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1 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Logistics beyond a mobile
Logistics conference, 26-27th September 2008 Portoroz
Jussi LaaksonenDirector, LogisticsWestern Europe Sales Cluster
Logistics beyond a mobile
Logistics conference, 26-27th September 2008 Portoroz
Jussi LaaksonenDirector, LogisticsWestern Europe Sales Cluster
2 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Nokia at a glance
Nokia key figures | page 5 of 22
Device volumes (millions of units)
Net sales (EUR million)
Operating profit (EUR million)
Operating margin (%)
Earnings per share, diluted (EUR)
Operating cash flow (EUR million)
Research and development (EUR million)
R&D (% of net sales)
Personnel at year end
2006
347
41 121
5 488
13.3
1.05
4 478
3 897
9.5
68 483
2007
437
51 058
7 985
15.6
1.83
7 882
5 647
11.1
112 262
Change
26%
24%
46%
-
74%
-
45%
-
-
Nokia is the world leader in mobility, driving the transformation and growth of the converging Internet and communications industries
Nokia is the world leader in mobility, driving the transformation and growth of the converging Internet and communications industries
3 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Our Vision, promise and approach
Vision Promise Approach
Our vision is a world where everyone can be connected.
Our promise is to help people feel close to
what is important to
them.
Trusted consumer relationship.
Best mobile devices
everywhere.
Context enriched services.
4 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Nokia’s Demand Supply Network Management
Device manufacturing in 9 countriesMore than 20 000 employees in production
437 million devices in 2007 ~1.2M / day ~14 / second
120 billion components in 2007 ~330M / day ~3800/second
Nokia devices are available at approximately 350 000 pos
5 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management? How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
6 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Refreshing our memories about LEAN production“Lean” is the optimal way of producing goods through the removal of
waste (muda, muri, mura) and implementation of flow • Lean recognizes 7 types of waste (muda):
• Transportation (moving products that is not actually required to perform the processing)
• Inventory (all components, work-in-progress and finished product not being processed)
• Motion (people or equipment moving or walking more than is required to perform the processing)
• Waiting (waiting for the next production step)
• Overproduction (production ahead of demand)
• Over Processing (due to poor tool or product design creating activity)
• Defects (the effort involved in inspecting for and fixing defects)
• Muri addresses non value added work demanded of workers
• Mura addresses fluctuations at schedule and operational level
Source: Wikipedia
7 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Applying LEAN to supply chain:
Three key components:• Logistics is about managing inventory
• Lean is about speed, flow and the elimination of waste (inventory)
• Six Sigma is about understanding and reducing variation
Lean Logistics, can then be defined as:
The elimination of unnecessary inventories through disciplined efforts to understand and reduce variation, while increasing speed and flow in the supply chain
Source: http://www.ltdmgmt.com/mag/understanding-lean-logistics.htm
Reduce variation,
cost & inventory
Responding to customerExpectations
•No disruption
•Long lead times
•Standardized products
•Standardized quantities
•Fast response
•Short lead times
•Maximum flexibility
•Customized products
8 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Do we understand E2E supply chain?
Inventory profile of UK Automotive Supply Chain Source: http://www.3daycar.com/mainframe/publications/3daycar.pdf
9 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management?How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
10 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
0
40
80
120
160
1995 1996 1997 1998 1999 2000 2001 2002 2003
The story begins already at 1995…
Inventories in Days of Supply(DOS)
TOWARDS WORLD CLASS
COMPETITIVE ADVANTAGE
SHAPE-UP
Annual report 1995:
“Despite strong sales growth, Nokia Mobile Phones profitability was adversely affected by a number of factors during the year. The principal factor affecting profitability was the difficulty of meeting the challenges created by the business group's rapid growth. …. Profitability was also affected by … interruptions in the supply of certain components, as well as logistical issues. Consequently, the business group experienced certain difficulties in bringing this production capacity and logistics associated therewith up to optimal levels.”
11 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Nokia’s award winning supply chain
Source: http://www.amrresearch.com/supplychaintop25/#
AMR research ranks top 25 supply chains in the world by following criteria:
•Financial performance
•AMR expert evaluation
•Peer assessment
Nokia’s supply chain rankings:
#2 in 2004#4 in 2005#1 in 2007#2 in 2008
12 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Modularity in products
Example:N95
Supply Operation: Final assembly and variation
234 handsets 336 sales packages
12
EngineOperation
13 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Assembly& deliveryAssembly
& deliveryAssembly& deliveryAssembly
& deliveryAssembly& deliveryAssembly
& delivery
Modularity in production
Engineproduction
Enginebuffer
Push driven by plans 2-6 days of supply Pull driven by orders
14 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Reynosa
NokiaContract manufacturer
Manaus
Salo
Komarom
Chennai
Beijing
Dongguan
Masan
Cluj
Manaus
GuadalajaraMonterrey
Tallinn
Komarom Pecs
Beijing
Longhua
Tiszaújváros
Nokia’s global network of operations
15 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Nokia is the only large scale manufacturer in Europe
KomaromPecs
Salo
Nokia factory
Nokia Contract manufacturer
Tiszaujvaros
Tallinn
Being closer to customers enables us to build lean logistics – sense and response in SCM
Key benefits:•Manufacturing only against customer orders•Fast respond to volatile market and customer demand changes
•Minimized order fulfillment lead time without inventories
•High number of customized products with small order lot sizes
Cluj
16 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management? How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
17 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Ihub model
Suppliers own and manages material flow until Nokia’s production line.
