Building a Lean Supply Chain Blending Lean Pull with Planning Excellence - PowerPoint PPT Presentation

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Building a Lean Supply Chain Blending Lean Pull with Planning Excellence

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Global Composite Cans. Plastic Containers. Metal & Plastic Closures. Services ... Inventories concentrated on raw materials with primarily make to order FG ... – PowerPoint PPT presentation

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Title: Building a Lean Supply Chain Blending Lean Pull with Planning Excellence


1
Building a Lean Supply Chain Blending Lean
Pull with Planning Excellence
  • WCBF Lean Six Sigma Summitt
  • June 25, 2009

Keith Holliday- Director Corporate Supply Chain
Operating Excellence Sonoco Products
Company keith.holliday_at_sonoco.com
2
How to create more agile supply chains
  • Conflicts between disciplined planning agile
    response
  • traditional production to a forecast with set
    lead time agreements with customers (and
    suppliers) and
  • demand driven pull, short lead time processes
    emphasized in lean supply chains
  • Sonoco Products has blended the use of forecast
    based supply chain practices with demand pull
    processes to create agile supply chains
  • collaborative demand management,
  • sales operations planning (SOP)
  • lean transformation and cash/ cost optimization.

3
Sonoco 100 Years of Packaging
  • Sonoco Southern Novelty Company
  • Founded in Hartsville, South Carolina in 1899
  • First product cone-shaped paper yarn carrier
    used for winding and transporting yarn
  • Today, Sonoco is a 4Bn global manufacturer of
    industrial and consumer packaging products
    (Fortune 550)
  • 335 operations in 35 countries
  • 18,600 employees

4
Business Segments
Consumer Packaging
Tubes and Cores/Paper
Global Engineered Carriers
Global Paper
Plastic Containers
Global Composite Cans
Other
Flexible Packaging
Metal Plastic Closures
Protective Packaging
Molded Plastics
Services
Service Centers, Graphics Management and P-O-P
Displays
5
Sonocos Customers
6
Lean Six Sigma Experience
  • Sonoco launched lean six sigma in 1997 with over
    1100 people trained as project leaders to date
  • Current results are on track to achieve 100MM in
    productivity improvements each year
  • Productivity improvements are becoming
    increasingly difficult to sustain at this rate
  • Improvements now coming more and more in end to
    end process improvement from the customer back

7
What makes a lean supply chain lean?
  • Low Inventory
  • Synchronized Flows Information, Materials,
    Dollars
  • Optimized logistics full truckload, on time and
    in full
  • Perfect quality, perfect transactions
  • Demand pull from the customer back
  • an optimized value stream from the customer
    through our supply chain and into our suppliers
    supply chains

The rest of the presentation is an example of how
we worked with one customer to build a
collaborative, integrated supply chain process
8
Consumer Packaging- Supply Chain
Customer
Sonoco
9
Industrial Products- Supply Chain
Conversion Step
Paper
Conversion must build to order with short lead
times and high service levels
Paper must have Forward Looking, Demand Based
planning to get ready for conversion and maintain
operational efficiency
10
Define- the problem when we started
  • Cash performance had declined
  • No measure of customer experience, but
  • Surveys showed that we had no competitive
    advantage in our markets
  • Consumer-
  • CPG companies demanding 95-98 fill rates
  • Increasing interest in supplier managed/ owner
    inventories
  • No visibility to real demand reactive response
    to order patterns
  • Industrial-
  • Pressure on margins, cash
  • Reliability important, often achieved with
    expedites/ schedule breaks
  • Finger Pointing between internal supply divisions

11
Measure Analyze
  • Set Cash Gap as a corporate measure and priority
    in 2006
  • Corporate teams to drive components (AP, AR,
    Inventory)
  • Selected Perfect Order as the corporate customer
    experience metric in 2007
  • Put metric in place in 2007, began reporting in
    2008
  • Developed a baseline based on 2Q08 and set
    improvement objectives
  • Supply Chain Cost Metric
  • (in development)

2005 Cash Gap Benchmark (CFO Magazine REL
Hackett)
12
Measure Analyze
  • Began using a hierarchy of metrics to work on the
    inputs

