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ProDesign International A/S

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ProDesign International A/S Group A Problem statement - Questions Asked General Questions - Please state ProDesign s vision and mission. - Please briefly outline ... – PowerPoint PPT presentation

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Title: ProDesign International A/S


1
ProDesign International A/S
Group A
2
Problem statement - Questions Asked
Which difficulties have the Danish eyewear
manufacturer ProDesign International experienced
in implementing SCM?
  • General Questions
  • - Please state ProDesigns vision and mission.
  • - Please briefly outline the competitive
    situation in the industry.
  • SCM and implementation
  • - Have you during the last few years actively
    attempted to change the relationship with your
    suppliers, and if so what has happened to
  • Information sharing
  • Horizontal Business Processes
  • Number of suppliers
  • Delivery time and quality of input
  • Coordination and sharing of information with
    suppliers (electronically)
  • - Did you encounter any problems in the
    process?
  • - How did your suppliers react to the
    introduction of e.g. new processes at ProDesign?
  • - Are you planning on intensifying the
    relations to your suppliers even more? (E.g.
    joint ventures, forward or backward integration)

3
Assumptions and Delimitations
  • Focus on the up-stream part of the value chain.
  • The analysis is based on Vokurka and Lummus
    (2000) 7 recommended supply chain management
    issues.

4
ProDesign International
  • Danish design eyewear manufacturer.
  • Established in 1989 but started a major
    turnaround in 1998 due to diminishing results.
  • The new business concept increased focus on
    technical innovation, high product quality and
    design instead of a more price oriented view.

5
Industry Overview
  • Highly competitive industry (Lindberg, Bellinger,
    Eye Eye in Århus alone plus competitors like
    Luxottica internationally).
  • ProDesign draws attention through groundbreaking
    design that challenges suppliers and fosters
    learning throughout the supply chain.

6
Industry Overview
  • Rising raw material prices in recent quarters
    margin pressure.
  • Common to the Danish eyewear industry is a focus
    on innovation and revolutionary designs an
    appropriate strategy given the fact that
    competition in the eyewear market primarily is on
    design and customer service and less so on price.

7
ProDesigns Mission
  • Ongoing collection development, to be designed
    in accordance with our interpretations of fashion
    trends and new production technology.

Source ProDesign International Business Partner
Concept
8
Core Principles
  • While retaining a competitive edge in a fast
    moving market, ProDesign remains true to the
    lifestyle values of Denmark where care and
    attention is always given to the individual, to
    suppliers and distributors, to ProDesigns own
    personnel, and to eyewear retailers worldwide.
  • Value generation at each step of the value chain
    redesign or abandonment if necessary.

Suppliers (1st 2nd tier)
ProDesign Denmark
End User
Eyewear Retailers
Source ProDesign International Business Partner
Concept
9
Core Principles- Supply Chain Strategy -
  • Making highly innovative products through
    strategic long-term relationships to suppliers
    securing high product quality and on time
    deliveries.

10
Turnaround
  • Poor performance in late 90s Hiring of
    Mogens Frederiksen (former Red//Green CEO) in 99
    Progress through innovation, groundbreaking
    design and tight financial control.

11
Turnaround
  • Change of strategy from dispersed supplier
    relationships to closer-knit win-win
    relationships characterized by sharing through
    trust on time delivery higher quality
    greater customer satisfaction.
  • Implementation of new administrative data system
    in 2000 reluctance to change limited due to
    favorable demographic composition plus the fact
    that ProDesign is an innovative company by nature.

12
Orientation Towards ERP
  • Introduced new software package in 2006 (Visma)
  • Integration of the entire value chain.

Value-Network
Enterprise
Departmental
ProDesigns current position
  • Departmental
  • Each department operates as an isolated
    department.
  • Enterprise
  • Information is shared between departments
    throughout the enterprise.
  • Value-Network
  • Information is shared throughout the entire
    supply chain.

13
Channel Design
14
The Design Process
15
Implementation Issues
  • In order to achieve supply chain excellence, the
    company must be willing to change the way it does
    business.
  • It is important that SCM issues are addressed at
    all organizations along the horizontal process.

16
Vokurka and Lummus
  • In order to implement supply chain management
    successfully Vokurka and Lummus (2000) emphasize
    seven implementation issues that a company should
    focus on.
  • The difficulties of ProDesigns SCM
    implementation process will be considered in
    reference to these 7 management issues.