Global suppliers deliver to inbound hub and local suppliers directly to factory.
LSP’s Operate the supply chain:transportations to ihub, warehousingat ihub and replenishments to production line
Nokia’s responsibility is to provide best possible demand visibility to suppliers, manage LSP relations and pay for the standard services
18 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Industrial village concept
19 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management? How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
20 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Smart manufacturing Smart Manufacturing Principles
("Smart Way", inner layer of the picture)
•Empowerment
•Get rid of waste
•Keep it moving
•Keep it simple
•Visualize
•Build quality in
Continuous Improvement Concepts ("Smart Improvement", middle layer)
• Select improvement opportunities
•Execute improvement activities
•Sustain the results
•Practice continuous improvement
Process Harmonization Concepts ("Smart Copy", outer layer)
•Network - Process owner networks
•Copy - Copy and standardize the essentials
•Share - Share best practices and know-how
21 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Reduce, Reuse, Recycle• Eco-efficient materials
• Innovative design concepts
• Eco-efficient packaging
• Energy-efficient chargers
• Software and services todrive sustainable behaviorand choices
• Optimizing transportation logistics
• Between 65% and 80% of a Nokia mobile device can be recycled
• Nokia participates in collection schemes with other manufactures
• Nokia works with qualified recyclers around the world to ensure proper end-of-life treatment for used devices
22 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Capturing Sales in Volatile Markets
Perc
en
tata
ge
Example of daily demand fluctuation - %
-50
0
50
100
150
200
250
300
350
400
Days
DiffMedian
Terminal vendor shipments (M units)
Source: released terminal shipments
0
20
40
60
80
100
120
140
160
Q1
02
Q2
02
Q3
02
Q4
02
Q1
03
Q2
03
Q3
03
Q4
03
Q1
04
Q2
04
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Nok MOT SE Sam LG
23 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
0% 20% 40% 60% 80% 100%
01.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.200701.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.200701.02.200601.03.200601.04.200601.05.200601.06.200601.07.200601.08.200601.09.200601.10.200601.11.200601.12.200601.01.200701.02.200701.03.200701.04.200701.05.200701.06.200701.07.200701.08.2007
DE
01
FI0
3H
U01
Sum of 1-10
Sum of 11-50
Sum of 51-100
Sum of 101-1000
Sum of 1001->
factoryMonth
Data
European delivery statistics
24 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management? How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
25 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Modular logistics service offering consists of:
Variant Management & Customization
Capability
Outbound Logistics Capability
Information Management & Data Exchange
Capability
Planning &
ReplenishmentCapability
“When you
Want”
“How you
want”
“Where you
Want”
26 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Sales package customization offering
• Co-branded sales package graphics
• Combos
• Sleeves
• Leaflets/brochures
• Stickers
• Customized labels
• Closing and sealing
• SIM cards
• Sales package size and concept
27 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Customer Collaboration maturity stages
Collaborative planning “Regular weekly information sharing”
Collaborative planning , forecasting andreplenishment (CPFR)
“Jointly managed inventory levels in customer’s DC”
Vendor managed replenishments (VMR)
“Nokia manages inventory within agreed target”
Vendor managed availability (VMA)
“Nokia serves customer’s channel directly”
Customer Nokia
Purchase plans,Stock levels, Actual sell through,Campaigns
Actual and planned sell-through,Visibility to channels
Supply indications,Order confirmations,Launch & End of Life,
Daily info sharing, S2S integration
Channel specific deliveryschedules,Channel customization
Proposed delivery plans,2nd opinion on demand plan,Backup / contingency plansCampaigns support
Daily info sharing, S2S integration,Delivery schedules
Detailed deliveryinformation, Channel priority
+
+
+
+
+
+
Focused Campaign support
28 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Without customer collaboration…
29 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Collaborative planning
30 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Collaborative planning, forecasting and replenishment
31 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Vendor Managed Replenishment
32 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Vendor Managed Availability
33 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Role of tools to ensure scalability
The old phrase: ” if you can do it with pen and paper you MAY be able to automatisize it” is very much true. And the focus should be in the process, not in the tools.
However, tools will start to play a very important role when implementing the process on scalable way with many customers.
34 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Contents
What is Lean supply chain management? How to build in both agility and efficiency?
Demand supply network structure
Synchronizing inbound logistics
Smart manufacturing
Collaborating with customers
KPI’s
35 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
KPI’s – what gets measured gets done…
Customersatisfaction
Availability Days of supply Costs
Additional measures – like the ones mentioned below -can have an explanatory role, but don’t lose your focus from the main KPI’s.
• On time delivery performance, • Perfect order fulfillment• Planning accuracy• Etc…
36 © 2008 Nokia logistics beyond a mobile.ppt / 2008-09-26 / Jussi Laaksonen
Thank you