Mart Leepin 3092991

Chain strategy for earthmovers

Overview

Company background Scenario and actions undertaken Assessment of the planning processes Questions

HFP - Background

HFP – Heavy Fabricated Products

Manufacture earthmovers in Melbourne.T/O of $20mil AUD annually.Employ 300 people.Are part of a larger leading American heavy fabrication company.

Mart Leepin 3092991

HFP - Background

HFP supply chain

Suppliers HFP Dealers Customers

HFP - Background

Conservative management style identified

Slow reaction from the dominant parent. Outdated Info systems used.

HFP - Background

Fabrication Example - Inside the JCB factory UK

Scenario

Assembly improvement required

Slow movement of parts between production areas.

Four month lead time for some parts.

Products made to customer specification.

Human precision is required for provision – specialized metal working activities.

Actions Undertaken

External party engaged to lead planning

Two representatives from Victoria University were invited by the MD to lead the development of plans across the whole supply chain.Victoria University representatives acted as facilitators for the SOLP process undertaken.

Actions Undertaken – SOLP

SOLP - Strategic Operations Logistics Planning Process

A method used to improve a business channel situation by carrying out planning with supply chain partners.

Mart Leepin 3092991

1/ Determine SC objective

3/ Determine competitive

criteria

2/ Determine product groups

4/ Audit SC

5/ Assess current strategy

6/ Formulate required strategy

7/ Determine action plan

Business objective

Product range

Examine SC

Current policy status

Customer needs Order winning

criteria

Actions Undertaken – SOLP Overview

Suitable strategies

Chosen strategies

and actions

Actions Undertaken – SOLP

HFP SOLP sessions - Outline Session 1 Session 2

Participants

1 Dealer;2 Suppliers;9 HFP Managers.

1 Customer (Conference call);9 HFP Managers.

Product Earth movers Truck Bodies

Time frame

7 workshops;2 hrs long;6 months.

7 workshops;2 hrs long;6 weeks.

Actions Undertaken – SOLP

Overview of SOLP stages

1/ Set supply chain objectives

Decide business objectives.What Products? Which Market?

Actions Undertaken – SOLP

2/ Arrange products into groups

Groups are determined by market segment or particular resources used in production.

Product Group 1 - EarthmoverWheel loader earthmover Hex earthmover

Product Group 2 – Truck bodyStandard Truck body Custom Truck body

Actions Undertaken – SOLP

3/ Decide competitive criteria

Determine what will win a customer order?Price, quality, delivery speed, flexibility, range, support.

Actions Undertaken – SOLPOrder winning criteria – Truck bodies

Competitive factors Standard body Custom

Reliability of delivery 35 35

Features

Quality 10 25

Flexibility of Design

Response to variation in volume 10

Price 15 25

Delivery lead time 30 20

Total 100 100

Actions Undertaken – SOLP

4/ Audit supply chain

Review and measure capabilities of operations, info. systems, and logistics.Inventory, Inbound logistics,Provision,Distribution,Management of SC,Financial Control of SC.

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Actions Undertaken – SOLP

4/ Audit supply chain: Provision – Areas of focus: Receipt of materials from suppliers, availability of people & machinery, Q & A, Information flows.

Possible performance measures considered:Capacity - i.e. - quantity of bodies / earthmovers per week,Product defect rate,Accommodation for customer specification,Response to demand.

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Actions Undertaken – SOLP

4/ Audit supply chain: Inbound logistics - Areas of focus:Evaluation of suppliers, JIT, transport of material to production areas.

Possible performance measures considered:Timely, accurate receipt of quality materials,Flexibility of suppliers.

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Actions Undertaken – SOLP

4/ Audit supply chain: Outbound logistics -Areas of focus:

Effective transport from manufacturer to DC.

Possible performance measures considered: Timely and accurate delivery of orders.

Actions Undertaken – SOLP

5/ Assess current strategy

Introduce policy areas, identify current practices, processes and resources. Capacity, human resources, quality, facilities.

Assess whether order winning criteria is being met.

