Manufacturing Global - November 2015

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TOP 10 Industrial Plants PEOPLE & SKILLS Manufacturing growth through innovation Industrialised IT quality Giving business agility to manufacturers

Bosgraaf Group offers a total package

Bosgraaf Group’s state-of-the-art systems and service for the production of semihard and hard cheeses, is a result of the company’s extensive experience and innovative technical solutions. With an unrelenting focus on performance, hygiene and sustainability, Bosgraaf’s bespoke production facilities ensure that an optimal solution is found across the organisation to suit the clients’ needs, including the use of robotics in mould handling and treatment lines. Bosgraaf specialises in cheese moulding, handling and pressing systems as well as rack brining, treatment and maturation installations. www


Raising the bar W E L C O M E T O T H E N O V E M B E R 2015 issue

of Manufacturing Global. This month, we take a look at the crucial role played by innovation in manufacturing, with SAP UK’s John Hammann highlighting the opportunities it provides for growth. Another company flying the flag for innovation is SQS and David Rigler talks to Manufacturing Global about the importance of raising the bar when it comes to IT quality within manufacturing. Our round-up of the best manufacturing plants naturally shines the spotlight on some of the world’s most innovative manufacturers, unsurprisingly including several leaders from the aviation and automotive industries, as well as a food and drink producer and a scientific instruments manufacturer. We also hear from Affecto, a company promising an unmatched customer experience through the use of analytics, design and technology. We hope you enjoy the issue, do send us your feedback on Twitter @ManufacturingGL

Enjoy the read,

Lucy Dixon Managing Editor EMEA 3




TECHNOLOGY Industrialised IT quality gives business agility to manufacturers


PEOPLE & SKILLS Manufacturing Growth Through Innovation

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November 2015

TOP10 Manufacturing Plants




30 38





58 A M E R I C A L AT I N A

Mexichem Peru


British American Tobacco

46 5


Industrialised IT quality gives business agility to manufacturers Building IT quality into manufacturing processes is more important than ever in today’s industry, and David Rigler of software quality specialist, SQS, believes industrialisation holds the key W r i t t e n b y : D a v i d R i g l e r, D i r e c t o r, Central and Nor thern Region, SQS


TECHNOLOGY MANUFACTURERS LIVE, EAT and breathe quality when it comes to practices and processes such as lean, Six Sigma and metrology. It seems strange then that the quality of the IT systems, including ERP, PLM, MES or CAD, that underpin an entire manufacturing business, is not afforded the same importance. Feast or famine Entry-level IT quality in the manufacturing sector is focused on detecting high-risk defects before they cause damage. Traditionally, IT quality has relied on the time-consuming manual testing efforts of large teams drawn from several departments across the manufacturing business. This manual testing effort reduces overall productivity during the testing phase, while re-testing in response to changes can be prohibitively expensive. However, if testing is not conducted, the risk of introducing a regression into the software is high. Therefore an entry-level approach to IT quality leads to change being deferred until it becomes unavoidable through obsolescence 8

November 2015

or lack of competitiveness. With this feast or famine approach, the IT department often becomes the bottleneck to change within a manufacturing business. Ideally, defects can be prevented through the introduction of an effective quality management regime covering the entire software lifecycle, from requirements validation to production monitoring. A key part of this process

“Industrialised IT qual emerging trend among more forward-thinking quality and testing spe involves significant amounts of regression testing, so that any new change will not have a negative impact on key business processes. Improving quality costs money and spending more money on quality will eventually result in diminishing returns. Therefore it is necessary to apply control to the investment in quality based on an assessment of risks to the manufacturing business. Quality is also about effective


lity is an g some of the g software ecialists�

David Rigler, Director of Central and Northern Region SQS Software Quality Systems 9


reporting and root-cause analysis, so that a manufacturer has the ability to learn and respond quickly to an IT production issue with details on exactly how a code error managed to get to production, the proposed fix and how any reoccurrence will be prevented. IT quality is set to rise to prominence in manufacturing as

results in extensive data corruption. Only an effective quality regime will produce the business confidence to apply patches, hotfixes, upgrades and new functionality to different parts of the interconnected IT estate. Being able to change enhances the ability of an organisation to maintain or gain competitive advantage. In essence, quality enables change

“Quality is also about effective reporting and root-cause analysis so that a manufacturer has the ability to learn and respond quickly to an IT production issue� more organisations attempt to integrate their core IT applications; doing so provides significant return on investment but can also substantially increase the risks posed when changing an application. For example, an isolated ERP application that fails can only impact the business processes linked to that system. However, this one failure could cause utter devastation throughout the entire IT estate if the one failure in an ERP system that is connected to other applications

and change enables business agility. Automation All industry sectors, including manufacturing, are increasingly using software quality to support new product or service launches. Techniques such as specialist 11

TECHNOLOGY quality management and testing outsourcing, the setting up of test centres of excellence, code scanning and large scale automation involving component, unit, service and user interface testing are all being used to outmaneuver competition. Large scale automation underpins the business agility of organisations including Google, Facebook, Twitter and Amazon. Their ability to innovate has seen a meteoric rise in company fortunes. Powered by automation, this new breed of organisation is able to put several new releases of code into production within a week. Industrialised IT quality Industrialised IT quality is an emerging trend among some of the more forward-thinking software quality and testing specialists and is being driven by the factors including: Large Scale - Most large businesses have a huge number of test cases that ideally need to be run when there is a change that could regress the affected area. Continuous Improvement Companies are under pressure to increase the efficiency and effectiveness of their quality 12

