Supply chain transformation
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Transcript of Supply chain transformation
Supply chain transformationMahindra South Africa case study:
Running with the big dogs, even if you’re small
InSync Solutions
Savino Del Bene – Fast facts
A multinational freight and logistics organization
Employing in excess of 3000 staff
Operating in 45 countries with owned offices
InSync – Fast facts
• InSync – from Integration and Synchronisation; two key principles for JIT logistics
• Founded: 2006• Majority shareholder: Resolve – an Imperial company• Logistics Solutions Provider: Design, implement and manage• > 900 Employees• 18 Grad Engineers , 6 Diplomats
• Operational activities at 6 sites:• PE – VW SA ,• East London – Mercedes SA, • Gauteng – SAB, SCJohnson, Mahindra, BMW SA
InSync Solutions
Strategic objectives
• Improve CSI – brand value (service to dealers)
• Platform for sustainable future growth
• Flexible solution to support future growth
• Minimum effort to administrate
• Competitive costing
InSync Solutions
Improved
Competitiveness!
Beating the trend….
InSync Solutions
Co
stC
ost
SizeSize
• Inbound volume, # of lines
• Outbound volume, # of
lines
• Distribution density - # of
lines per distribution point
Beating the trend….
InSync Solutions
Co
stC
ost
ServiceService
• Accurate
• Reliable and
predictable
• Cost effective
• Minimum effort for
dealer network
• Visibility of important
information to all
parties
• …..
Beating the trend….
InSync Solutions
Co
stC
ost
Distribution frequencyDistribution frequency
Pop-corn factor 1:7
Partner of choice
• Single partner with end-to-end service offering
• Specialised skills, processes & systems
• Right size – take business serious
• Experience
• Flexible – adjust solution around Mahindra’s specific needs
• Innovation to “beat the trend”
InSync Solutions
Solution requirements: Dealers
Dealer must be confident to promise service and deliver on it:
• Visibility of stock at warehouse
• Simple ordering process
• Accurate, reliable ETA for orders
• Correct part at right quality
• Quick turn-around for back orders
• Empowered through information available at all times
InSync Solutions
Solution requirements: Mahindra
Service excellence to dealer network:• 100% on time in full delivery against dealer orders• Accurate inventory records• Quality assurance throughout all elements of the supply chain• High levels of automation of business processes• Secure business process reflecting Mahindra business rules• Real time, on demand reporting• Simple, pleasant experience with system for dealer network when
placing orders• Information available to dealers to reduce basic queries• Industry best cost competitiveness• Automated workflow for return orders
InSync Solutions
Solution requirements: InSync
Ability to meet customer expectations effectively:
• Full integration with Principal system
• Clear, simple KPI’s agreed to reflect SLA, visible to all parties in real time
• Stability in business rules supported by work flow
• Flexibility to design & implement “best fit” solution based on our experience
InSync Solutions
Focus…
“There is nothing so useless as doing efficiently that which should not be done at all.”
– Peter F. Drucker
VALUE:
Any activity or process that the
customer is willing to pay for.
InSync Solutions
Absolute clarity on customer requirements vital to understand VALUE.
