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
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
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.
To access this video interview online,
Q: Are the suppliers cooperating? Are you
finding that they’re willing to come on
Mitsubishi Caterpillar Forklift America,