Archive for the ‘Supply Chain’ Category

IKEA Billy turns 30

September 29, 2009

In a couple of days, IKEA will celebrate the 30th anniversary of their classic bookshelf Billy and to this date IKEA has sold more than 41 million Billy:s and whilst doing so continuously improved their supply chain performance in such a manner that they’ve been able to lower the price to consumer by 30 percent.

One of the lesser known reasons for this superb performance is the constant interaction between IKEA designers, purchasers and the actual end-user goods. Many IKEA purchasing staffers eat their lunch in the IKEA store food court – right there alongside consumers – and on their way to lunch they pass through the store seeing their products “in action”.

So not only do the purchasers and designers have the possibility to constantly monitor how consumers judge their products, they’re also provided ample non-formal opportunities to engage in development. And as anyone familiar with creative (and yes, I do count purchasers as creatives) work will acknowledge – the best ideas are often hatched outside of the confinement of the office.

Posted in Organization, Supply Chain | Leave a Comment »

Schaeffler Group and Continental in purchasing co-operation to fight the downturn

April 24, 2009

In the light of all the recent automotive news; least not WSJs report on Chrysler’s plans for bancrupsy or Roland Bergers gloomy outlook for automotive suppliers who are unable to compensate for cash shortages, little new money available from owners of capital markets, withdrawn credit coverage and have no customer support to count on what so ever – this press release from Schaeffler Group sheds light on what some suppliers are doing to negate the impact of the downturn.

The purchasing cooperation [between Shaeffler and Continental]… …is to optimize cost of materials and achieve an annual triple-digit million benefit through access to the steel markets and component suppliers as well as investments and non-manufacturing materials.

With a combined purchasing volume of €20 billion, Continetal and Shaeffler predict they will benefit about $6,6 billion in synergy effects resulting in a savings potential of €350-400 million over the next two years. Most of the synergy effects are expected to come from the complimentary purchasing focus that each company has.

While Schaeffler’s annual purchasing volume of as much as 1 million tons of steel brings it direct access to steel producers, a high level of competence in this segment and also very good purchasing conditions, Continental’s strength lies in the purchase of mechanical and electronic components. Both companies have a well established portfolio of suppliers. The joint access to the partner’s purchasing expertise makes it possible for both companies to benefit from the improved purchasing conditions.

And what is more, Continental’s suppliers will obtain far better access to global steel markets than they presently have separately. In return, the Schaeffler Group will benefit from Continental’s large supplier portfolio which will now also be available to that company.

In addition the two companies see a high potential in bringing home savings for non-manufacturing materials as well. Tough times bring out the best of us, and it’s going to be interesting to see where this co-operation will go in the future.

Posted in Best Cost Country Sourcing, Organization, Spend management, Supply Chain | Leave a Comment »

Supply chain fit key to performance excellence

April 22, 2009

That efficent supply chain management can provide a factual competitive edge has been one of the key components of the spend management marketing toolkit but there have been few studies that empirically nail down the reasoning.

Fortunately, Roland Berger’s (in co-operation with WHU, Stanford University and ETH Zürich) recent Global SCM Excellence Study takes the factual approach and offers numbers to convert any disbelievers out there.

The main objective of the study was to analyze the impact of strategic supply chain fit on actual company performance (Roland Berger used ROCE to measure the performance) and what they found was that the companies with a supply chain fit outperformed their competitors by 15,5 percent on average.

Furthermore, the study claims that companies with a supply chain fit also outperform their non-fit competitors on ROA (Return On Assets), sales growth and EBIT margin.

  • ROA: Outperformed by 5 percent
  • Sales growth: Outperformed by 6,5 percent
  • EBIT Margin: Outperformed by 3 percent

All in all, the report is good news for anyone struggling to convince skeptics of just how powerful supply chain management can be in achieving operational and financial excellence.

Posted in Business, Supply Chain, Supply Chain Management | 1 Comment »

Supply chain rumors stall production at SAAB

February 26, 2009

As more and more information slips out regarding the Detroit/GM crisis; the different divisions are running into (un)expected supply chain issues due to the massive restructuring programs that are taking place.