17
Implementation Process and Issues
  • Openly share information with suppliers
  • Mainly through the design phase AutoCAD is used
    as a standard software package throughout the
    industry.
  • The main problem that occurred was that some of
    the suppliers werent in the possession of
    videoconference equipment but made the
    investments (DKK 100.000) on ProDesigns request.
  • Supplier review of sketch drawings followed by
    e-mail feedback or videoconference.
  • Videoconference meetings every 2nd week.
  • Discussion of urgent issues.

18
Implementation Process and Issues
  • Creation of horizontal business processes
  • The turnaround affected most horizontal business
    processes.
  • Lack of data compatibility New vs. old system.
  • The new system (2000) improved
  • Internal processes improved through common
    platform.
  • Data management.
  • The opportunity to pursue major goals.
  • On-time delivery and higher quality products.

19
Implementation Process and Issues
  • Rely on a smaller number of outside suppliers
  • Major purposes of ProDesigns turnaround were to
    bring down the number of suppliers in order to
    build a closer relationship through the set-up of
    long-term partnerships.
  • The suppliers idiosyncratic (asset specific)
    investments in manufacturing tools underline a
    more committed and long-term oriented
    relationship.
  • The long-term relationship serves as basis for
    shorter-term planning in regard to production
    capacity and the achievement of higher quality
    products and on-time deliveries.
  • The reduction of suppliers did not imply any
    major problems due to short-term contracts but
    supplier screening lasted 4 years.

20
Implementation Process and Issues
  • Increasing organizational and process flexibility
  • The new software system (2000) increased the
    organizational and process flexibility - In
    regard to more standardized processes throughout
    the supply chain.
  • Some employees had a negative view of the new
    technology, especially because it implied major
    changes to their job. In this regard ProDesign
    must
  • Ensure that the employees is prepared for the
    implementation.
  • Provide training for employees at operational and
    tactical levels that focuses not just on how to
    use the software but also on how the software
    will make their job easier and more efficient
    (doing the things right).

21
Implementation Process and Issues
  • Coordinate processes across organizational
    boundaries
  • Process collaborative planning, forecasting and
    replenishment takes place.
  • ProDesign maintains a gentleman agreement with
    its suppliers about flexible production capacity.
  • Serves as a buffer against fluctuation in demand,
    and provides ProDesign with a competitive
    advantage in periods of high demand.
  • Communication about forecasting etc. is limited
    to e-mail communication after first stock order
    is placed.

22
Implementation Process and Issues
  • Empower employees to make process decisions
  • Decision makers from the strategic as well as the
    tactical levels are involved in most of the
    decisions regarding the supplier network.
  • Due to the size of ProDesign a relatively
    hierarchical structure is justified. It could be
    argued that top management should not get
    involved with tactical and operational issues
    delegation appears to be a forgotten virtue.
  • Top management Strategic issues
  • Middle management Tactical issues
  • Employees Operational issues

23
Implementation Process and Issues
  • Make real-time decision support systems available
  • ProDesign has not managed to implement real-time
    decision support systems.
  • However, a real time support system may not be
    appropriate.
  • Impossible to convince every customer (optician)
    to share e.g. real-time replenishment information
    with the suppliers.

24
Recommendations
  • Implementation of a PLM software package
  • Integrating product information that may be
    housed in different software systems.
  • Information available to decision makers on a
    real-time basis.
  • Better handling of on time deliveries.
  • Implementation of ERP software
  • Integrating ERP would lead to increased
    efficiency in the supply chain preventing sub
    optimization. In addition
  • Information will replace inventory
  • Coordination will replace functional silos
  • Win-win strategy will replace sub-optimization
  • Knowledge will replace condemnation
  • But the unpredictable nature of the industry
    poses certain difficulties to ERP implementation
    such as fashion trends.
  • E-procurement
  • Enables electronic processing of stock orders and
    reduces transaction costs.
  • Increased overview of inventories at ProDesign as
    well as suppliers.
  • Empower employees
  • Top management should be better at delegating
    responsibility.

25
QA
26
References
  • Interview CEO Mogens Frederiksen
  • Danish News paper Børsen, 20.06.2007, pp. 14
  • Danish News paper Børsen, 08.09.1999, pp. 10
  • Danish News paper Børsen, 23.07.2001, pp. 7
  • The Role of Just-In-Time in Supply Chain
    Management, The International Journal of
    Logistics Management, Volume 11, Number 1, 2000,
    Vokurka, Robert J., Lummus, Rhonda R.
  • ERP and Supply Chain Management, Madu, Christian
    N., Kuei, Chu-hua, 2004
  • ProDesign Annual Reports 1999-2006
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