November 2015

and testing processes. Shared Risk - It is not possible to carry out all of the testing that is required for every change. Therefore there is always some risk that defects will appear in production. Sharing that risk allows an organisation to confidently state to the wider stakeholders in the business how they are mitigating the overall risk. Focus on core business Quality management and testing are disciplines in their own right and can distract a company from focusing on their primary goals. These factors are driving the uptake of managed testing services, shared risk/reward models based on output or outcome based pricing and test centres of excellence tasked with driving continuous improvement. SQS’ Test Automation Factory uses the principles of lean, high-volume, high-quality manufacturing. In the Test Automation Factory, each test ‘production line’ is composed of a number of discrete workstations for each testing role with a typical configuration consisting of approximately three workstations, each staffed by specialists. The automation team is the engine


Companies are under pressure to increase the efficiency and effectiveness of their quality and testing processes at the heart of the Test Automation Factory, building the test framework and executing test cases; it can be scaled up or down flexibly and rapidly to suit customers’ needs. Forecasting Until recently, one of the primary reasons for a manufacturing company to industrialise IT quality was to provide evidence of testing; for example, process manufacturing companies that have to provide evidence for GxP or other standards

such as J-SOX. Some of these companies have embraced automation and managed testing services to provide this evidence. However, over the next few years all manufacturing companies should carefully consider the benefits provided by industrialised IT quality not only in terms of evidence for reporting, but also to provide greater business agility to enhance revenues and ensure standardised and cross-application processes to improve profits. 13


Manufacturing Growth Through Innovation John Hammann discusses why innovation is so crucial in the continued growth of the UK’s most important industry Wr i t ten by: J O H N HAM MAN N , I N DU STRY PRI NC I PAL FOR MAN U FACTU RI NG , SAP U K

BRITISH INDUSTRIAL OUTPUT experienced a slow but steady growth this year, accordng to an earlier survey from EEF, the manufacturers’ organisation, and advisory firm BDO, underlining the nature of the country’s recovery so far this year. Historically, the UK manufacturing industry’s credentials have stacked-up well in terms of its overall value to the 14

November 2015


PEOPLE & SKILLS country. A sentiment underlined by the fact manufacturing generates between 11 and 12 percent of the UK’s overall wealth, 60 percent of exports and 2.6 million jobs. On the other hand, global manufacturing must be cautious with its optimism. The closely-watched ISM index of US factories tumbled far below expectations. It’s the lowest since the depths of the crisis in mid2009 and a clear sign that US budget cuts are starting to squeeze the economy. The news came just hours after HSBC said its index for China had also fallen, a major inflexion point for the world’s industrial workshop. Spotlight on innovation

From conversations with partners and customers, it’s evident that businesses are confident in their own ability to drive growth and they have identified a number of opportunities to help deliver it. For the majority of UK manufacturers, innovation plays a critical role with 82 percent considering it “important” in helping achieve growth in 2013 and beyond, according to the findings of SAP’s Manufacturing Success research. Despite all the signs pointing towards a continued investment in innovation, manufacturers appear to be divided on the merits. Some organisations remain focussed on investing to innovate and grow, while

SAP Manufacturing: Production Efficiency



November 2015


“Businesses are confident in their own ability to drive growth and they have identified a number of opportunities to help deliver it” – John Hammann, Industry Principal for Manufacturing, SAP UK others take the primary stance of protecting themselves against risk. However, while investing in innovation is a calculated risk, it’s a risk that can bring benefits through improved business processes and product development. Innovation nation While the current economic climate is a significant barrier for firms achieving immediate growth, interestingly it’s also the biggest driver in motivating businesses to innovate. Other significant drivers of innovation include changing customer demands, increasing sales and cost reduction/ need for increased efficiency. External pressures are forcing manufacturers to re-evaluate their processes and how they do business with their customers. It is how companies do business with others where organisations should place

a greater deal of significance when looking to drive innovation. In order to effectively innovate, it’s important for firms to build close relationships with their customers and also understand their customers’ customer. Having greater visibility of the supplier-buyer network is not easy to achieve, but true innovation is often built from a solid understanding of industry dynamics, drivers and relationships. In the modern manufacturing environment, being able to develop creative ideas, address new and complex problems and deliver innovative products and services to global markets will be the capabilities most coveted by both countries and companies. But even more essential for innovation to flourish will be access to a workforce capable of driving it. Next steps in innovation With a plethora of technologies now 17


available, manufacturers are able to harness a greater understanding of customers and their changing demands, greater innovation can allow businesses to form more valuable partnerships within their business network. As a result, manufacturers can look beyond their own company to build their strength, allowing them to better integrate with suppliers, customers and even their competitors. However, in order for innovation to be most effective in the year ahead and beyond, businesses must have the 18

November 2015

right technology foundations in place to support their desired growth. While organisations may have the desire and optimism to change their business, without the right tools in place to execute their objectives, their ambitions are unlikely to become a reality. Manufacturers exploring the notion of investment in innovation, have an abundance of choices which to choose from, but breakthrough R&D and incremental improvements to existing products and services seem to be the most popular.


Through continued investment and innovation we will start to see some breakthrough with new data technologies and disruptive technologies impacting on not only the products but also to the process. In a recent report released by KPMG, they have suggested 68 percent of manufacturers will invest in incremental R&D and 31 percent in breakthrough innovation in 2013 and further. The report also suggests that nearly half of large global manufacturers are planning mergers or acquisitions in order to compete in the industry. Central to this is not thinking

“Dynamic manufacturers who put innovation at the forefront of their industries will be best placed to react to the changing marketplace and will emerge from the economic storm stronger than ever�

about innovation in individual silos, incorporating historical considerations such as products and services, but also in terms of thinking differently about business operations, processes, technologies and talent. Dynamic manufacturers who put innovation at the forefront of their industries will be best placed to react to the changing marketplace and will emerge from the economic storm stronger than ever. The manufacturing industry is at a tipping point, we must react to the needs of our customers and partners. Innovation is at the forefront of this call to arms. Download the SAP Manufacturing Success report here:



Sustainability, innovation and operational efficien manufacturer must adhere to, but some go t


November 2015

TOP 10


ncy are three key facets which a market leading that extra mile to ensure industry dominance Written by: Sheree Hanna


TOP 10

10. General Cable Corp Spread across 186,000 square feet, General Cable Corp’s Jacksonville manufacturing facility in the US has achieved a 129 percent increase in performance productivity since 2010. The copper cable manufacturer has also dramatically improved its first-pass yield over the same period as a result of plant closures elsewhere and subsequent enhanced specialisation.

