Our client is a $15.0B global power leader that designs, manufacturers, sells, and distributes its product and related technology around the world. The client was experiencing on time delivery performance of its supply base in the lower 80 percentile and more specifically in the lower 50 percentile on its worst performing suppliers.
We were engaged in November 2010 to formulate and execute an improvement process that would drive supplier on time delivery performance to the 95% level or higher by June 30, 2011.
The challenges facing this organization with regards to this project were as follows:
- Which initial group of problem suppliers should be targeted?
- How to communicate, initiate, execute, track, and maintain the improvement process in a cross functional matrix environment?
- How to incorporate specific supplier project management with the organization’s own problem identification and resolution process, in order to track deliverables and insure a systemic ongoing solution.
- Developing specific metrics and expectations
- Buy in from the commodity teams to support such activity
Strategy and Actions:
After completion of an initial review phase, we were then able to determine and develop the overall project scope, identify specific global geographical complexities, and determine the appropriate group of suppliers to target in the initial improvement project. We focused on an initial group of twenty suppliers who had a high level of delivery volume, in addition to those that would generate a high value impact to our client through improved performance.
The team then developed an operational improvement strategy that focused on utilizing the client company’s 7 Step problem identification and resolution procedure, coupled with project management software to track team activity and deliverables for each supplier.
The next step in this process was to communicate project initiatives to the individual sourcing teams, and then drive the process of problem identification and resolution with the sourcing teams and the supplier.
This stage of the project entailed more detailed data analysis, ongoing communication and conference calls with the team and supplier, weekly order delivery status reviews, monthly supplier scorecards, and supplier site visits.
Additionally, to keep senior management informed of progress and deliverables, a weekly supplier tracking sheet was formatted and updated each week. The tracking sheet was known as the ‘PDCA Update”, and is the acronym which represents Planning-Doing-Checking–Actions. This simple format tracked current and future team / supplier improvement initiatives, OTD metrics from a weekly and monthly basis, and project management status of each supplier. This format was also shared with sourcing team members to insure ongoing awareness, communication, and progress.
The client’s OTD performance improved from 59% to 95% within a 120 day period (Nov 2010 to March 2011). This approach also provided a systemic process which allowed for individual supplier assessment in order to analyze, determine, and resolve the root cause issues that were impacting and preventing the individual supplier companies from achieving OTD performance. Overall, the project resulted in achievement of positive delivery performance for our client company, along with a demonstrated and defined supplier process manual, which will be used as an educational and guidance tool for future sourcing personnel.
Not only was OTD performance improved substantially, but the improved OTD performance also brought operational efficiencies along with significant WIP inventory reductions to the various business segments. Our process now allows the client and suppliers to monitor and improve its processes in order to achieve continuous improvement and achieve higher levels of delivery performance.