Our approach and management of this project delivered substantial OTD results well ahead of the time expectations of our client. The clients OTD performance improved from 59% to 95%, within a 120-day period (Nov. 2010 to March 2011), and was achieved well ahead of the clients initial targeted completion date of June 30, 2011.
We principally achieved this target as a result of OTD performance improvements.
Our client is a $15.0B global power leader that designs, manufacturers, sells, and distributes its product and related technology around the world. This client has a global supply chain, and was forecasting strong revenue growth across several of its business units. Contributing to its operational challenges was the ongoing unacceptable on-time delivery performance of its component suppliers across all major component categories.
Our client was experiencing on-time delivery performance of its supply base in the lower 80 percentile and more specifically in the lower 50 percentile on its worst performing suppliers.
Based on our team’s reputation, knowledge, and expertise in supply chain management and systems, we were engaged in mid-November of 2010 to formulate and execute an improvement process that would drive supplier on time delivery performance to the 95 percent level or higher by June 30, 2011.
The challenges facing this organization with regards to this project were as follows:
- Which initial group of problem suppliers should be targeted?
- How to communicate, initiate, execute, track, and maintain the improvement process in a cross functional matrix environment?
- How to incorporate specific supplier project management with the organizations own problem identification and resolution process, (7-Step Process), in order to track deliverables and insure a systemic ongoing solution.
- Developing specific metrics and expectations.
- Buy in from the commodity teams to support such activity.
Strategy and Actions: Weekly Tracking of On-Time Delivery
Our Operational Excellence team initially sent an assessment team into our client’s organization in order to review and analyze the company’s supplies-base metrics and OTD performance data. After completion of this initial review phase, our team was able to determine and develop the overall project scope, identify specific global geographical complexities, and determine the appropriate group of suppliers to target in the initial improvement project.
The criteria that were utilized in selecting the initial group of 20 suppliers focused on suppliers who had a high level of delivery volume, in addition to those that would generate a high value impact to our client through improved performance. Our client specified that it would like us to develop an approach that would enable them to achieve 95% OTD from the targeted group of suppliers by June 30, 2011, while also offering the knowledge of our Operational Excellence Team to mentor and develop their personnel while leaving them with robust processes and a methodology to stay on track.
The team then developed an operational improvement strategy that focused on utilizing the client company’s 7-Step problem identification and resolution procedure, coupled with project management software to track team activity and deliverables for each supplier. The next step in this process was to communicate project initiatives to the individual sourcing teams, and then drive the process of problem identification and resolution with the sourcing teams and the supplier. This stage of the project entailed more detailed data analysis, ongoing communication and conference calls with the team and supplier, weekly order delivery status reviews, monthly supplier scorecards, and supplier site visits.
Additionally, to keep senior management informed of progress and deliverables, a weekly supplier tracking sheet was formatted and updated each week. The tracking sheet was known as the ‘PDCA Update,” and is the acronym which represents Planning-Doing-Checking-Actions. This simple format tracked current and future team/supplier improvement initiatives, OTD metrics from a weekly and monthly basis, and project management status of each supplier. This format also was shared with sourcing team members to insure ongoing awareness, communication and progress.