Key focus: Waste elimination
• MURI – Design and plan to prevent waste
• MURA – Implementation of work design through system & equipment and elimination of fluctuation in work load
• MUDA – Further waste discovered after implementation and focus of continuous improvement
InSync Solutions
MURI – plan & design to prevent waste
InSync Solutions Innovation
SystemSystem
ProcessProcess
Customer requirements
Customer requirements
MURI – plan & design to prevent waste
InSync Solutions
Management Philosophy and
practices
Processes
Equipment, layout & facilities
System
Holistic
solution
Balance and integration more important than pockets of excellence
Creating value: Waste elimination
• Waste of transport – distribution
• Waste of space
• Waste of excess capacity to cover for order fluctuation
• Waste of motion
• Waste of complexity
InSync Solutions
Waste of transport
InSync Solutions
CostEffort
Impact on operations
FrequencyReduced inventoryFlexible inventory
Balance?Moderate expectations
Waste of transport
• 1 m3 flows in; 3-5 m3 flows out
• 1,1 m3 per delivery point
• Collection allowed at warehouse
Network solution• Single National Warehouse close to COG
• Single, daily delivery overnight to Gauteng and main centers
• Lead time as per network to outlying areas
• Vehicle off road orders for critical orders– Limited through rules and discount structures
InSync Solutions
Waste of space
InSync Solutions
Data complexityWarehouse
flexibilty
Storage typesStorage density
Balance?Layout optimisation
System innovation
Benchmark info
InSync Solutions -
500
1 000
1 500
2 000
2 500
3 000
3 500
Op1 Op2 Op3 Op4 Op5 Op6 Op7
Inventory held for one orderline out
Rinventory(ave)/Orderline(m)
-
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
Op1 Op2 Op3 Op4 Op5 Op6 Op7
Sales generated per inventory unit
RAnnualSales/R(Ave)Inventory
-
2 000
4 000
6 000
8 000
10 000
12 000
Op1 Op2 Op3 Op4 Op5 Op6 Op7
Inventory density
Rinventory(ave)/SQM
Waste of space
• One part # per bin location required for
process assurance
• Accessibility by foot to be maximised
• Maximise storage density (m3 parts/m3 racks
and part # per sqm)
• Storage types matched to product attributes
and material handling requirements
InSync Solutions
Waste of space
InSync Solutions
Vo
lum
e p
er
part
Bulk
sto
rage
Bulk
sto
rage
Larg
e p
alle
tLarg
e p
alle
t
Sm
all
bin
are
aS
mall
bin
are
a
Sm
all
palle
tS
mall
palle
t
Lean lifts
Lean lifts
# o
f u
nit
s in
sto
ck
Part #’s
Waste of space
InSync Solutions
Lean Lifts
Small Bins
Cro
ss
Do
ck
Cro
ss D
ock
Lean lifts362 bins/sqm
5427 bin locations
Small bin area
14 bins/sqm
Waste of space• 2 Lean lifts installed• High security parts• Small parts for medium and slow
movers• Strategic items (extremely low
sales)
27 bins per tray for bigger parts
54 bins per tray for smaller parts
75 trays per machine
5427 bin locations in 2 machines
• Standard light duty racking used
• Boxes specially designed to fit into racks
• Box size range determined by part sizes
Waste of space
Waste of excess capacity
InSync Solutions
Operational complexityExcess capacity
Unlimited capacity
Multiple cut-offsOrder flexibility
Balance?• Business rules• System
innovation
Waste of excess capacity:Order intake patterns
InSync Solutions
Cut-
off
1 Cut-
off
2 Cut-
off
3
Time of day
# o
f ord
er
lines p
er
hr
Day of month
# o
f ord
er
lines p
er
day
Month
-end
Waste
Waste
Waste of excess capacity:Order intake patterns
InSync Solutions
Cut-
off
1 Cut-
off
2 Cut-
off
3
Time of day
# o
f ord
er
lines p
er
hr
Day of month
# o
f ord
er
lines p
er
day
Month
-end
Excess
capacity
Customer waiting
or overtime
Customer waiting
or overtime
Excess
capacity
Waste of excess capacity
• Single daily cut-off (16h00)
• Daily order buckets limited to agreed capacity
• Various order types with discount structure and rules – different lead time promise
• Work pattern introduced
InSync Solutions
Waste of excess capacity:Order intake patterns
InSync Solutions
Cut-
off
1
Time of day
# o
f ord
er
lines p
er
hr
Day of month
# o
f ord
er
lines p
er
day
Month
-end
Fixed daily capacity
Work pattern
allows variation
in capacity
without
additional cost
Waste of motion
InSync Solutions
Minimise moving distance
Minimise handling steps
Space considerations
Racking limitations
Balance?• Layout
optimisation
• Bin Structure
optimisation
• System
innovation
Benchmark info
-
1,00
2,00
3,00
4,00
5,00
6,00
7,00
Op1 Op2 Op3 Op4 Op5 Op6 Op7