9. Nestlé Leading the way in the food and drink industry, Nestlé’s advanced manufacturing facility in the Philippines continues to set new market standards through its innovative approach to automation.Environmentally friendly technologies and hazard analysis systems are especially critical components of an operation which puts food safety at the top of its priorities. 22

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8. Thermo Fisher Based in North Carolina, Thermo Fisher’s 325,000 square feet facility has also been optimised with safety and energy usage in mind, reducing defect rates by nearly three-quarters since the turn of the decade. The scientific instrument manufacturer has also reduced landfill waste by 90 percent through plant efficiencies.

7. Harley-Davidson Motor Co For a brand with such rebellious undertones as motorcycle manufacturer, Harley-Davidson, the art of operational efficiency and regulation adherence might seem ironic, but product safety and environmental enhancements remain paramount considerations. A 92 percent completion of its zero landfill target epitomises the developments that have occurred internally in recent years. 23

TOP 10

5. Flextronics

Flextronics’ head facility in contemporary masterpiec and innovation but is set u employee satisfaction.The work teams pays off in term and an all-important 100 p delivery promise for its tec

6. Boeing The world’s largest aerospace company, and jetliner and defence manufacturer also boasts the world’s largest building in terms of volume. It stands to reason then that the facility in Washington is also state-of-the-art, housing not just operational efficiencies but also a Boeing store, a theatre and a Future of Flight Aviation Centre. 24

November 2015


n California is not only a ce in terms of technologies up in a way to enhance e formation of empowered ms of product quality percent on-time chnological products.

4. Volkswagen As the world’s leading manufacturer, it is perhaps unsurprising that Volkswagen’s headquarters in Wolfsburg, Germany are among one of the most advanced automotive factories on the planet. As the first to use eco-friendly water-based paints, the company was named the most sustainable automotive group in 2013 as CEO, Martin Winterkorn edges towards his goal of making VW the leader in green mobility. 25

TOP 10

3. Toyota Again unsurprising is Toyota’s appearance in the list, given its infamous affiliation with lean processes and operational excellence. The automotive giant’s headquarters in Nagoya, Japan is a flagship for the world-renowned culture and the ‘Toyota Way’ by implementing the unique multi-model system, allowing the production of all vehicle models on the same production line. 26

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2. McLaren Bridging high-end consumer cars and elite sports machines, McClaren’s Technology Centre in the UK is an extraordinary facility dedicated to the most advanced and innovative processes in the industry. Despite the design of the building itself being a work of art, the internal production centre comprises 38,000 square metres of floor space where everything from the Mercedes-Benz SLR McLaren to the McLaren Racing Formula One vehicles are manufactured.


TOP 10

1. Lockheed Martin One of the world’s leading aviation companies has enhanced its operational efficiencies in recent years through a stringent set of targets aimed at making its factories as sustainable as possible. Its 350,000 square feet of facility in Pennsylvania, US, is a flagship for this strategy and the results in recent years have been unchallenged as it plots the most efficient route towards the production of its C-130, F-16, F-35 and C-5 spare parts and assembly 28

November 2015


components. Also manufacturing nuclear instrumentation and control technologies, the Missiles and Fire Control plant has accrued more than two million hours without a lost-time injury while achieving a 99 percent on-time product delivery rate. This potent combination epitomises the culture within the organisation as a whole, which reported in May, 2014 that sustainability goals continue to be met and surpassed across operational and resource efficiency, product performance, IT security, talent competitiveness, supplier sustainability and Corporate Social Responsibility initiatives. 29


European Materials Handling Federation

Written by FEM 31



n 1953, the Fédération Européenne de la Manutention (now European Materials Handling Federation) was created with the aim of fostering exchange and technical cooperation among European manufacturers of materials handling, lifting and storage equipment. More than 60 years later, this technical work is still the backbone of FEM activity. Several dozens of technical guidance documents on materials handling equipment are in use all over the world and certainly contribute to the recognition of FEM worldwide. However, FEM has widened the range of its activities that now include legislative monitoring, international cooperation, statistics, communication, cooperation with trade exhibitions… FEM now counts 15 members representing some 1,000 companies employing 160,000 people directly and generating €45bn annual turnover (2013). It is one of the largest sectors within the European mechanical engineering industry, with many companies as world leaders, and it contributes significantly to EU wealth, notably thanks to a €18bn positive trade balance. Role and objectives Last year coincided with the start of a new EU cycle with the election of a new European Parliament and the nomination of a new team of European Commissioners. FEM took that opportunity to present its midterm Vision and Strategy. The objective was twofold: 1-


November 2015


checking that FEM goals and work still match our companies’ needs and realities, and 2- presenting our sector’s vision to EU decision-makers. During our internal discussions, it rapidly became clear that the key word was “competitiveness”. Many of our companies are world leaders. In the past 10 years, important market developments have taken place. Extra-EU exports now represent close to 50% of our production value, more than twice the level of 2005. Meanwhile, domestic demand for materials handling equipment is still 25% less than in 2005. On international markets where we compete with many global players, our competitiveness is vital to our success. Our competitiveness is not built on low wages, low production costs or cheap materials. One of our

‘Extra-EU exports now represent close to 50% of our production value, more than twice the level of 2005.’

