integration; the way forward for supply chain. · of goods from supplier to manufacturing and...

Integration; The Way Forward For Supply Chain.Presented By: Shane MaherDate: 27 June 2012

Supply Chain. oOliver and Webber (1982) “supply chain management covers the flow

of goods from supplier to manufacturing and distribution chains to end-user"

oOliver and Webber (1982) “supply chain management covers the flow of goods from supplier to manufacturing and distribution chains to end-user"

oHopp (2003) "a supply chain is the goal orientated network processes and start points used to deliver goods and services to customers".

oBicheno and Holweg (2009) "the key trick to supply chain management is to consider the entire suppliers, manufacturing plants, and distribution tears, and the aim for synergy: 2+2=5”.

o“Integration is a process of redefining and connecting parts of a whole in order to form a new one” (Craft, 2006).

o“Integrating the supply chain is an incremental process, with priority typically given to the highest potential returns on investment” (Ketchenand Hult 2006).

Types of Integration.

Vertical Collaboration.

Horizontal Collaboration

Source Barratt 2004.

External Collaboration

(Suppliers)

Internal Collaboration

External Collaborations (Competitors)

External Collaboration (Customers)

External Collaborations

(Other Organisations)

Structures & Expectations.

Closeness

Relations Depth

Actual Power

Perceptive Power

Benefits

Actual Dependence

Perceived Decencies

Problem Solving

RelationshipEnablers Influencers

Contact Frequency and Type

Sale Size and Type

Resources Committed

Marketing Abilities

Internal Relationship

Competitive Priorities

Competitive Pressures

Supplier DimensionInfluencers Enablers

Competitive Pressures

Order Size and Type

Competitive Priorities

Internal Relationship

Contact Frequency and TypePurchasing

Abilities

Resources Committed

Customer Dimension

Source Lamming et al 1996.

Structures & Expectations.

Buyer’s Expectations

(S1)

Sellers Expectations

(S2)

Mutual Understanding,

Commitment(S3)

Performance Activity(S4)

Corrective Action (S5)

Success Feedback Deviation Feedback

Source Emmett & Cocker 2006

Buyer’s Expectations (S1)

Sellers Expectations(S2)

Mutual Understanding, Commitment(S3)

Performance Activity(S4)

Corrective Action (S5)

Success Feedback

Deviation Feedback

Source Emmett & Cocker 2006

Changing Environment FDA.

• 2008oCriticized for not doing their joboIncreased congressional oversight

• 2009oNew administrationoNew CommissioneroIncrease budgetoIncrease in head countoIncrease enforcement powersoReady to regain stature and credibility

• 2010+oIndustry sees the impact of increased scrutinyoInspections, 483’s, warning letters

External Environment

Mapping the Current State

Mapping the Current State (Activity of the Operator).

Creating A Future State

oCreating a visible supply chain that could react to changes in demand.

oA supply chain based on trust within the supplier base (Difficult).oEducate the SC group including the supplier base on, how to

improve. oReducing the amount of manual input required to change the flow

of material.oEliminating the requirement for storage of material on site thus

releasing the current floor space of 7,000 sq ft back to production.oStandardising the work required to ensure consistency.oCreation of systems to support the drive to 20 days by 2015.

Strategy for Integration VMI.

oCreation and implementation of VMI program. oImplementation of a pull system from DePuy to the supplier. oFull disclosure of all forecasting information to the supplier base.oPayment terms of 60 days within 14 days of usage.oThe VMI contracts were not to carry any deferred payment clauses.

In keeping with the risk equalisation policy.oDePuy to address the incoming inspection backlog prior to the

implementation of the VMI. oTaking into consideration the VOC and the difference in

knowledge, DePuy undertook the creation and implementation of a lean training course.

oDevelopment of a set of metrics that drive change in the SC reviewed on a monthly basis with those suppliers engaged in the program.

Strategy for Integration. Training Program

oOutlining DePuy’s strategy for the future, outlining the DePuy 2014 vision and targets.

oA brief over view of the behavioural standards program and the engagement levels on site.

oOverview of the transformational program to date. oBasic lean program that could be given to the entire workforce at

the receiving site. oLeadership training on strategy and the importance of strategy.oBasic lean tools including VS mappings, VOC, Standard work and

Line balancing.oPractical onsite training for a number of the functional

professional’s onsite with the suppliers.

