Transforming supply chain Harish Bawari - Hero MotoCorp May 2016

Using IT to Strengthen Supply Chain Planning

Tuesday, 10th May’2016

Harish Bawari

External - General e-Material Flow

• The world’s largest two wheeler manufacturer

• Presence in 30+ countries outside India • 6500+ Customer Touch points in India • 4 Manufacturing Plants in India • One in Columbia • Overseas Assembly operations: Kenya, Uganda, Tanzania, Bangladesh

Hero MotoCorp Ltd.


Supply Chain is about…

Flow of products and services from

–Raw materials manufacturers

–Component and intermediate manufacturers

–Final product manufacturers

–Wholesalers and distributors and Retailers

–Finally to Customer


And Supply Chain Management is about…

Design and management of seamless,

value-added processes across

organizational boundaries to meet

the real needs of the end customer


Key Focus Areas in Supply Chain Management–Improving Service Levels and

efficiency

–Cost reduction

–Continuous Improvement

through automation


Today we want to Share a

Project we have done in IT to

Strengthen Supply Chain at

Hero MotoCorp


Business Scenario

• We have grown tremendously in our operations, resulting in

complex Operations and Supply Chain

• The flow of materials is a key factor in making sure that

production is smooth and streamlined

• The material and information at the right place and right

time is very important

• It flows through various points in the operations chain

• The cycle of transfer of information ends up being too

complex owing to the scale of operations and the Bill of

Materials


So, we implemented a System


The system was conceptualized and

designed to make sure that the

supply chain becomes more

efficient, cost effective and

information is easily available

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e-Material Flow

Business Objectives


To have smooth material flow at optimum costs

across the Supply Chain based on JIT principles

– Inventory management

– Production Sequencing and scheduling

– Uniform communication to all vendors and

the Shop floor

– Enhance quality and productivity -

removing NVAs


• To streamline the Supply Chain by making

available the right information at the right time

to the right stakeholders

• Enabling real time visibility of production status

to the vendors as well as shop floor to enable

the right people to act in time

• Proactively get alerted in case of any

abnormality in Operations


e-Material Flow

What was done…


• The project entailed using the SAP ERP system and

integrating it with various other systems to achieve

the objectives

• The solution was designed in SAP system for making

the delivery schedule available to the vendors online

based on the production

• Automation in assembly lines with initiatives like

scanning of SKU, hanger and VIN number at different

stages

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• Scanning at the time of Gate entry and goods

receipt, etc. were done which added to the overall

automation of the chain

• To streamline SC, the delivery schedule is made

available online to the vendors based on production

forecast and detailed planning

• Further automation has been done through this

system in the related processes such as Gate entry

and GR to create synergy in the entire material flow

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EMF System is integrated with multiple systems :

– SAP EP – for delivery schedules publishing and bar coded tags printing

– SAP BI – for analytics to improve the abnormalities

– Extensive integration with the barcode system so that the processes are automated across the Supply Chain

– Gmail for communication of exceptions/alerts – SMS system for sending alerts

– Empty Return system to reduce efforts of duplication

– Truck Turn Around Time system


Enhanced HMCL-Vendor Interface Portal• Information flow through the portal

• All schedules uploaded in the portal which vendor can access-no

emails

• Vendor prints all tags (Vehicle Tag, Receipt Tag, Bin Tag) from

portal

• Only those material for which schedule is given can be printed

• All acknowledgements & discrepancy note, if any, generated

through the same portal & can be seen on real time basis

• The vehicle entry time and exit time can also be viewed by

vendor on real time basis from the portal

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e-Material Flow

How the Way of Working has

Changed


PPC

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# Before emf system After emf system

1 Plan is issued monthly and inconsistently Plan is being issued fortnightly and on time

2 Colour wise plan is issued very late after the start of month

Production plan is being released at SKU level

4 All work is done manually/in excel and then loaded in SAP

System generates the plan

5 Frequent changes in production plan, no rules are set for the changes

Minimum changes in the production plan as per set rules and due approval

6 Plan if not completed by month end is treated as cancelled

Plan once issued will not be cancelled but shifted

External - General e-Material Flow 21

# Before emf system After emf system1 Monthly schedules are sent indicating

total requirementFortnightly day wise/line wise schedules are sent

2 Day wise schedules are not sent Daily day wise schedules indicating time & unloading location

3 Vendor usually supply material in the beginning of the month

Vendor can supply day wise required material only

4 Plan is issued to vendors. Vendors do their own manual calculations

Daily System generated part wise schedule are released.

5 Daily meetings & constant follow up to ensure supplies

Time wise schedule will take care, monitoring screens are available. Auto alerts available in case of deviation.

