1 © 2008 nokia logistics beyond a mobile.ppt / 2008-09-26 / jussi laaksonen logistics beyond a...

1 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen

Logistics beyond a mobile

Logistics conference, 26-27th September 2008 Portoroz

Jussi LaaksonenDirector, LogisticsWestern Europe Sales Cluster

Logistics beyond a mobile

Logistics conference, 26-27th September 2008 Portoroz

Jussi LaaksonenDirector, LogisticsWestern Europe Sales Cluster


Nokia at a glance

Nokia key figures | page 5 of 22

Device volumes (millions of units)

Net sales (EUR million)

Operating profit (EUR million)

Operating margin (%)

Earnings per share, diluted (EUR)

Operating cash flow (EUR million)

Research and development (EUR million)

R&D (% of net sales)

Personnel at year end

2006

347

41 121

5 488

13.3

1.05

4 478

3 897

9.5

68 483

2007

437

51 058

7 985

15.6

1.83

7 882

5 647

11.1

112 262

Change

26%

24%

46%

-

74%

-

45%

-

-

Nokia is the world leader in mobility, driving the transformation and growth of the converging Internet and communications industries

Nokia is the world leader in mobility, driving the transformation and growth of the converging Internet and communications industries


Our Vision, promise and approach

Vision Promise Approach

Our vision is a world where everyone can be connected.

Our promise is to help people feel close to

what is important to

them.

Trusted consumer relationship.

Best mobile devices

everywhere.

Context enriched services.


Nokia’s Demand Supply Network Management

Device manufacturing in 9 countriesMore than 20 000 employees in production

437 million devices in 2007 ~1.2M / day ~14 / second

120 billion components in 2007 ~330M / day ~3800/second

Nokia devices are available at approximately 350 000 pos


Contents

What is Lean supply chain management? How to build in both agility and efficiency?

Demand supply network structure

Synchronizing inbound logistics

Smart manufacturing

Collaborating with customers

KPI’s


Refreshing our memories about LEAN production“Lean” is the optimal way of producing goods through the removal of

waste (muda, muri, mura) and implementation of flow • Lean recognizes 7 types of waste (muda):

• Transportation (moving products that is not actually required to perform the processing)

• Inventory (all components, work-in-progress and finished product not being processed)

• Motion (people or equipment moving or walking more than is required to perform the processing)

• Waiting (waiting for the next production step)

• Overproduction (production ahead of demand)

• Over Processing (due to poor tool or product design creating activity)

• Defects (the effort involved in inspecting for and fixing defects)

• Muri addresses non value added work demanded of workers

• Mura addresses fluctuations at schedule and operational level

Source: Wikipedia


Applying LEAN to supply chain:

Three key components:• Logistics is about managing inventory

• Lean is about speed, flow and the elimination of waste (inventory)

• Six Sigma is about understanding and reducing variation

Lean Logistics, can then be defined as:

The elimination of unnecessary inventories through disciplined efforts to understand and reduce variation, while increasing speed and flow in the supply chain

Source: http://www.ltdmgmt.com/mag/understanding-lean-logistics.htm

Reduce variation,

cost & inventory

Responding to customerExpectations

•No disruption

•Long lead times

•Standardized products

•Standardized quantities

•Fast response

•Short lead times

•Maximum flexibility

•Customized products


Do we understand E2E supply chain?

Inventory profile of UK Automotive Supply Chain Source: http://www.3daycar.com/mainframe/publications/3daycar.pdf


Contents

What is Lean supply chain management?How to build in both agility and efficiency?



Smart manufacturing


KPI’s


0

40

80

120

160

1995 1996 1997 1998 1999 2000 2001 2002 2003

The story begins already at 1995…

Inventories in Days of Supply(DOS)

TOWARDS WORLD CLASS

COMPETITIVE ADVANTAGE

SHAPE-UP

Annual report 1995:

“Despite strong sales growth, Nokia Mobile Phones profitability was adversely affected by a number of factors during the year. The principal factor affecting profitability was the difficulty of meeting the challenges created by the business group's rapid growth. …. Profitability was also affected by … interruptions in the supply of certain components, as well as logistical issues. Consequently, the business group experienced certain difficulties in bringing this production capacity and logistics associated therewith up to optimal levels.”


Nokia’s award winning supply chain

Source: http://www.amrresearch.com/supplychaintop25/#

AMR research ranks top 25 supply chains in the world by following criteria:

•Financial performance

•AMR expert evaluation

•Peer assessment

Nokia’s supply chain rankings:

#2 in 2004#4 in 2005#1 in 2007#2 in 2008


Modularity in products

Example:N95

Supply Operation: Final assembly and variation

234 handsets 336 sales packages

12

EngineOperation


Assembly& deliveryAssembly

& deliveryAssembly& deliveryAssembly

& deliveryAssembly& deliveryAssembly

& delivery

Modularity in production

Engineproduction

Enginebuffer

Push driven by plans 2-6 days of supply Pull driven by orders


Reynosa

NokiaContract manufacturer

Manaus

Salo

Komarom

Chennai

Beijing

Dongguan

Masan

Cluj

Manaus

GuadalajaraMonterrey

Tallinn

Komarom Pecs

Beijing

Longhua

Tiszaújváros

Nokia’s global network of operations


Nokia is the only large scale manufacturer in Europe

KomaromPecs

Salo

Nokia factory

Nokia Contract manufacturer

Tiszaujvaros

Tallinn

Being closer to customers enables us to build lean logistics – sense and response in SCM

Key benefits:•Manufacturing only against customer orders•Fast respond to volatile market and customer demand changes

•Minimized order fulfillment lead time without inventories

•High number of customized products with small order lot sizes

Cluj


Contents




Smart manufacturing


KPI’s


Ihub model

Suppliers own and manages material flow until Nokia’s production line.

