GOL FOCUS Selected Order-Delivery process or Supply Chain(B2B) Analysis and development-Simple way how to apply efficient methods of Lean, Value Stream Mapping(VSM) and Theory Of Constraints(TOC) for improving selected order-delivery process or supply chain (B2B)

Updated 11.7.2014Contact: Petri Huitti, M.Sc., owner, Business CoachGol Solutions (www.golsol.fi )+358405597866 petri.huitti@golsol.fi This presentation can be found here: http://www.golsol.fi/toiminnan-kehittaminen/gol-focus-supply-chain-value-stream-mapping/?lang=en

Make Your Gol in Logistics.

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Common challenges in Supply ChainPoor delivery accuracy, too long delivery lead timesCustomer(s) dissatisfied, in worst cases lost sales or even

customersPersonnel losing lots of time and energy in firefightingAdditional costs because of delays, urgent deliveries, demand

peaks -> over-time work, express transportation, etc.Inventory cumulated with products when something missing

(e.g. supplier late), customer deliveries and production delayedBlaming other teams, suppliers, people, circumstances –

working atmosphere suffering –> blocking improvement together

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Order-Delivery process challenges: Why?

Sale

s

Logi

stics

Production

Purchasing

Topmgt

HORIZONTAL ORDER-TO-CASH PROCESS DEFINES:1. SERVICE LEVEL TO

CUSTOMERS (-> SALES) 2. TOTAL COST EFFICIENCY

AND PROFITABILITY

CUSTOMERS SUPPLIERS

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..BUT MOST COMPANIES AND SUPPLY CHAINS ARE WORKING AND MANAGED MORE AS ”SILOS” IN PRACTICAL LEVEL.

DEMAND SUPPLY PLANNING &ORDER-TO-CASH PROCESS

Challenges overcome: How?

Sale

s

Logi

stics

Production

Purchasing

Topmgt

CUSTOMERS SUPPLIERS

LOOKING END-TO-END PROCESS FLOW FROM CUSTOMER AND BUSINESS POINT

OF VIEW WITH VALUE STREAM MAPPING HELPS TO:

1) ”BREAK THE SILO WALLS” BY UNDERSTANDING AND SHARING WHOLE PROCESS CURRENT STATE

WITH ALL INVOLVED AND 2) TOGETHER IMPROVE PROCESS

PERFORMANCE WITH SIMULTANEOUSLY DECREASED

INVENTORIES AND COSTS.

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DEMAND SUPPLY PLANNING &ORDER-TO-CASH PROCESS

Example project logistics ”control panel”(global company, incl. all deliveries for 1 site)

Delivery Accuracy to customer requests, % of deliveries

Demand Planning Accuracy %

Inventories MEUR

Delivery Accuracy to first confirmed, % of deliveries

1st wave (originally delaying product)

On target in July

2nd wave (new delaying product

due to MFG relocation)

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Global company - internal customer feedback

“The customer eventually was very satisfied and delivery was never a major problem since.”-Customer turn-key & installations project director Pawel Buda, Poland

“Inventories were reduced at least by 1MEUR because of the project.” –Customer team controller, Poland

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References & partners

"With the new order-delivery process and its' added value to the customer, our competitiveness has increased significantly.“-Production Director Juha Anttila, HT Laser

”We got help with one of our product lines order-delivery process and inventory analysis, and very concrete and valuable point of views and ways to increase inventory rotation, product availability and profitability at short and long term.– Production Manager Jussi Virtanen, Artekno Oy

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Benefits and deliverables of Value Stream Mapping (VSM) of selected Supply Chain

Without understanding the process, it cannot be improved

Improve locally, fast results available, show ”it can be done” You can use results and findings to improve at company level and in long

term (system infrastructure partly the same) Provides tools for personnel for further improvement in selected process Learn simple & effective methods to apply by yourself elsewhere You may identify potential for different business offer (win-win), enabling

increase of sales and profits

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Focused miniproject content – How to do it?

