A leading international plant engineering company had accumulated considerable deficits in supply chain management over the years, which were exacerbated by the supply chain disruptions caused by the coronavirus pandemic. The current interim manager was hired as Material Planning Manager in the Swiss supply chain organization for Europe to eliminate the deficits and ensure planning security in production and delivery with reliable planning of material flows.
When the material planning expert took on the task, the full extent of the problems became apparent: In the recent past, production had been repeatedly halted and postponed at short notice. The delayed processing had led to considerable disgruntlement among important customers and significantly weakened the confidence of production managers in supply chain management. A constantly growing backlog, rising costs due to overtime in production and loss of sales due to unfinished orders depressed the mood in the company.
Value stream mapping reveals numerous deficiencies in supply chain management
After extensive workshops with the management team, managers from production and purchasing as well as employees in the supply chain department, the expert analyzed the processes in material planning with the help of value stream mapping. This revealed two major weaknesses: firstly, material planning had hardly any reliable key figures. Secondly, the responsibilities in supply chain management were not clearly defined.
Reorganization of teams and responsibilities in material planning
In some areas of supply chain management, the unclear responsibilities meant that important decisions were sometimes made late or not at all. To remedy this shortcoming, the interim manager reorganized the relevant teams and assigned clear responsibilities. This accelerated necessary decisions. At the same time, internal communication improved, as those involved were dependent on reliable information from a wide range of areas to make decisions - and also demanded this. By redistributing responsibilities, the interim manager also ensured that duplication of work was avoided in future. This significantly increased efficiency.
Forecast analysis facilitates timely procurement of components
In the next step, the interim manager organized a cross-departmental project to summarize all important production and delivery data and derive a forecast for production requirements. In close coordination with Purchasing, Sales and Marketing, he identified, for example, which components are used particularly frequently or have long delivery times - and should therefore be held in higher quantities to guarantee rapid availability. Based on this analysis, the interim manager worked with Purchasing to derive correspondingly early delivery dates for suppliers.
Reducing dependency on critical suppliers from Asia through local purchasing
In the course of this forecast analysis, the interim manager also discovered that the company was sourcing numerous components from suppliers in Asia. For many of these suppliers, there was no fallback solution, i.e. no second source of supply. In order to minimize the correspondingly high risk of failure in light of the experience from the coronavirus pandemic (or other crises such as the war in Ukraine), he convinced the management to find alternative local suppliers despite higher prices. This is because the total cost of ownership (TCO) is lower despite the higher costs if production stops can be prevented.
Early warning system for production bottlenecks developed and escalation rules defined
In order to be able to react to supply chain problems as early as possible, the interim manager derived an early warning system from the database that shows the current status in a dashboard. He defined escalation rules for critical developments to ensure that the production and delivery of such customer orders can be prioritized early on.
Successful reorganization of material planning within eight months
After eight months, the interim manager had successfully reorganized the material planning. The company now has a reliable materials planning system and an early warning system that identifies emerging problems at an early stage and enables rapid responses. The clear responsibilities in the supply chain team have ensured that decisions are made in a timely and efficient manner.
After optimizing material planning and downstream processes, production is running without unplanned stops or changeovers. Delivery reliability and customer satisfaction have improved significantly. Cross-departmental trust has been restored - and employee motivation has increased significantly.