Actions Undertaken – SOLP Assessment of operations strategy example – Truck bodies

Order Winners

Policy areaCurrent Practice

Reliabilityof delivery

Quality-Attain spec

Flexibilityof design Price

Deliverylead-time

Facilities 2 factories 1 1 0 -1 -2

Capacity

120 hours2 bodies per week -1 0 0 -1 -1

Vertigal Integration

Assemble in - house -1 -1 1 -1 -1

Process & Technology Fixtures -1 -1

-2 0 -2

HR's

Core team and contract 0 1 -1 -1 1

Actions Undertaken – SOLP Assessment of operations strategy example – Truck bodies

Policy areaCurrent Practice

ReliabilityQuality

- Flexibility

Price

Delivery

of delivery

Attain spec of design lead-time

QualitySelf -

inspection 0 2 0 1 0

Control Policies

BPICS

0 2 0 1 -1MRP II

ProcedureCo-

operation -2 1 -1 0 -1

DistributionTransport

Co 0 0 0 -2 0

New Product

Formal process

plan 0 2 0 1 -2

Actions Undertaken – SOLP

6/ Formulate required strategies

Identify areas for improvement.

Policy areaCurrent Practice

Reliability Quality- Flexibility

Price

Delivery

of delivery Attain spec of design lead-time

Process & Technology Fixtures -1 -1 -2 0 -2

Actions Undertaken – SOLP

6/ Formulate required strategies

Identify specific weaknesses. Lack of tooling and fixtures used to hold components.Identify corrective strengths.Consider the situation in reverse, - Reduce reliance on tooling.Identify solution.Install robotic welding.

Actions Undertaken – SOLP

7/ Create action plan

Use strategy to drive concrete, specific, timely actions.

Actions Undertaken – SOLP Action plan example for wheel loader bucket earthmover

Policy Area

Year 1 Q3 Year 1 Q4 Year 2 Q1/2 Year 1 Q 3/4

Facilities Review floor space

Layout design completed

Allocate extra space acquired

Cell layout completed for additional production

Capacity Examine feasibility of new press

Develop alternative suppliers

Order new equipment

Install new equipment

Process & tech

  Review fixtures and robot welding

HR’s Hire weld engineer,Review recruitment & T/d of welders

 Recruit work tools engineer

Complete training of new welders

 

Outcomes and Assessment

Positive response received from HFP Detailed action plans created for the next 1.5 - 2 years for

policy areas. Less detailed action plans created for supplier and dealer

policies and shorter term actions. Assessment of SOLP Process was undertaken via

observation and interviews undertaken. SOLP can assist a diverse team formulate strategic plans.

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Outcomes and Assessment

PositivesStructured process.Assists stakeholders in gaining insight and understanding.

NegativesInput from a greater range of members may be difficult to arrange.A SOLP restricted to a focal co., can mean ‘not seeing wood for the trees’.

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Questions 1/ What are the strong and weak points of the SOLP

process for strategic planning of a SC ?

Structured approach, democratic, potential for a range of valuable insights & inputs.

Potentially difficult to co-ordinate various participants and inputs.

2/ Should the SC strategy team include members from all partners in the chain?

Yes, ensures realistic order winning criteria, assists in improving relationships with customers and suppliers, leading to attainment of goals relating to Inbound logistics, Provision and Distribution.

Mart Leepin 3092991

Questions

3/ Why should HFP use the SOLP Process to form its future strategic actions in operations areas? How will actions be implemented?

Time already invested , familiarity by participants, (refer to strengths q 1). Approval will be required from the parent for actions that require expenditure.

Involve participants from the planning process & perhaps external change management.

Mart Leepin 3092991

Questions

4/ Is it sufficient to end external help when strategic action plans have been derived or is implementation assistance essential to put into practice the strategies derived?

Assistance may be required, especially if an organization has not undertaken a major change for some time.

Due to the characteristics of the parent, external assistance may provide a additional drive and perspective to meet objectives.

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Reference

Sadler I. (2007) Logistics and Supply Chain Integration, Sage, London