Supplier Process Improvement Strategies Improving Apparel Supply Chain without Major Investments Presentation for Prime Source Forum March 30, 2011 Roger Nelson Managing Director Concepts 2 Results Ltd. Hong Kong 852-9839-6987 mobile [email protected]
Supplier Process Improvement Strategies Improving Apparel Supply Chain without Major Investments Presentation for Prime Source Forum March 30, 2011 Roger.
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Supplier Process Improvement Strategies Improving Apparel Supply Chain without Major Investments
Presentation forPrime Source Forum
March 30, 2011Roger Nelson
Managing DirectorConcepts 2 Results Ltd.
Hong Kong 852-9839-6987 [email protected]
Purpose
• This session will discuss the methodologies of lean manufacturing and other process improvement strategies. Learn what is required for a successful implementation and also how to measure the impact of your improvements.
WHAT Does this Mean?
Global Trends
• Speed
• First Time Quality
• Accuracy in everything
• On-time delivery – all the time
• Cost effectiveness
• Collaborative, seamless processes
Total Cycle Time™
• Fastest Customer Responsiveness
• Lowest Costs
• Best Quality for the Money
• High Speed Product/Service Development
• High Productivity
• Flexible Capacity with Optimized Resources
• Excellent Value for all … customers, owners, employees, suppliers
What determines competitive advantage?
Solution
• Improve the process from end-to-end
• Consider all steps– Eliminate, combine, streamline
• Measure progress– Cockpit charts
How do we address this?
• Everything is a process
• Processes can be mapped, measured and improved
• Processes are cross companies and cross functional within a company
Using Total Cycle Time™ Methodology
Issues
• Competing Objectives
• Too long in total cycle time
• Rework of samples
• Inaccuracy in orders
• Incomplete and late deliveries
• Slow collection process
• Disconnected processes
What use is a good process?
• Achieving a GOAL requires a good process
• Performed by the right resources
… Utilizing the proper investment in People, Inventory & Equipment
• Executed with a set of high Value Added steps
• Delivered within a range of repeatable outcomes
• Delivered within a range of repeatable time frames
Actions to Achieve Goal
1. Analyze2. Develop plan3. Try it out4. Review results5. Standardize / correct / repeat
Lean Management• A process improvement strategy focused on:
– Meeting customer requirements & Increasing satisfaction
– Reducing variation & Improving on-time performance
– Eliminating waste & Reducing cost
– Cleanliness, organization & Improved safety
– Standardization & Improved quality
• The goal is to achieve perfection through the total elimination of waste in the value stream
5 Principles of Lean Management
1. Specify Value
2. Identify Value Stream
3. Flow
4. Pull
5. Perfection
Lean Management
Identify the Value Stream• Make the process visible
– Process sequence descriptions
– Process sequence flow maps
– Value stream mapping (Value Added/Non-Value Added)
• Make the process speak with data
– Cycle time, first pass yields, productivity
– Volumes, capacity, hours available, defects
– Inventory levels at each process step
– Staffing requirements, shifts
– Set-up times and frequencies
– Lot sizes
Types ofWaste
CORRECTIONRepair or Rework.
Doing it over.Not getting it right
the first time
MOTIONAny wasted motion to pick up parts or stack parts. Also wasted walking,
searching.
WAITINGAny non-work time
waiting for tools, supplies, parts,
paperwork, engineering, QA,
E&E, etc.
OVERPRODUCTIONProducing more than is
needed before it is needed.
Batching
OVER PROCESSING
Doing more work than is necessary..
INVENTORYMaintaining excess
inventory of raw mat’ls, WIP, or
finished product.Managing WIP.
TRANSPORTATIONWasted effort to
transport mat’ls, parts, or finished product into
or out of storage, or between processes.
Understanding the Process
If any of the following questions are answered yes, Throughput will improve:
1. Will the decision result in a better use of the worst constrained resource?
2. Will it make full use of the worst constrained resource?3. Will it speed up delivery? 4. Will it provide a product or service that is valuable?5. Will it improve consistency?6. Will it reduce scrap or rework? 7. Will it reduce rework/replacement costs?
Questions to ask to identify constraints:
What is Process Improvement Implementation?
The implementation of a standard logic for the efficient layout of a production line including work stations, machines, personnel assignments, skill levels, constraints, lot sizes, etc. This also applies to any related process such as design development, product launch, supply chain steps, collection, etc.