Throughput per SQM
Orderlines(m)/SQM
-
2,00
4,00
6,00
8,00
10,00
12,00
Op1 Op2 Op3 Op4 Op5 Op6 Op7
Frequency in vs out
LinesOut(m)/LinesIn(m)
Waste of motion
• Maximise picks on minimum distance corridor
( 92% picks)
• Maximise picks by foot
InSync Solutions
Quara
n
tine
Dam
ag
es
Deale
r
Retu
rn
s
Receiving
Bulk North
Racking
Lean Lifts
Small Bins
Palletized Racking Palletized Racking
Dispatch
Dispatch
Cages
Packing
Stations
WH Office
Bulk South
Racking
Green Area
Co
llect
ion
s
Cro
ss
Do
ck
Cro
ss
Dock
Minimum distance corridorMinimum distance corridor
Fast moving, high volume parts Fast moving, high volume parts
Waste of motion
InSync Solutions
Quara
n
tine
Dam
ag
es
Deale
r
Retu
rn
s
Receiving
Bulk North
Racking
Lean Lifts
Small Bins
Palletized Racking Palletized Racking
Dispatch
Dispatch
Cages
Packing
Stations
WH Office
Bulk South
Racking
Green Area
Co
llect
ion
s
Cro
ss
Do
ck
Cro
ss
Dock
Fast moving, high volume parts Fast moving, high volume parts
Rapid fire zone
O
u
t
Small MediumLarg
e
Waste of motion
• Sequence picks to minimise movement distance
• Ensure equipment layout, process and system steps align
• Place parts at heights based on movement
InSync Solutions
D
A
B
C
Waste of motion
InSync Solutions
Safety
net
High volume, fats moving
parts (filters, etc)
replenished into pick face
on minimum distance
corridor – pick by foot
Waste of motion
• Sequence put away to minimisemovement distance
InSync Solutions
Split by area
Route by Bin
location
Route by Bin
location
Warehouse layout
InSync Solutions
Quara
ntin
e
Dam
ages
Deale
r
Retu
rns
Receiving
Bulk North
Racking
Lean Lifts
Small Bins
Palletized Racking Palletized Racking
Dispatch
Dispatch
Cages
Packing
Stations
WH Office
Bulk South
Racking
Green Area
Co
llectio
ns
Expansion
possible
Cro
ss
Do
ck
Cro
ss D
ock
Minimum distance corridor
Waste of complexity
InSync Solutions
ControlAutomationEfficiency
Complex systemComplex master
dataComplex process
Balance?• Interfaces
• Automated
workflow
• Simple processes
• System
innovation
Interfaces (key enabler)
• To and from Host system (SAP)
• Master/slave relationship observed to maintain data in one place
• Real time for critical and daily for non-critical
• Automated error handling, logging and notification
InSync Solutions
Automated workflow
InSync Solutions
Dealer: places order
DespatchDespatch
Result
SAP
Courier
Order info
Invoice
Automated workflow
• Credit control
• Back-orders
• Supersessions
• Dealer returns (return logistics)
• Invoicing (goods and courier costs)
Information
• Brochures, Training Manuals
• Invoices
• Order status
• Warehouse performance reports
InSync Solutions
Simple processes
InSync Solutions
• I see, I do
• Simple menu steps in system
• System driven routing to reduce decision making
• Minimum process steps
• Build-in mistake proofing– One piece flow– Never separate data and material– Scan where possible
• No planning for standard material flow – work flow based
• Reflect, support and enforce business rules
System innovation
InSync Solutions
• Portable printing to allow user to print at material
• Work leveling of dealer orders into demand buckets
• Dealer credit handling as part of ordering process
• Configurable order type based business rules
• Courier service levels interactive selection
• Automated backorder and supersession handling
• Rule based Return Order handling – work flow based with build-in notifications
• Handling of multi client warehouse (Mahindra & SSangyong)
Results
InSync Solutions
• Improve CSI – brand value (service to dealers)
• Platform for sustainable future growth
• Flexible solution to support future growth
• Minimum effort to administrate
• Competitive costing
In summary
InSync Solutions
• Most important measure of success is impact on the targeted business strategic initiative
• Subject all decisions to objective when compromises are required (customer response & cost)
• Design warehouse layout for customer response (outbound speed & efficiency)
• Design warehouse structure and processes for costs (storage density, automated workflow)
• Optimise, optimise, optimise equipment, process and system integration during design phase to prevent waste in operation
• Drive waste reduction as way of life after implementation
• Serve warehouse operator as customer to the best of your ability during the project phase and warehouse operator will serve final customer to the best of his ability during operations