There were three finalists in this category, but the judges also chose to consider the sole finalist in the otherwise week Process Industries category here. Bertil O Steen AS is a major automotive agent and importer in Norway, and the judges were asked to review their aftermarket operations, which account for around 50 per cent of group profits. This operation supplies from a stored base of around 62,000 skus to about 160 customers throughout Norway. The supply chain is relatively simple, although complicated somewhat by Norway’s interesting geography, and the firm is achieving service levels of around 90 per cent. A new ERP implementation is in progress which will lead to more unified systems and processes, but so far, in the judges’ view whilst the firm is trying to be progressive the results are no more than average for the industry sector, and they are yet to demonstrate true excellence.
Also entered was Tintas Dyrup, a Portuguese manufacturer of inks and printing products. Dyrup is one year into an intensive continuous improvement programme, which has produced remarkable results. In August 2004, delivery performance was by the firm’s own admission very poor – only 45 per cent on time and in full. That figure is now 90 per cent, an improvement achieved through a focus on better production and purchasing planning, improved short term scheduling and better warehouse/distribution management; along with better demand forecasting and promotions planning. Several techniques including Theory of Constraints, have been deployed, says operations director José Silva, and daily performance reviews leading to specific improvement actions have remotivated the workforce.
The speed of change is certainly impressive, but the judges felt there is still a journey to travel before Dyrup can be called excellent in absolute terms. Ford’s LandRover subsidiary presented a joint entry with NYK Logistics. The overall transformation at LandRover has been widely reported: here the focus is on changing the operational logistics model to that of an outsourced partnership, and to pull from the production line, rather than push from inbound logistics. NYK now has responsibility not only for LandRover’s inbound logistics, but for internal movements to the point where ‘LandRover’s first touch is at the point of fit’. Paul Kavanagh, md of NYK Logistics european automotive group, says ‘The transformation of LandRover’s supply chain has been a spectacular one, achieved through a combination of NYK’s experience and expertise, the unwavering support and encouragement of LandRover’s management, and the sheer determination of everyone involved’.
The judges were certainly impressed by the scale of change, especially in a heavily unionised business where change can be difficult to negotiate, and the way that synergies are exploited across the whole Premier Automotive Group, not just LandRover, to exploit techniques such as cross-docking to minimise the ‘distribution footprint’ of material flows in and out of the UK, despite the less than optimal locations of key suppliers. Cost savings in the distribution centres are reckoned in multi-millions, and the operation has won environmental awards.
The new arrangements are clearly highly effective and adaptable – volumes on the new ‘baby LandRover’ are already 30 per cent over plan, but this has been accommodated without any diminution in vehicle delivery performance. The plant works on a 45 minute cycle for bulk stocks, three hours for replenishment goods.
The judges felt that procedures and processes couldn’t yet be classed as ‘excellent’ but this huge transformation is a work in progress and the team strengths that have made outsourcing work in a potentially hostile environment are truly impressive. Rexam Beverage Can Europe & Asia is a young (four year) company with an old pedigree, formed from a merger of PLM and American National Can. The challenge, says purchasing director Alex Jennings, has been to combine two different cultures: one American and centralised, the other Swedish and decentralised, with a supply chain function that worked very much on a ‘silo’ basis.
One of the first steps was to integrate an end to end supply chain including customer services, planning, warehousing, logistics, master data and purchasing, and a young dynamic team including members drawn from other industries such as automotive was created with ‘a strong values-based culture (“The Rexam Way”) and “can do attitude”. This rapid transformation dramatically changed the business landscape and the way the department interacted with other stakeholders including customers, suppliers and other Rexam sites’, says Jennings.
A Supplier Development Program was started in 2002, based on teamwork, trust, recognition and continuous improvement, and has driven significant improvements in cost, quality and supply. Collaboration with customers is equally important – Rexam is, although itself a large company, typically ‘squeezed’ between larger suppliers and customers.
Although the manufacture of cans appears to be a typical commodity business, demand is highly seasonal, and the pressure for a quick response to demands for store promotions and the like is driving Rexam to the concept of the ‘one day can’ as the sort of quick response that will be necessary in future.
The judges weren’t necessarily swayed by the knowledge that Rexam uses the ESCE Awards process itself as part of its benchmarking, but had little hesitation in naming them the sector Award winner.