Tier 2 Example

AGENDADAY BY THE HOUR

Week 1

GOAL ACTUAL GOAL ACTUAL GOAL ACTUAL GOAL ACTUAL

CHANGE MANAGEMENT

PROJECT MANAGEMENTACTIVITY OF PRODUCT

PRODUCT FAMILY MATRIXBREAK

BREAK

ACTIVITY OF OPERATORVALUE STREAM MAPPING

CHARTERSIPOCVOC

BREAK BREAK

STANDARD WORK

COLLECT DATA / PFM / VSM

500

530

730 730 730

130

200

230

300

330

400

1030

1100

1130

1200

1230

100

430

330

400 400

100

Simulation

Lean Overview

DAY 4

800

830

900

930

1000

1230

530

200

230

300

100

130

330

500

1200

DAY 3

430

800

830

900

LUNCH

LINE BALANCING

NEXT STEPS DISCUSSION

1130

1030

1130

1200

1230

1030

1100

LUNCH

ADDITIONALLEADERSHIP TRAINING

Lean Culture

Technical Lean

Overview continued - Dan Jones / Brainpower / Lessons

Lean Implementations / DePuy Program Elements

Flipchart elements in previous section. Populate elements with

site specific agreements.

130

230

1000

930

430

DAY 1 DAY 2

800

830

800

830

900

930

1000

730

OPEN930 PLANT

LEAN AWARENESSTRAINING

900

LUNCH

PERFORMANCE MEASUREMENT

VALUE STREAM MAPPING

530

500

300

STRATEGY SESSION

1100

1000

200

530

500

430

400

330

300

230

200MEET WITH LEADERSHIP

TO SHARE MATERIALS AND DIRECTION

130

1200

1230

100

1030

1100

LUNCH1130

AGENDADAY BY THE HOUR

Week 2

GOAL ACTUAL GOAL ACTUAL GOAL ACTUAL

BREAK BREAK

BREAK

BREAKBREAK

BREAK

WRAP UP

430 430 430

LEAN TOOLS330 330

Lessons Learned400

KAIZEN EVENT230 230 230


WRAP UP330

200

RAPID CHANGEOVER

200 200

400 400

1130LUNCH

1130


KAIZEN TRAINING

1230

RAPID CHANGEOVER

1230 LEAN AUDIT 1230

130 130 130

LUNCH1200 1200 1200

1000 1000TRAINING MATRIX

1030 1030 1030

LESSONS LEARNED1100 1100 1100

1130LUNCH

KAIZEN EVENT

930 930 930

LINE DESIGN

1000

830 FORMAL PROCESS HANDOFF 830

LINE DESIGN900 900 900

PERFORMANCE MEASUREMENT

DAY 4 DAY 5 DAY 6

700 700 700


800 RECAP DAY 1, 2, & 3 800 RISK ASSESSMENT/FMEA 800

830

Results to Date oSupply Chain mapped from distribution centre back to tier 2 suppliers.oSupplier Categorisation complete.o100% of consumable suppliers on VMI consolidated to 3 providers.o40% of all raw material on VMI. o87% reduction in the PO’s placement per week.o100% first time pass rate on all VMI PO’s.oElimination of the warehouse returning 7,000sq ft to the operations

group currently housing a new machining cell. o$2.1 million capital cost avoidance.o53 suppliers have completed tier 1 training program.o1 supplier completed full tier 2 integration program resulting in 75%

reduction in LT.oTotal supply chain reduction of 6 days from 74 to 68.oVMI reduced on-hand inventory by over $790k in total system.oAchieved 3.4 in lean maturity audit in July, one of three from 122.

Integration Framework

Manufacturer End UserCustomerTier 1Tier 2

Information Flow

Quality

Product Flow

Logistics

Integrated Process (VMI)

Common Metrics & Measures (Lead Time)

Relationship Based on Trust

Agreed Strategy Deployment

Training & Knowledge Transfer

Mapping & Understanding

DiscussionoThere is a lot of information on SC & Integration process.oFocused on individual items within the process e.g. supplier selection

process.oRelationships & Trust central to the process.oMisunderstandings need to be addressed early.oA number of models in place for relationship management and

supplier selection.oMapping is the basis of the process.oUnderstanding the differences between organisations culture is

crucial.oWillingness to invest in integration e.g. training programs.oOutcomes and benefits do exist. We do need to define how the

benefits are going to be shared.oBenefits exist but need to develop long term strategy to reap rewards.

Integration; The Way Forward For Supply Chain.Supply Chain. Types of Integration.Structures & Expectations.Structures & Expectations.Changing Environment FDA.External EnvironmentMapping the Current StateMapping the Current StateMapping the Current StateMapping the Current State (Activity of the Operator).Creating A Future StateStrategy for Integration VMI. Strategy for Integration. Training ProgramTier 2 ExampleResults to Date Integration FrameworkDiscussionSlide Number 19

integration; the way forward for supply chain. · of goods from supplier to manufacturing and...

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