bpcouncil sathi presentation

Extended Enterprise – Evolutionary approach to Supply Chain

Project Sathi :

A Six Sigma initiative with suppliers

1 December 2007 Manosh Kurup 1

About SKF

21 December 2007 Manosh Kurup

SKF - A Truly Global CompanySKF - A Truly Global Company

Established: 1907

Sales 2006: 53 101 MSEK (5 800 MEuro)Sales 2006: 53 101 MSEK (5 800 MEuro)

Employees: 41 090Employees: 41 090

Production sites: 120 in 24 countries

SKF presence: more than 140

countriescountries


SKF – 5 PlatformsSKF – 5 Platforms

Lubrication Lubrication Lubrication systemsSeals Bearings

and units Lubrication systemsSeals Bearings

and units and units and units

ServicesMechatronics ServicesMechatronics


SKF IN INDIA

SKF India Head Office

%New Delhi

SKF India Head Office

IBU & SBU Sales Unit

#%New Delhi

BHUTAN

Mumbai %%

Pune %

" Calcutta

Pune %

Bangalore %

" Chennai

TRB & MDGBB

SDGBB

RS OPERATIONS % SKF India HO

Factory Locations

" Sales Office

" Coimbatore

" ChennaiSDGBB

3S India

* Two new factories – Haridwar and for Large Size Bearings in progress


* Two new factories – Haridwar and for Large Size Bearings in progress

Six Sigma in SKF India


Six SigmaUSLLSL

σσσσσσσσ

� MeasureMeasure of Qualityof Quality� MeasureMeasure of Qualityof Quality

� ProcessProcess For Continuous Improvement For Continuous Improvement � ProcessProcess For Continuous Improvement For Continuous Improvement

� EnablerEnabler for Culture Changesfor Culture Changes

Starts with Ends withSixStarts with

CustomerNeeds

Ends withCustomerSatisfaction

Six

SigmaSigma

We use Six Sigma to make it easier and attractive for our

customer to do business with us.


customer to do business with us.

What is Six Sigma?

Definition:

A systematic and disciplined approach to

achieve radical improvementsachieve radical improvements

towards excellence in all business processestowards excellence in all business processes

with improved customer satisfaction

as the main driveras the main driver

The Focus of Six Sigma

f (X)f (X)Y=Y=


D M A I CAnalyze

MMEASUREMeasure

USLLSL AnalyzeUSLLSL

Measure

What Goes Into This Process ?

What Are The X’s and How Do They Relate To The Y’s ?

Where Are We Today ?

ImproveWhat Are The X’s and How Do They Relate To The Y’s ?

Improve

MImproveControl

MI

USLLSL AUSLLSL AUSLLSL A

How Can I Make Sure It Stays

Control

91 December 2007 Manosh KurupHow Can I Change The Process?

How Can I Make Sure It Stays

Improved?

Control

Why 99% Isn’t Good EnoughWhy 99% Isn’t Good Enough

“99% Good”� 20,000 lost articles of mail per

hour

� Unsafe drinking water almost 15 2 308,733

σσσσ Defects % Good

69.1%

“99% Good”

Per million� Unsafe drinking water almost 15

minutes out of each day

� 5,000 incorrect surgical

2 308,733

3 66,803

4 6,200

69.1%

93.3%

99.38%� 5,000 incorrect surgical

operations per week.

� 2 short or long landings at most

major airports each day

4 6,200

5 233

6 3.4

99.38%

99.976%

99.9996%major airports each day

� No electricity for almost 7 hours

each month

6 3.4 99.9996%

Source: The Nature of Six Sigma each month

99% Isn’t Good Enough!

Source: The Nature of Six Sigma

Quality.

M. Harry, Ph.d


99% Isn’t Good Enough!

