Revitalizing Supply Chain for XYZ – An Automobile Leader

CONTENTS

Supply Chain Assessment

New Design - Overall benefit

Supply chain blueprint and process flows

Review mechanisms

Implementation requirements from stakeholders

SUPPLY CHAIN ASSESSMENT METHODOLOGY

SCOR Level 1 Supply Chain Metrics

Customer Facing Internal Facing

Supply Chain Reliability

Flexibility and responsiveness

Cost Assets

Delivery Performance Line Order Fulfillment Perfect Order Fulfillment

Supply chain Response time

Production Flexibility Total Logistics Cost Inventory Days Inventory Turns ROI

QUANTITATIVE PERFORMANCE ASSESSMENT

SUPPLY CHAIN PRACTICE ASSESSMENT

There is Need for Redesigning the Supply chain …..

CONTENTS

Supply Chain Assessment

New Design - Overall benefit

Supply chain blueprint and process flows

Review mechanisms

Implementation requirements from stakeholders

THE NEW DESIGN CAN REDUCE LEAD TIMES BY 30-40% AND IMPROVE THE FILL RATES BY 20-30%

13

8

3

7

2

2

Lead Times can be reduced by 30-40%…

Sourcing LT

Dispatch LT

Manf LT

69

50

95

80

Fill rates will be Improved by 20-30 %

Perfect Order Fill rate

Line Fill Rate

…resulting in improved supply chain performance• Optimal design–Customer orientation–Minimal made-to-stock

inventory points

• Best-in-class support processes–Forecasting–Sourcing–Order and dispatch

Baseline performance

New design performance

Percent

Days

THE NEW DESIGN CAN REDUCE INVENTORIES BY 50-60% AND REDUCE POTENTIAL LOST/DEFERRED SALES BY 9-10%

27

18

51

15

10

15

Inventories can be reduced by 50-60%…

Rawmaterial

WIP

Finishedgoods

9

0

…and lost/deferred sales are not likely…

Likely lost / deferred sales in future

Lost / deferred sales at SKU levels in baseline

…resulting in improved supply chain performance• Optimal design–Customer orientation–Minimal made-to-stock

inventory points

• Best-in-class support processes–Forecasting–Sourcing–Order and dispatch

Baseline performance

New design performance

Percent

Days of inventory

THERE WILL BE OVERALL BUSINESS IMPROVEMENTS BY REDESIGNING THE SUPPLY CHAIN

Internal Facing Improvements

Customer Facing Improvements

IMPR

OVE

D BU

SIN

ESS

15

10Increase in Sales

Customer Satisfaction

20

30Inventory Reduction

Return On Investment

Improved SalesImproved MarginsPercent Percent

CONTENTS

Supply Chain Assessment

New Design - Overall benefit

Supply chain blueprint and process flows

Review mechanisms

Implementation requirements from stakeholders

SUPPLY CHAIN REDESIGN APPROACH WILL ENSURE SERVICE LEVELS BY MEETING END-CUSTOMER BREAK POINTS, AND

MINIMIZING INVENTORY AND DISTRIBUTION COSTS

High level steps to redesign

• Understand customer break points for various part categories

• Establish target service levels around customer break-points

• Design supporting network structure and set inventory and lead time norms

• Design key supply chain processes – forecasting, sourcing, order processing and dispatch

• Outline KPIs organizational and IT support requirements

• Develop supply chain transition plan

DESIGN IS BASED ON CUSTOMER BREAK-POINTS AND IS SUPPORTED BY DETAILS OF ALL 4 KEY PROCESSES

• Understand customer segments

• Identify breakpoints for each segment

Develop overall supply chain blueprint

Forecasting

Production planning

Sourcing

Begin with the customer…

… Develop the solution …

… and define the details

Ordering and Dispatch

IN THE END-STATE, IT-ENABLED SYSTEMS WILL MANAGE INFORMATION FLOWS ACROSS THE SUPPLY CHAIN

Suppliers Production

Marketing

Dealers

Informationsystems

SupplierRelationshipManagement

Web-enabledfield input

system

Enterprise Resource Planning

• Purchase orders• Order status

• Master Demand Schedule (MDS)

• Master Production Schedule (MPS)

• Manufacturing Resource Planning (MRP)

• Field inputs for order-enquiry status

• Dispatch plan

XYZ

Key information

THE NEWLY DESIGNED SUPPLY CHAIN PROCESSES WILL ADDRESS ROOT CAUSES OF KEY CURRENT PROBLEMS

Area Root causes How addressed in new design

• Forecast accuracy

• Weak processes• Inadequate scope• Poor measurement

• Standard tool and process • Direct linkage to sourcing plan• Clearly defined KPIs

• Sourcing accuracy

• Weak processes

• Large lead time variability

• Clearly defined process• Supplier agreements on lead times and delivery

dates

• Order processing accuracy

• Inadequate norms

• Delays in part availability

• New norms to satisfy breakpoints• Stronger sourcing process due to tighter

monitoring of supplier performance

• Dispatch accuracy • Variations in shipment processing time

• Processing delays at transporters

• Standard dispatch rules • Dispatch plan prepared• Transportation service level agreement

NEW PERFORMANCE MANAGEMENT SYSTEM

Financial Operational

People-related

Customer- related

A balanced scorecard should include all relevant categories to measure business performance

Specific performance measures / metrics• Pick a few metrics grouped into categories

(e.g. financial, operational, etc.)• Align selection with corporate objectives• Focus measures on past, present and future• Give important metrics higher weight

• Set targets for both short and long-term• Establish realistic base targets and clearly

articulate stretch targets• Make stretch “uncomfortably” aggressive

but not “unreasonable”• Ensure targets of individual units “add-up”

to corporate aspirations / strategy

Targets

FEATURES OF GOOD SCORECARDS

CONTENTS

Supply Chain Assessment

New Design - Overall benefit

Supply chain blueprint and process flows

Review mechanisms

Implementation requirements from stakeholders

2 CATEGORIES OF REVIEWS TO MONITOR ONGOING PROGRESS AND TO DRIVE DESIGN IMPROVEMENT

Objectives

Category 1 Category 2

Implementation review Design review

• Review progress against targets set for Key Performance Indicators (KPIs)

• Provide support for debottlenecking implementation

• Approve minor changes in design

• Improve design elements to meet best-in-class performance

• Implement new tools

Timing• Regular frequency–Weekly with process owners–Monthly with functional

heads–Quarterly with Steering

Committee

• Significant changes in conditions (customers/competitors)

• New systems within plant (e.g., lean manufacturing)

CONTENTS

Supply Chain Assessment

New Design - Overall benefit

Supply chain blueprint and process flows

Review mechanisms

Implementation requirements from stakeholders

CIL WILL NEED TO UNDERTAKE SEVERAL CHANGES TO ENSURE SUCCESSFUL RESULTS FROM THE SUPPLY CHAIN INITIATIVES …

Type of change / actions

Action required by

Long-term changes

Near-term changes

• Organizational redesign (cross-functional)

• Organizational realignment• Policy development• IT actions

• Leadership Team • Dealerships• Marketing• Manufacturing

WHY ZENSAR …

Supply chain redesign at ABC

Supply chain revitalization at DEF

PROJECT ESTIMATES

PROJECT ESTIMATES - TIMELINE

PROJECT ESTIMATES - FINANCIALS