As part of the restructuring, SAAB filed for reorganization in Sweden last week and as a result the SAAB plant in Trollhättan faced production disruptions relating to suppliers threatening to stop deliveries. And if that wasn’t bad enough, Swedish media  claimed that the Swedish Customs had stopped SAAB from using certain parts (as SAAB had not paid customs for these) due to SAAB’s credit rating. Media also reported that Schenker logistics had stopped all current deliveries while renegotiating contracts with the ailing car maker. While some of these claims were played down by all parties as time passed; the damage to the brand has already been done.

The whole thing is turning into a supply chain nightmare as media, suppliers, regulators and logistics providers all pour extra pressure on an industry in a state of meltdown. In this extraordinary state; managing the media adds further complexity to managing the supply chain.

Posted in Business, Supply Chain | 2 Comments »

Supply Chain Risk Visualized

February 11, 2009

The recent months have seen supply chain risks in the headlines on multiple occasions. If you’re still unconvinced of the necessity of managing the risks of your supply chain; lend an eye to this Business Week slide show. It neatly displays some of the latest supply chain related scares and briefly outlines the outcome – both for the companies who sold tainted and/or faulty products and the consumers who bought them including:

  • 45 million toys recalled due to poisonous lead paint
  • The shut down of Chi-Chi’s chain of restaurants and $800,000 of damages paid to 9,500 guests due to tainted scallion
  • 52,000 children sickened, 13,000 of which are still hospitalized due to tainted powdered milk

Posted in Risk Management, Supplier Performance, Supply Chain | Leave a Comment »

When to convert strategic items into competitive bidding

September 26, 2008

The business case of converting strategic items into competitive bidding needs to be thoroughly examined over a long period of time; especially when looking if the decision makes sense from a commercial perspective since decisions like this are often extremely strategic.

Fellow blogger Christer Hallqvist described this (stretched, in his words) example in the sourcing chapter of IBX book Purchasing Transformation.

One example relating to the matter of buying level comes from Saab and the purchasing challenges they faced when developing and introducing the Trionic engine management system in the early 1990s.

At the time, Saab relied on a first-tier supplier that was commercially much larger than Saab itself. Due to Saab’s diminutive size in the automotive industry, the company was in no position to influence the supplier in meeting Saab’s advanced demands for the engine management system. Yet Saab was so convinced of the power of its concept that it re-evaluated the supplier relationship.

Saab decided to develop the engine management system in-house to bridge the gap for the future, and the Trionic engine management system was born. In essence, the decision meant to substitute the first-tier supplier with Saab’s own development and use the previous first-tier supplier as a second-tier supplier, among others, for engine management components to the system. By changing the buying level to the second tier, the company increased the supplier competition and made it possible to source them by applying a competitive bidding approach.

The result of this buying level switch is that Saab is still – almost 15 years on – uniquely positioned to utilize its own technology to outperform competition in the increasing segment of alternative fuel engines. First launched in 1994 as Saab Trionic 5, Saab are now building cars using Saab Trionic 8 – dubbed Saab Biopower it’s the worlds first turbocharged bioethanol engine. Running on E85, the engine output increased by nearly 20 percent, with torque rising almost 15 percent to 280 Nm. 

The Trionic engine management system and the turbo technology takes advantage of the fact that bioethanol has a higher octane-rating than regular petrol. Saab claims it’s a win win situation; it’s environmentally- as well as driver friendly.  

One could add that it’s strategic sourcing at its finest.

Posted in Sourcing, Strategy, Supplier Management, Supply Chain, Supply Chain Management | Leave a Comment »

And You Thought Youtube Was Just For Kicks – Think Again – Supply Chain Video

September 3, 2008

One of the great things about user created content and the so called web 2.0 technologies is when these tools and ideas are picked up by professionals and used for non-entertainment purposes.

My favourite pastime at the moment is checking out the supply chain videos compiled Ehsan Ehsani on Supplychainer.com. Most of the content linked from youtube.com and have been published by a wide array of publishers big and small.

If you have been led to believe that web sites such as Youtube is for kids or for after curricular activities; think again. If you don’t believe me, just check out how online publishers such as GasgooTV  use Youtube as the medium to provide indepth analysis of the Chinese automotive industry.

Posted in News, Supply Chain, Supply Chain Management, Technology | Leave a Comment »

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