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‘We identify 7 pillars to our competitiveness: safety, technology, intellectual property, global market access, people, energy, and environment & resources. FEM activities revolve around these themes.’ 34

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great strengths is our ability to constantly design, develop and provide advanced solutions for our customers. We can only remain competitive if we preserve our reliability, flexibility, knowhow and innovation in order to maintain our leadership position, and ultimately preserve the wealth and jobs we provide for Europe. In our Vision & Strategy, we identify 7 pillars to our competitiveness: safety, technology, intellectual property, global market access, people, energy, and environment & resources. FEM activities revolve around these themes.

Key Personnel

Olivier Janin Secretary General

Current legislation Since the mid-nineties and the implementation of the EU Internal Market, FEM has been increasingly involved in technical harmonisation legislation. With nearly 20 European Directives and Regulations directly applying to materials handling equipment, monitoring EU regulatory developments has become a major activity of FEM. One issue is of particular importance at the moment. Directive 97/68 on exhaust emissions from engines used in non-road mobile machinery is under revision. It directly affects 4 families of materials handling equipment: industrial trucks, telehandlers, mobile elevating work platforms and mobile cranes. Our sector has one specificity: none of our OEMs manufactures its own engines, which makes us completely dependent on engine manufacturers to start the redesigning process of our machines to adapt them to new w w w . f e m - e u r. c o m



‘We can only remain competitive if we preserve our reliability, flexibility, know-how and innovation in order to maintain our leadership position, and ultimately preserve the wealth and jobs we provide for Europe. ‘


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engines. Without going into details on the various issues associated with this revision, our general objective is to achieve a balanced legislation that addresses environmental aspects without disproportionately hindering our industry’s competitiveness. Other important regulatory topics include market surveillance, outdoor noise, standardisation… A revision of the Machinery Directive will start by the end of the year and this is likely to keep FEM very busy for the next few years. Benefits of membership Members’ benefits are many and varied but we can underline three. FEM members and their companies have priority access to information on upcoming regulatory developments and a direct influence on the defence and promotion of our industry’s interests at European level. In view of the impact of European technical legislation on their business, being directly involved certainly gives them an edge. They can also shape FEM technical guidance documents, which are used all over the world. Finally, they benefit from the FEM network to exchange with fellow manufacturers.


Social Media

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AFFECTO: Makin Written by: Nye Longman Produced by: Alex Neagu

ng the connection 39


The IT company is providing real value for money for its globally based customers. We explore how it has achieved this while remaining competitive


aving started around 30 years ago as an IT company based in Finland, Affecto has grown into a regional player with a massively extended offering of products and services, and has extended across multiple industries and territories. Having undergone many evolutionary changes over the years, the company has gained support from an impressive roster of clients and is now the most significant company in its field in Northern Europe. Affecto employs just over 1,000 people across its operations in multiple markets and last year posted a turnover of $142 million; we talk to Henri Engström, the company’s Head of Industrial Operations about this success and what Affecto’s focus areas for the future, especially regarding its industrial customers. Operations Affecto focuses very intensely on its customers. The company’s promise is to create unmatched customer experience and customer value through the use of analytics, design and technology. Engström said: “To achieve this, we work with the customer’s entire value network to test and create new business models for extended markets, improve operational efficiency and the way we serve our existing customers.” The company is structured to focus on its customer’s industries. This drives the ambition of all Affecto employees to become the best industry specialists in their respective fields of expertise.


November 2015


Affecto is now the most significant company in its field in Northern Europe

For any business operation the blur of digital and physical domains, consumerisation, revolutionary business models and the market transformations driven by these forces should be extremely high priorities. Many companies are still assessing their options while more determined competitors are already reaping the benefits of being forerunners in this rapidly evolving environment. EngstrĂśm said: “Velocity in essential. Being in business as long as Affecto has, we have been able to develop deep and long-lasting customer relationships and have accumulated knowledge across many industries. “Combined with our thought leadership and knowledge of adopting emerging digital paradigms such as Internet of Things, omnichannel user experience, and applied advanced analytics we provide our customers a unique set of services

1200 Number of staff employed by Affecto

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It offers an effective business advisory unit

to prototype, refine and rapidly scale their new concepts from new ideas to the market.â€? From a services perspective, Affecto is able to exploit its decades of experience in order to provide an effective business advisory unit backed up by its business intelligence and enterprise information management capabilities. Furthermore, it offers bespoke planning, design, collaboration and management tools, oriented to suit the needs of a particular customer or customer base. EngstrĂśm said: “Together with our wideranging network of highly knowledgeable partners we provide a trustworthy partnership

Experts in transport logistics At A & R Haulage, no job is too far, too complicated or too short notice for us to consider. We operate our own fleet of highly maintained, branded trucks 24 hours a day, 365 days of the year and deliver both to the UK and mainland Europe, specialising in the transportation of hazardous chemicals, temperature controlled goods, and storage & distribution. Get in touch to find out how we can help you.

Phone: +44 (0)1954 710638 Email:


November 2015


for transforming the customer’s business or sometimes just simply run the business better. Effectiveness is our keyword.” Its experience with its products, services and sector clients also enables it to offer full outsourcing services ranging from application support to functional outsourcing, alongside a help desk and a comprehensive consultation service which helps to prevent problems before they can occur. Engström said: “Commitment to success from all stakeholders is essential. When seizing the new business opportunities and benefits co-creation and even joint ventures can often be a desirable business model for all parties.” Competitive advantage Engström noted that Affecto had been able to leverage its business model to develop both its territorial and sectoral reach in order to become a strong regional player, he said: “Having started over 30 years ago in Finland, we had a lot of growth there starting in the late 1990’s. Then around 2005 we started decisively expanding; we went to Latvia, Lithuania and Estonia and soon after to Sweden, Norway, Denmark, Poland and South Africa.” He also explained how the company’s dedication to customers provided a strong framework for future partnerships. Affecto has built a reputation for offering a comprehensive package of solutions and services that scale from business and technology advisory to implementations

