Download - Bill Stankiewicz Schneider Electric
Supply Chain & Logistics
From Downstream Logistics to Supply Chain
From operations excellence to customer intimacy
JM Fallet – SVP Supply Chain & Logistics
SC&L – JM Fallet - September 2007 2
Schneider ElectricA world leader in Power & Control
“Control and monitor
machines and installations,
protect people”
ElectricalDistribution
# 1 worldwide
“Make power
safe, available
and reliable”
Automation& Control
# 2 worldwide
Energy management“Ensure uninterrupted and high quality power,
optimise energy consumption”
SC&L – JM Fallet - September 2007 3
Close to you with strong local operations
Sales and employees by geographical region
*workforce including permanent
and temporary employees
Source: 31/12/2006
Schneider Electric in figures
� €13.7 billionrevenue in 190 countries
� 105,000 employees*
� Local presence in
106 countries
� more than 200 factories
� 6,500 R&D people in
25 countries
31% of revenue in emerging countries
27%
26 000
North America
8%
7 500
Rest of the world
47%
48 500
Europe
18%
23 000
Asia-Pacific
SC&L – JM Fallet - September 2007 4
Installation Systems and ControlJean-Pierre CHARDON
Global Human ResourcesKaren FERGUSON (2)
InternationalChristian WIEST (2)
new²Company programAlejandro SOLIS
QualitySerge GOLDENBERG
Strategy, Customers &TechnologyEric PILAUD (2)
Strategic resources and organizationJean-François PILLIARD(2)
Globalization & IndustryHal GRANT (2)
An international leading team
Customized SensorsChuck TREADWAY
AutomationMichel CROCHON (2)
Chairman of the Management Board & CEOJean-Pascal TRICOIRE (1),(2)
Chief Financial OfficerPierre BOUCHUT (1),(2)
Asia-PacificRussell STOCKER (2)
North AmericaDave PETRATIS (2)
PowerEric RONDOLAT (2)
EuropeJulio RODRIGUEZ (2)
Renewable energiesClaude GRAFF (2)
Building AutomationArne FRANK (2)
Services & ProjectsEric PILAUD (2)
(1) Management board
(2) Executive committee
Critical Power & Cooling servicesLaurent VERNEREY (2)
Business units
Operating divisions
Central functions
SC&L – JM Fallet - September 2007 5
Industry
food & beverage, automobile, electronic, packaging, pharmaceuticals
productivity, flexibility,
safety, traceability
32% of sales
A unique offer in four markets
Energy & infrastructures
electrical networks,water treatment, airports, tunnels, telecom, data centres
availability, safety,
Cost effective
16% of sales
Buildings
offices, stores, factories, hotels, hospitals, museums, schools, universities
comfort, communication
safety, operating costs
37% of sales
Residential
single-family homes, apartment buildings
safety, comfort,
communication
15% of sales
SC&L – JM Fallet - September 2007 6
A unique offerin the management of power and control
Power Control
Industrial
Automation and ControlLow & MediumVoltage
core and historical activities
integrated, communicating and smart products, equipment and systems
Services
new activitiesEnergy management
critical power and cooling services / energy efficiency
Building Automation
Installation systems Home control&
SC&L – JM Fallet - September 2007 7
Partnering with & for our customersto serve end-users
Schneider Electric
End user
Wholesaler
installer
panelbuilder
electricianOEM
engineering firm
contractor
systems integrator
power utility
global strategicaccount
prime contractor project owner
SC&L – JM Fallet - September 2007 8
MICHAEL DELLLots of work goes on behind the scenes to shape demand and supply,
and adjust to the optimal outcome. There have been disruptions.
We had the West Coast dock strike, which was a big one.
But it caused less of a disruption for us than for our competitors.
That's the opposite of what you'd think, but it's because of our flexibility,
reaction time, planning and anticipation.
The ability to fundamentally alter a lot of outcomes in a dynamic fashionbased on what is going on around us.
In December 2004 the MIT Supply Chain 2020 Industry Advisory Council visited Dell Computers. The Council discussed the future of supply
chains and talked with Michael Dell about his company’s supply chain-
driven success.