UNDERSTAND BIG PICTURE, IDENTIFY MAIN PROBLEM(S) AND IMPACTS -> Select target process for improvement, define & agree BUSINESS CASE, potential benefits vs. cost(FOCUS)

ESTABLISH PROJECT, PLAN, TEAM AND KICK-OFF THE WORK

ANALYZE SELECTED PROCESS AND UNDERSTAND IT1) Interviews, ”walk through”2) Data analysis

-> Process current state description and understanding (Value Stream Mapping)

WORKSHOP (1day): 1) REVIEW ANALYSIS RESULTS2) DEFINE IMPROVEMENT ACTIONS orNEW ORDER-DELIVERY PROCESS TO BE PILOTED OR IMPLEMENTED+ proposals of long term improvements

EXECUTE AND FOLLOW-UP IMMEDIATE IMPROVEMENTS,MONITOR RESULTS, CORRECTIVE ACTIONS

PROJECT CLOSING-Reporting-Feedback, lessons learntProposals for the future

”HAND-OVER”

Internal need, problem, DESIRE TO IMPROVE supply chain performance

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Business case calculation – financialsUse pen, paper and calculator” – better to have it roughly right than exactly wrong

Examples and basis for calculations of business case – focus on Customer & sales:+1MEUR/year more or saved sales with 30% gross margin → +300kEUR more net

profits (assumption: fixed costs staying the same)

Additional financial benefits can include (but these can be more difficult to estimate beforehand): Inventories reduced –1 MEUR → 100-400 kEUR annual cost savings when with total

inventory carrying (annual) costs 10-40% of avg inventory value (incl. space, personnel, interests, value depreciation, scrapping risk)

Additionally better delivery performance -> more satisfied customer -> less need for discounts, penalties and compensations → direct impact to net profits (currently wasted EURs can be estimated based on sales people interviews)

Adjust numbers for your own operations and potential business case and compare them to the costs of improvement! Select the one with most money ”on the table”.

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Supply Chain improvement is teamwork..can be both fun & hard..

”Problem is an opportunity to improve. If we want, together we can do it.”

Customer focused VSM projects’ motto 2009-2010 / Michelangelo Lo Curto & Petri Huitti

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© Gol Solutions 2014 - Increase well-being & results

Interested? -> Next steps- customer & sales focus -

You can start on your own or with our help The thing is to first identify is there a good business case for improvement or not. 1) Do on your own: Send your company’s relevant Business or Sales Manager or sales men

following simple questions (you can copy-paste and send email or call to them): Are there important customers who are dissatisfied for our delivery performance? Are we under risk of losing sales or even customers if we don’t improve logistics

performance? How much in sales and profits EUR? Could we increase (or maintain)our sales if we improve logistics to certain customers? How

much? 2) With our help: Find out 2-5 important customers dissatisfied for logistics/ delivery

performance, agree short 30-60min interviews(phone) with responsible sales persons and us, we will take care of the questions

You can also identify preliminary candidates based on customer satisfaction survey or other feedback or there might be critical situation ongoing with important customer-> approach sales persons for these customers to check, how big problem is delivery performance.

Output: 1) If there is no good business case, doesn’t make sense to continue. 2) If there is enough potential and EURs inline, after these questions you should know about

that. Then it is your management to make decision whether to proceed or not.

At your service:Contact and background information

EDUCATION, WORKING EXPERIENCE, TOOLBOX, NETWORK, CORE COMPETENCE: Education: M.Sc. Industrial Engineering and Management, main subject Logistics,

Lappeenranta University of Technology(LUT), Finland, graduated 1996 Working experience: Over 18 years on different logistics aspects from customer

interface to suppliers, with different products and roles in global companies Metso Automation, Nokia Networks and Nokia Siemens Networks: Product Manager, Development Manager, Quality Manager and Project Manager in several IT and process improvement projects. Since 2010 helping also SME industrial and retail companies to improve logistics & SCM and educated logistics & SCM in Finnish and English.

Toolbox: Theory Of Constraints(TOC), Lean, Value Stream Mapping, 8D - systematic problem solving, common sense.

Core competence: How to improve delivery performance to customers to secure or increase sales and how to improve inventory rotation, with less costs.

”Problem is an opportunity to improve.”

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Contact information:Gol Solutions Oy Ltd.

Petri HuittiBusiness Coach

+358405597866petri.huitti@golsol.fi

Pirkkala & Kuopio, Finlandwww.golsol.fi

LinkedIn / Facebook / Twitter / Blogi

Let it flow.Improve delivery performance, secure and increase sales.

With less inventories & costs.

”Our biggest constraint is our way of thinking.” Dr. Lisa Lang, TOC Expert© Gol Solutions 2014 - Increase well-being & results