Steelcase and Supply Chain Management

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Steelcase and Supply Chain Management

• Wendy Kremers, CPM
• Feb. 8, 2008
• Orlando, Florida

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Who am I.

• Lean Supply Chain Mgr. Steelcase Inc.
• Past APICS BOD Executive Vice President, VP
  Educational Development, Region 14 VP
• 2003 2004 Co-chair APICS International
  Conference.
• 2006 APICS International Conference Chair,
  Orlando
• 2007 2008 APICS International Conference
  Committee.
• Mother of three plus two fur children
• Grandmother of, Kimberly, Brittany, Nicole, Tony,
  Brooklyn, Jaxon and Chloe

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Who Is Steelcase?

• Founded in 1912
• First to make Office furniture from Metal rather
  than Wood
• Industry sales leader since 1974
• Product portfolio includes office furniture,
  interior architectural products, and technology
  products
• Fiscal 2007 revenue of approximately 3.5 billion
• Over 30 manufacturing locations
• 13,000 employees 800 dealers

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Worldwide Manufacturing Sites
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What We Do...

• World leader in designing manufacturing
  products used to create high-performance work
  environments
• We help individuals and the organizations that
  employ them around the world to work more
  effectivelyWe Transform the Ways People Work

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Steelcase and Understanding Supply Chain
Management

• Very functionally focused
• Supply Chain Management a new concept
• Each functional area performing to a difference
  set of metrics

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Product Complexity

• Make-to-Order No Finished Goods Inventory
• Number of Locations across the Globe
• Catalog entries 90,000 discrete orderable items
  everything made to order
• Special custom models in addition
• Myriad of colors, fabrics, finishes

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Product Complexity

• Total orderable in the trillions!
• Previous strategy Forecasts and Inventory, very
  vertically integrated
• Lean strategy Flow, Pull, and Speed. More
  outsourcing and virtually integrate suppliers.

Requires a reliable supply base and continuity of
supply.
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Situation Analysis

• Company had a need for improvements in Supply
  Chain
• Supply chain/product complexity
• Lack of contractual or supplier discipline
• Need to support lean operations

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Corporate Lean Strategy

• Current supply base was struggling with key
  components that support lean manufacturing
• Lacked on-time delivery discipline
• Quality concerns
• Inability to meet exact ordering quantities
• Long lead times

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Understanding the Basics

• First Supply Chain Manager named in the late
  1990s - Fabric
• Education of materials management team on Supply
  Chain Management basics
• Gaining alignment on shared metrics
• Creating a Supply Chain Culture.

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What is Supply Chain Management?

• The process of managing the flow of material and
  information beginning at the lowest raw material
  level of the supply chain to the ultimate
  consumption of the finished product.

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Which includes..

• Demand Management
• Sourcing and Procurement
• Order Processing
• Production Scheduling
• Inventory Management
• Transportation
• Warehousing
• Customer Service
• Concurrent Engineering
• Quality
• Targeted Costing

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Basic Concepts of SCM

• Supply chains encompass the companies and the
  business activities needed to design, make
  deliver and use a product or service.
• Every business fits into one or more supply
  chains and has a role to play in each of them

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Nothing entirely new..

• Napoleon made the remark, An army marches on its
  stomach.

Unless the soldiers are fed, they cannot march.
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Total Supply Chain Review

• Started with Fabric Supply Chain
• High spend commodity for Steelcase
• Intense focus on the details end to end, location
  by location
• Cross functional activities involving both tier 1
  and tier 2 suppliers all the way to the point of
  use, the customer installation

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Cross-Functional Fabric Supply Chain Team

• Operations
• Quality Engineering
• Product Engineering
• Fabric Quality Engineering
• Process Improvement Management
• Sourcing
• Design
• Marketing Sales
• Product Development
• Finance

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So where do you start? The hardest part is
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One of the Biggest Issues? Ownership of the
Entire Process.What Will Ownership Do?

