p2p lean management transformation 2012
DESCRIPTION
TRANSCRIPT
Author : Tahir Rafiq
Project Start Date:
ATR Consulting Limited
June 2012
Lean Management Transformation
Case Study : Leading Bank in UAE
atr
Tahir Rafiq
Applying automotive best practice in the Banking Industry.....
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Schedule Page
The Purchasing Maturity Model (PMM) Journey towards best in class 1
Best in class procurement some attributes of a best in class procurement function...... 2
The gap analysis 3
Current state audit . collecting the voice of the customer (VOC) 4
Current state audit. Usage analysis 5
Developing a category strategy informed through analysis 6
Current state audit. mapping existing processes 7
Current state audit. value stream mapping 8
Current state audit. physical audit identifying waste 9
Transformed state. Using 5 S Framework to identify and eliminate waste 10
Transformed state. breakthrough change 11 - 13
End of presentation 14
Contents
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Journey towards best in class
The Purchasing Maturity Model (PMM)
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3
Public Utilities Public Sector Financial Sector Food & Beverages Pharmaceuticals Telecomms
Automotive Aerospace
Retail Computers
1
5
2
0
Inhibiting Performing Slow & Unresponsive
Process Optimizing Enabling System Optimization Best In Class Lean + Agile
• Procurement is not perceived as a core competency by business
• Business avoids procurement • Procurement disengaged with business
• Procurement perceived as “valued function” • Some executive support + Investment
• Business interacts with procurement • Procurement engaged with business • Some pursuit of best practice
• Qualified staff (degrees + certifications) • High degree of automation • Metrics driven (KPI, SLA) • Supplier diversity • Supplier rationalization
• Procurement perceived as strategic • proficient at expected business practices • High degree of business satisfaction • Procurement represented by CPO
• > 95% of all procurement under management
• Electronic PO cover > 80%
• 75% of spend through approved suppliers
• Procurement staff receive 24+ hours of training annually
• > 80% contract executed using own contract templates
• > 80% contracts executed within 30 calendar days; 95% within 60 days
Some hard KPI’s for Best Practice
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Mfg
Logistics
IT Finance
Planning
Eng
Mtkg
Maint
World class procurement
Some attributes of a best in class procurement function......
• Procurement is embedded within the organisation
• Procurement is completely integrated with its strategic suppliers
including systems and processes
• Procurement is strategically aligned with key suppliers, sharing
risks in, investments, inventory and product development.
• Procurement and its strategic suppliers are involved at the design
stage of product development (Supplier led design)
• Procurement has achieved an agile and lean supplier base, which
responds quickly to customer needs and help bring products to market
sooner than competitors.
• Procurement is consulted during planning and forecasting and is aware
of production schedules well in advance of actual requirements.
• Procurement shapes the supplier market dynamics, by creating competition,
by encouraging market entrants, by reducing dependencies on critical
supplies and guarding against monopolies.
