: 5 The overall supply-chain (re-) configuration plans or actions are part of a cost-based manufacturing or distribution strategy. Improvement actions optimize the functional performance of independent supply-chain entities. Main decoupling point is defined In the supply-chain configuration process, key suppliers and key customers are taken into consideration. Ambition Level: 8 Supply-chain configuration also considers responsiveness and flexibility of key partners in the supply chain. Steps to take first Derive Supply-chain strategy directly from the business strategy Configure the supply chain to optimize integral supply-chain costs and performance and meeting market needs. Involve some key suppliers and key customers in the supply-chain configuration process, resulting in SLA s. 20 februari 2014 Reinier Remmelink 25
Supply Chain Planning Maturity Level: 4 Planning process is cascaded with planning information flowing from the one supply-chain entity to the next supply-chain entity (resulting in information delays). Key suppliers are periodically informed with planning information comprising a binding fixed time period. Plans are changed without consultation as unplanned orders are expedited. Ambition Level: 7 Supply-chain plans (including a Goods Movement Plan) are formalized and available to all supply-chain functionaries and top-tier partners. The supply-chain planning is robust and therefore not disrupted by ordinary events that can be anticipated (customs clearance, production stops, planning changes, cycle counts, etc.). The planning rhythm is in compliance with customers' requirements (e.g. bucket sizes or planning milestones, if applicable). Different planning cycles for the long, medium and short term are in place. Steps to take first Demand/supply balancing occurs monthly with all necessary decision makers in the supply chain. Plans are changed in consultation with other supply-chain entities. Demand/supply balancing occurs weekly with all necessary decision makers in the supply chain. This results in one agreed supply chain plan. 20 februari 2014 Reinier Remmelink 26
Source Execute Maturity Level: 3 Material scheduling techniques are differentiated by commodity type (e.g. based on an ABC analysis of the purchased value). Scheduling procedures are formalized, with the material planner using an MRP schedule and judgment to generate purchase orders. Usually purchase orders need to be expedited to meet requirements. Ambition Level: 5 Transfer material is optimized with the key suppliers (minimal handling; avoiding re-packing or re-palletizing). Steps to take first MRP and re-order point methodology are working appropriately. Expediting is exceptional. A full documentation check, parts count and visual check is still carried out on all materials. 20 februari 2014 Reinier Remmelink 27
Performance Management and Benchmarking Maturity Level: 4 Service-performance indicators as described in SLA (Service Level Agreements) are measured. Targets are set on key performance indicators to support continuous improvement. Functional measures are maintained and regularly reported. Benchmarking is done in isolation by the functionaries and is purely numerical. Ambition Level: 8 A set of common real-time metrics is shared and regularly reviewed with suppliers, and serves as the basis for joint actions. Steps to take Metrics are in place to measure supply-chain management costs (inventory, inventory-carrying costs and material acquisition costs). Order-fulfillment lead-time is measured consistently from order receipt to product receipt by customer. Service levels are measured against customer requested date and committed date. Metrics are in place to measure flexibility and responsiveness of the supply chain. One scorecard for supply-chain management is in use. Metrics reflect how customers perceive your performance. Performance is benchmarked against external firms with comparable processes. Compensation is tied to performance metrics, enforcing accountability. 20 februari 2014 Reinier Remmelink 28
Risk Management Maturity Level: 3 Source risk is mitigated Source risk mitigation strategies include: Multiple sources of supply, Strategic agreements with suppliers, Supplier partnerships, Ambition Level: 3 Steps to take Continue to assess the supply base and understand their planning strategies in order to take decisions on sourcing method. 20 februari 2014 Reinier Remmelink 29
Observations from assessment The organization is kept responsible for the Supply Chain Performance, which is currently not on required performance level. Is unclear what products will be ready and what revenue will be realized. Basic supply chain elements are in place, however the Supply Chain is not sufficiently configured to realize the requested lead time and delivery performance. Special attention need to be paid to points: Supply Chain Planning process in general More specific demand planning process Performance measurement Supply Chain Organization setup The organization has knowledgeable people, people know what has to be done, but not yet how. Steering needed regarding way forward and needed capacity to get actions implemented. The new implemented SAP system still needs knowledge transfer to various users and has master data integrity / stock accuracy issues. 20 februari 2014 Reinier Remmelink 30
Recommendations to company Supply Chain Planning process and organization Roles and responsibilities and way of working of the planning processes have to be mapped and agreed with the different stakeholders: The company has to take a leading role and be the lord of the chain More focus on managing and control of the stock levels at the CODP Performance and Monitoring Monitor on daily level with Subcontractor current and future CODP availability (leading metric) and agree on action plan. Supplier integration Clarity on planning / stocking strategy of suppliers Is Stock available, is a forecast needed, etc. Supplier relationship management 20 februari 2014 Reinier Remmelink 31
Recommendations to company Organization of Supply Chain team Supply Chain people to join forces and together manage Supply and Demand SAP Invest in SAP knowledge and utilize SAP. This can be a very powerful tool, if applied correctly. Appoint Master Data coordinator Assign project to address stock accuracy Demand Planning / Ordering Forecast purchasing, Communicate planned production of front modules to suppliers. Supplier to derive their plan 20 februari 2014 Reinier Remmelink 32
Summary 20 februari 2014 Reinier Remmelink 33
Thank you Reinier.Remmelink@philips.com 20 februari 2014 Reinier Remmelink 34