Global suppliers deliver to inbound hub and local suppliers directly to factory.

LSP’s Operate the supply chain:transportations to ihub, warehousingat ihub and replenishments to production line

Nokia’s responsibility is to provide best possible demand visibility to suppliers, manage LSP relations and pay for the standard services


Industrial village concept


Contents




Smart manufacturing


KPI’s


Smart manufacturing Smart Manufacturing Principles

("Smart Way", inner layer of the picture)

•Empowerment

•Get rid of waste

•Keep it moving

•Keep it simple

•Visualize

•Build quality in

Continuous Improvement Concepts ("Smart Improvement", middle layer)

• Select improvement opportunities

•Execute improvement activities

•Sustain the results

•Practice continuous improvement

Process Harmonization Concepts ("Smart Copy", outer layer)

•Network - Process owner networks

•Copy - Copy and standardize the essentials

•Share - Share best practices and know-how


Reduce, Reuse, Recycle• Eco-efficient materials

• Innovative design concepts

• Eco-efficient packaging

• Energy-efficient chargers

• Software and services todrive sustainable behaviorand choices

• Optimizing transportation logistics

• Between 65% and 80% of a Nokia mobile device can be recycled

• Nokia participates in collection schemes with other manufactures

• Nokia works with qualified recyclers around the world to ensure proper end-of-life treatment for used devices


Capturing Sales in Volatile Markets

Perc

en

tata

ge

Example of daily demand fluctuation - %

-50

0

50

100

150

200

250

300

350

400

Days

DiffMedian

Terminal vendor shipments (M units)

Source: released terminal shipments

0

20

40

60

80

100

120

140

160

Q1

02

Q2

02

Q3

02

Q4

02

Q1

03

Q2

03

Q3

03

Q4

03

Q1

04

Q2

04

Q3

04

Q4

04

Q1

05

Q2

05

Q3

05

Q4

05

Q1

06

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

Q1

08

Nok MOT SE Sam LG


0% 20% 40% 60% 80% 100%

01.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.200701.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.200701.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.2007

DE

01

FI0

3H

U01

Sum of 1-10

Sum of 11-50

Sum of 51-100

Sum of 101-1000

Sum of 1001->

factoryMonth

Data

European delivery statistics


Contents




Smart manufacturing


KPI’s


Modular logistics service offering consists of:

Variant Management & Customization

Capability

Outbound Logistics Capability

Information Management & Data Exchange

Capability

Planning &

ReplenishmentCapability

“When you

Want”

“How you

want”

“Where you

Want”


Sales package customization offering

• Co-branded sales package graphics

• Combos

• Sleeves

• Leaflets/brochures

• Stickers

• Customized labels

• Closing and sealing

• SIM cards

• Sales package size and concept


Customer Collaboration maturity stages

Collaborative planning “Regular weekly information sharing”

Collaborative planning , forecasting andreplenishment (CPFR)

“Jointly managed inventory levels in customer’s DC”

Vendor managed replenishments (VMR)

“Nokia manages inventory within agreed target”

Vendor managed availability (VMA)

“Nokia serves customer’s channel directly”

Customer Nokia

Purchase plans,Stock levels, Actual sell through,Campaigns

Actual and planned sell-through,Visibility to channels

Supply indications,Order confirmations,Launch & End of Life,

Daily info sharing, S2S integration

Channel specific deliveryschedules,Channel customization

Proposed delivery plans,2nd opinion on demand plan,Backup / contingency plansCampaigns support

Daily info sharing, S2S integration,Delivery schedules

Detailed deliveryinformation, Channel priority

+

+

+

+

+

+

Focused Campaign support


Without customer collaboration…


Collaborative planning


Collaborative planning, forecasting and replenishment


Vendor Managed Replenishment


Vendor Managed Availability


Role of tools to ensure scalability

The old phrase: ” if you can do it with pen and paper you MAY be able to automatisize it” is very much true. And the focus should be in the process, not in the tools.

However, tools will start to play a very important role when implementing the process on scalable way with many customers.


Contents




Smart manufacturing


KPI’s


KPI’s – what gets measured gets done…

Customersatisfaction

Availability Days of supply Costs

Additional measures – like the ones mentioned below -can have an explanatory role, but don’t lose your focus from the main KPI’s.

• On time delivery performance, • Perfect order fulfillment• Planning accuracy• Etc…


Thank you

1 © 2008 nokia logistics beyond a mobile.ppt / 2008-09-26 / jussi laaksonen logistics beyond a...

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