SC2020How has the Dell business model contributed to the company’s success?
What is Supply Chain ?Michael Dell definition
SC&L – JM Fallet - September 2007 9
What was the situation of the Schneider Electric Supply Chain 3 years ago ?
� Countries independent and managing both Business and
Operations
� No visibility
� Local option & Micro-optimization
� Re-invent permanently the wheel
� No SC organization, only downstream Logistics in countries
� Poor competencies in planning and international transportation
� Silos between Front office, Logistics and Manufacturing
� Low performance
� Service Rate on lines below 93%
� Costs on Logistics 7% of P&L
� 93 days of inventory, no forecast accuracy in place
� Customer surveys pointing Logistics as a main weakness for SE
SC&L – JM Fallet - September 2007 10
The first questions I’ve asked to my team
� How many customers have you met ?
� How many suppliers have you met ?
� How many KPI’s for SC&L ?
� What is the cost of transportation ?
� How many DC’s
� How many gates between Plant and
Customers
� How many sku’s
� 1 to 3…. We are process makers
� None… Purchasing responsibility
� 53…. We need to know
� Nobody knows…. Local vision
� Nobody knows…. Local vision
� 2 to 4…. Close to the market
� Nobody knows…. The marketing
decides
SC&L – JM Fallet - September 2007 11
� To convert into solutions the customers expectations
� To make sure that the right resources are available all along the
supply chain from suppliers to end user customers delivering the
goods, services & information at the right time in the right location
� To execute operations with optimum level of quality relative to
costs and assets management
� To manage end to end flows of information
� To ensure that our actions fit into the criteria of Sustainable
Development while improving continuously our environmental
health and safety performances
� increase our competencies and develop the Continuous
improvement process with the contribution of all employees
Define a StrategyMissions : a Supply Chain for what ?
SC&L – JM Fallet - September 2007 12
Complexity is increasing1st of Jan 2007 figures
� 20% growth a year
� 215 Plants (40 moves in 3 years to support the rebalancing plan)
� 135 DC’s (50 closed in 3 years and 35 new one linked to acquisition)
� 700 applications to run operations
� > 880 000 ref
� 115 Brands (70 brands 3 years ago)
� 16 000 suppliers (of which 856 carriers)
� 36 000 000 lines shipped
� 800 000 tons
� 2,8 Bn€ inventory
� 1,2 Bn€ Spent
SC&L – JM Fallet - September 2007 13
� Increase & strengthen Customer satisfaction thanks to accurate
and proactive information to our customers : BOOSTER project
� Simplify & shorten the logistics network
� Organization of Logistic Territories
� Transportation network with end to end visibility : T² Project
� Standardization of execution processes
� Develop Supply Chain Planning & Inventory Control
Management: SLICE project
� Create demand/ supply planning process
� Integration of Product Life Cycle management
� Communication throughout the Supply Chain
StrategyMain orientations & Projects
SC&L – JM Fallet - September 2007 14
Strategy Organization
APC-MGEJay GUIMOND
EODBernard PESSO
APODJames KEEGAN
NAODChuck GERARDI
I & I ODGérard JORGE� Strategy
� Design
�Operations
�Projects
Supply Chain ExecutionTransport - Warehousing
Logistics NetworkJean OBERLE
Human ResourcesZita PATONAI
Financial Controller
Hervé LE MAREC
BridgeChristophe GALLET
�Support
�Control
Supply Chain Planning
PlanningHervé GALON
Customer Relationship Management
Customer SatisfactionXavier GAUVAIN
G&IHal GRANT
Supply Chain DesignJean-François GROLLIER
Supply Chain & Logistics
Jean-Michel FALLET
SC&L – JM Fallet - September 2007 15
SC&L Corporate and OD’s relationship
� Global strategy and Arbitrage
� Share vision & tactical approaches, Co-design the implementation
� Market intelligence
� Intercontinental Transport Plan
� SC&L Committee 3 times a year with SC&L OD’s VP & Central SC&L
� Networking and community reinforcement
� Main projects review & Transversal processes
� Functional WW People review / Competency development