Six Sigma India Update –20072007

121121121121117117117117

138138138138

115115115115

100100100100

150150150150

Training

30303030 30303030

17171717

58585858

50505050

10010010010003

Training

Engagement &

Effectiveness

Black belt Trained 9 6 10 11

04 05 06 07

17171717

0000

2003-042003-042003-042003-04 2005200520052005 2006200620062006 2007200720072007

Act ualAct ualAct ualAct ual Project edProject edProject edProject ed

GB Trained 12 95 82 105 76*

Project Completed 1 49 73 53 37 *

* YTD July07 Act ualAct ualAct ualAct ual Project edProject edProject edProject ed

Program till date Savings 306

MINR

* YTD July07

BB GBBelt EngagementMINR

Engagement as % of SKF

India Total (Workmen + Staff)

1.3% 14.6%

Engagement as % of SKF 5.0% 59.1%

PROJECT STATUS

PROJECTS COMPLETED IN 2007 : 38

India Total Staff5.0% 59.1%

D M A I C

43 29 17 15 11

ACTIVE

PROJEC

TS 117


First European Six Sigma Leadership

Award to SKF CEO Tom JohnstoneAward to SKF CEO Tom Johnstone

• Tom Johnstone - First European corporate leader to • Tom Johnstone - First European corporate leader to

receive Six Sigma Premier Leader Award

• Awarded for • Awarded for

• For his work with committing the company to continuous

improvement.

• Awarded By

• The International Society of Six Sigma Professionals • The International Society of Six Sigma Professionals

(ISSSP)

• Who Were the former achievers• Who Were the former achievers

• - Jack Welch of GE

• Chad Holliday of DuPont.

• Larry Bossidy of Honeywell


• Larry Bossidy of Honeywell

Project Sathi (Partner)


Project Sathi - BackgroundProject Sathi - Background

Sales Growth (MINR)

1342514000

16000

Exponential growth in last 3 yearsSales Growth (MINR)

5813

7814

6000

8000

10000

12000

Outlook continues to be bullish with

further growth potential of 25 % in next

Exponential growth in last 3 years

40724670

0

2000

4000

6000

2002 2003 2004 2005 2006

further growth potential of 25 % in next

3 years

2002 2003 2004 2005 2006

� Installation of additional production channels� Installation of additional production channels

� Out-sourcing of non core areas

� Integrating different management approaches like Six Sigma, Lean, etc. � Integrating different management approaches like Six Sigma, Lean, etc. to improve internal efficiencies and maximize output from existing assets



RM & BOC Consumption (MINR)

3260.8350048 % Growth in RM & BOC

1671.4

2208.3

2780.1

3260.8

2000

2500

3000

350048 % Growth in RM & BOC

procurement value

1354.6

1671.4

500

1000

1500Group is looking at India as one of the

Global sourcing location – exports are

expected to grow > 50 % in the coming

years

� But the internal improvements cannot fructify without a commensurate

improvement in the procurement parameters

0

2002 2003 2004 2005 2006years

improvement in the procurement parameters

� Suppliers capacity trailing demand

� Service indicators showing poor performance – there was � Service indicators showing poor performance – there was a need for radical improvements

� Tremendous pressure of cost reduction to remain competitive in market


competitive in market


Traditional approach : An “arms length” relationship

….. Limited knowledge / understanding of suppliers processes….. Limited knowledge / understanding of suppliers processes

….. Focused more on transactional issues like price based discussions

….. Limited attempt to develop suppliers, but these efforts were ….. Limited attempt to develop suppliers, but these efforts were

disjointed due

to lack of a coordinated approach

Need for an innovative approach –Need for an innovative approach –

from “cross functional” to “cross enterprise” integration

Project Sathi

Sathi : An Indian word for partner

Joint Six Sigma projects to drive operational excellence / productivity

improvements within supplier's processes to realize the SKF Vision

“To be the preferred company…for our suppliers”


“To be the preferred company…for our suppliers”

Project Sathi - ApproachProject Sathi - Approach

Approach : Cross Functional Integration to Cross Enterprise Integration

CollaborationCoordinationCooperationOpen Market

Negotiations

Approach : Cross Functional Integration to Cross Enterprise Integration

Price based

Discussions

Adversarial

Relationship

Fewer suppliers

Information sharing

Long term contract

Information

Linkages

Workflow

Linkages

Supply chain

Integration

Joint planning

Technology Sharing

� Coordinate activities across companies as well as across internal functions

� Build an “extended enterprise” with the suppliers –

Relationship Linkages

EDI Exchange

Technology Sharing

� Build an “extended enterprise” with the suppliers –

� - involve them in the change initiatives

� - engage them to identify potential improvement beyond the known horizons

� Create supply partnership which reduce our cost and expand our markets� Create supply partnership which reduce our cost and expand our markets

� Build transparency, joint working & trust which will be key to future competitiveness

