Supply Chain Brain - November/December 2011

SUPPLYCHAINBRAIN EXCLUSIVE

board and help you in this effort? Sigamani: Absolutely. We picked up about 15 suppliers for a pilot, to showcase the benefits of how PFEP would help. Partners at both ends of the supply have been cooperating in helping us to lean our supply chain all the way.

waste, which surfaced as we did this Lean program over the past four years.

Q: What were some of the results? Sigamani: We gained a lot of ground from an on-time delivery perspective. Our inventory levels have gone down dramatically. Our on-time performance, meeting our customer committed shipment date, went up by about 40 percent.

From a solution perspective, where we are right now in 2011, we want to take a look at the bullwhip effect— inconsistencies in supply and demand spikes that are created in the organization and travel through the supply chain. So we partnered with JDA again, and formed a model that incorporates level scheduling and scheduling stability. That was the most recent transformation we made, which helped us improve our on-time starts tremendously.

ufacturers like us, and also for fast-paced companies like automakers. We took ideas from them as to where we need to be looking for problems. Having said that, some problems can be specific to an organization, and for those we needed a business-specific solution.

Q: So you got your ducks in order internally. Then it was time to go out to suppliers. Was that a whole separate initiative, or simply a continuation of what you were doing? Sigamani: It was a momentum that we had gathered internally, then wanted to pass on to our suppliers. One of our foremost objectives with this whole initiative over the past seven or eight years has been to have as much inventory as possible toward the earliest part of the supply chain, where we can have an efficient operation, rather than having many finished goods waiting. Now, we literally have a “plan for every part,” or PFEP, which is an industry benchmark. Basically it’s all about how the part is purchased, packaged, moved from the suppliers to our warehouse, and moved from the warehouse to our assembly lines. This particular database helps us to link suppliers all the way to our finished goods.

Q: So you’ve brought us up to date in 2011. What’s next?

Sigamani: The journey of supply-chain improvement that we’re on is all geared toward one key word: integration. We’re looking into integrating our business processes across the entire value chain, starting from order promising, from a profitability and customer-satisfaction perspective. We would like to link order promising all the way up to our execution. Demand management is another aspect we’re looking into. If there is a lack of formal demand and supply synchronization, we will always have the ripple effect and the bullwhip effect. So we’re aiming at streamlining demand management.

All of those things will lead us to the one big buzzword: sales and operations planning. We are working with JDA to do an assessment of how well are we doing currently, and what is the gap that we can fill over the next three to four years. The goal is to get us to a place where we can collaborate with our suppliers and the dealers—get them all in synch. The keyword “ integration” again comes into play—there will be an integration of business-planning processes across the entire value chain.

That’s what we’re moving toward.

Q: You just talked about some classic
Lean techniques, such as the seven types
of waste. Were you benchmarking your
efforts against any other company? How
did you realize the value of these initia-
tives, and how did you understand how to
implement them?
Sigamani: We were inspired by the
Toyota Production System, which was a
proven benchmark for medium-sized man-

Q: Do you think of yourself as having a formal S&OP process in place now, or is that a goal for the future? Sigamani: We are still in the primitive stages of S&OP. Our business model has changed dramatically over a period of time. We used to do a lot of make-to-stock orders. Now we are moving into configure-to-order. We are configuring the orders even before we take them from the customers. We are going toward an entire transformation of S&OP.