“Commitment to success from all stakeholders is essential. When seizing the new business opportunities and benefits cocreation and even joint ventures can often be a desirable business model for all parties” –H enri Engström, Head of Industrial Operations

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The Affecto

and business process outsourcing services.

management team

Strategic technology Having such a deep knowledge of its customer’s business accompanied by a wide range of technology at its disposal, the company has been able to gain the attention of some high profile clients which has proven to be a fruitful experience for all involved and has enabled clients to gain significant business benefits. EngstrĂśm explained: “We worked with many companies that build and provide equipment and technology. They had a hard time reaching all of their customers that they have sold throughout 44

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the time of the business. Their channels are numerous and the aftermarket is often very lively.” “Our modern solutions mean they will be able to exactly locate the equipment and gain data on how it’s being used, what spare parts have been used, who has been doing the maintenance. If they then go into the service of their own equipment and fleet in the future, they would know what they are up to.” He added that, by using Affecto’s partnership model, some of these companies were able to develop bespoke prototyping in their specific field, he said: “We went to an industrial customer to start prototyping and designed some new sensors to better gain insight to the real process itself. We were then able to guide the engineers who are using that facility and help them to make better use of their resources.” Focusing on the needs of the customer has, quite simply, enabled Affecto to grow its business beyond the borders of Finland to a position where it can now offer a selection of world-beating solutions to a global client base. Engström said: “I would like to encourage influencers within their companies to start exploring. Start prototyping. Take the first few uncertain steps and you’ll be a lot smarter after that. It might feel like a tough place to start but companies like us can help and really just start the journey together. There’s a lot of companies talking about digital strategies, but actually committing and implementing them is going to make all the difference.”

Company Information INDUSTRY

IT Systems, Solutions and Services HEADQUARTERS

Helsinki, Finland



$143 million, 2014 PRODUCTS/ SERVICES

A leading solutions provider for information management and business analytics assist organisations looking to improve productivity and competitiveness

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Bringing internati to Southern Africa

Written by: N

tional standards can markets

Nye Longman Produced by: Daniel Pritchard



Pioneering best practices across the board, the multinational tobacco products manufacturer has become one of South Africa’s top companies as well as a leading regional organisation.


November 2015


hrough its commitment to operational excellence, British American Tobacco (BAT) has proven healthy growth is possible, even in an increasingly competitive and regulated sector. By championing the work of its staff and supporting the communities it operates in, the company has positioned itself to continue its dominant position in Southern Africa and beyond. We spoke to Seyi Adeyemo, BAT’s Head of Supply Chain for the Southern African region, to learn more about how a company with a global remit was able to achieve this while retaining local relevance. BAT’s operations cover every aspect of the tobacco product cycle, everything from growing the tobacco, through to manufacture, marketing and distribution to the adult consumer who gets to enjoy his or her smoking moments. Three manufacturing facilities (including one which ranks as one of the largest in the world) cover the company’s regional production requirement including exports to over 20 countries in Africa and the Middle East. Local Distribution is serviced by eight mega depots and 10 cross docks with multiple distribution networks across the country. This supply chain directly oversees 10 markets comprising: South Africa; Angola; Zambia; Lesotho; Botswana; Namibia; Malawi; Swaziland; Mozambique and Zimbabwe. Although focused regionally, Adeyemo said, the tobacco products manufactured at these facilities were exported globally, not to


Key Personnel

Seyi Adeyemo Head of Supply Chain SAA BAT - South Africa factory

mention to the rest of the African continent. He said: “We have a big local market in South Africa; we undertake most of the support for manufacturing, product research and regional quality management for the continent from here.” Being part of a company with a global reach has exposed operations in Southern Africa to international standard expectations across the board, in terms of operational excellence, quality and social responsibility. Commenting on BAT’s production standards in this regard, Adeyemo said: “There is a constant focus on improving the efficiencies of our processes and operations. We do an internal benchmark first and look at best practices across the region as well as across all of our operations globally. “We do regional and global reviews so

Seyi Adeyemo became Head of Supply Chain, Southern Africa Area (SAA) in January 2014 following a stint as the Head of Product and Quality for Southern African Area. Seyi Joined BAT in 2013 as the Head of Quality after which he moved into the Area Supply Chain Manager role. Seyi has Prior FMCG experience with Procter & Gamble where he worked for 14 years in various capacities including head of Logistics, head of Supply Chain, lean/Six Sigma program manager and Group Operations manager in West Africa.

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2,500 Number of Employees at British American Tobacco SA 50

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that there is clear visibility to management from efficiency, inventory management and all the financial control requirements. “We also do external benchmarking, since often non-tobacco related industries also have some very good standards that can be reapplied, particularly with Lean, 6sigma and Integrated Works Systems. If there’s a best practice in another industry, we are not shy to apply it to our own.”


Arturo Rodriguez Head of Operations, Southern Africa Area

Mastering the African supply chain Being the dominant tobacco company in most of the markets it serves comes with its own challenges, not least those imposed by operating in countries where both infrastructure and legislative challenges are commonplace. Adeyemo said: “African logistics is complex. Getting our products around can be difficult, especially because road networks and infrastructure are not always well developed.

Arturo joined BAT in 1995 and has fulfilled various roles in Operations in Mexico and Kenya, including Manufacturing Manager at Heidelberg for three years. As the Head of Operations for ECA in 2011, Arturo led the overall expansion and optimisation of the factory. He has a depth of business experience and leadership and is well known for his commitment to developing people and getting things done quickly and to a high standard. These are qualities that are valued and critical for the success of Operations in SAA. Arturo is married with three sons.

