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Supply Chain Process Management in Vestas

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Presentation done by Roxana, Christel, Beathe John and Thomas Introduction The study Vestas SCPM Problems 7 objectives Evaluation Recommendation / conclusion Study ... – PowerPoint PPT presentation

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Title: Supply Chain Process Management in Vestas


1
Supply Chain Process Management in Vestas
  • Presentation done by
  • Roxana, Christel, Beathe
  • John and Thomas

2
Introduction
  • The study
  • Vestas
  • SCPM Problems
  • 7 objectives
  • Evaluation
  • Recommendation / conclusion

3
Study question
  • The study of Supply Chain Process Management
    application in Vestas
  • WHY
  • Vestas changed their strategy in 2006 to improve
    its market leader position in the global wind
    power industry
  • Facing problems, especially in SC process
    management

4
Supply Chain Process Man
Suppliers
Vestas
Customers
Towers and Steel components
  • Private owners
  • Wind turbine asso
  • Local power companies

5
Company Information
  • Vestas is the worlds leading producer of
    high-tech wind power systems
  • Head office in Randers Denmark.
  • 13000 employees.
  • Production facilities in Denmark, Germany,
    India, Italy, Scotland, England, Spain, Sweden,
    Norway, Australia and China.

6
Strategy
  • Vestas strategy is to supply customized wind
    power solutions that can generate electricity of
    the optimal quality at the most competitive
    price
  • Vision Oil, Wind and Gas
  • Mission At Vestas failure is not an option

7
Share price 1998 - 2007
Source www.Euroinvestor.dk
8
Supply chain
  • Complex product (over 8000 parts)
  • Deteriorating customer satisfaction
  • The stability of supplies of key components is
    crucial to Vestas ability to fulfill orders

9
SWOT
Strenghts
Weaknesses
  • Goodwill from capital markets
  • Geographically spread (less risk)
  • RD department with great
  • knowledge
  • Employee development programs
  • Market-leader position in all
  • product segments
  • Lack of production facilities in the US
  • Past production errors has resulted in
    uncertainty
  • Backorders

10
Threats
Opportunities
  • Green power is supported politically with
    subsidies, and preferred choice among consumers.
  • Deregulation of power markets
  • The production price per
  • output (kWh)
  • Economy of scale makes
  • Large projects with large customers e.g. offshore
    wind parks
  • local community attitude towards turbines
  • Larger customers lead to more competition and
    bargaining power
  • Growth without the necessary capital for
    development
  • Dependent on high-tech components from suppliers

11
SCPM objectives
  • Effective
  • Efficient
  • Adaptable
  • Customer Friendly
  • Supplier Friendly
  • Environmentally Friendly
  • Mistake proof

12
Effective SCPM
  • Until 2005 effectiveness internally
  • growth, RD, market share, acquisitions
  • Efficiency demanded by suppliers
  • Merger?forced suppliers to lower prices
  • Pricetag sourcing
  • Lack of common SCP improvement
  • Defects occurred after installation ? loss
  • Source Bang, 2005

13
Lack of common SC objectives
Suppliers
Vestas
Customers
Effectiveness
Efficiency
Efficiency
14
Ideal situation
Suppliers
Vestas
Customers
Effectiveness
Efficiency
Difficult to balance effectiveness and efficiency
but needed to survive in compettition
15
Efficiency and effectiveness in SCPM after 2005
  • efficiency in Vestas
  • effectiveness in suppliers
  • Goals
  • short and long term profitability for all trading
    partners
  • asset utilllization in SC
  • Vestas Six Sigma consultants help suppliers for
    long term commitment alliances
  • Increase prices to take advantage of capacity
    shortage and high demand
  • Lesson learned
  • The fundamental challenge of integrated
    mangement is to redirect traditional emphasis on
    functionality in an effort to focus on process
    achievement (Bowersox et al. 2006)

