bpcouncil sathi presentation
TRANSCRIPT
Extended Enterprise – Evolutionary approach to Supply Chain
Project Sathi :
A Six Sigma initiative with suppliers
1 December 2007 Manosh Kurup 1
About SKF
21 December 2007 Manosh Kurup
SKF - A Truly Global CompanySKF - A Truly Global Company
Established: 1907
Sales 2006: 53 101 MSEK (5 800 MEuro)Sales 2006: 53 101 MSEK (5 800 MEuro)
Employees: 41 090Employees: 41 090
Production sites: 120 in 24 countries
SKF presence: more than 140
countriescountries
31 December 2007 Manosh Kurup
SKF – 5 PlatformsSKF – 5 Platforms
Lubrication Lubrication Lubrication systemsSeals Bearings
and units Lubrication systemsSeals Bearings
and units and units and units
ServicesMechatronics ServicesMechatronics
41 December 2007 Manosh Kurup
SKF IN INDIA
SKF India Head Office
%New Delhi
SKF India Head Office
IBU & SBU Sales Unit
#%New Delhi
BHUTAN
Mumbai %%
Pune %
" Calcutta
Pune %
Bangalore %
" Chennai
TRB & MDGBB
SDGBB
RS OPERATIONS % SKF India HO
Factory Locations
" Sales Office
" Coimbatore
" ChennaiSDGBB
3S India
* Two new factories – Haridwar and for Large Size Bearings in progress
51 December 2007 Manosh Kurup
* Two new factories – Haridwar and for Large Size Bearings in progress
Six Sigma in SKF India
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Six SigmaUSLLSL
σσσσσσσσ
� MeasureMeasure of Qualityof Quality� MeasureMeasure of Qualityof Quality
� ProcessProcess For Continuous Improvement For Continuous Improvement � ProcessProcess For Continuous Improvement For Continuous Improvement
� EnablerEnabler for Culture Changesfor Culture Changes
Starts with Ends withSixStarts with
CustomerNeeds
Ends withCustomerSatisfaction
Six
SigmaSigma
We use Six Sigma to make it easier and attractive for our
customer to do business with us.
71 December 2007 Manosh Kurup
customer to do business with us.
What is Six Sigma?
Definition:
A systematic and disciplined approach to
achieve radical improvementsachieve radical improvements
towards excellence in all business processestowards excellence in all business processes
with improved customer satisfaction
as the main driveras the main driver
The Focus of Six Sigma
f (X)f (X)Y=Y=
81 December 2007 Manosh Kurup
D M A I CAnalyze
MMEASUREMeasure
USLLSL AnalyzeUSLLSL
Measure
What Goes Into This Process ?
What Are The X’s and How Do They Relate To The Y’s ?
Where Are We Today ?
ImproveWhat Are The X’s and How Do They Relate To The Y’s ?
Improve
MImproveControl
MI
USLLSL AUSLLSL AUSLLSL A
How Can I Make Sure It Stays
Control
91 December 2007 Manosh KurupHow Can I Change The Process?
How Can I Make Sure It Stays
Improved?
Control
Why 99% Isn’t Good EnoughWhy 99% Isn’t Good Enough
“99% Good”� 20,000 lost articles of mail per
hour
� Unsafe drinking water almost 15 2 308,733
σσσσ Defects % Good
69.1%
“99% Good”
Per million� Unsafe drinking water almost 15
minutes out of each day
� 5,000 incorrect surgical
2 308,733
3 66,803
4 6,200
69.1%
93.3%
99.38%� 5,000 incorrect surgical
operations per week.
� 2 short or long landings at most
major airports each day
4 6,200
5 233
6 3.4
99.38%
99.976%
99.9996%major airports each day
� No electricity for almost 7 hours
each month
6 3.4 99.9996%
Source: The Nature of Six Sigma each month
99% Isn’t Good Enough!
Source: The Nature of Six Sigma
Quality.
M. Harry, Ph.d
101 December 2007 Manosh Kurup
99% Isn’t Good Enough!