• Move from having a task orientation to having
  a process centered orientation
• Task (part) piece of work, performed by one
  person
• Process (whole) related group of tasks that
  create value for a customer
• No one had a complete understanding of how the
  individual tasks should be combined to create a
  robust process that could deliver the needed
  results

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Functional Focus
MFG SRC FIN ENG QLT PIC MKT SDP MILLS...
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Functional Focusand a Process Mgmt Focus
MFG SRC FIN ENG QLT PIC MKT SDP MILLS...
Business Processes
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Key Learning

• A process focus is going to put pressure on the
  organization, as cross-functional teams will be
  needed from different organizations because
  processes cross existing organizational
  boundaries
• This new way of working is incompatible with
  existing organizations, their structure,
  personnel, management styles, cultures, reward
  and measurement systems, etc., etc.
• Need a physical presence in the implementation
  phase of process improvement

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So, how do you possibly understand and address
the complexity, waste, excess inventory, etc.
while increasing Supply Chain reliability?Analys
is of the entire Process Documenting the
current state Develop a future state So that
you ultimately get...
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Results
Focusing on the Process identifies where to
devote your attention and resourcesand delivers
these results
EVA Improvement
Growth
Improve Cash-to-Cash Cycle
Financial Flow
Profitability
Capital Utilization

Forward Integration
Freight Consolidation
Backward Integration
Inventory Consolidation
Value
Transaction Visibility / Schedule Coordination
Inform-ationFlow
MaterialFlow
JIT
Automation of Transactions
Postponement
Sequencing
SCM Performance Metrics
Fabric Application Technologies
Supplier Decision Support
Available to Promise
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From Vertical to Virtual Integration
Creating Supply Sync

• Created one-stop portal
• Standardized sourcing processes
• Improved supplier visibility
• Integrated information
• Supplier self-service
• Collaboration Knowledge management

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From Vertical to Virtual Integration
Supply Sync Platform
SupplySync Supplier Portal One Steelcase - One
Portal - One Stop Shop
eProcurementAutomate indirect procurement
eRFxAutomate supplier RFI, RFP and RFQ process
CollaborationAutomate exchange ofproduct
designs, knowledge management, project
management, Broadcast email etc
Supply SideOptimizationStandardize direct
material and finished goods procurement
Transaction Exchange (SUS)
Information Services (BW) - Data Standards
Centralized Control
SAP Procurement to Payment (P2P)
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From Lean Manufacturing to
LEAN EVERYWHERE!!
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lean supply management focus
strengthen the supply network
Lean Supply Chain Projects Apply lean supply
chain principles and seamless technology to
improve flow and eliminate waste in the joint
value stream
Lean Supplier Development Projects Creating a
culture of lean within the suppliers
facility (focused more on lean manufacturing
principles and practices)
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How Weve Been Successful...

• being completely focused on the process
• The words that every operations person loves to
  hear
• Im from Corporate and Im hear to help.
• Our approach has been
• How does the process work and how should it
  work?
• If you dont know, well work with you to
  document it
• We arent leaving until weve implemented the
  changes.

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What are we doing? Supply Chain Management
Initiatives

• Strategic Sourcing / Supplier Consolidation
• Technology / Supplier Collaboration
• Working with Tier 2s to focus on Raw Material
  sources (pricing availability)
• Complexity optimization
• Lean Supply Chain Management (Steelcase all the
  way through our supply chains)

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Capacity Management

• Focus on purchase parts components
• Sourcing working jointly with Materials
  Management, Operations
• Information reviewed as part of weekly SOP review
• Support for our say yes metric

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Major Components of Capacity Management
Capacity monitoring what are my volume
capabilities?
Forecasting what are my volume projections?
Capacity Management