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Proud packaging partner


hen only the best packaging will do for intensely competitive cigarette marketers. CTP Gravure is almost invariably the company of choice – offering these discerning customers exactly the right combination of design innovation, handsome aesthetics and the highest printing and finishing standards on all outer packaging as well as cork tipping and multi-colour tipping requirements. Your partner in print for products on the move CTP Gravure (Jhb) a division of CTP Limited Tel: +27 11 345 – 4000 Fax: + 27 11 345 – 4400




November 2015



Sometimes our products have to go out by sea into Europe in order to then get back to Africa! “This is just part of doing business on the continent and is factored into the cost of production. Planning is critical, understanding the market and understanding the culture of the markets that we go into is therefore essential. “We need to plan how we manage our inventory, how we manage logistical lead times and how we work with different currencies to handle the volatility that exists in our business environment. We have global systems in place; we have dedicated people who understand the terrain, and we have systems that help us to predict and plan our logistics. Speed to market and availability of stock to our customers and consumers are our crucial logistical concerns in this regard. “We work with third Partly Logistics companies across Africa who know the terrain, especially in terms of Port operations, road transport, and they move the majority of our stock for us. We work with the right partners to get our product to where we want it to be.” Growing responsibly Across its global operations, BAT seeks to operate in a way that not only directly create value for its shareholders, but also those stakeholders involved with its operations indirectly, particularly the communities it works in, both socially and environmentally. By factoring this into its business model, the company has received

Key Personnel

Brian Finch Managing Director Brian Finch was appointed as the Managing Director of BAT Southern African Area in April 2010 following a stint as Head of Marketing for BAT’s Africa Middle East Region. He began his career at BAT more than 20 years ago and has occupied several marketing roles at different levels in seven countries, including Congo, Zimbabwe, the UK and Switzerland. One of Brian’s secrets of success is to try to turn bad into good, and challenges into opportunities.

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Video: A day in the life of a prompt sales representative


November 2015

international awards alongside local recognition. Adeyemo noted that this holistic approach began within the business itself; with our commitment to skills development and training, opportunities to progress both educationally and professionally are always available for employees looking to excel and lead those around them along the same path. The company operates a 70:20:10 Development model (70 percent on-thejob learning, 20 percent learning through others and 10 percent formal training) which supports agile learning by encouraging individuals to identify flexible ways of acquiring knowledge and skills in relevant contexts.


BAT’s operations cover every aspect of the tobacco product cycle

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“More than 77 percent of employees are from previously disadvantaged population groups and BATSA is Certified as a Top Employer in South Africa for 2015 and achieved the much coveted level 3 BBBEE compliance.” – Seyi Adeyemo Head of Supply Chain SAA


November 2015

The company’s CSR operations in its region are well-esta

On top of having to compete with other tobacco producers, BAT has to deal with all the challenges associated with the illicit tobacco trade, as well as government regulation that is sometimes inconsistent across different markets. Adeyemo was confident that the company’s competitive position enabled it to not only conquer these challenges but also to be in a position to work with governments to defeat the illicit trade. The company’s CSR operations in its region are well-established and have received international acclaim, with focus on empowerment, sustainable agriculture and civic life. More than 77 percent of employees are from previously disadvantaged population


Company Information INDUSTRY

Tobacco supply and production HEADQUARTERS



ablished and have received international acclaim


groups and BATSA is Certified as a Top Employer in South Africa for 2015 and achieved the much coveted level 3 BBBEE compliance. The company has been able to recycle over 95 percent of waste generated, as well as upwards of 50 percent of its water, which it also collects and feeds back into production. By combining its might as a global operator with a dedicated focus on the needs and nuances of the markets comprising southern Africa, BAT has been able to remain one of the top tobacco companies while also proving that retaining a position as strong as this can be done so in a socially and environmentally friendly fashion.


85% of Legal Market Share in South Africa PRODUCTS/ SERVICES

Tobacco supply and production

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SDI Managing risk to incre

reliability for fo

Through a more connected MRO supply chain, S

Written by: Sasha Orman P

Inc. ease productivity and

orty-four years

SDI Inc. is helping organizations grow and thrive

Produced by: Jason Wright 59


SDI’s President & CEO, Andy Cvitanov, was the Master of Ceremonies at the inaugural Innovation Symposium this spring. The Innovation Symposium was a 2-day educational forum for the advancement of MRO


isruptive innovation, compressed product life cycles and changing consumer expectations are driving companies to become more efficient. With this comes an increased focus on enterprise asset management and reliability. This has caused a shift in industry from a segmented, functional department perspective towards a fully integrated end-to-end model. SDI is the first to develop a true end-to-end supply chain management platform that takes 60

November 2015

into consideration how MRO (maintenance, repair and operations) impacts the rest of the supply chain and the enterprise overall. The evolution Traditional integrated supply simplifies purchasing and inventory practices by consolidating a company’s supply base through a single source, allowing the company to focus on core business activities and produce more efficient results. While traditional integrated supply eliminates several steps in the


segmented supply model, there are still missing links in the supply chain — links that enable manufacturers to identify and correct redundancies. Much like the supply chain for direct materials, the MRO supply chain includes the design, planning, execution and control (or maintain) components, as well as monitoring the supply chain activities. The MRO supply chain most often interacts with the direct supply chain between the planning and execution stages, with the objectives of mitigating risk, reducing costs and creating

measurable value. This strategic, collaborative approach in the supply-chain-as-a-service model delivers harmony between MRO supply and demand, supporting reliable production. A holistic approach “We provide end-to-end supply chain management as a service, focused on MRO for large multisite clients that are capital intensive,� says Jim Owens, Senior Vice President of Business Development for SDI. But one key differentiator w w w. s d i . c o m




for SDI is that it does not just focus on certain elements of the supply chain. “It’s a platform of people, technology, and processes that we provide to our clients as a service to manage the MRO supply chain holistically,” Owens continues. “It helps them achieve greater visibility and overall equipment effectiveness in a more sustainable way, whereas solutions that are designed just for one particular element in the MRO supply chain might only offer short-term savings and no long-term value.” MRO in the hands of professionals According to a 2008 study by Frank Lynn and Associates, U.S. manufacturers spend approximately $125 billion a year on MRO purchases. The high demand mix of parts