Six Sigma India Update –20072007
121121121121117117117117
138138138138
115115115115
100100100100
150150150150
Training
30303030 30303030
17171717
58585858
50505050
10010010010003
Training
Engagement &
Effectiveness
Black belt Trained 9 6 10 11
04 05 06 07
17171717
0000
2003-042003-042003-042003-04 2005200520052005 2006200620062006 2007200720072007
Act ualAct ualAct ualAct ual Project edProject edProject edProject ed
GB Trained 12 95 82 105 76*
Project Completed 1 49 73 53 37 *
* YTD July07 Act ualAct ualAct ualAct ual Project edProject edProject edProject ed
Program till date Savings 306
MINR
* YTD July07
BB GBBelt EngagementMINR
Engagement as % of SKF
India Total (Workmen + Staff)
1.3% 14.6%
Engagement as % of SKF 5.0% 59.1%
PROJECT STATUS
PROJECTS COMPLETED IN 2007 : 38
India Total Staff5.0% 59.1%
D M A I C
43 29 17 15 11
ACTIVE
PROJEC
TS 117
111 December 2007 Manosh Kurup
First European Six Sigma Leadership
Award to SKF CEO Tom JohnstoneAward to SKF CEO Tom Johnstone
• Tom Johnstone - First European corporate leader to • Tom Johnstone - First European corporate leader to
receive Six Sigma Premier Leader Award
• Awarded for • Awarded for
• For his work with committing the company to continuous
improvement.
• Awarded By
• The International Society of Six Sigma Professionals • The International Society of Six Sigma Professionals
(ISSSP)
• Who Were the former achievers• Who Were the former achievers
• - Jack Welch of GE
• Chad Holliday of DuPont.
• Larry Bossidy of Honeywell
121 December 2007 Manosh Kurup
• Larry Bossidy of Honeywell
Project Sathi (Partner)
131 December 2007 Manosh Kurup
Project Sathi - BackgroundProject Sathi - Background
Sales Growth (MINR)
1342514000
16000
Exponential growth in last 3 yearsSales Growth (MINR)
5813
7814
6000
8000
10000
12000
Outlook continues to be bullish with
further growth potential of 25 % in next
Exponential growth in last 3 years
40724670
0
2000
4000
6000
2002 2003 2004 2005 2006
further growth potential of 25 % in next
3 years
2002 2003 2004 2005 2006
� Installation of additional production channels� Installation of additional production channels
� Out-sourcing of non core areas
� Integrating different management approaches like Six Sigma, Lean, etc. � Integrating different management approaches like Six Sigma, Lean, etc. to improve internal efficiencies and maximize output from existing assets
141 December 2007 Manosh Kurup
Project Sathi - BackgroundProject Sathi - Background
RM & BOC Consumption (MINR)
3260.8350048 % Growth in RM & BOC
1671.4
2208.3
2780.1
3260.8
2000
2500
3000
350048 % Growth in RM & BOC
procurement value
1354.6
1671.4
500
1000
1500Group is looking at India as one of the
Global sourcing location – exports are
expected to grow > 50 % in the coming
years
� But the internal improvements cannot fructify without a commensurate
improvement in the procurement parameters
0
2002 2003 2004 2005 2006years
improvement in the procurement parameters
� Suppliers capacity trailing demand
� Service indicators showing poor performance – there was � Service indicators showing poor performance – there was a need for radical improvements
� Tremendous pressure of cost reduction to remain competitive in market
151 December 2007 Manosh Kurup
competitive in market
Project Sathi - BackgroundProject Sathi - Background
Traditional approach : An “arms length” relationship
….. Limited knowledge / understanding of suppliers processes….. Limited knowledge / understanding of suppliers processes
….. Focused more on transactional issues like price based discussions
….. Limited attempt to develop suppliers, but these efforts were ….. Limited attempt to develop suppliers, but these efforts were
disjointed due
to lack of a coordinated approach
Need for an innovative approach –Need for an innovative approach –
from “cross functional” to “cross enterprise” integration
Project Sathi
Sathi : An Indian word for partner
Joint Six Sigma projects to drive operational excellence / productivity
improvements within supplier's processes to realize the SKF Vision
“To be the preferred company…for our suppliers”
161 December 2007 Manosh Kurup
“To be the preferred company…for our suppliers”
Project Sathi - ApproachProject Sathi - Approach
Approach : Cross Functional Integration to Cross Enterprise Integration
CollaborationCoordinationCooperationOpen Market
Negotiations