� SC&L OD’s Business review 2 times a year
� Business Review : results, organization, priorities, action plans
� OD’s best practices
� Skill Network & Program Management
� Main global projects
� Standardization and simplification of processes
� Performance measurement : KPI & Commitments
� Execute missions & projects : do with them
� High level of expertise on specific missions
� Share and deploy best practices
SC&L – JM Fallet - September 2007 16
CRM
SCE
SCP
MaterialManagement
Logistic Offer
DemandPlanning
Transport
Warehousing
OTDSOTDC2
LCS
DIN
Strategy KPI’s Projects Skill Networks
CoherencyGlobal vision from strategy to concrete actions
� Simplify and shorten the logistics network
Organization of Logistic Territories
Transportation network : E2E visibility
Standardization of processes
� Develop & deploy Supply Chain Planning
Create demand/supply Planning process
Integration of Product Life Cycle Mgt
Communication throughout the Supply Chain
� Increase & strengthen Customer satisfaction thanks to accurate and proactive information to our customers
T²
(SC
E)
BO
OS
TE
R (C
RM
)
SL
ICE
(S
CP
)
SC&L – JM Fallet - September 2007 17
Supply Chain Reengineering Projects Management and KSF
� Be very ambitious
� Raise the bar : service rate from 93% to 97%
� Identify breakthrough opportunities : total redesign of transportation
� Recruit only the best
� Go outside and manage WW people review
� Manage competencies and knowledge as well & as fast the Cie
manage the growth
� Limit the number of priorities : 3 or 4 no more
� Very clear deliverables with limited number of common WW Kpi's
� A project has to be a first step for DNA new structure of the Cie
� Pilots to be launched very soon : test and fail as a best practice
SC&L – JM Fallet - September 2007 18
Work on a solid foundationThe golden rules of SE Supply Chain Management
1. The Logistics Offer, part of the Commercial Offer, is the base of the Supply Chain design and performance2. Logistics offer and stocking policy are defined before the launch of the products, and should be revisited during
their lives3. Supply Chain design has to comply with the Logistics territories structure4. Simplify the logistics network and shorten lead-times. Any Supply Chain lengthening must be validated by SC&L5. Supply chain decisions must take into account the desired level of return on capital employed.
SUPPLY CHAIN DESIGN
FORECASTING & PLANNING
FULFILMENT
6. Countries' marketing own the forecast process. They enrich the statistical forecast with their knowledge of market,
customers and products
7. The forecast must be done in quantities to be understood and used by all the stakeholders
8. The Master Production Schedule (MPS) drives plants' ability to respond to demand, and is used to generate supplier forecast
9. Sales Marketing, Product Marketing, Operations and controllers must share formally and regularly assumptions, commitments and financial risks
10. The overall planning process Forecast, DRP, MPS, S&OP should run at least monthly. The outcome must be realistic and feasible
11. Each entity is committed to a service level on first and second delivery date
12. Each entity makes information available prior to the delay
13. A reliable second delivery date must be given before being late
14. Each customer order must go through an approval process before execution
15. Transportation optimizations are to be weighed against inventory and lead-time considerations
SC&L – JM Fallet - September 2007 19
One Priority and its global main project Supply Chain Execution : The T² Project - Context
� Ambition
� Set-up best -in class transportation practice at Schneider Electric through a
global Transportation Transformation (T²) initiative
� Reduce energy consumption as well as CO² emission
� Objectives
� Improve significantly customer satisfaction
� Generate €40 million annual savings by end of 2008
� Stakes
� 3,1% of sales (400 M€ in 2005) without customs clearance fees
� An ambassador of =S= for our customers
� A vital link between =S= and our suppliers