Aligned to SKF being a Knowledge Engineering


Aligned to SKF being a Knowledge Engineering Company

Project Sathi – Strategic

Issues Objectives

ContextIssues

� Poor delivery performance

� Cost reduction pressures

� Inconsistent quality

� Supperf improvement >90%

� Efficiency / Productivity

improvements within supplier’s

Objectives

� Inconsistent quality

performance

� High Lead times

� Suppliers unable to keep

improvements within supplier’s

processes

� Defect reduction (Suppliers & SKF)

6σ6σ6σ6σ

� Suppliers unable to keep

pace with SKF growth due to

capacity constraints

� Defect reduction (Suppliers & SKF)

� Green flow supplies

� Volume ramp up with strategic � Volume ramp up with strategic

suppliers

Forge collaborative partnership with strategic

suppliers based on WIN – WIN approach


Project Sathi - RoadmapProject Sathi - Roadmap

April 06

Sept 05 –

April 06

onwards Project Closure

Project Execution,

Nov + Dec

2005

Sept 05 –

March 06Project Execution,

Mentoring & Review

Supplier GB Training

Aug 2005 Project Structure + Team Finalization

July 2005

Aug 2005 Launch of Initiative

Project Selection

Supplier IdentificationJuly 2005

July 2005 Project Selection


Supplier Selection

40 Direct Material Suppliers

QFD Principle followed for supplier selection

1st Filter : Business volume with suppliers40

QFD Principle followed for supplier selection

402nd filter :

- Strategic nature of the suppliers (single source / major / global)

- SKF’s share in the total business volume of the suppliers12 - SKF’s share in the total business volume of the suppliers

- Willingness of the suppliers

- Present technology with the suppliers

- Financial stability of the suppliers

12

- Financial stability of the suppliers

- Ease of implementation of improvement actions at the suppliers

3rd filter : Operational parameters –8 3rd filter : Operational parameters –

cost, quality, delivery and lead time

8


7

Project Selection

• Opportunities / pain areas identification by supplier• Opportunities / pain areas identification by supplier

• Multiple project proposals received (23 nos)

• Mutually beneficial projects selected• Mutually beneficial projects selected

Project Category

2

1

4

1

Service ImprovementService ImprovementService ImprovementService ImprovementQuality ImprovementQuality ImprovementQuality ImprovementQuality ImprovementProcess / Product ivity ImprovementProcess / Product ivity ImprovementProcess / Product ivity ImprovementProcess / Product ivity Improvement


Project Structure

Project Sponsor

K Ramakrishnan

Project Review Board

Rakesh MakhijaProcess Owners

Devjit Sarkar

Program Leader

Controller

K Ramakrishnan Rakesh Makhija

CMT

Kamal Sehgal

Devjit Sarkar

Controller

NHBSupplier

ISMT

CRRMukand Harsha Tolia JFPL Star

STPL

Group

Project Sponsor –

Supplier

Rajubhai

ShahRajesh

Tolia

Gopal

Jinagouda

Manish

Kalaria

Anil

AgrawalI M D’Costa

BB

Mathur

Kalpesh

Mehta

Project Leader – SKF

Project Leader – Supp.

Janardan

Rao

J M Desai

Milind

V Bhogaonkar

Ananthraj

V M

Mashruwala

PSN Rao

M G

Ramesh

Milind

S D

Upponi

Hemant

Arunkum

D Adsul

Manish

Manosh

DeependraProject Leader – Supp.

Black Belt

J M DesaiV Bhogaonkar

Mashruwala Ramesh UpponiArunkum

ar

Manish Deependra

Manosh Milind Manosh Milind Milind Milind Satish Manosh

221 December 2007 Manosh KurupProject Team – SKF

Project Team – Supp.

Supplier Training & Mentoring.Supplier Training & Mentoring.

• Lack of 6S knowledge among Suppliers

• Difficult for SKF team to work full time at � Each project mentoring by SKF BB• Difficult for SKF team to work full time at

suppliers

• Need for trained resources within suppliers

organization

� Each project mentoring by SKF BB

� SKF Experts from relevant areas

assigned to each projectorganization

• GB training program organized in SKF

Training details :