Approach : Cross Functional Integration to Cross Enterprise Integration
Price based
Discussions
Adversarial
Relationship
Fewer suppliers
Information sharing
Long term contract
Information
Linkages
Workflow
Linkages
Supply chain
Integration
Joint planning
Technology Sharing
� Coordinate activities across companies as well as across internal functions
� Build an “extended enterprise” with the suppliers –
Relationship Linkages
EDI Exchange
Technology Sharing
� Build an “extended enterprise” with the suppliers –
� - involve them in the change initiatives
� - engage them to identify potential improvement beyond the known horizons
� Create supply partnership which reduce our cost and expand our markets� Create supply partnership which reduce our cost and expand our markets
� Build transparency, joint working & trust which will be key to future competitiveness
Aligned to SKF being a Knowledge Engineering
171 December 2007 Manosh Kurup
Aligned to SKF being a Knowledge Engineering Company
Project Sathi – Strategic
Issues Objectives
ContextIssues
� Poor delivery performance
� Cost reduction pressures
� Inconsistent quality
� Supperf improvement >90%
� Efficiency / Productivity
improvements within supplier’s
Objectives
� Inconsistent quality
performance
� High Lead times
� Suppliers unable to keep
improvements within supplier’s
processes
� Defect reduction (Suppliers & SKF)
6σ6σ6σ6σ
� Suppliers unable to keep
pace with SKF growth due to
capacity constraints
� Defect reduction (Suppliers & SKF)
� Green flow supplies
� Volume ramp up with strategic � Volume ramp up with strategic
suppliers
Forge collaborative partnership with strategic
suppliers based on WIN – WIN approach
181 December 2007 Manosh Kurup
Project Sathi - RoadmapProject Sathi - Roadmap
April 06
Sept 05 –
April 06
onwards Project Closure
Project Execution,
Nov + Dec
2005
Sept 05 –
March 06Project Execution,
Mentoring & Review
Supplier GB Training
Aug 2005 Project Structure + Team Finalization
July 2005
Aug 2005 Launch of Initiative
Project Selection
Supplier IdentificationJuly 2005
July 2005 Project Selection
191 December 2007 Manosh Kurup
Supplier Selection
40 Direct Material Suppliers
QFD Principle followed for supplier selection
1st Filter : Business volume with suppliers40
QFD Principle followed for supplier selection
402nd filter :
- Strategic nature of the suppliers (single source / major / global)
- SKF’s share in the total business volume of the suppliers12 - SKF’s share in the total business volume of the suppliers
- Willingness of the suppliers
- Present technology with the suppliers
- Financial stability of the suppliers
12
- Financial stability of the suppliers
- Ease of implementation of improvement actions at the suppliers
3rd filter : Operational parameters –8 3rd filter : Operational parameters –
cost, quality, delivery and lead time
8
7201 December 2007 Manosh Kurup
7
Project Selection
• Opportunities / pain areas identification by supplier• Opportunities / pain areas identification by supplier
• Multiple project proposals received (23 nos)
• Mutually beneficial projects selected• Mutually beneficial projects selected
Project Category
2
1
4
1
Service ImprovementService ImprovementService ImprovementService ImprovementQuality ImprovementQuality ImprovementQuality ImprovementQuality ImprovementProcess / Product ivity ImprovementProcess / Product ivity ImprovementProcess / Product ivity ImprovementProcess / Product ivity Improvement
211 December 2007 Manosh Kurup
Project Structure
Project Sponsor
K Ramakrishnan
Project Review Board
Rakesh MakhijaProcess Owners
Devjit Sarkar
Program Leader
Controller
K Ramakrishnan Rakesh Makhija
CMT
Kamal Sehgal
Devjit Sarkar
Controller
NHBSupplier
ISMT
CRRMukand Harsha Tolia JFPL Star
STPL
Group
Project Sponsor –
Supplier
Rajubhai
ShahRajesh
Tolia
Gopal
Jinagouda
Manish
Kalaria
Anil
AgrawalI M D’Costa
BB
Mathur
Kalpesh
Mehta
Project Leader – SKF
Project Leader – Supp.
Janardan
Rao
J M Desai
Milind
V Bhogaonkar
Ananthraj
V M
Mashruwala
PSN Rao
M G
Ramesh
Milind
S D
Upponi
Hemant
Arunkum
D Adsul
Manish
Manosh
DeependraProject Leader – Supp.
Black Belt
J M DesaiV Bhogaonkar
Mashruwala Ramesh UpponiArunkum
ar
Manish Deependra
Manosh Milind Manosh Milind Milind Milind Satish Manosh
221 December 2007 Manosh KurupProject Team – SKF
Project Team – Supp.
Supplier Training & Mentoring.Supplier Training & Mentoring.
