Applying Data-Driven Techniques for Supply Chain Excellence

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Applying DataApplying Data--Driven Techniques for Driven Techniques for

Supply Chain ExcellenceSupply Chain Excellence

Lean & Six Sigma Summit

Chicago, IL

April 29- May 2, 2008

April 2008 © Steve Lesser

Orica Mining ServicesOrica Mining Services

Parent company- Orica Limited publicly traded on ASX

Top 40 ASX company

14,000 employees in around 50 nations across six continents

Headquarters

Corporate- Melbourne

Regional- Denver, Santiago, Troisdorf, and Sydney

Business units

Orica Mining Services- largest, global entity

Orica Consumer Products

Chemnet

Chemical Services

Minova


Orica Mining Services: Supply ChainOrica Mining Services: Supply Chain

Two main supply chains- chemical (ammonium nitrate) and assembly (initiating systems)


Orica Mining Services: Global Supply Chain OrganizationOrica Mining Services: Global Supply Chain Organization

Global Manufacturing and Supply Chain Leader

Global Manufacturing and Supply Chain Team

One Global Supply Chain Leader

Four Regional Supply Chain Leaders

Two Global Product Line Manufacturing Leaders- Ammonium Nitrate and Initiating Systems

Management philosophy

Drive standards particularly in systems, processes, and people

Quarterly face to face reviews

Monthly global Sales & Operations Planning conference calls

Challenges

Time zones: 2 pm Denver conference call equates to 4 pm Santiago, 10 pm Troisdorf, and 6 am Melbourne

One Orica global desire, but regional GM model accountability

Regulatory environment driving towards regional manufacturing

Alaska supply chain example


Driving Change in North AmericaDriving Change in North America

Objective in January 2006

Baseline current capability

Set vision of future state

Develop deployment strategy

Phase 1- build structural foundation using SCOR basic principles

Phase 2- institute change management methodology through Lean Six

Sigma implementation

Phase 3- accelerate project delivery

Educate stakeholders

Communicate progress throughout focusing on delivering financialresults in each phase


Driving Change: Baseline Capability & Set VisionDriving Change: Baseline Capability & Set Vision•Optimally utilized SAP•Critical processes enabled by interfaced, hosted supply chain tools•Clear supply chain architecture•Data warehouse

•Global SAP •Ad-hoc bolt-ons•Dependency on Notes databases•No supply chain architecture map•Limited access to data, but improving via new reports

Systems

•Six Sigma driven process work aligned to business strategy and bottom line impact•Set documentation infrastructure•SCOR standardization•Visible metrics with targets and corrective action

•Spot process work•Limited, formalized documentation•Limited standards•No set continuous improvement methodology•Spot use of metrics

Process

•Stable cross trained workforce•Supply chain trained and certified team members•Bench strength including active campus recruiting for entry level roles•Monthly leadership team forum

•Constant churn leading to team with less than one year in current role•Limited external supply chain expertise•Battling negative perception•Solid mining industry experience

People

Future StateCurrent State


Driving Change: Baseline Capability & Set VisionDriving Change: Baseline Capability & Set Vision

5= solid, sustainable year over year improvement

4= increasing improvement

3= stable progress

2= sustainable action started

1= one-time improvements

0= non-existent-

1.00

2.00

3.00

4.00

5.00

Bas

eline

Sep

06

Sep

07

Futur

e

Systems

Process

People


Driving Change: Deployment StrategyDriving Change: Deployment Strategy-- SCOR AlignmentSCOR Alignment

Balance resources with requirements and communicate plans

Schedule inbound deliveries, warehouse management, and transportation management

Identify and select supply sources

Schedule production, issue product, produce and test, package, stage product, and release to deliver

All order management steps

Schedule outbound deliveries, warehouse management, and transportation management

All return defective, MRO, and excessive product steps for both source and deliver processes

Within Scope?

YES

YES

NO

YES

YES

PLAN

SOURCE

MAKE

DELIVER

PLANRETURN

Supply Chain Operations Reference Model


Driving Change: Deployment StrategyDriving Change: Deployment Strategy-- SCOR AlignmentSCOR Alignment

PLAN

SCOR Processes(MAKE- under manufacturing organization)

DELIVERSOURCE ENABLE

Steve LesserVice President, Supply Chain

Glenn WattLogistics Director

Nancy Bilodeau

Client Services Manager

Lewis Greig

Compliance ManagerRoyden Brown

Planning Director

Sandy RudolphAN Procurement

Director

Sebastien PichetteProcurement

Director

OpenMBB

Lean Six Sigma

Kevin McBrideSupply Chain

Program Manager


Driving Change: Deployment StrategyDriving Change: Deployment Strategy-- Lean Six SigmaLean Six Sigma•Why Lean Six Sigma?–Methodology to drive improvement in cost, quality, capital, and lead-time through identification and correction of the activities that cause our customer’s critical-to-quality issues and create the longest time delays.