Jim Owens, SVP Business Development


Employees: Over 500 Established: 1935 Industry: Food Service Disposables, Paper Products & Janitorial Supplies Distributor Services: Food Service, Restaurants, Supermarkets, Education, Building Services, Healthcare, Sports Facilities, and more. Management: • Robert Tillis, CEO • Jason Tillis, President • Paul M. Cervino, CFO Website:

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The SDI Solution Center helps visitors understand all the different components of an MRO platform, how they’re tied together and how they impact one another—and the enterprise as a whole

required for increasingly complex production lines leads to a high incidence of obsolete inventory. This, combined with a highly transactional market for low value, high volume spending makes for a fragmented, increasingly globally distributed supply base. “For many large multi-site clients, often times MRO is a neglected, 64

November 2015

underfunded and under-resourced area of the business,” Owens says, adding that in situations like this the MRO process can become fragmented and decentralized— and processes like this are often not operating at their best or most efficient. “We strip all that out and focus on delivering value from an end-to-end


perspective,” he explains. “The value comes from eliminating waste and defects in supply chains, reducing costs substantially, and enabling reliable production by making sure the right parts are there when they’re needed and in the right condition,” Owens says.

Working with the client’s best interests at heart How does SDI set itself apart from the competition? One of the most important factors is its 40-plus years in business, which have given the company expertise in a number of key industries. Another is its deep commitment to working alongside clients as true partners. w w w. s d i . c o m



undertake a root cause analysis and tackle the issue from multiple angles, whether it’s finding an alternative or re-engineering an existing part. SDI serves its clients through a pure play relationship: This means they are supplier neutral and are not a distributor, but rather an extension of their clients’ businesses. They sit side-by-side with clients to understand their business process to better assess and meet their MRO needs, without bias or any internal conflict. SDI’s goal is to lower the total cost of ownership of their production assets, improve overall equipment effectiveness and lower parts consumption. “We have a dedicated staff of This differs greatly from other reliability engineers that work integrated MRO providers whose directly with our clients in a primary business and revenue collaborative fashion, helping clients models are focused on making enable sustainable production by money by selling specific lines of eliminating unexpected equipment products to clients, regardless of downtime and improving MRO need or expanding inventory levels. process reliability — all while “Our business model today is a reducing the total cost of MRO,” supply-chain-as-a-service platform says Owens. — we’re not selling parts, we’re If a part is failing and needs not selling supplies, and we don’t maintenance, SDI is able to make money off transactions,” 66

November 2015


says Owens. “We like to think we sit on same side of the table as our client, driving continuous improvement and creating value year after year and decade after decade.”

Company Information INDUSTRY

Supply Chain

What’s next Looking toward the future, SDI sees plenty of potential in its capacity to create value for an everexpanding clientele. The industrial internet of things, 3D printing, cloud computing, machine learning and predictive analytics are driving changes in manufacturing processes and technologies that are leading to an even more complex and dynamic MRO supply chain. “Manufacturing is going through an evolution, and our clients and prospects are looking for more than just service: they want us to be able to impact their business outcomes directly,” says Owens, noting that its operations must become more predictive to anticipate where problems could arise within their clients’ supply chain systems. Added efficiency measures like remote monitoring, 3D scanning and 3D printing on site are already going a long way toward improving productivity while cutting down on costs, saving time and money for SDI and its partners. As the market continues to evolve and grow, SDI is committed to observing trends in manufacturing in order to anticipate and meet the future needs of its clients.


1414 Radcliffe Street, Suite 300, Bristol PA, USA, 19007 FOUNDED


Not disclosed REVENUE


Supply chain management

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Mexichem Peru’s global leadership in plastic pipes and water conveyance brings a top quality product into the South American country. Writen by: Mateo Rafael Tablado, Associate Editor Interview by: Rebecca Castrejon, Editor Produced by: Taybele Piven, Director of Operaciones at WDM Group - LATAM Interviewee: Carlos Campillo, CEO for Mexichem Peru S.A. 68 November 2015

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exichem is Latin America’s largest petrochemical and chemical company and a leading global supplier of plastic pipes and connections for fluids, electricity and other resources. As a result, the company’s products are crucial for water supplies in cities worldwide.

percent intent to purchase and 88 percent B2B brand evaluation) among clients and end consumers.

The company was branded as Mexichem in 2005, but its operations started more than 60 years ago through acquisitions, joint ventures and creating affiliate companies. Mexichem’s business in 30 countries employs 19,000plus workers in the more than 120 facilities, mines, laboratories and training centers.

Campillo was hired to Mexichem in 2015 as country manager. His background includes

MEXICHEM IN PERU Mexichem’s introduction to Peru happened nine years ago with the acquisition of PAVCO, a leading company for decades in the Peruvian market. It is no small feat to be Peru’s top supplier for pipe systems, since surveys show Mexichem’s products report the highest satisfaction levels (82 70

November 2015

“Mexichem is the largest plastic processing company. I longed to work for Mexichem,” shared Carlos Campillo, CEO for Mexichem Peru, S.A.


military training in the Colombian Army; he earned two MBAs, one of them in foreign trade. Since 2000, Campillo began working in the PVC molding and plastics industry. His relationship with Mexichem started as a machinery supplier to the company, and in other venture he also became Mexichem’s client. “I’ve worked in this industry during the last 15 years. The time

Key People

Carlos Campillo CEO Carlos Campillo enrolled in the Colombian Army, where he majored in Business Administration. He also obtained two MBAs, one from the Miguel Hernandez University of Elche (Spain) and other from ISOM Business School (England).