• Lack of 6S knowledge among Suppliers
• Difficult for SKF team to work full time at � Each project mentoring by SKF BB• Difficult for SKF team to work full time at
suppliers
• Need for trained resources within suppliers
organization
� Each project mentoring by SKF BB
� SKF Experts from relevant areas
assigned to each projectorganization
• GB training program organized in SKF
Training details :
� Review meeting every 4 ~ 6 weeks with
Deployment Champion and Top
Management of Sourcinga. External faculty & training material
b. Duration 3+ 3 days
c. Participants : Supplier project leader
Management of Sourcing
Y = f(x1,X2……..xn )
c. Participants : Supplier project leader
+ few supplier team members
a. Training cost Paid by suppliers
231 December 2007 Manosh Kurup
Challenges
With Suppliers� Awareness session at the suppliers
� Took feedback from suppliers for � Buy-in of the suppliers
� Lack of transparency
� Took feedback from suppliers for
possible failure reasons and addressed
these concerns
� Tendency to go into a solution mode
� Lip service by suppliers
� Positioned the program as a joint
initiative with the suppliers for
improvement
At Suppliers
improvement
.… and not just as a cost cutting
exercise
� Lack of trained resources
� Lack of supporting infrastructure
� Organized GB training for the
suppliers
� Provided mentoring support� Limited resources, involved in more
than one activity
� Provided mentoring support
� Shared success stories
- Suppliers began to see the
241 December 2007 Manosh Kurup
- Suppliers began to see the
benefits
- Openness – willingness to look at
Project Details
Sr.
#
Supplier Project CTQ Baseline Goal Actual
#
1 Jinabakul Forge Supperf Improvement Supperf
%
40 80 88
2 ISMT CRR Supperf Improvement Supperf 50 80 1002 ISMT CRR Supperf Improvement Supperf
%
50 80 100
3 Noble & Pushp
Enterprises
OEE Improvement OEE % 50 75 75
4 Star Industries Volume ramp up of taper rollers Million
pcs
6.25 9.0 9.77
5 NHB Bearings Development of G10 grade steel
balls
L / M
Bands
8 / 10 5 / 6 4 / 5
balls Bands
Run Rate 5 / 2 8 / 4 6
6 Mukand Limited Volume ramp up of wires for Qty / 35 170 1716 Mukand Limited Volume ramp up of wires for
National warm forming
Qty /
Month
35 170 171
7 Tolia Industries Reduction of (internal) rejection
due to length variation [project is
in control phase, awaiting formal
DPMO 27000 8000 18000
Project Lead Time : Median = 8 months, Spread = 8 to 15 251 December 2007 Manosh Kurup
in control phase, awaiting formal
closure]Project Lead Time : Median = 8 months, Spread = 8 to 15
months
Benefits
Financial Impact
� Improved flexibility
� Better utilization of plant assets22
MINR � Better utilization of plant assets
� Redeployment of manpower
� Reduction of material downtime
6 MINR
MINR
SoftHard
Hard Savings
50 : 50 Gain sharing
� Reduction of material downtime
� Reduction in premium freight, etc.
� Strengthened supplier relationship
SavingsSoftHard
50 : 50 Gain sharing
Agreements made with the supplier
Benefits in terms of Price reduction
� Strengthened supplier relationship
� Improved / streamlined processes at
suppliersBenefits in terms of Price reduction
Soft Savings
Cost avoidance to SKF
� New problem solving tool
261 December 2007 Manosh Kurup
Cost avoidance to SKF
RecognitionRecognition
SKF Excellence Award 2006 in the Knowledge CategorySKF Excellence Award 2006 in the Knowledge Category
The jury motivation reads :
“The SKF Excellence Award 2006 in the “The SKF Excellence Award 2006 in the
Knowledge category is received for the
comprehensive initiative to
systematically engage key suppliers in systematically engage key suppliers in
Six Sigma training and projects. This has
transferred valuable knowledge to a
number of strategic suppliers. It has
resulted in significant improvements in resulted in significant improvements in
terms of efficiency and capacity. Thus,
the benefits are outstanding for the
involved suppliers as well as for SKF. involved suppliers as well as for SKF.
This is the first initiative of its kind within
SKF and provides an in-depth
understanding of the supplier
processes”.
271 December 2007 Manosh Kurup
processes”.
RecognitionRecognition
Autofit Rolling Trophy at 4th National Six Sigma Convention
organized by CII Northern Chapterorganized by CII Northern Chapter
281 December 2007 Manosh Kurup
Team MembersTeam Members
K Ramakrishnan
Manosh Kurup
Devjit SarkarDevjit Sarkar
Janardhan Rao
Anil KarnikAnil Karnik
Dilip Waghela
Narasimha Bhat
Dnyanadev Adsul
V Ravi
M VijayakumarM Vijayakumar
+ Supplier team members
291 December 2007 Manosh Kurup
Way ForwardWay Forward
•• Big Mind change in approach to collaboration-sustain this
� Launched Sathi – II
� Focus on cost saving projects
We recognize this is just the beginning of a long journey-We recognize this is just the beginning of a long journey-
But cultural change is already giving us the positive spiral effects
301 December 2007 Manosh Kurup
Thank You for your attention.Thank You for your attention.
Questions are welcome !Questions are welcome !
311 December 2007 Manosh Kurup