Supply Chain Organization Design

8/8/2019 Supply Chain Organization Design

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CREATING SUPPLY CHAINORGANIZATION&

INTEGRATION WITHCUSTOMERS

MESUT GNEY14/04/2010


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AGENDA

AGENDA

1. BORELK

2. SUPPLY CHAIN ORGANIZATION MODELS

Design Considerations

3. CREATING A SUPPLY CHAIN ORGANIZATION

Basic Principles

Borelik Experience in SCM Organization

4. INTEGRATION WITH CUSTOMERBorelik Experience in Borelik & White Good Customers Integration

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BORELKA General Overview


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Capacity Cold Rolled: 600 ktons Hot Dipped Galvanizing: 800 ktons

Total : 1,4 mtons (prime)

AA JOINTJOINT--VENTURE OF BORUSANVENTURE OF BORUSAN

HOLDINGHOLDING AND ARCELORMITTALAND ARCELORMITTAL

Located 200 km away from Istanbul and20 km away from Bursa

Logistic advantage: Borusan Port

240k m2 total area out of which 118k m2

covered. Domestic and export customers: 120

Number of Employees; 648

~30% market share

2009 turnover 762 MUSD

2010 projection 1,2 BilUSD

BorelikisTurkeys first privateandsecondlargest flatsteel producer.

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BORELK


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Extensively utilizes Lean 6 Sigma & TPM as a Business Management Model

Quality System

The First Company in Turkish Steel Industry to be certified: ISO 14001 in 1998 Environmental Management System

OHSAS 18001 in 2000 Occupational Health and Safety Management System ISO/TS 16949: 2002 and ISO 9001 in September 2003 ISO 10002 in 2007 - Complaints Management System ISO 27001 in 2007 Information Security Management

Awards

2001 EFQM Excellence Model - National Quality Award in Enterprises Category 2006 ISO Environment Award Honorable Mention 2006 2008 JIPM Excellency Award BUSIAD Environment Award in 2009

BORELK


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SUPPLY CHAIN

ORGANIZATION MODELSDesign Considerations


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Traditional supply chain organization:

Functionally oriented

e.g., Logistics (receiving and shipping) and manufacturing

ProcurementCustomer order management groups

Reporting directly to relevant functional heads

e.g., Logistics, Sales, Marketing, etc.

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Traditional Supply Chain Management Organization


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The new supply chain organization:

Core supply chain functions are organized within SCM department and

responsible from development and execution of each of the core Plan, Source,Make, Deliver, and Return processes. (Transitional Models)

Business unit level, end-to-end supply chain function reporting directly to thehead of the business unit

Supply chain management group is responsible for achieving cross-functionaloperational objectives (i.e. inventory days of supply, order-fulfillment leadtime, or customer on-time delivery. )

Supply chain team do have full control over the resources responsible forexecuting the supply chain strategy

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New Appoach in Supply Chain Management Organization


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CREATING A SUPPLY CHAINORGANIZATION

Basic PrinciplesBorelik Experience in SCM Organization


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In todays business climate, adaptability and agility are the keys. Supplychain organization needs to keep up with the changes in the competition.

Achieving a superior design of SCM organization requires a deepunderstanding of

Underlying processes, Critical success factors,

Organizational dynamics

Company strategies are changing more frequently than ever. The

organization should be aligned to support the overall business strategy.

There should be an agreement on what internal core competencies areneeded and cross funtional coordination should be achieved.

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Basic Principles in Creating SCM Organization


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The organization should be capable of executing all required supply chainprocesseswhether through internal capabilities or strategic partnershipswith companies that can provide required competencies.

Metrics are in place to provide objective information about organizationaleffectiveness. Supply chain performance should be evaluated and monitoredcontinuously.

Roles and responsibilities should be redefined by focusing on changed

objectives. New competencies and skills for newly required capabilities shouldbe developed.

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Process complexity should be reduced. Lean transformation of supplychain management activities should be facilitated.

Seamless information flow structure should be developed in order tomake the whole SCM organization to reach required information.

In re-organization it should be keep in mind thatThere is no unique and universal definition for the supply chain

organization

There is no one-size-fits-all approach for crafting that organization.


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B Organization Early 2004

GeneralManager

SalesMarketing

Customer relationship

Purchasing&

PlanningTechnical Finance

&IT

A team was

established to

review the

organization

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Borelik SCM Re-organization - Before

Before:


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Reasons forre-structuringoftheorganization:

Boreliks vision: Create value to our shareholders by being the pioneer inindustrial partnership with the first class steel users

Increase in the scale of Borelik by the completion of the capacity extensioninvestment

Potential threads of the competitors & market conditions Customers rigorous expectations for delivery performance & stock levels.

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Borelik SCM Re-organization - After

After: GeneralManager

Supply ChainManagement

CommercialTechnical Finance

&IT


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CommercialDepartment:

Margin concentration Deals with the customers, signs the contracts and performs collection Deals with the suppliers, signs the contracts Marketing and CTR

Supply Chain Department:

Working capital concentration Improving on-time delivery performance

Follow up the contracts with suppliers Planning of the production lines Follow up the contract with clients

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Borelik SCM Re-organization - New organization


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To create planning and scheduling solutions are based on the principles of

constraint management and simultaneously consider demand, capacity and

material to generate production plans that can be fine tuned towards specific

business objectives:

maximum capacity utilization

minimum quantity of stocks, inventory lowest cycle times, just-in-time

production and delivery

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New Supply Chain ManagementDepartmentsobjectiveswereclearlydefinedandallignedwiththeoverallbusinessstrategyofthecompany

Borelik SCM Re-organization What has changed?