Source- AMR Research
13
Improve
  • First work on cash gap- put foundational
    disciplines in place
  • Ongoing Aged/ Aging Inventory managing process
  • Monthly working capital reviews with the business
    teams
  • Performance management with working capital/
    inventory management objectives
  • Performance data reported and shared down to the
    plant/execution level
  • First work on Perfect Order
  • Repeatable measurement process
  • Root cause analysis of misses
  • Visible reporting vs improvement targets

14
Improve- Developed process capability
improvements to sustain the results and continue
to improve over time
  • Top few common areas
  • Demand Forecasting/ SOP
  • MRP/ Mfg Optimization/ Inventory Management
  • Sourcing/ Logistics/ Perfect Order
  • Distribution asset optimization
  • Each Division has mapped their own set of supply
    chain priorities
  • Divisions are piloting different areas based on
    their business priorities
  • Div 1 is piloting SOP and Demand Management
    systems
  • Div 2 is developing improved demand forecasting
    for internal divisions
  • Div 3 is driving MRP
  • Div 4 is driving Distribution asset optimization

15
Improve- example paper based supply chain
  • Conversion division focused on lean flow
  • Many Customers, short 2-3 day order fulfillment
    lead time
  • Inventories concentrated on raw materials with
    primarily make to order FG
  • Postponement strategy with many small facilities
    close to customer
  • Forecast effort is on raw materials to prepare
    supplier
  • MAPE on raw material demand averages 5-10
  • Paper manufacturing
  • Runs integration process through monthly SOP
    cycle
  • Integrates input from 3 internal divisions and
    external sales
  • Operates a forecast based push process for asset
    optimization
  • Each mill tracked weekly on Perfect Order
    performance
  • ABC categorization for inventory strategy lead
    time promise

16
Improve- example consumer supply chain
  • First step- talk to customer
  • Commercial organizations in both companies were
    reluctant to let the supply chains talk directly
  • Critical to take commercial terms out of the
    discussion
  • Once the supply chain to supply chain discussions
    began, agreements to openly share information
    were easy
  • Worked together to design and map information
    flows
  • Defined what information was available and could
    be shared in a format meaningful to the process
  • Agreed to openly share problems so that they
    could be resolved quickly and agreements reached
    on corrective actions
  • Dedicated capable people to the process
  • Process Goals were set and improvement driven
    using a combination of Lean and Supply Chain
    planning disciplines
  • Activities driven from DEMAND (i.e. actual
    production schedule ) procurement to shipping
  • Standardized how information is shared and
    processed across the supply chain
  • Streamlined internal and external communications
  • Established time fences for planning purposes

17
Improve- example service supply chain
  • Designed to serve a particular customer or small
    set of customers
  • Integration and communication are already
    inherent in the design
  • Close physical proximity facilitative close
    coordination
  • Challenge is to improve flow through the facility
    and streamline consistent with service needs of
    customer
  • Tight focus on lean in the context of the
    customer forecast
  • Ability to staff up or down to meet changes-
    variable workforce
  • Value stream mapping- phased improvement plan

100 Service Level Is expected
18
Improve Control- so how are we doing?
Perfect Order
  • Cash Gap improved 15 days (3 month moving
    average) between Dec05 and Oct08
  • As the recession hit, cash emphasis continued to
    drive inventory down and sustain gains in AR AP

Now 90
-15 Days
  • Perfect Order (On time ) (in full )
    (Perfect Condition ) (Invoice Accuracy )
  • Baseline is 2Q09

2008 thru Oct
Cash Gap Days
19
Sonoco vs competition in 2008 Cash Gap Performance
20
Control- What is next?
  • Each division receives a monthly stoplight chart
    for their cash gap and perfect order performance
  • Each division continues to drive their supply
    chain process capability improvements per their
    roadmap
  • Accelerate improvements through implementation of
    a Sonoco Performance System to standardize
    metrics and work
  • Planning to launch pilots in mid 2009
  • Partnership with Milliken

21
Key Takeaways
  • Lean pull systems are most effective in
    combination with data driven, disciplined supply
    chain practices
  • Demand Management is critical to prepare to meet
    customer requirements
  • Best accomplished with collaborative planning
    and real demand visibility
  • SOP provides the cross functional process to
    make decisions based on the best demand
    information available
  • Lean pull systems provide the response capability
    to deal with the remaining error
  • Performance Management Systems are the logical
    next step to standardize process and reproduce
    the gains across an enterprise

22
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