Proc
Stores
2
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The gap analysis
Shifting the teams focus from short to long term and imbibing a philosophy of continuous improvement
1. Current State Push System
3. Future State Pull System
2. Transformation
• Satisfied customers
•Reduced lead time
• Visible process
• Reduced administration
•Reduced waste
• No overstocking
•Increased automation
•Reduction in LPO
•Reduction in invoices
• Reduction in resource
•Up skill staff
• Paperless solution
• Dissatisfied customers
• Long lead times ( 3 wks)
• Long process 15 steps
• Opaque process
• Over processing
• Overstocking
• Low automation
• 4.5k po’s issued
• 6k invoices received
• Low skill
• Too many bottlenecks
• Paper intensive
Team Problem Solving
Long Term Process
Eliminate Waste
Continuous Improvement
Lean
O optimization Process Optimization
Process + System Optimization
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Current state audit . collecting the voice of the customer (VOC)
Transforming feedback into insight
High satisfaction delighted
Low satisfaction disgusted
Low performance
High performance
Late PO’s
Linear Performance
Basic
Long LT
Helpful
Competence
Polite Communication
Easy to Use
P2P Functionality
Late Deliveries
Stock outs
GRN Issues
Invoices
Item Codes
Bureaucracy
Approval Process
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Current state audit. Usage analysis
Identifying top 20% SKU’s that constitute 80 % of usage across 200 locations
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20
30
40
50
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Item A
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40
60
80
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Item B
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60
80
100
120
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Item C
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Item D
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80
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Item E
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Item F
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Item G
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Item H
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Item I
Please note. These are not actual usages or products, these have been changed to protect the company confidential data
1. Extract yearly usage per location (200 loc)
2. Identify and investigate anomalies
3. Establish monthly average per loc & add
10% buffer to mitigate stock outs and
arrive at Kan Ban volume
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Developing a category strategy informed through analysis
Deploying the Portfolio Analysis Tool
Suppliers Switching Costs are Low
Tactical
Many Buyers & Many Suppliers in the Marketplace
Buyers Switching Costs are Low
Suppliers Product / Service is Commoditised
Buyers Business is not Particularly Attractive
Buyers Search Costs are Low
Lots of Substitute Products in the market
Supply Market Dynamics
Val
ue
($)
of
Spen
d
Supply Risk
Simplify and streamline purchasing process, reduce
number of suppliers and automate ( reduce no of touch
points)
Procurement Strategy
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Current Requisition Process
Req
uis
itio
ner
P
2P
Su
pp
lier
Gen
eral
Ser
vice
s A
cco
un
ts P
ayab
l
ager
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Current state audit. mapping existing processes
Slow and bureaucratic process with little value add
Raise PR > 1K Branch Manager
> 5K > 1K
Regional Manager
Start
P2P Manager Approves
> 5K
Deliver Items
Raise PR > 1K
Check OK ? Release Payment End
To order one pen it takes more than
15 steps and touches more than 4 departments………
15
yes
No
14 13
12
yes
9
7 6
5 4 3 2 1
7
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Current state audit. value stream mapping
Current PR to LPO Process
80 % of the time is wasted in queues. Multiple bottlenecks (stop-start-stop...) which cost
both time and money
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Current state audit. physical audit identifying waste
Overstocking satellite storage (tied up Capital)
AED 3K x 206 locations
= AED 620 K
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Transformed state. Using 5 S Framework to identify and eliminate waste
Streamlining processes will not lead to optimization alone..........
Sustain
Sort Straighten
Shine
Standardize
1. Obsolete Stock
4. No Visibility of Working Stock
As Is 2. Over Stock
3. Multiple Satellite Stores
To Be
1. Obsolete Stock Removed
2. Only Kan Ban Items Remain
3. Consolidate into single store
4. True Visibility of Working Stock
5 S Framework
Before 5 S After 5 S
PO’s not aligned to demand
Kan Ban aligned to demand
Push System
Pull System
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Push System PO is not aligned to demand
Pull System Kan Ban is aligned to demand
Scale - Technology
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Transformed state. breakthrough change will only be achieved by scaling through technology
Coupling a procurement card solution with software....
O Optimisation
Partial Optimisation
Visa Intelli Link
Cloud based spend management tool
for procurement card transactions
Visibility & control over
organisational spend
Reporting & Analytics Capability
Maximum Optimisation
achieving break through change with....... Technology
Procurement & Intellilink Card Process
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Transformed state. breakthrough change will only be achieved by scaling through technology
Coupling a procurement card solution with software....
Reduced bottle necks
Eliminated unnecessary paperwork. Eliminated non
value added steps
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Reduced no of annual PO’s from 4.5K to less than 200
Reduced no of annual invoices
From 6k to less than 200
Reduced Lead Time from 6 working days to 0
Freed up 0.5FTE in accounts
Freed up 1 FTE from P2P
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Transformed state. breakthrough change will only be achieved by scaling through technology
Coupling a procurement card solution with software....
Measures of success
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End of presentation
Tahir Rafiq Feedback would be greatly received and appreciated
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