• Forecasting and capacity monitoring challenges
• Parts shared across plants (domestic and global).
• Parts shared across various products/buckets.
• Capacity is generally linked to manpower and
  capital. The capital may produce a part family
  instead of an individual part number.
• Large amount of data involved in properly
  managing capacity and constraints
• Buckets are at a work center level while
  components are tied to a product

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Major Components of Capacity Management
Capacity monitoring what are my volume
capabilities?
Forecasting what are my volume projections?
Capacity Management

• We will restrict capacity monitoring and
  forecasting to critical components or families
  to make the process manageable
• A critical component or family is a major
  component of a product (used on almost every
  production unit) that is generally too expensive
  to hold in inventory.
• Examples of critical chair parts seats, backs,
  bases, and arms
• Examples of non-critical chair parts fabric,
  paint, fasteners, and hardware
• Forecasting is also important for long lead
  time parts (LCC part)

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Steelcase Operations Strategy
FY10
Agile (grow the business)
FY09
FY08
One (design the experience)
FY07
Reliable (process excellence)
Operate with AGILITY
It feels like Steelcase has a broad offering,
lots of experiences and brands but they are
nimble, responsive and flexible. They will say
yes to important requests, they keep me
informed and they are also quick to react.
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Steelcase Operations Strategy
FY10
Agile (grow the business)
FY09
FY08
One (design the experience)
FY07
Reliable (process excellence)

• New Measures
• Supply Chain Reliability
• Purchased Part Splits
• Incoming Quality PPM
• Corrective Action Reports Culture

• SupplySync Platform Globally
• SAP Platform Globally
• Business Management System

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Supply Chain Agility

• What we promise to our customers
• Say Yes as much as possible (unlimited part
  availability)!
• Offer a wide variety of options!
• Push for competitive product lead times!

we need to reliably deliver on this promise!

• Reduce the causes of waste and variation we can
  control (unnecessary noise).
• Become proficient at managing sudden,
  unpredictable changes in customer demand

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Supply Chain Agility Roadmap

• Right size supply base
• Select lean suppliers

• Optimize part complexity
• Design for agility

• Demand management
• Customer demand visibility shared with all
  suppliers
• Replenishment model based on part predictability
• eKanban model predictable parts
• Collaborative planning spike management model
  variable parts
• Inbound material flow
• Optimize inbound logistics, inventory placement,
  and point of differentiation specific to each
  supplier value stream at the part level
• Supplier Development
• Focus on Process Measures
• Days in Inventory Lead Times/Availability Times

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Inbound Logistics

• Concentrating on Planning Data
• Ship from addresses
• Inco terms
• Pack file
• Kaizen in Seating for standardizing shipping
  schedule process through receiving
• You have been selected to participate in a
  workshop where we apply Lean Principles to the
  management of transportation across North
  America, including inbound materials and outbound
  customer deliveries.
• The goals of the workshop are (1) to standardize
  the processes of planning, shipping, carrier
  payment, and reporting and analysis for both
  inbound and outbound shipments in a centralized
  logistics organization and (2) to provide daily
  visibility to all logistic moves.

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Regional Summits

• Tentative Agenda
• 2 hours - general business conditions, the
  direction of SCM at Steelcase, and what it means
  to be a supplier
• 1.5 hours - Predictability part segmentation,
  complexity, agilitydemand visibility, eKanban,
  the other tools available to become more agile
• 1.5 hours - Lean supplier development we will
  explain the program and have a supplier or two
  discuss their experiences in the program
• 1.5 hours - Quality and reliability
• 1.5 hours - Tour of a Steelcase plant
• Each segment will have QA built in

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Meetings and Metrics

• LSM meetings at all levels
• Executive Management to the Shop Floor
• Shared Metrics
• Supply Chain Mgmt and Materials Mgmt
• Accountability Boards
• Executive Management to Shop Floor
• Standardized Tools
• A-3s, reporting tools and reports etc

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Steelcase and Supply Chain Management

• Wendy Kremers, CPM
• Feb. 8, 2008
• Orlando, Florida