16
Adaptable
  • Adapt to changes in the environment
  • 2005 New business structure
  • Geographically distributed business units
  • Closer to the customers (logistics)
  • Local knowledge (culture)
  • Improved relations with local suppliers
  • ERP system (SAP) implemented in 2006-2009
  • (parallel integration)
  • Full integration of the different BUs

17
Customer Friendly
  • Study shows a decrease in customer satisfaction
    due to poor
  • Turbine performance
  • Handling of customer wishes and enquires
  • Handling and performance of service
  • Information/knowledge sharing with customers
  • Delivery of spare parts on time
  • 2006 Dialogue for development

18
Improving customer satisfaction
  • Investing in testing facilities
  • Policies for quick responses to customers
  • Acting proactively, contacting customers
    regularly to get feedback (Use of Key accounts)
  • Integrate customers in the ERP system, to improve
    knowledge sharing
  • Extensive reporting

19
Supplier Friendly
  • Forecasting and Demand

High Demand
Pressure on suppliers
High emphasis on Dialogue suppliers
Estimate safety stock and inventory pre-build
Good forcast can be made from statistical data
20
  • Supply Demand Vestas

Actual demand Rates are the answer
Suppliers and own inventory Magnifies with
the Supplier inventory over or under
Replenishment rules - Magnifies with the
customers replenishment rules
21
Supplier key suggestions
  • Integrated product development is the key word
    with strategic suppliers
  • Due to ERP they can intergrate supplier in the
    process
  • Never be dependent on one supplier
  • Why To reduce reliability and vulnerability
  • Recognizes the need for strategic suppliers, and
    give a fair margin on their products
  • Why satisfactory is more important in the long
    run

22
Environmentally friendly processes
With quality and care we use the wind to create
competitive environmentally friendly energy
  • Big issue Environmental awareness is increasing
    throughout the world
  • At Vestas consideration for environmental aspects
  • is the foundation for the products
  • and the basis for the business
    concept
  • high priority to the environment both globally
    and locally
  • Increase in external environment issues and
    safety

23
How are processes being made environmentally
friendly?
  • Certifiable management system
  • ISO 14001 and OHSAS 18001 (77)
  • Communicating knowledge at all levels
  • integrated enviromental policy
  • Continuous environmental improvement
  • Suplliers auditing
  • abide by Vestas chemical and material blacklist
  • Reporting system
  • Group level environmental reporting

24
Impact on the external environment
  • Most significant environmental impact CO2savings
    from Vestas turbines. Environmental pay back
    time 7 months

HOW true LCA (Life Cycle Assesment) reports and
Environmental Product Declarations Suggestion
Sponsor green events to increase brand
awareness and attention like theFIRST LEGO League
(FLL) tournaments
25
Occupational health safety issues
  • Top priority at Vestas Safety
  • Integration Will to win culture high safety
    culture
  • Changing mission Failure is not an option
    zero accidents
  • Major challange reducing injuries by
    improvement, information and training
    implementation
  • Results decrease with 22 from last year but
    still major concern!
  • Suggestions- continuous improvement in in-house
    processes, training and education
  • integrate different cultures together

26
Mistake proof
  • Failure in First Off Shore project
  • Weakness was component quality performance
  • Repair at sea not possible transport on shore
    for repair extremely costly
  • Learning
  • failure is not an option also apllies to
    suppliers
  • education of everyone in Vestas also suppliers
    Vestas lends Six sigma consultants to its
    suppliers
  • Stop selecting by pricetag

New Mission Failure is not an option
27
Suggestions
  • Focus on importance of supplier qualification and
    selection by
  • Implementing an efficient supplier
    selection process
  • Contract administration

28
Summary
  • Emphasis should be put on some issues in
    particular
  • Improving communication throughout the
    supply-chain
  • Quality problems escalate throughout the SC
  • An efficient supplier management is of central
    importance for successfull supply chain

29
Questions .
  • Why does supplier management (or suppliers as
    trading partners) play such an important role
    in SCPM?
  • What possible risks and losses can an enterprise
    face due to lack of integration, collaboration to
    trading partners in the SCM?
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