� A key input of infrastructure strategy tomorrow (sourcing, plants, warehouses)
� An activity to put under control before any outsourcing decision can be made
� A key activity for best-in-class companies (e.g. Toyota, Walmart, Dell)
SC&L – JM Fallet - September 2007 20
Our starting point 18 months ago
DimensionDimension Weaknesses observedWeaknesses observed Assesment of maturity levelAssesment of maturity level
StrategyI
1 2 3 4
OrganizationII
ProcessIII
KPIs & Performance
Management
IV
IT Systems & ToolsV
• Transportation cost-oriented and local approach derived
from strong leadership of purchasing and country
management
• Professional buyers in place
• Almost no transportation mode experts
• Operational role undervalued
• Too many Indians, not enough leaders
• Poor knowledge of supplier market and practices
• Little integration of customs operations
• Too few reviews of flows (competitive bidding,
optimization…)
• Very little consolidation of flows
• Objectives setting and target definition
• No working relationships with transport suppliers
• Service KPIs looked on a monthly basis
• No visibility on costs
• Poor carrier performance
• Many diverse IT systems
• No visibility tools
SC&L – JM Fallet - September 2007 21
Transportation costs & service not under control
Schneider Electric transport flows synthesis [2005, M€]
With a total transportation costs of 400M€ (of which 104M€ are not tracked or managed)
External suppliers =S= factory =S= IDC / RDC =S= RDC / LDC Customers
=S= factory =S= LDC
Supplier flows = 85 M€(21%)
Internal flows = 127 M€(32%)
External flows = 187 M€(47%)
85 M€(21%)
74 M€(19%)
53 M€(13%)
127 M€(32%)
60M€(15%)
Road mode represents 73% of spent& 93% of volumes
Air mode for 19% spent & 2% volumes
Sea mode for 8% spent & 5% volumes
And…
Domestic flows represent 62% of spent
Intercontinental flows for 21%
Continental flows for 17%
9 Logistics Territories cover 87% of transportation expenditures
Of which France covers 31%
And US cover 30%
SC&L – JM Fallet - September 2007 22
Priorities and main projects Supply Chain Execution : The T² project - Main Deliverables
� Organization
� Federate Schneider Electric transportation community
� Standardize transportation organization
� Staff each logistics territory with dedicated transportation
management and transportation procurement dedicated resources
� Set-up a centralized and dedicated team of project managers and
buyers to manage all air and sea & express flows at group level
� Project Management
� 3-year roadmap (2006-2008) with key tactics, actions planned, roll-
out by geography to manage transportation productivity
� Design under access of a program management tool to manage
more than 150 transportation projects
� Control 100% of transportation invoices through a freight payment
outsourcing project covering 80% of transportation expenditures
� Optimization of EOD road flows (€130 million scope)
SC&L – JM Fallet - September 2007 23
454,3
399,7
493,714,0 4,6 12,38,8 13,780,4
27,6
53 M€ annual productivity by EOY 2008...
12% 31% 22% 35%
Transport
cost 2005
% of total productivity earnings
% of total productivity earnings
Volume
effect
Extrapolated
baseline
Local
initiatives
Flow
optimization
Intercon-
tinental
Invoice
control
Impact of
productivity
in spend
Source: Data collection, June 2006 ; OD estimation savings ; Roland Berger analysis
Price effect
Productivity earnings by lever [2005-2008; M€]
Purchasing
Productivity
+6,3% per year
+2,1% per year
Annual Saving 39,4 M€
- - - - -
T2 projects (included purchasing contribution) : reported
in detail in program management
Pure purchasing actions : consolidated
in program
management PROGRAM MANAGEMENT PERIMETER
SC&L – JM Fallet - September 2007 24
80% of costs are invoiced by 9% of suppliers
Source: Data collection, June 2006 ; OD estimation savings ; Roland Berger analysis
Transportation suppliers Pareto
Transport
Costs %
8560%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 100 200 300 400 500 600 700 800
80%
77
# Active
Suppliers
SC&L – JM Fallet - September 2007 25
How to distribute responsibilities and leverage each available expertise?