OrderFulfillment
Process CFT
SellingProcess
CFT
Warehouse & Distribution Process CFT
BIT
Barrier Removal Teams/BRT
BusinessImprovement
Team/BIT
How Do We Do It?
BRT BRT
Cross Functional Teams/CFT
BRT
Map the Process
Customer
Sales
Marketing
Planning
Production
Purchasing
Suppliers
Receiving
Shipping/Warehouse
IDRqmt
QuotePDT
IssuePO
GenerateS.O.
BuildCompnts
Ship
RecGoods
TestAssemble
RcvMtls
ShipMtls
OrderMtls
Approve
Yes
No
ScheduleB=20E=4 FPY=80%
B=30E=10
B=4E=3 FPY=75%
B=8E=3
B=3E=3
B=3E=2
B=8 E=5 FPY=70%
B=3 E=2 FPY=90%
B=3 E=2 FPY=90%
B=3E=2
B=20 E=9 FPY=40%
B=15E= 6Baseline Cycle Time
Baseline FPYEntitled Cycle TimeEntitled FPY
120 Days14%
51 Days95%
Rework
FPY – First Pass Yield
Process Improvement Methodology
Time
Entitlement = Where you should be
Baseline = Where you are today
Process Improvement Im
pact
Re
sults
Barriers
Measure The Process StepsEstablish Baseline and Entitlement
What is a Required for Successful Process Improvement Implementation?
are willing to learn new concepts,
Managers who:
are willing to accept risks,
are willing to accept failures as COL’s (Cycles of Learning),
thoroughly understand the concept and potential huge benefits, and
are willing to commit the required investment in time and support,
are willing to take initiatives to see that unforeseen difficulties are quickly resolved,will insist that good preventative maintenance and quick equipment repair is practiced,
will work cross-functionally with other managers as a team.
What is a Required for Successful Process Improvement
Implementation ? (continued)
are top performers,
Workers who:
understand that Improvements will make their jobs more enjoyable,
understand that experimentation and frequent changes are necessary,understand that change is necessary for a company to survive in the present climate of intense competition, andhave a spirit of cooperation and willingness to share positive experiences with others.
are team players,
want maximum pay,
Everyone Benefits ! Process
Improvements Do This:
•Identify and minimize bottlenecks
•Eliminate unnecessary steps
•Simplify remaining steps
•Reduce waiting
•Reduce movement of people
•Reduce movement of material
•Cause us to produce only what is needed downstream
Which Contribute to:•Much less WIP (work-in-process)
•Improved productivity
•Shorter Cycle Time
•High First Pass Yields
•Less rework
•Efficient use of material
•Less scrap
•Less clutter
•Less confusion
That Result In:•Higher pay
•Better working conditions
•Happier workers
•Better on-time delivery
•Better quality
•Happier customers
•Lower costs
•Greater profits
•More business
•More worker opportunities
Measure Progress
• We Know Baseline
• How are we progressing towards entitlement?
• What Drives improvement?
• What are the results?
• How do we identify stalls in improvement progress?
Global Supply Chain ChartInventory Turns
10
12
14
16
18
20
22
24
26
May-00
Jun-
00
Jul-0
0
Aug-
00
Sep-
00
Oct-0
0
No
v-00
Dec-
00
Jan-
01
Feb-
01
Mar-0
1
Apr-0
1
May-01
Jun-
01
Tu
rns
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
May-0
0
Ju
n-0
0
Jul-0
0
Aug-
00
Se
p-0
0
Oct-0
0
No
v-0
0
Dec-0
0
Ja
n-0
1
Fe
b-0
1
Mar-0
1
Ap
r-01
May-0
1
Ju
n-0
1
Inbound Freight Costs
0.0
0.5
1.0
1.5
2.0
2.5
Jun-
00
Jul-0
0
Aug-
00
Sep-
00
Oct-0
0
No
v-00
Dec-
00
Jan-
01
Feb-
01
Mar-0
1
Apr-0
1
May-01
Jun-
01
Do
lla
rs (
M)
Material Cost % COGS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mar-0
1
Apr-0
1
May-01
Jun-
01
Jul-0
1
Aug-
01
Sep-
01
Oct-0
1
No
v-01
Dec-
01
Jan-
02
Feb-
02
Mar-0
2
Apr-0
2
May-02
% C
OG
S
Complete and OTD to CustomerB
B
E
E
B
E
B
E
B
E
Forecast Cycle Time & FPY
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
WK
1
WK
3
WK
5
WK
7
WK
9
WK
11
WK
13
WK
15
Cyc
le T
ime
(D
ay
s)
0%10%
20%30%
40%50%60%
70%80%
90%100%
Yie
ld (
