This category produced probably the most closely fought contest among the sector categories and included – Ducati Motor Holdings of Bolgna, Italy, Lafarge Nida Gips (partly French-owned but located in Poland), Philips Lighting in Eindhoeven, the Netherlands, and Rexam Beverage Can Europe, based in Wakefield but part of an organisation which extends from Ireland to Turkey and Russia.
Philips Lighting in Eindhoven is part of a complex European structure of seven production and logistics centres, plus regional distribution centres, although the entry focused on Eindhoven. The assessors found a fully integrated supply chain with high visibility at board level, and clear responsibilities and accountability. A particular highlight is the planning process, which uses a single resource to cover the entire supply chain for each product group, from stock management to customer service, allowing a single contact point for all issues, and for decisions to be based on a much broader set of criteria than where functions have separate responsibilities (this structure is unique to Philips Lighting but is being considered in other divisions). Philips was described as ‘a mature global industry with the supply chain at the heart of the business’, but given the relative simplicity of the product mix, the judges couldn’t place Philips first.
Nor could they Lafarge Nida Gips, although this was another entry that illustrated just how far the former communist states have come in a short time. LNG, jointly owned by Lafarge of France and Atlas of Poland, is primarily a plasterboard business exploiting local gypsum deposits, although with significant turnover in related metal products such as sections and studs. Customer service and logistics director Jacek Tarkowski says ‘Our supply chain and service levels are making us the preferred supplier in Poland, offering 48 hour delivery using optimised distribution, flexible production planning and using modern IT solutions, in particular to communicate and partner with logistics providers such as LCS Logistics’.
The assessors found a very enthusiastic team who have ‘come a long way from a state industry. Their performance is significant, but the track record so far is short. There are many further initiatives going through and in a year or so they will really have achieved the transition to a class-leading private sector organisation’.
Ducati is certainly one of the famous names in this year’s awards – but not many two-wheel fans may realise how close the firm came to collapse in the early 1990s. Under new owners since 1996, the business has been rebuilt, backed by investment not only in production but in supply chain processes.
A ‘lean’ programme across the business has seen real benefits coming through, under a very high-quality supply chain team. Excellence in manufacturing is discernibly spreading into the supply chain, although Ducati is still in the middle of a five-year programme and some plans, for example Customer Relationship Management, and an Oracle e-business suite, have yet to be fully implemented. The assessors reported that ‘some results have already been reached, for example service levels have improved from 85 per cent to nearly 99 per cent, but other KPIs have not yet been fully achieved’.
Also half way through a five-year transformation programme is Rexam Beverage Can Europe. Unlike Ducati, this results not from incipient business failure, but from a major merger. Richard Downes, VP supply chain, explains ‘We had to bring two acquisitions together, and create not just real business change, but cultural change as well.
‘We had excellence in manufacturing, but nowhere else, and our supply chain was at best very average. We are looking not for pockets of excellence, but excellence in everything from purchasing to customer service, based on the values of trust, teamwork, continuous improvement, and recognition’.
Rexam’s approach has been built around strong partnerships and a supplier development programme (based loosely on the Toyota system); meanwhile, logistics was centred on four partners to cover the whole of Europe, and a high percentage of logistics tasks were outsourced, while fully integrating the partners into the process. The key, Downes says, is to pull together two key processes – Sales, Inventory and Operations planning on the one hand; on the other, the cash to cash cycle. ‘The only real measure of whether a supply chain makes good business sense is cash to cash performance’.
The assessors met a strong enthusiastic team who had found the Awards process ‘a very positive experience’. They reported ‘cans may be taken as a commodity, but the team has really made significant change in the three years of the five year strategy. This organisation is certainly progressing quickly towards its goal of excellence in each dimension of the supply chain’.
Which left the judges with a dilemma – Ducati, they felt, showed gaps in planning and fulfilment; Rexam, on the other hand, was strong across the board but hadn’t the direct links to customers and brand management that Ducati has to manage. All the contenders are on the road to excellence; none is really there yet, but on balance the palm went to Rexam Beverage Can Europe.