supply chain excellence

© S A Partners 2014

Leadership for

Enterprise Excellence

September 2014


Henry Ford’s inspiration

Hounshell (1985)

© S A Partners 2014© S A Partners 2014

Food Industry is getting fatter

0

2

4

6

8

10

12

Sto

cktu

rn

Food and drinks Manufacturing Trend (food and drinks) Trend (manufacturing)

Automotive:15

Toyota: 35

Dell: 80


The Lean Business system Model


Lean & Green Maturity

GREEN

LEAN

Ambidexterity

Lean and green

can co-exist and

even be

complementary.

E.g. efficient

technical

solutions for both

lean and green

outcomes.

Synergy

Catalytic

relationship

between lean and

green.

E.g. clean tech.

allowing tax

concession.

Simultaneous

elimination of

economic and

green wastes.

Symbiosis

Lean and green are

pursued as part of

the same strategy.

E.g. L&G strategy

for reducing ‘loss’

imparted to society

during entire

product life cycle.

Trade-off

Lean contradicts

organisation’s green

ambitions and vice

versa.

E.g. more frequent

deliveries increases

CO2 emissions. Lower

CO2 emissions

reducing productivity.

+ +

--

++

--

+ +

++

Source: Martinez, Vazquez and Zokaei et al, 2010


Lean &

Green

Enterprise

Strategy Deployment

•Case study of Tesco

Process

Management

• Applying L&G

toolkit

• Case study of

Toyota

Supply Chain

Management

• Case study of

M&S and MAS

Leadership and

People Engagement

• Case study of Adnams

The Lean and Green Business

System Model


Problem Solving v.

Implementation Mind-set

Mike Rother, 2009

Based on the work of Shirzad Chamine

While your IQ, SQ and EQ (emotional intelligence)

contribute to your maximum potential, it’s your PQ

that determines how much of that potential you

actually achieve

Based on the work of Shirzad Chamine

• Positive Intelligence (PQ) measures the

percentage of time that your mind is serving you

as opposed to sabotaging you

• An indicator of how much mastery you have

developed over your own mind is sometimes

called mindfulness, self-awareness or

consciousness.


The Shingo Model and its Principles

Culture• Values-What is important

• Beliefs-What is right and wrong

• Behaviours-How we demonstrate the

above

Behaviour• Described, Observed and Recorded

Purpose

Process

People

Stakeholders


Association

Command Individuality

A Simple Idea


Tesco Case Study

Strategy Deployment across

end-to-end supply chain


Tesco’s Growth and profitability

0

10

20

30

40

50

60

Sales excl.VAT £bn

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

Profit £bn

Internal efficiency … whole chain efficiency … effectiveness ... sustainability

£400m saving due to Lean

thinking. Starts

systematically deploying

clubcard information.

Start of Lean

Programme. Extending

efficiency to whole chain

1/3 UK market share.

Clear environmental

strategy and action


PROFIT IS NOT THE CORE PURPOSE

IT IS ONE OF THE MEASURES OF SUCCESS

BY WHICH TESCO JUDGES IF IT IS ACHIEVING ITS CORE

PURPOSE

TESCO Core Purpose

To create value for customers to earn their lifetime loyalty

(Evans, Mason & Zokaei, 2007)


BETTER SIMPLER CHEAPER

• Better for customers

• Simpler for staff

• Cheaper for Tesco

Based on

• Lean Thinking - Womack & Jones

• Loyalty - Reichheld

• Simplicity - de Bono


TESCO Approach


TESCO Business Model

BuySupply Distribute Sell

“Convenience” factory

Availability

Convenience

Price

Value

One-stop shop

Innovation

LOYALTY

How do Tesco thrive

when they make

nothing?



•

Exploiting Customer Data

BuySupply Distribute Sell

Insight

-segmentation

availability

Insight -

disappointment

Loyalty Cards as a source of knowledge on customer behaviour



Tesco One Touch Replenishment

Tesco

RDC

Cola

RDC

1 2 3 4 5 6

30% Lower Logistics Costs

Tesco

X Dock

Cola

RDC

1 2 3


Tesco One Touch Replenishment


Lean & Green Strategy

Updated in 2008/09

and now has 5 spokes

• Actively supporting local communities

• Buying and selling our products responsibly

• Caring for the environment

• Giving customers healthy choices

• Creating good jobs and careers

Tesco Steering Wheel


What do you think went wrong?


Operational

Excellence


Operational Excellence

Best in class end to end Supply Chain performance in

Safety, Quality, Customer Service, Cost and Cash

Pro

cu

rem

en

t

Pla

nn

ing

Op

era

tio

ns

Lo

gis

tic

s

Supply Chain Development

Project Assurance

Continuous Improvement

Process Development

Group Engineering

Operational Improvement

Standardised Processes, Systems & KPIs/Scorecards

Safety

Meat Supply

QualityCustomer

ServiceCost Cash


Henry Ford’s inspiration

Hounshell (1985)


The Lean Business system Model


Inventory is Cash in Food Industry

0

2

4

6

8

10

12

Sto

cktu

rn

Food and drinks Manufacturing Trend (food and drinks) Trend (manufacturing)

Automotive:15

Toyota: 35

Dell: 80


Opportunities for Operational Excellence

Household food waste

Giveaway

Food on the floor

Out of life


Case Study:

10 steps Value Chain Analysis

Detailed

Mapping

VCA Current

State

Mapping of both physical processes &

information flows within each facility

VCA

Future States

Develop future state maps

Chain opportunities

Cost/benefit matrix

Executive

report

Detailed action plan

Implementation roadmap

Lean VCA

workshop

Team build

Lean familiarisation

Construct ‘ big picture’ map

Day 1

Day 2-6

Day 7

Day 8-9

Day 10

Construct overall

current state map and

Identify opportunities


Waste Map

Ou

t o

f L

ife

Qu

alit

y w

aste

Sh

rin

ka

ge

& R

DC

wa

ste

Prim

ary

de

po

t

Giv

e a

wa

y (

on

ave

. 4

% o

fp

acks a

re o

ve

rwe

igh

t)

Lin

e &

cha

ng

eo

ve

r w

aste

Un

de

r w

ieg

ht p

acks

OO

L in

gre

die

nts

Drip

lo

ss

Giv

ea

wa

y: o

ve

r sp

ec c

uts

Do

wn

gra

de

to

dic

e

Store WasteLogistics lossManufacturing wasteMeat cut & pack waste

Waste=11.5%

[32]


Yield-loss and Giveaway

2 616

4348

73 74

115

35

64

15 8 1

65

MM

66

MM

67

MM

68

MM

69

MM

70

MM

71

MM

72

MM

73

MM

74

MM

75

MM

76

MM

77

MM


50% of food CO2 attributed to

“animal foods”


Customer benefits

• Better Quality

• More consistent product

• Better Customer Service

• Fresher products

• Higher availability

• Cost

• Lower prices

• Cash

• Lower Inventory

• Less environmental impact


Potential benefits to share with

the whole chain

Benefit % Improve

Food waste 50% 1000 T

CO2 15,000 T

Water 20 osp

Lower costs 8% £xxxm

Sales uplift 4% £yyym

Productivity

increase7%

Inventory

reduction25%


Variation is the root of all evil

You need stability before you can pinpoint areas to improve

Pro

cess p

erfo

rmance

VARIATION STABILITY IMPROVEMENT

supply chain excellence

Leadership & Management

action s

lean business system

green business system

endtoend supply chain

lean programme

green wastes

green outcomes

organisations green