Lean Focus

Six Sigma Focus

Lean Six Sigma

Shorter

DeliveryTimes

Improved

ProductQuality

Lower

ProductCosts


Driving Change: Deployment StrategyDriving Change: Deployment Strategy-- Lean Six SigmaLean Six Sigma

Five major work streams identified

Growth/Acquisitions Integration

Optimize Supply Chain

Trade Working Capital Improvement

Lean Manufacturing

Global EBS Manufacturing

First wave of Black Belts with Green Belts nominated to five specific projects in addition to the Global EBS trained resources

Initial Training Plan

Black Belt training concluded in February 2007

Green Belt training in USA concluded in November 2006

Green Belt training in Canada concluded in January 2007

Second wave of Black Belts with Green Belts nominated for early January 2008 start and training


Driving Change: Deployment StrategyDriving Change: Deployment Strategy-- Accelerate Project DeliveryAccelerate Project Delivery

Bu

sin

ess N

ee

d

Pro

du

ctivity-

Ha

rd

Pro

du

ctivity-

Co

st A

vo

ida

nce

Ris

k

Ma

na

ge

me

nt

Infr

astr

uctu

re

Tim

e-

Du

ratio

n

Re

qu

ire

d

Re

so

urc

es

Ch

an

ge

Ma

na

ge

me

nt

Imp

lem

en

tatio

n

Co

sts

Pe

rce

nta

ge

Co

mp

lete

Goal

Link Project

Six

Sigma 15 15 5 15 10 5 5 5 10 15 Total Owner

Supply Chain and Six Sigma Project Listing

Strategy Execution

Weighted Value

With foundation set and change management methodology in place, the focus shifts to project prioritization and delivery

Projects ranked based on strategic benefit and execution


Driving Change: Educate StakeholdersDriving Change: Educate Stakeholders

E = E = ff (Q x A)(Q x A)The Effectiveness of any initiative in achieving results,

is a function of the Quality of the technical solution times its Acceptance within

the culture.

Organizational Effectiveness Model


Driving Change: Communicate ProgressDriving Change: Communicate Progress

FY07 target=

Mobility Project delivered

FY07=

FY07 target= USD

FY07 stretch= USD

System ImplementationNorth America Supply Chain Productivity Initiatives

TMS launched FY07=Forecast FY07= USD

FY06= USD*

Current Month=

YTD=

Net Promoter Score

YTD Savings/Costs= TBD

FY07 target= %

YTD NA adoption= %

FY07 target= %

Lean Six Sigma DeploymentS&OP

YTD Trained BB/GB=

FY07 Target=

YTD Global mtgs=

FY07 target=

FY07 target= (budget)

FY07 stretch=

Inventory Turns

FY07 target= % (budget)

FY07 stretch= %

FY07 target=

FY07 stretch=

Supply Chain Fixed Costs/Gross Margin(FY07 + Upton, AN Consulting, & more Global Procurement - Compliance)

Category 2+ Distribution Incidents

Creative Customer SolutionsWorking Together

Feb07=

FY06=

YTD= %

FY06= %

YTD=

FY06=

Commercial OwnershipSafety, Health, & Environment


Weekly Monthly Quarterly Annually

BB Coaching With

MBB Coach

4 Block Report Updated

(sent to Steve, MBB Coach, & Sponsor)

Driving Change: Communicate ProgressDriving Change: Communicate Progress

4 Block Report UpdatedTop 10

excl Six Sigma(sent to Steve)

NA Training & Project Sharing

(Training or Conf Call)

Global Best PracticeSharing Conf Call

NABT LeadershipUpdate- BRR

Lean Six Sigma

Supply Chain

Combined

NA Supply ChainSub-process Leader

Coachingwith Steve

NA Supply ChainLeadershipConf Call

NA BB/MBB Best PracticeSharing Forum

NA Supply ChainLeadershipForum

(start 2007)

Six SigmaAnnualGlobal

Conference

NA Supply ChainAnnual

Conference(under review)

NABT LeadershipUpdate

Global S&OPConf Call

(Steve only)

NA ExecutiveS&OP

M&SC GlobalConf Call

(Steve only)

M&SC GlobalLeadershipForum

(Steve only)

NA LeadershipConference

(as approved)

EBS LeadershipConf Call

(Steve only)

NA/GlobalProcurementConf Call


Maintain Control while Delivering ProductivityMaintain Control while Delivering Productivity

Driving change will yield the productivity improvements, but

safety cannot be compromised in the explosives industry

No injuries to anyone, ever

The brass ring and the underground mine

Risk Management techniques are employed to identify gaps

and projects to reduce the gaps

Example- ammonium nitrate prill delivered in railcars


Seal and locking policy obviously not

effective due to the condition of the

railcar gates

Pictures to be inserted for presentationPictures to be inserted for presentation



Texas City Disaster- April 16, 1947

Two freighters, Grandcamp and High Flyer, full of ammonium nitrate fertilizer destined for war torn Europe caught fire and exploded sixteen hours apart.

Almost 600 dead; 3,500 injured

Worst industrial disaster in American history




AFTER

BEFORE



Questions?

Applying Data-Driven Techniques for Supply Chain Excellence

Education

Transcript of Applying Data-Driven Techniques for Supply Chain Excellence