%)
B.C/TB.FPY
E..FPY
E.C/T
Procurement Cycle Time & FPY
0
12
3
45
6
7
89
10
WK
1
WK
3
WK
5
WK
7
WK
9
WK
11
WK
13
WK
15
Cyc
le T
ime
(D
ay
s)
0%
10%20%
30%
40%50%
60%
70%
80%90%
100%
Yie
ld (
%)
B.C/T
B.FPY
E..FPY
E.C/T
Supplier L/T & OTD
0
5
10
15
20
25
30
35
40
WK
1
WK
3
WK
5
WK
7
WK
9
WK
11
WK
13
WK
15
Le
ad
Tim
e (
Da
ys
)
50%
60%
70%
80%
90%
100%
OT
D (
%)
B.C/T
B.FPY
E..FPY
E.C/T
Supplier Delivery Accept Rate
0
0.5
1
1.5
2
2.5
3
WK
1
WK
3
WK
5
WK
7
WK
9
WK
11
WK
13
WK
15
Cyc
le T
ime
(D
ay
s)
0%10%20%30%40%50%60%70%80%90%100%
Yie
ld (
%)
B.C/T
B.FPY
E..FPY
E.C/T
PROCESS DRIVERS
PROCESS RESULTS
Cost of Ownership
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mar-0
1
Apr-0
1
May-01
Jun-
01
Jul-0
1
Aug-
01
Sep-
01
Oct-0
1
No
v-01
Dec-
01
Jan-
02
Feb-
02
Mar-0
2
Apr-0
2
May-02
% C
OG
S
B
E
Inventory Turns Customer Satisfaction INT/ EXT
Cost of Ownership % Of Turnover
Material Cost % Turnover
:
Dock To Stock CT/ FPY
Sample C/T & FPYHit Rate %
Order Management CT Suppliers CT/FPY
Total Inventory $Divided by
Cost of Goods Sold
Rework +Scrap+ICC+Cost $ Purchased +
Lost Margin $+ Write Off $+ Expedite $ + Total
IncomingFreight Cost divided by
The Turnover $
Days from Receipt of Tech Pak to the Final Sample Approval % of
Sample Styles Produced To # Converted to
Volume Orders
Days from Issue of the BOM Until the
receipt on the Material at the
Production Factory, % Received as
scheduledFabric Only
Days From receipt of Goods at Factory until goods are
Ready for consumption% of Goods Passing Initial
Inspection
Total $ ReceivedDivided byTurnover $
Matrix Components TBD
Percentage of Styles planned for release to productionduring the reporting period which were released, complete,
And on time. Both Material and Non Material related support activities
US$ (month)
% (Monthly
% Monthly
US$ (month)
CT (days) FPY (%)
Days from Order Confirmation to BOM complete
CT (days) FPY (%) CT (days) FPY (%)
% (monthly) % (YTD)
% YTD
MMMMMM Material & Non Material Schedule Adherence Hit Rate %
CCCU
CT (days)
Supply Chain
Entitlement
Baseline
Barriers
Barrier
BRT Dissolved
CFT Selects Next Barrier
BRT Commissioned
Implementation - Road to Entitlement
Process Improvement Management (PIM) Methodology
Process Improvement Do’s and Don’ts
• Do– Involve operators and maintenance personnel
• Check machines, samples of thread tension at beginning and lunch break
– Visually manage by walking around– Make needed changes immediately– Recognize good performance– Make daily target achievable– Emphasize it is a team effort
• Don’t– Say it cannot be done– Be negative– Ignore bottleneck problems– Wait for someone else to solve the problems, take action
Process Improvement Guidelines
•Release XX pieces from cutting every XX minutes
•Walk around and look for WIP buildup or no WIP at each station
•Watch potential bottlenecks
–Add operator
–Move part of work to another operator
•Look for excessive moving of material, relocate stations if possible
•Monitor output and record production
Source: Inditex
Q1 Q2 Q3 Q4 Q5
TraditionalIndustry
Visit ToExhibits
Design Intro ToCollection
Manufacturing Distribution & Sales
Sale
s M
ark
do
wn
s
SEASON
Zara
Design & Raw Material Sourcing
External Manufacturing
Sale
s M
ark
do
wn
s
SEASON
65%
55%
15%Internal Manufacturing 85%
40-50%
35%
The Model Is Changing: Zara’s Speed to Market
Case Study Apparel Manufacturing
Global garment manufacturer of Women’s Fashion, Outerwear and Casual Pants
Headquartered in Hong Kong with 17 factories in Hong Kong, China, Philippines, Thailand, Laos, Viet Nam, and Taiwan
Results
Reduced Sample Cycle Time – 20%
Improved Sample First-Time Quality – 317%
Improved Sample On-Time Delivery – 136%
Reduced Fulfillment Total Cycle Time – 30%
Improved Production On-Time Delivery – 154%
Reduced WIP Inventory – 40%
