Reshaping vertical supply chain networks: UK furniture industry

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• Reshaping vertical supply chain networks UK
  furniture industry
• Dr Sharon Williams,
• ESRC Post Doctoral Fellow, Lean Enterprise
  Research Centre, Cardiff University, UK

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Content

• Overview of LERCs research activities
• Reshaping networks project
• Offplan Case study supplier development
  programme
• Whats next.

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Lean Enterprise Research CentreCardiff Business
School

• Formed in 1994 by Prof Dan Jones Prof Peter
  Hines
• 23 staff now

Researching, applying, communicating lean
thinking
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LERC Research

• Core activity
• Collaborative approach
• multi-sponsor studies
• firms receptive to new thinking
• Application of new developing techniques
• Help businesses organisations become world
  class

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LERC Research Projects
Automotive
Retailing Distribution
(1999-2001)
Process Improvement
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LERC Research Projects
New Sectors
Furniture
Healthcare
Transportation
Construction
Public Sector
Services
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Lean in Different Business Activities
Manufacturing
Assembly
Processing
Job shop
Retailing
Distribution
Logistics
Transportation
After Sales Services
Admin/processing
Repair maintenance
Public Services
Healthcare
Public Administration
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Lean in Different Business Processes
Order Fulfilment
Sales Acquisition
New Product Development
Business Planning
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Lean Thinking.

• An approach to the way you make a product or
  deliver a service
• Focus on value waste
• 5 basic principles customer value, removing
  waste, making products flow at the pull of the
  customer and always striving for perfection.
• Numerous tools techniques developed to apply in
  organisations
• Appropriate to all types of organisations, in all
  sectors

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The Lean Enterprise

• Organisation as part of extended supply chain
• Need to think strategically beyond own boundaries
  - the lean enterprise
• also, value streams flow across boundaries
• common targets, rules for sharing gains etc

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Reshaping vertical supply chain networks

• Need to improve existing networks
• Pilot activities undertaken with office seating
  manufacturer
• Launched supply chain improvement programme
• Supplier development programme
• Benefits to both manufacturer and suppliers

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Case study - Offplan

• Manufacturer of office seating SME employing
  120 staff
• Centrally located within the supply chain
• Early work by Purchasing manager to evaluate
  capabilities of supply base
• Management Buyout (1998) long term objective
  sustainable, profitable growth
• Relatively small in comparison to some of their
  SC members.

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Reshaping supplier networkSupplier development
activities

• Aim to develop a network of competent suppliers
  (Lambert et al., 1998 Toni and Nassimbeni,
  2000).
• Activities organised by a customer on a strategic
  and practical level.
• Dissemination of customer practices so that
  suppliers can plan their processes more
  effectively.
• Areas of assistance can include
• Factory layout
• Set-up time reduction
• Kanban systems
• Environmental management schemes

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SC networks and learning

• Know how is one of the factors required to
  promote and sustain SC networks (Powell, 1990).
• Single loop learning provides short term
  solutions and limited levels of integration
  double loop learning critical to the development
  of distinctive resources(Argyris and Schon,
  1978).
• Organisational learning dependent upon open
  channels of communication and no barriers to
  learning (Mintzberg, 1996).
• A learning organisation can enhance the learning
  of its employees/ SC transform itself (Pedler
  et al., 1988).

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1. Partnership, Trust and Empowerment (PTE)
Pilot Scheme

• Relations and communication main focus
• Local foam supplier Foampack (part of
  multi-national group)
• Small cross-functional team meeting on monthly
  basis
• Undertook problem solving training
• Initial reservations from supplier in terms of
  whether both parties would benefit.

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PTE pilot activities

• Activities
• Agreed lead times (review of 7 day lead time and
  impact of holiday shutdowns).
• Product specifications tolerance levels agreed
  further work done with design teams
• Quality issues Additional information recorded
  by customer concerning scrap and defects
• Communication regular meetings and
  communication
• Packaging Dedicated packing team assigned to
  Offplans product

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Benefits of PTE pilot programme

• Reduced scrap levels and defective parts
• Reduced costs
• Identified re-engineering and design
  opportunities
• Improved ordering and packaging process
• Improved communication levels
• PTE members more receptive and proactive to ideas
  and suggestions
• Operators more open to discuss produce
  solutions.

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2. Environmental Management Scheme (EMS) Pilot
Project

• Offplan gained ISO14001 in 1998
• Part of Offplans policy to understand the
  environmental credentials of key suppliers
• Environmental issues not of paramount importance
  to suppliers need to raise profile
• Supplier - Small (micro) engineering company in
  West Midlands (Steelco)
• Supplier had displayed a positive and proactive
  approach to Offplans supplier evaluation
  programme

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EMS pilot activities

• Activities
• Conducted environmental audit with assistance of
  Offplans environmental manager
• Compiled environmental statement to confirm
  commitment to programme
• Introduced environmental improvement activities
• Sort external funding to support further
  activities

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Benefits of EMS pilot programme

• Implemented sound environmental policies and
  statements
• Understand and improved environmental impact of
  products
• Reduced costs and identified additional sources
  of funding for further improvements
• Working towards formal accreditation
• Working with some of their key suppliers to make
  further environmental improvements

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Conclusion

• Organisations can facilitate and enhance learning
  among their SC network members.
• Benefits to suppliers have been increased spend
  with Offplan, the security of long term business
  improved levels of competitiveness.
• Benefits to Offplan were total product life-cycle
  cost savings through a process of continuous
  improvement, earlier supplier involvement in
  product design and reduced lead times due to
  improved communication and closer collaboration.

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Research Issues and Opportunities

• Offplan demonstrated it is possible for the
  smaller organisation to implement a supplier
  development programme and engage suppliers
  irrespective of their size or standing.
• Challenge will be to rollout these pilot
  activities to include other suppliers.
• The sustainability of the supplier development
  activities will need to be monitored.
• SCM is not a quick fix but a progressive and
  adaptive long term solution.
• Adaptive learning styles and open communication
  are critical to SC activities both at company and
  SC levels.

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Project Update

• Supplier development programme has been extended
  to include other activities such as product
  design, kanban, and value stream mapping.
• EMS has been rolled out to a further six
  suppliers
• Business contingency planning and risk assessment
  are now key components of Offplans supplier
  selection and evaluation process.
• Offplan focusing on understanding customer value

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Whats next

• Continue work with the furniture industry
• Collaborative research International partners
• Sustainability of Lean and Supply Chain activities

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Contact details

• Dr Sharon Williams
• Senior Research Associate
• Lean Enterprise Research Centre
• Cardiff Business School, Cardiff University,
• Aberconway Building, Colum Drive, Cardiff,
• Wales, UK. Tel [phone]
• Email WilliamsS10_at_cardiff.ac.uk

www.leanenterprise.org.uk