Reshaping vertical supply chain
networks: UK furniture industry
Dr Sharon Williams, ESRC Post Doctoral Fellow, Lean Enterprise Research Centre,
Cardiff University, UK
Lean Enterprise Research Centre
ContentContent
Overview of LERC’s research activities
Reshaping networks project
Offplan Case study – supplier development
programme
What’s next…….
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Lean Enterprise Research CentreLean Enterprise Research CentreCardiff Business SchoolCardiff Business School
Formed in 1994 by Prof Dan Jones & Prof Peter Hines– 23 staff now
“Researching, applying, & communicating
lean thinking”
“Researching, applying, & communicating
lean thinking”
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LERC ResearchLERC Research
Core activity
Collaborative approach– multi-sponsor studies
– firms receptive to new thinking
Application of new & developing
techniques
Help businesses & organisations become
world class
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LERC Research ProjectsLERC Research Projects
AutomotiveAutomotive
(1999-2001)
Supply Chain
LEARNNetwork Programmes(2000-2004)
Bread
Home Shopping Research Unit
2002+
Retailing & DistributionRetailing & Distribution
Red Meat
Project2002+
[Food Process Innovation Unit]
Process ImprovementProcess Improvement
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Healthcare
ConstructionTransportation
New SectorsNew Sectors
Public Sector
Services
Defence
Furniture
LERC Research ProjectsLERC Research Projects
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Lean in Different Lean in Different Business ActivitiesBusiness Activities
ManufacturingManufacturingManufacturingManufacturing Processing
Public ServicesPublic Services Public ServicesPublic Services
DistributionDistributionDistributionDistribution
Assembly
Logistics
Healthcare
Job shop
After Sales ServicesAfter Sales ServicesAfter Sales ServicesAfter Sales Services Admin/processing
Transportation Retailing
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Lean in Different Lean in Different Business ProcessesBusiness Processes
Order FulfilmentOrder FulfilmentOrder FulfilmentOrder Fulfilment
Business PlanningBusiness PlanningBusiness PlanningBusiness Planning
Sales AcquisitionSales AcquisitionSales AcquisitionSales Acquisition
New Product New Product DevelopmentDevelopmentNew Product New Product DevelopmentDevelopment
Production planning, production
Taking, processing orders
Delivery to customer, payment management
Winning new business (new/existing customers)
Customer needs
Design new products Produce
Introduce to market
Strategic management of the company
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Lean Thinking….Lean Thinking….
An approach to the way you make a product or deliver a service
Focus on value & waste 5 basic principles – customer value, removing
waste, making products flow at the pull of the customer and always striving for perfection.
Numerous tools & techniques developed to apply in organisations
Appropriate to all types of organisations, in all sectors
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The Lean EnterpriseThe Lean Enterprise
Organisation as part of extended supply chain
Need to think strategically beyond own boundaries - the lean enterprise– also, value streams flow across boundaries– common targets, rules for sharing gains etc
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Reshaping vertical supply chain Reshaping vertical supply chain networksnetworks
Need to improve existing networks Pilot activities undertaken with office
seating manufacturer Launched supply chain improvement
programme Supplier development programme Benefits to both manufacturer and
suppliers
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Case study - OffplanCase study - Offplan
Manufacturer of office seating – SME employing
120 staff
Centrally located within the supply chain
Early work by Purchasing manager to evaluate
capabilities of supply base
Management Buyout (1998) – long term objective:
sustainable, profitable growth
Relatively small in comparison to some of their SC
members.
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Reshaping supplier network:Reshaping supplier network:Supplier development activitiesSupplier development activities
Aim to develop a network of competent suppliers (Lambert et al., 1998; Toni and Nassimbeni, 2000).
Activities organised by a customer on a strategic and practical level.
Dissemination of customer practices so that suppliers can plan their processes more effectively.
Areas of assistance can include: – Factory layout– Set-up time reduction– Kanban systems– Environmental management schemes
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1. Partnership, Trust and Empowerment 1. Partnership, Trust and Empowerment (PTE) Pilot Scheme(PTE) Pilot Scheme
Relations and communication main focus Local foam supplier – Foampack (part of multi-
national group) Small cross-functional team meeting on monthly
basis Undertook problem solving training Initial reservations from supplier in terms of
whether both parties would benefit.
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PTE pilot activitiesPTE pilot activities
Activities– Agreed lead times (review of 7 day lead time and
impact of holiday shutdowns).– Product specifications – tolerance levels agreed
& further work done with design teams– Quality issues – Additional information recorded
by customer concerning scrap and defects– Communication – regular meetings and
communication – Packaging – Dedicated packing team assigned to
Offplan’s product
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Benefits of PTE pilot programmeBenefits of PTE pilot programme
Reduced scrap levels and defective parts Reduced costs Identified re-engineering and design opportunities Improved ordering and packaging process Improved communication levels PTE members more receptive and proactive to
ideas and suggestions Operators more open to discuss & produce
solutions.
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2. Environmental Management Scheme 2. Environmental Management Scheme (EMS) Pilot Project(EMS) Pilot Project
Offplan gained ISO14001 in 1998 Part of Offplan’s policy to understand the
environmental credentials of key suppliers Environmental issues not of paramount
importance to suppliers – need to raise profile Supplier - Small (micro) engineering company in
West Midlands (Steelco) Supplier had displayed a positive and proactive
approach to Offplan’s supplier evaluation programme
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EMS pilot activitiesEMS pilot activities
Activities– Conducted environmental audit with assistance
of Offplan’s environmental manager– Compiled environmental statement to confirm
commitment to programme– Introduced environmental improvement
activities – Sort external funding to support further
activities
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Benefits of EMS pilot programmeBenefits of EMS pilot programme
Implemented sound environmental policies and statements
Understand and improved environmental impact of products
Reduced costs and identified additional sources of funding for further improvements
Working towards formal accreditation Working with some of their key suppliers to make
further environmental improvements
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ConclusionConclusion
Organisations can facilitate and enhance learning among their SC network members.
Benefits to suppliers have been increased spend with Offplan, the security of long term business & improved levels of competitiveness.
Benefits to Offplan were total product life-cycle cost savings through a process of continuous improvement, earlier supplier involvement in product design and reduced lead times due to improved communication and closer collaboration.
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Research Issues and OpportunitiesResearch Issues and Opportunities
Offplan demonstrated it is possible for the smaller organisation to implement a supplier development programme and engage suppliers irrespective of their size or standing.
Challenge will be to rollout these pilot activities to include other suppliers.
The sustainability of the supplier development activities will need to be monitored.
SCM is not a ‘quick fix’ but a progressive and adaptive long term solution.
Adaptive learning styles and open communication are critical to SC activities both at company and SC levels.
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Project UpdateProject Update
Supplier development programme has been extended to include other activities such as product design, kanban, and value stream mapping.
EMS has been rolled out to a further six suppliers Business contingency planning and risk
assessment are now key components of Offplan’s supplier selection and evaluation process.
Offplan focusing on understanding customer value
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What’s next………What’s next………
Continue work with the furniture industry
Collaborative research – International
partners
Sustainability of Lean and Supply Chain
activities
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Contact details
Dr Sharon WilliamsSenior Research Associate
Lean Enterprise Research CentreCardiff Business School, Cardiff University,Aberconway Building, Colum Drive, Cardiff,
Wales, UK. Tel +44 (0)29 2087 4544Email: [email protected]