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Production Planning&Scheduling Determines the maximum capacity offer per period and product Ensures the balance charges/capacity Programs the tools by respecting the constraints in order to optimize

time Controls metal flows in the plant

Raw Material and Sales Planning Order / Capacity Management Raw material avalibility Confirms delivery terms

Follows the evolution of the orders throughout the production &Capacity

Informs the network on the follow-up of the orders General customer contacts (visits) Raw material tracking

Rolesandresponsibilitieswerere-defined

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Cross-FunctionalCoordinationwas providedwithintheorganization

Core supply chain processes such as demand/order management, customer

service targeting, production scheduling, and distribution network

configuration require an end-to-end perspective that cuts across sales,

marketing, and operations.

Power of the functions (sales)

Lack of flexibility (production)

Commercial environment

Power of the individuals Argues between staffs

Rather, these activities require the input and feedback of other functions within

the company, as well as suppliers and customers.19



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Improvement projectsweredonetosimplifythe Supply Chainmanagementactivitiesandtoimprovethecustomersatisfactionbytaking VOC intoaccount.

Order and order change management

Intelligent order acceptance

Implement coil flow management & production monitoring system

Raw material management; Current sigma level 1,63 Target %30improvement

Seamlessinformation flowstructurewerereinforcedand

new ERP systemwasadapted.

i.e., SAP ERP, MES, BI and company specific Decision Support &Sheduling tools

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RECRUIT POWERFUL STAFF

BE PATIENT BE DESIROUS

BE COMPULSIVE

BE INSISTENT

CONVERT ORGANIZATION TO TEAM

CREATE SUPPORTERS BE PROACTIVE INSTEAD OF DEFENSIVE

Supply chain organizational design can have a direct impact on a companysability to optimize material and information flows and do a better job ofmeeting customer needs, all with significant impact to both top and bottomlines:

Executive Team

Held together bya shared view of

the strategy

CIO

SMO

CFO

CEO

MKTG

OPS

R&D

HRO

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Borelik SCM Re-organization - Suggestions


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Inordertobalance

Voiceof Customer(VOC) & VoiceofBusiness (VOB)

Takecareofboth Industrial Needsand Commercial Envorienment

WORK MORE CLOSER AS UNIQUE TEAM

TECHNICAL; COMMERCIAL; FINANCE; SUPPLY CHAIN;HUMAN RESOURCES

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Borelik SCM Re-organization - Suggestions


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INTEGRATION WITHCUSTOMERBorelik & White Good Customers

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Understand betterUnderstand betterActAct

betterbetter

ServeServe

betterbetter

VOCVOC

ManegementManegement

Continuous and systematic VoC Collection

(Understand better)(Understand better)

Continuous and systematic VoC Collection

(Understand better)(Understand better)

Continuous improvement according to VoCs

(Act better)(Act better)

Continuous improvement according to VoCs

(Act better)(Act better)

Serving according to customer expectations

(Serve better)(Serve better)

Serving according to customer expectations

(Serve better)(Serve better)

Voice of Customer - VOC

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Industrial Partnership Customers

Projects dedicated to increase our integration in supply chain of white

goods customers have been implemented to ensure long term

Business :

% 100 supply with negative stock in sheets

Daily/Shiftly delivery in sheets

Integration with Kerim elik (SSC)

Order management & Follow up improvement

IT & ERP Integration

Customer Intergration Projects - Overview

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Objective:

Integration of BORELK and WHITE GOOD PRODUCERs SupplyChain in order to provide continuous, lean and low cost flow ofsheet metals to the customer via KERM ELK (Steel Service

Center).

Scope:

Order Management, Stock Management, Dispatching

Borelik- WhiteGood Customers SCM Integration

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Material Flow Diagram

BORELK

Gemlik

KERM ELK

Tuzla/Bursa

WHITE GOOD

PRODUCER

CR COIL CR SHEETHR COIL

PACKAGING MATERIAL

Borelik- White Good Customers SCM Integration

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Stock Management & Order Processing Principles


600 ton1200 ton 1200 ton 600 ton 600 ton

ARELKKONSNYE

STOK

HAFTA1 HAFTA2 HAFTA3 HAFTA4 HAFTA5 HAFTA6 HAFTA7

B HAMMADDE

K BOY KESMEGR

K DLME GRB ARA HAT

B Raw MaterialB WIP

Negative

Stock

Week1 Week2 Week3 Week4 Week5 Week6 Week7

K Slitting

LineK Slitting

Line

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White Good Producer

BORELK

Daily Sheet Requirements

Daily Consumption Rates

Monthly Coil Demand Forecast

Daily Stock-Order Information

KERM ELK

Daily Sheet Requirement Program

Monthly Sheet Demand Projections

Dispatch Information

Raw material Requirement & Production

Status

BorcelikWeb

Information Flow Structure

EDI

ERP - SAP


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EXAMPLE - B-WG ORDER PROCESSING &

STOCKING PRINCIPLES

LATE DAY1 DAY2 DAY3 DAY4 DAY5 DAY6

ALLOWANCE FOR SUPPLY: 3 DAYS

DAY4 DAY5 DAY6

WEEK3WG SHEET

PROGRAM

WEEK1WEEK2

WG CONSUMPTION

CONSTANT

2 WEEKS 1 WEEK 1 WEEK 2 WEEKS

1000 TON 500 TON 500 TON 1000 TON

WG WEEKL CONS MPTION : ~500

RAW MATERIAL SEMI-PRODUCTCSL/CIL+CTL

ENTRANCEBSH READY MATERIAL

READY MATERIAL TOTAL STOCK CAPACITY = 1000 ton


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B-WG SCM INTEGRATION PROCESS

DIAGRAM


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Supply Chain Organization Design

Documents

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