� Review meeting every 4 ~ 6 weeks with

Deployment Champion and Top

Management of Sourcinga. External faculty & training material

b. Duration 3+ 3 days

c. Participants : Supplier project leader

Management of Sourcing

Y = f(x1,X2……..xn )

c. Participants : Supplier project leader

+ few supplier team members

a. Training cost Paid by suppliers


Challenges

With Suppliers� Awareness session at the suppliers

� Took feedback from suppliers for � Buy-in of the suppliers

� Lack of transparency

� Took feedback from suppliers for

possible failure reasons and addressed

these concerns

� Tendency to go into a solution mode

� Lip service by suppliers

� Positioned the program as a joint

initiative with the suppliers for

improvement

At Suppliers

improvement

.… and not just as a cost cutting

exercise

� Lack of trained resources

� Lack of supporting infrastructure

� Organized GB training for the

suppliers

� Provided mentoring support� Limited resources, involved in more

than one activity

� Provided mentoring support

� Shared success stories

- Suppliers began to see the


- Suppliers began to see the

benefits

- Openness – willingness to look at

Project Details

Sr.

#

Supplier Project CTQ Baseline Goal Actual

#

1 Jinabakul Forge Supperf Improvement Supperf

%

40 80 88

2 ISMT CRR Supperf Improvement Supperf 50 80 1002 ISMT CRR Supperf Improvement Supperf

%

50 80 100

3 Noble & Pushp

Enterprises

OEE Improvement OEE % 50 75 75

4 Star Industries Volume ramp up of taper rollers Million

pcs

6.25 9.0 9.77

5 NHB Bearings Development of G10 grade steel

balls

L / M

Bands

8 / 10 5 / 6 4 / 5

balls Bands

Run Rate 5 / 2 8 / 4 6

6 Mukand Limited Volume ramp up of wires for Qty / 35 170 1716 Mukand Limited Volume ramp up of wires for

National warm forming

Qty /

Month

35 170 171

7 Tolia Industries Reduction of (internal) rejection

due to length variation [project is

in control phase, awaiting formal

DPMO 27000 8000 18000

Project Lead Time : Median = 8 months, Spread = 8 to 15 251 December 2007 Manosh Kurup

in control phase, awaiting formal

closure]Project Lead Time : Median = 8 months, Spread = 8 to 15

months

Benefits

Financial Impact

� Improved flexibility

� Better utilization of plant assets22

MINR � Better utilization of plant assets

� Redeployment of manpower

� Reduction of material downtime

6 MINR

MINR

SoftHard

Hard Savings

50 : 50 Gain sharing

� Reduction of material downtime

� Reduction in premium freight, etc.

� Strengthened supplier relationship

SavingsSoftHard

50 : 50 Gain sharing

Agreements made with the supplier

Benefits in terms of Price reduction

� Strengthened supplier relationship

� Improved / streamlined processes at

suppliersBenefits in terms of Price reduction

Soft Savings

Cost avoidance to SKF

� New problem solving tool


Cost avoidance to SKF

RecognitionRecognition

SKF Excellence Award 2006 in the Knowledge CategorySKF Excellence Award 2006 in the Knowledge Category

The jury motivation reads :

“The SKF Excellence Award 2006 in the “The SKF Excellence Award 2006 in the

Knowledge category is received for the

comprehensive initiative to

systematically engage key suppliers in systematically engage key suppliers in

Six Sigma training and projects. This has

transferred valuable knowledge to a

number of strategic suppliers. It has

resulted in significant improvements in resulted in significant improvements in

terms of efficiency and capacity. Thus,

the benefits are outstanding for the

involved suppliers as well as for SKF. involved suppliers as well as for SKF.

This is the first initiative of its kind within

SKF and provides an in-depth

understanding of the supplier

processes”.


processes”.

RecognitionRecognition

Autofit Rolling Trophy at 4th National Six Sigma Convention

organized by CII Northern Chapterorganized by CII Northern Chapter


Team MembersTeam Members

K Ramakrishnan

Manosh Kurup

Devjit SarkarDevjit Sarkar

Janardhan Rao

Anil KarnikAnil Karnik

Dilip Waghela

Narasimha Bhat

Dnyanadev Adsul

V Ravi

M VijayakumarM Vijayakumar

+ Supplier team members


Way ForwardWay Forward

•• Big Mind change in approach to collaboration-sustain this

� Launched Sathi – II

� Focus on cost saving projects

We recognize this is just the beginning of a long journey-We recognize this is just the beginning of a long journey-

But cultural change is already giving us the positive spiral effects


Thank You for your attention.Thank You for your attention.

Questions are welcome !Questions are welcome !


bpcouncil sathi presentation

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