CASE STUDY Presented By Donald Cross
CASE STUDY Presented By Donald Cross
ANALYSIS MAIN ISSUES Impact on Total Business 1. Managing Warehouses 2. Compliance 3. Lean Culture 4. New Global Logistics.ORG/ Local 5. Sales & Operation Planning (S&OP) 6. Process Harmonization To Improve Cost Efficiency 7. Delayering of Supply Chain 3-1 8. Consolidate Supplier Base & Transport Costs 9. Indirect Spend Optimization 10. Project Start up With PMO
1. Measuring & Develop metrics to optimize logistics 2. Indirect optimization projects with stakeholders/ Group 3. Management – Americas logistics team “No I in team” 4. Compliance & Data transparency (create visibility creates control) 5. Total Customer Service Solutions/ Service Levels/ Frontline 6. Develop Warehousing KPI’s/ Benchmark 7. Transport spend report Air, Ocean, Domestic (Air Freight Spend) 8. 3PL/ Freight Partners QBR/Budget/ Service 9. Multiple Supplier Consolidation 10. Creating a Culture for Change
“Building bridges between logistics and all departments to drive excellence. Resulting in pride and passion in our achievements as one Company.
Managing Warehouses 3PL & Satellite
1. FORM A CROSS-FUNCTIONAL TEAM—including representatives from multiple disciplines and departments across your enterprise.
FORMING A CROSSFUNCTIONAL TEAM
COLLABORATION
New Idea’s
Process & Continuation
More Success
Purchasing
Production
Manufacturing
Sales &
Marketing
Customer Service
Information
Technology
Finance
3PL
In the cross-functional team, include colleagues responsible for managing the company’s brand and
orchestrating the customer experience.
1) COMMUNICATE 2) VISUALIZE 3) ACKOWLEDGE
GENERAL OUTSOURCING MOTIVATIONS
Increase Revenue
Improve Capabilities
Reduce Costs
Increase Flexibility and Responsiveness Increase Speed to Market Improve Speed to Market
Focus on Core Business Gain Access to new Technology Gain Access to Advanced Skills
Reduce Operating Costs Reduce Capital Investment Transform Fixed Variable Costs
VALUE 3PL DRIVERS 1. Safety & Security - Compliant medical device warehouse facilities 2. Detailed Tracking - Web interface complete visibility 3. Daily Updates - KPI monitored uploaded (D-LOGPLUS) 4. On Going Value - Ongoing process improvement & cost reductions 5. Accurate on Time Deliveries - Optimization and Just in time 6. Real Time Metrics - Performance dashboards/ KPI’S 7. Cost V’s Insource - Budget & Value 8. Transport Costs Insource to Outsource
Compliance
COMPLAINCE CHALLENGES
EFFICIENT COMPLIANCE – Process Harmonization to Reduce Costs
The compliance space has matured over a period of time and is aiming for achieving efficiency along with effectiveness. Efficiency leads to cost reduction but efficiency cannot be achieved unless the compliance initiative is automated and controls are optimized. Controls cannot be optimized unless the controls are standardized. No amount of effort for standardization of controls will yield results unless business processes are standardized. Efficient compliance means following a consistent framework approach to achieve efficiency in reporting, consolidation and evaluation of controls. It is strategic, proactive and a long term compliance perspective
Lean Management
LEAN MANAGEMENT = LEAN CULTURE Overview Lean Management
Goals: Steady Cost Reduction Zero-Defect-Quality No Raw Material, finished goods or WIP High Production Flexibility
3 Cornerstones Of Lean Management: Principle 1) Avoid Capital Cost 2) Standardized Material Flow Just in Time (JIT) 1) Always provide the right material in the right time, in the right quantity at the right place. 2) Only when reaching the minimum quantity (consumption of which will cover the time for new delivery) a new order will placed (Kanban-principle), so that there is not big inventory buffer.
Approach:
Lean Management is focusing on the organization of all resources in a supply chain by eliminating non value-adding activities (waste) in order to achieve the optimal profitability.
