E2E Supply Chain Excellence - Delivering a Culture of Continuous Improvement (Sustainably) - DuPont Experience Don Wirth VP Global Operations SC and CoE (retired) EI dupont de Nemours Business s Do Not Compete Supply Chains Compete
Todays Discussion Why and Where: focus for E2E Supply Chain Excellence Our Journey and the challenges we faced Results and successes The approaches and differences Challenges and Actions 2
Future Focus for Industry Competitiveness DuPont Focus Industry Today Industry view 10yr from now Customer Responsiveness 4 1 1 Productivity Improvement 1 2 5 Logistics management 6 3 6 Demand Management 7 4 7 Enterprise Alignment 1 5 2 Performance Measurement 8 6 8 Vendor management 9 7 9 Asset management 1 8 10 Employee Development 4 9 3 System Infrastructure 10 10 3 60% of Leading Supply Chain Professionals see need for Transformation Corporate Executive Board and Supply Chain Council 2010 3
What a Business wants from Continuous Improvement- AND not OR From To Better Customer Experience + And Increase Velocity (asset optimized) + And Increase Margin (Reduce Cost to Serve) Inconsistent delivery performance Difficulty meeting promises Significant churn and effort High inventory vs. best in class Underutilized Assets Non productive inventory High complexity Manual interventions Numerous work arounds Significant expediting Reliable Supply Competitive Lead Times Differentiated service levels Advantaged working capital productivity Aligned E2E performance Capital available to re-invest Automated, streamlined, rules based processes Reduced manufacturing costs Reduced expediting costs 4
The DuPont Story from Best Practice to Production System and Demand led Fulfillment Performance Demand Led Fulfillment Managing Processes Engagement And not OR 2009 In 2006, struggling with Sustainability of benefits we undertook the DuPont Production System (DPS)to align the organization, engage our workforce, and achieve bottom-line results. The success of DPS, has led to Engaging Business Teams to transform with Demand Led Fulfillment (DLF) how we deliver to Customer with significant performance improvement 5
Why A Focus on Continuous Improvement is Important in 21 st Century ACTUAL BENEFITS TO DATE 40% improvement in EH&S performance Delivery to Promise has reached 80/85% (27%) from 60-70% with a goal of 95% $1.5bn reduction in manufacturing costs on sales revenue (4%) of assessed entitlement of $3.5B $2bn reduction inventory from $ 6.5bn = $500m pa reduction in carrying cost of inventory (30%) Qualitative Benefits Improved safety behaviour Higher predictability in manufacturing performance More capacity availability More responsive Supply Chain Capability More effective Supply Chain Structure Higher labour and asset productivity Engagement and enablement of improvement right down to operator level 6 6
80 90 100 110 120 DuPont Global Integrated Operations At a glance Supply Chain Costs 2007 2008 2009 2010 2011 2012 2013 Delivery to Promise (DTP) Production Volumes TRC Rate DuPont Integrated Operations Worldwide Global Supply Chains 90+ Plant sites 200+ Sites Warehouses 740+ Shipping Major Container user Employees (approx.) 34,000+ Countries 45 Contract operations ~1000 Sites New Product Launches 5%-25% Annual Gross Productivity > $1B per year PTOI Diverse Operations Seeds Discrete Parts Food Additives Industrial Biotech Film production Polymer Production Fiber production Consumer goods Electronic materials Continuous chemical process Fine and custom chemicals Fluorine Chemicals 7
Staged Focus The Evolution of a Business System Approach Business Processes Create Demand / Innovate Improvement Approach Develop Market and Shape Grow Market Fulfill Demand Operate Supply Chains and Plants Make Money improve profitability Supply Chain Transformation Operations Excellence Best Practice Focus Deliver Business Excellence Engage Entire Workforce Build Capability Efficiency 8
Demand Value Stages of supply chain maturity (AMR / Gartner View) Stage 1 (React) Stage 2 (Anticipate) Stage 3 (Integrate) Stage 4 (Collaborate) Stage 4 >(Orchestrate) Historic Accidental Grouped for Focus Balanced Mix Value Discovery Value innovation Business Architecture React Improvement Projects Projects Projects Integrated Functional Excellence Demand Supply Demand - driven Integrated E2E Processes Demand Product Supply Value Translation Network Demand Product Supply Shape for Value Synchronize Demand Reactive X Supply Reactive Reactive Demand X Product Supply Product Integrate Product Sense Product Projects The Transformation Zone 9
Leadership Focus on Supply Chain Excellence of Stage 1-3 Competencies (skills) Standard work processes Project Management Accountabilities Cross-functional interfaces and processes Governance Decision Rights Data quality and visibility Data ownership IT Systems Capabilities Managing Processes Systems & Information Flows Culture (M & B) Collaborative Structures Mindset and behaviors Change management initiatives to fit with cultural requirements Typical Focus Areas at this Level Performance metrics Entitlement ($$$$) Enforcement sanctions Skills building S&OP, Demand Planning, Supply Planning, Operations functional excellence Value Chain mentality Metrics ( Product & Family approach) Understanding Managing Motivators processes IT solutions Functional KPI s Project based improvements $ delivered Improvement to Business KPI s Organizational connections Roles and responsibilities Operations, Maintenance, Quality, Planning and HR 10
Leadership Focus on Supply Chain Excellence of Stage 1-3 Competencies (skills) Standard work processes Project Management Accountabilities Cross-functional interfaces and processes Governance Decision Rights Data quality and visibility Data ownership IT Systems Capabilities Managing Processes Systems & Information Flows Culture (M & B) Frustrations with Stages 1-3 Collaborative Structures Mindset and behaviors Change management initiatives to fit with cultural requirements Performance metrics Entitlement ($$$$) Enforcement sanctions Value delivery often with negative consequences to other areas. Benefit sustainability Value delivery underwhelming Metrics & Manufacturing Assets Motivators typically are unreliable and unpredictable S&OP often devolves into a PO discussion or delegated to SC Professionals Organizational connections Roles and responsibilities Operations, Maintenance, Quality, Planning and HR Customer Service not where needed 11
Leadership Needs Systemic Thinking to provide the reinforcing elements to ensure sustainability Cross-functional interfaces and processes Governance Decision Rights Managing Processes Culture (M & B) Mindset and behaviors Change management initiatives to fit with cultural requirements Competencies (skills) Standard work processes Project Management Accountabilities Capabilities Metrics & Motivators Performance metrics Entitlement ($$$$) Enforcement sanctions Data quality and visibility Data ownership IT Systems Systems & Information Flows Collaborative Structures Organizational Structure and connections Roles and responsibilities S&OP, Product Teams, Decisions Center and Plant steering Teams 12
Transforming Supply Chain Performance To Demand Driven Requires More Opportunity assessment - Strategy tested plus hypothesis driven analysis Customer Segmentation Portfolio Segmentation Supply Chain Capability Structural and Operational Archetyping Agile, efficient, cash focus MTO, MTS, FTO and other R, R, A, C, A linked to Plant operating discipline Systemic Implementation What is working What is possible Integrated approach What s important for competitive success KPI s (leading and Lagging) 13
Challenges and required Actions Leadership Alignment on shift in journey, Cultural development and Business value ( a conscious choice to go forward) Understand and then focus on Key KPI s both leading and lagging and then track. (EH&S, DTP, DTR, OFLT, MTP, FPPQY..OEE, SP, Productivity) Deployment design choices of speed, value and geography Training requirements for all levels of Operations (leaders to Operators) Need for delivery of benefits and understanding of financial flows Resource investment in front end loading and then understanding benefits from investment Consistency of purpose taking the long view to winning in market 14
Thank you 15