Supply Chain


Supply Chain

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06 Inventory adjustments are possible only at month end

Inventory adjustments are done on daily basis based on actual production

07 Due to uncertainty vendors keep inventory of all items for all models

As schedules are fixed therefore vendors to keep inventory of required items only

08 Inventory norms are fixed for all items No Inventory norms. Material will be available as per advance time

09 Line stoppages due to component shortages

Minimum Line stoppages due to component shortages

10 Segregation inside the plant No Segregation inside the plant


Stores

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1 Exact time of receipt, unloading location & consumption point is not known

Time of receipt, unloading location & consumption point is mentioned on tags

2 Manual punching at gate, Manual counting of trolley/bins & GRN creation etc.

No manual punching. Every entry, counting of trolley/bins, GRN creation is through the reading of the bar-coded documents

3 Any material in any quantity is sent by the vendor

Material can be sent only as per the daily schedule

4 Vendor persons inside the plant to take physical stock etc

No need of vendor persons inside the plant

5 Real time information of dispatch of material, GE and GR not available

Real time information is available


e-Material Flow

Key Benefits Achieved


The project benefited the organization in multiple

ways. The key benefits that we realized post

implementation

• Inventory carrying cost reduction - parts and engines

• Lesser instances of line stoppages, helped in

increased production and lot of savings in the labour

cost

• Manpower savings which resulted from automation

across the supply chain, store and planning

departments

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• Truck Turn Around Time reduction and in turn,

increase in the logistics efficiency

• We also realized a lot of other benefits as a

result of streamlining of the Supply Chain and

the automation at various levels

• Benefits which we reaped from this project -

way surpassed the cost of the project

• RoI within 6 months of the launch owing to the

scale and the effectiveness of implementation

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Benefits to Suppliers

• To the minute firm scheduling system helped Suppliers -Optimise human resources -Inventory optimization -Reduction in manufacturing losses -No requirement calculation from rolling plan -Simpler material reconciliation at both locations -Standardize production lot size and economise on logistics costs

• Real time information of truck entry, acknowledgement, discrepancy if any, return of empties and truck exit etc.

• Reverse logistics management is simpler and efficient • The number trolleys/bins in circulation reduced • Truck TAT improved

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e-Material Flow - AchievementsParticulars Before EMF @6600VPD After EMF@9100VPD

No. of filled trolleys 2200 nos. ~700 nos.

Avg. Inventory of emf parts

15 Crore 9 Crore

Avg. engine inventory 3200 Nos. 2700 Nos.

Line stoppages Avg. 3073 Min/Mth Avg. 1350 Min/Mth

Production plan changesAvg. 75 /Mth (Unplanned)

Avg. 10/Mth (Approved)

Manpower in Stores 184 148

3PL operators (stores + vendors)

244 112

Manpower in PPC 231 201

No. of 3PL trucks 102 85

Truck turn-around time Avg. 130 Min Avg. 90 Min


e-Material Flow - AchievementsParticulars Before EMF @6600VPD After EMF@9100VPD

Schedule adherence No day wise schedule Avg. 95% for daily schedules

On-time delivery NA 87% on time achieved

% Lot segregation 1.2% 0.04%

Accuracy-BOM 86% 100%

Minor injuries/Annum (PPC + Stores)

50 16

Visuals/FIFO No Visuals/FIFO Day-wise colour tags and emf layout ensures FIFO

Information flow Slow: combination of manual and emails.

Fast: Combination of real time reports and Auto alerts

Total 2.83 Crores/Annum recurring cost has been saved from one plant.


e-Material Flow

Key Business Challenges Faced


The complexity of the project was huge.

There were so many areas which the project

touched and hence the challenges. Top 3

Challenges :

• Physical changes on shop floor ( stores

layout changes without stopping

production ) Overcome by Detailed planning

for contingency and top management drive


• Cultural changes (Change Management)

Adherence to MRP (legacy System) –

Overcome by involvement of key

stakeholders in testing and suggestions

during the project

• Availability of business experts for sufficient

and quality time – Overcome by calendar

planning and top management involvement


e-Material Flow

Key Technical Challenges Faced


The system is unique. The challenge was high

risk on account of system failure. Top 2

Challenges:

• Since the system was evolving, the iterations

were more and to be done within stipulated

time frame. Overcome by Rigorous testing of

all scenarios and training to users before Go-

Live and building of robust fall back systems

for each and every process


• Development and support capability of internal

and external (Consultants) teams. Overcome by

motivating both teams (Business & Technical)

and involving external process experts to

achieve a unique and effective integrated

solution/system for complete supply chain, to

work as single team and complement each other


e-Material Flow

Next Steps


The EMF Journey Continues

• Continue to implement e-Material Flow System in all

our manufacturing plants - existing and upcoming

• Our endeavour always is to make sure that

–Technology is used in the most optimal way

–Functional processes designed efficiently

–Proposed benefits reaped thoroughly

Thank You

Transforming supply chain Harish Bawari - Hero MotoCorp May 2016

Technology

Transcript of Transforming supply chain Harish Bawari - Hero MotoCorp May 2016