Accelerate Production
Facilitate Production
Reduce complexity by using components
Standardization of the production program
Supplier
3PL Warehouse
Stage 1 1 User 8 hrs shift
Stage 2 2 User 8 hrs shift
Stage 3 1 User 8 hrs shift
Final Check 1 User 8 hrs shift
Process Time: 30 Min
Changeover Time: 5 min
Yield: 95%
Batch Size: 1
Process Time: 60 Min
Changeover Time: 25 min
Yield: 75%
Batch Size: 1
Process Time: 90 Min
Changeover Time: 15 min
Yield: 92%
Batch Size: 1
Process Time: 30 Min
Customer Customer Service
Request Phone/Email
Confirmation Phone/Email
Order Email
Confirmation Email
! 5 pieces 5 Hours
! ! 2 pieces 3 Hours
2 pieces 0.3 hours
Example: Finalizing the Value stream map
Total Lead Time (value Adding and non value adding time)
Sales & Customer
LEAN MANAGEMENT = LEAN CULTURE
Overnight Delivery
5 hrs 3 hrs 0.3 hrs (8.3 hrs) (3.5 hrs) (39%)
0.5 hrs 1 hrs 1.5 hrs 0.5 hrs Value Adding Time
Challenges of Global Sales & Operations Planning (S&OP)
• What do we want to achieve • Where do we want to be in short & long term • Clear vision & strategy, measurable plan 1) New Markets 2) Expansion into New Geographies 3) Be ahead of competition 4) Cost Reduction 5) Launch New Product • Do we want more than one S&OP? • Global companies AVERAGE more than one S&OP • Risk: Cultural and Regional differences
Growth, Revenue & Profit Improve Rev 2% to 5% Reduce Inventory 7% to 15%
Obstacles
• Language barrier (Chinese, Dutch, English & Spanish) • How does each region define success • How service levels are calculated and measured • Inconsistencies will exist from Region to Region • Enterprise Resource Planning (ERP) & Acquisitions
Accounting Sales Manufacturing
Financial Evaluation Inventory Producing Efficiently (Mix & Location) (Capital & Investment) (Hold More goods) Each Department focuses on own metrics and goals rather than company goal!
Multi Million Dollar Company with Operations 40 Countries
Improve Sales
Forecast
Increase visibility future
demand
Reduce Inventory
Obtaining Global view of demand, supply & inventory is a major challenge Data highly static and inconsistently represented Unable to Slice and Dice data (regional & global)
“S&OP BIG BANG TEST” Implemented in North America 1. Updated Forecasts Leads to Sales Plan 2. Production & Inventory Plan 3. Customer Lead Time (Backlog Plan) 4. New Product Development Plan 5. Strategic Inefficient Plan 6. Resulting Financial Plan
Americas EMEA AsiaPac
IMPLEMENTATION PLAN
Commence data gathering process, site visits, Operational methods
Review the current operations and facilities to establish suitability. Produce Data Report. Compile specification of Services & or Facilities Required document. Approach suitable contractors with an Enquiry Document to establish capability and interest. Develop and issue Invitation to Tender (ITT) document, prepare shortlist, arrange reference visits, field enquiries and select. Prepare Contract & Service Level Agreement documentation; assist with negotiation. Assist with implementation and monitoring of contractor performance.
First Step: Organization V’s Software Data Material Flow: 1) Receive 2) Store 3) Pick 4) Ship Gain real-time access and insight into warehouse operations, no matter where warehouse activities are conducted. Decrease inventory levels and carrying costs with greater visibility across all warehouse activities, regardless of system Reduce or eliminate the reliance on costly ERP and standalone warehouse management systems Improve flexibility and adaptability for managing remote, in-transit and satellite warehouse and storage locations Optimize warehouse labor and reduce overtime with improved access to workforce requirements and information Enhance warehouse productivity with automated and accurate picking, put away and inventory transfers
SATELITE WAREHOUSE
Thank you for your time.