Air ducts

Campillo has worked in the plastic molding, resins and pipe industry for more than 15 years, twelve of them working for leading companies based in Spain. Before joining Mexichem, his relation with the company began when he was a supplier of machinery and molds for plastic injection; and in a later venture he became a client, obtaining plastic resins from Mexichem.


Experience in pipe network engineering worldwide

I lived in Spain I was permanently tied to this sector, as production manager for a mold injection 72

November 2015

plant and as CEO for a high-tech plastics company which served the aeronautical and the astronautics

“Water is an important element to life, it’s nature’s dynamic force...Water conveyance is our specialty” – Carlos Campillo, CEO for Mexichem Perú

sectors in Europe,” pointed the executive.

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Latin American Company of the Year


as mining, construction, farming, telecommunications and others.

Mexichem’s global operation encompasses production of commodities, research & development, processing, marketing, sales and after-market services, providing to every branch a wide network of solutions for pipe systems and fluid conveyance worldwide. This allows the Peruvian market access to the best plastic pipes and molded plastic products available.

“The company’s main focus is achieving total quality in every product and service offered, there have been important efforts to make sure that consumers select the best available products according to their specific needs,” Campillo stressed. It is worth mentioning that Mexichem Peru owns one of the most complete quality control laboratories, recipient of international certifications, allowing the company to deliver a considerably superior product, well above the market’s average, made for the highest difficulties in installation conditions.

PAVCO is already a leading brand with a promising growth rate in different industries such 74

November 2015


Mexichem Peru has earned awards such as “Peruvian Company of the Year” by a landslide, due to the available technical assistance they offer both before a purchase and as after-sale service. WORKFORCE AND SALES TRAINING Maintaining a yearly production rate between 4,000 and 4,500 tons for both the Lima and the recently opened Arequipa plants requires skilled personnel, both for automated tasks as well as for manually-performed duties. “Our goal is to increase our

productivity with the same quantity of workers, aided by efficient machinery,” the executive summarized. Sales staff must be properly trained, becoming able to provide technical consultancy for clients to select the best product fitting their demands, helping them make the most out of these products and to provide proper maintenance. SOCIAL RESPONSIBILITY: THE COMMITMENT TO WATER Product quality, after-sale services, staff training and marketing abilities are not what w w w. p a v c o . c o m . p e


MEXICHEM PERU S.A. Mexichem’s operations are all about. Being a leading supplier for water conveyance also carries a social responsibility, and Mexichem is in charge of fully-developed endeavors raising conscience about proper water usage. “Our commitment to society and the environment contributes for our company to be perceived as a socially responsible business,” Campillo added.

Mexichem’s efforts are based on three schemes, all of them related to water usage: 1. Hydros Project: Started by Mexichem and other companies in the region. Its purpose is to create a water-preserving culture engaging private companies, society, public agencies, non-profits and special interest groups by sharing water preservation methods. The Hydros


Project website –available in Spanish, English and Portuguese- is the program’s main support for diffusion. 2. The Water Footprint Network: this program was developed by the Switzerland Embassy in Peru. The Water Footprint is a surveillance program, overseeing water use in industrial processes, waste disposal and proper resource usage. Mexichem Peru’s water usage optimization resulted in wasting only .002 percent during manufacturing procedures and from evaporation. The design of the new Arequipa facility contributed to achieve successful results in these measurements, meanwhile the Lima plant –a more than 40 year-old facility- has been subject to improvements for a better water usage. The only pending task in this effort is reducing water usage in the company’s offices: toilets and sinks, which will result in important savings for 2016. 3. Plumber Training: this has been Mexichem Peru’s ongoing effort with those involved in an

everyday contact with the product, being in charge of installing and repairing pipelines in buildings and waterworks. More than 7,000 plumbing technicians every year receive training from Mexichem at no cost. INNOVATIONS AND CLIENTELE DIVERSIFICATION, THE FUTURE FOR MEXICHEM Currently, Mexichem’s Peruvian market is benefitted from pipes and fluid conveyance products for the domestic, public works, mining and farming sectors with goods made from innovative materials such as thread fusion polypropylene, PVC-O and PVC-U pipes, Novafort and GRP, among others. These materials are able to convey larger water volumes, featuring mechanical resistance, avoiding pressure loss and able to compete globally with any kind of pipes. The company is currently developing a line of products for construction projects, such as water tanks, beam and sidewalk formworks, rain gutters and for other sectors, including new projects with the Telecom electronic w w w. p a v c o . c o m . p e


MEXICHEM PERU S.A. network and security company, as well as with the Gas Peru company. The future is promising for Mexichem, since 200 new products are ready to be introduced to the market; these will be launched strategically as to avoid market saturation while keeping up with innovation development. This upcoming expansion in the company’s portfolio will also showcase the new products developed by Mexichem in other


November 2015

countries, the company’s know-how and the chance to offer new options to the Peruvian market. As for the market abroad, Mexichem Peru is currently exporting mining products to neighbors Bolivia and Chile, but the company’s clear goal is to consolidate their operations in the country, as the new Arequipa plant brings down costs when working with clients in southern Peru.


“Being part of the world’s largest company for pipes and connections results in creating synergy with different entities, enabling us to supply Peru of the most advanced products in the trade, benefitting our clients and end consumers,” the CEO finalized.

Company Information NAME

Mexichem Peru S.A. INDUSTRY

Chemicals, fluorite mining, pipes, connections and fluid conveyance HEADQUARTERS

Lima, Peru FOUNDED



US $200 million WEBSITE

Sustainability: the Hydros Project


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