Challenges
Improve Sample Process
Improve Inventory Management
Improve First Time Quality
“The consultants teamwork, communications, and coaching lead to strong trust among our people and helped us develop a new way of doing business across all segments of our business” Country Manager, Philippines
Case Study Global Supply Chain
Supply Chain Management Company headquartered in Hong Kong
Coordinates the manufacture and distribution of goods through offices located in 40 countries
Results
Reduced Administrative costs – 30%
Reduced Sales Order process – 33%
Reduced A/R collection time – 20%
Developed Structure and Global Sales Processes Returning Operations to Profitability
Challenges
Execution of the Global Business Strategy in chaos Administrative costs too high
Sales generation activities too slow and expensive
Inefficient sales order process
The Consultants introduced world-class methodology that resulted in transforming a national business into a highly responsive, customer focused distribution organization providing unparalleled service to principal clients.” CEO, Country Logistics Subsidiary
Concept to Rack Phases(Overlaid with Retail Promotions Phases)
Concept Rack
DC
/Store
Logistics
Garment Production
CountryAllocations
52 Weeks
13 Weeks
13 Weeks
16 Weeks
6 Weeks
4Wks
ConceptDevelopment
8 (E)Weeks
8 (E)Weeks
9 (E)Weeks
? (E)Weeks
? (E)Weeks
Advance PlanningP
lann
ing
Forecast
Valid
ation
Ad
F
inalization
DC
/Store
Imp
lemen
tation
Gate 2
-11 wks
Gate 3
-7 wks
Gate 1
-15 wks
Concept to Rack
Retail Promotions Planning4
Wks4
Wks5
Wks4
WksC
ut -
Sew
F
inish
Gate 4
-4wks
RE
TA
IL E
XE
CU
TIO
N
Greige Weaving
Fabric Dyeing
In-Factory to Cut
Cut to X Factory
X Factory to X Country
X Country to In-W/H
30
30
7
35
730
139 109 79 72 37 30
Typical Example of CT Reduction
Greige Weaving
Fabric Dyeing
In-Factory to Cut
Cut to X Factory
X Factory to X Country
X Country to In-W/H
30
30
7
35
7
30
139 109 79 72 37 30
50% Commitment on greige
95
GreigeForecast
125
23
5
30
Days savedGreige Weaving 30
Dyeing 7
Production 5
44 CT 95 days
In-Factory to cut 2
Measure Potential
• Customer Response Time improve by over 10%• Fill rate (completed orders) improve at zero cost• On time delivery to customers improve by over 10%• Supplier on time delivery improve to over 10%• Supplier Lead time reduction 10 to 20%+
• Inventory reduction//cost improvements 10 to 20%+• Cost Reduction 5%• Rework reduction/Improved Quality 10 to 20%+• Productivity Improvements 10%
These improvements are based on each Factory implementing this approach without outside process improvement expert support.
Textile/Apparel Supplier Improvement Potentials
Measure Potential
• Customer Response Time improve by over 30%• Fill rate (completed orders) improve at zero cost• On time delivery to customers improve by over 40%• Supplier on time delivery improve to over 40%• Supplier Lead time reduction to over 50%+• Inventory reduction//cost improvements 10 to 20%+• Cost Reduction 5%• Rework reduction/Improved Quality 40 to 50%+• Productivity Improvements 20%+
These improvements are based on each Factory implementing this approach USING
outside process improvement expert support.
Textile/Apparel Supplier Improvement Potentials
Go For it !!!!
Who We Are
• Results—dramatically impact cash creation• Process Focus—radical increases in speed and
reliability• Methodology—top-down focus drives and
manages change• People—20+ years of management, industry
experience• Clients—operate in diverse, global markets
Years of success in fundamentally changing corporations’ management processes and dramatically improving their bottom-line results
Presentation forPrime Source Forum
March 30, 2011
Supplier Process Improvement Approach
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