reshaping vertical supply chain networks, sharon williams

Reshaping vertical supply chain

networks: UK furniture industry

Dr Sharon Williams, ESRC Post Doctoral Fellow, Lean Enterprise Research Centre,

Cardiff University, UK

Lean Enterprise Research Centre

ContentContent

Overview of LERC’s research activities

Reshaping networks project

Offplan Case study – supplier development

programme

What’s next…….


Lean Enterprise Research CentreLean Enterprise Research CentreCardiff Business SchoolCardiff Business School

Formed in 1994 by Prof Dan Jones & Prof Peter Hines– 23 staff now

“Researching, applying, & communicating

lean thinking”

“Researching, applying, & communicating

lean thinking”


LERC ResearchLERC Research

Core activity

Collaborative approach– multi-sponsor studies

– firms receptive to new thinking

Application of new & developing

techniques

Help businesses & organisations become

world class


LERC Research ProjectsLERC Research Projects

AutomotiveAutomotive

(1999-2001)

Supply Chain

LEARNNetwork Programmes(2000-2004)

Bread

Home Shopping Research Unit

2002+

Retailing & DistributionRetailing & Distribution

Red Meat

Project2002+

[Food Process Innovation Unit]

Process ImprovementProcess Improvement


Healthcare

ConstructionTransportation

New SectorsNew Sectors

Public Sector

Services

Defence

Furniture

LERC Research ProjectsLERC Research Projects


Lean in Different Lean in Different Business ActivitiesBusiness Activities

ManufacturingManufacturingManufacturingManufacturing Processing

Public ServicesPublic Services Public ServicesPublic Services

DistributionDistributionDistributionDistribution

Assembly

Logistics

Healthcare

Job shop

After Sales ServicesAfter Sales ServicesAfter Sales ServicesAfter Sales Services Admin/processing

Transportation Retailing

Repair & maintenance

Public Administration


Lean in Different Lean in Different Business ProcessesBusiness Processes

Order FulfilmentOrder FulfilmentOrder FulfilmentOrder Fulfilment

Business PlanningBusiness PlanningBusiness PlanningBusiness Planning

Sales AcquisitionSales AcquisitionSales AcquisitionSales Acquisition

New Product New Product DevelopmentDevelopmentNew Product New Product DevelopmentDevelopment

Production planning, production

Taking, processing orders

Delivery to customer, payment management

Winning new business (new/existing customers)

Customer needs

Design new products Produce

Introduce to market

Strategic management of the company


Lean Thinking….Lean Thinking….

An approach to the way you make a product or deliver a service

Focus on value & waste 5 basic principles – customer value, removing

waste, making products flow at the pull of the customer and always striving for perfection.

Numerous tools & techniques developed to apply in organisations

Appropriate to all types of organisations, in all sectors


The Lean EnterpriseThe Lean Enterprise

Organisation as part of extended supply chain

Need to think strategically beyond own boundaries - the lean enterprise– also, value streams flow across boundaries– common targets, rules for sharing gains etc


Reshaping vertical supply chain Reshaping vertical supply chain networksnetworks

Need to improve existing networks Pilot activities undertaken with office

seating manufacturer Launched supply chain improvement

programme Supplier development programme Benefits to both manufacturer and

suppliers


Case study - OffplanCase study - Offplan

Manufacturer of office seating – SME employing

120 staff

Centrally located within the supply chain

Early work by Purchasing manager to evaluate

capabilities of supply base

Management Buyout (1998) – long term objective:

sustainable, profitable growth

Relatively small in comparison to some of their SC

members.


Reshaping supplier network:Reshaping supplier network:Supplier development activitiesSupplier development activities

Aim to develop a network of competent suppliers (Lambert et al., 1998; Toni and Nassimbeni, 2000).

Activities organised by a customer on a strategic and practical level.

Dissemination of customer practices so that suppliers can plan their processes more effectively.

Areas of assistance can include: – Factory layout– Set-up time reduction– Kanban systems– Environmental management schemes


1. Partnership, Trust and Empowerment 1. Partnership, Trust and Empowerment (PTE) Pilot Scheme(PTE) Pilot Scheme

Relations and communication main focus Local foam supplier – Foampack (part of multi-

national group) Small cross-functional team meeting on monthly

basis Undertook problem solving training Initial reservations from supplier in terms of

whether both parties would benefit.


PTE pilot activitiesPTE pilot activities

Activities– Agreed lead times (review of 7 day lead time and

impact of holiday shutdowns).– Product specifications – tolerance levels agreed

& further work done with design teams– Quality issues – Additional information recorded

by customer concerning scrap and defects– Communication – regular meetings and

communication – Packaging – Dedicated packing team assigned to

Offplan’s product


Benefits of PTE pilot programmeBenefits of PTE pilot programme

Reduced scrap levels and defective parts Reduced costs Identified re-engineering and design opportunities Improved ordering and packaging process Improved communication levels PTE members more receptive and proactive to

ideas and suggestions Operators more open to discuss & produce

solutions.


2. Environmental Management Scheme 2. Environmental Management Scheme (EMS) Pilot Project(EMS) Pilot Project

Offplan gained ISO14001 in 1998 Part of Offplan’s policy to understand the

environmental credentials of key suppliers Environmental issues not of paramount

importance to suppliers – need to raise profile Supplier - Small (micro) engineering company in

West Midlands (Steelco) Supplier had displayed a positive and proactive

approach to Offplan’s supplier evaluation programme


EMS pilot activitiesEMS pilot activities

Activities– Conducted environmental audit with assistance

of Offplan’s environmental manager– Compiled environmental statement to confirm

commitment to programme– Introduced environmental improvement

activities – Sort external funding to support further

activities


Benefits of EMS pilot programmeBenefits of EMS pilot programme

Implemented sound environmental policies and statements

Understand and improved environmental impact of products

Reduced costs and identified additional sources of funding for further improvements

Working towards formal accreditation Working with some of their key suppliers to make

further environmental improvements


ConclusionConclusion

Organisations can facilitate and enhance learning among their SC network members.

Benefits to suppliers have been increased spend with Offplan, the security of long term business & improved levels of competitiveness.

Benefits to Offplan were total product life-cycle cost savings through a process of continuous improvement, earlier supplier involvement in product design and reduced lead times due to improved communication and closer collaboration.


Research Issues and OpportunitiesResearch Issues and Opportunities

Offplan demonstrated it is possible for the smaller organisation to implement a supplier development programme and engage suppliers irrespective of their size or standing.

Challenge will be to rollout these pilot activities to include other suppliers.

The sustainability of the supplier development activities will need to be monitored.

SCM is not a ‘quick fix’ but a progressive and adaptive long term solution.

Adaptive learning styles and open communication are critical to SC activities both at company and SC levels.


Project UpdateProject Update

Supplier development programme has been extended to include other activities such as product design, kanban, and value stream mapping.

EMS has been rolled out to a further six suppliers Business contingency planning and risk

assessment are now key components of Offplan’s supplier selection and evaluation process.

Offplan focusing on understanding customer value


What’s next………What’s next………

Continue work with the furniture industry

Collaborative research – International

partners

Sustainability of Lean and Supply Chain

activities


Contact details

Dr Sharon WilliamsSenior Research Associate

Lean Enterprise Research CentreCardiff Business School, Cardiff University,Aberconway Building, Colum Drive, Cardiff,

Wales, UK. Tel +44 (0)29 2087 4544Email: [email protected]