� Air and Sea carriers
� Trucking companies
� Fleet Management
� Freight forwarders
� Freight audit and payers'
� Consolidators
� Control Towers
� …
SC&L – JM Fallet - September 2007 26
Built internally a “plug & play” 4PL capability
COST VISIBILITY
Freight Audit & Payment
SERVICE VISIBILITY
Global Trade Management Road Tower Control
• Transportation track events• Customs (SKU, order, shipment)• Use of consolidators• Direct negotiations with sea/air carriers
• Route optimizer• GPS localization• Track & Trace• Driving hours and ton.kms
Air & Sea Road
SC&L – JM Fallet - September 2007 27
Benefits of a freight audit & payment system
Budget Budget
Transport/ Transport/
salessales
Transport / Transport /
purchasepurchase
Inter sitesInter sites
Freight Freight
payment payment
costcost
Double invoiceDouble invoice
Mistake tariffs & conditionsMistake tariffs & conditions
Non justified shipmentsNon justified shipments
Rate / Ship Rate / Ship
auditaudit
Cost Cost
managementmanagement
--3 3 àà 6%6%
Scan + PODScan + POD
Audit + managementAudit + management
Payment & reportingPayment & reporting+0,5 +0,5 àà 0,7 %0,7 %
SITE & INTRA SITE & INTRA -- DIVISIONSDIVISIONS
Consolidation / GroupConsolidation / Group
Benchmark / TenderBenchmark / Tender
Transport methodologyTransport methodology--2 2 àà 3%3%
Immediate
(3 months)
-- 7 7 àà 12%12%
Cost Cost
managementmanagement
GROUP & INTER GROUP & INTER -- DIVISIONSDIVISIONS
Consolidation / GroupConsolidation / Group
Benchmark / TenderBenchmark / Tender
Transport methodologyTransport methodology--2 2 àà 3%3%
Operations Operations
costscosts--0,5 et 0,7%0,5 et 0,7%
Reallocation of internal resources Reallocation of internal resources
(cost allocation, shipment registration, (cost allocation, shipment registration,
custom & transport invoicing, control) custom & transport invoicing, control)
Price Price
evolutionevolution+1 +1 àà 5%5%
12- 24 months
In place in the US, Starting in France ans Spain, next step Australia
SC&L – JM Fallet - September 2007 28
Transportation major cost drivers (1/2)
TRADE AGREEMENTS OIL PRICE POST-PANAMAX
LACK OF GLOBAL VISIBILITY SOCIAL & DEMOGRAPHICS GLOBAL WARMING
SC&L – JM Fallet - September 2007 29
Transportation major cost drivers (2/2)
LEAD TIME VARIABILITY SUPPLY CHAIN SECURITYCONGESTION
PACKAGING PAPER WASTELACK OF SYNCHRONIZATION
SC&L – JM Fallet - September 2007 30
In short : 3 KKey SSuccess FFactors
� Processes
� Run the supply chain with processes that are clear, well defined and targeted
with Few but global KPI’s
� Focus
� Focus the whole supply Chain on :
– Customers
– Speed
– Profit
� Networking
� Coordinate the SC together with the whole Cie, through clear leadership
� Develop our people : be an emerger
� Benchmark, exchange, enrich permanently your knowledge
SC&L – JM Fallet - September 2007 31
TransparencyTime
Trust
Conclusion
� SC is transversal,
addressing global end to
end processes
� SC is focused on customer
satisfaction and asset
management
� SC is strengthening its
professionalism
� SC is becoming a Bridge
between Sales and
Manufacturing
Teamwork
How to transform our Supply Chain and achieve
our Customer satisfaction goals ? … the 4T’s
� From local single initiatives to processes
� From Experts in silos to Professionals in Network
We believe the supply chain must become more than
a series of cost centers, transactions and negotiations
it can and must be and engine for growth itself
A.G. Lafley, Chairman, President and CEO,
Proctor & Gamble
SC&L – JM Fallet - September 2007 32
My job
� If you ask me what I’m doing……….
� I will answer : proselytism
� 50% of my time to explain why and how
to change
SC&L – JM Fallet - September 2007 33
Supply ChainReplacing inventory
with information
for customer satisfaction
http://logistics.schneider-electric.com
Jean-Michel Fallet
+33608558447+33608558447
SC&L – JM Fallet - September 2007 34
Q & A