Manufacturing Global - Feb 2018

February 2018

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DISRUPTING YOUR BUSINESS WILL PROTECT ITS

TOP 10

CHEMICAL MANUFACTURERS

REPORT: IS YOUR SUPPLY CHAIN IN A DEATH SPIRAL?

THE FUTURE OF LENDING IN MANUFACTURING

FOREWORD WELCOME TO MANUFACTURING Global’s February 2018 edition.

This month, we speak to Claire Vyvyan, Senior Vice President for Dell UK & Ireland, regarding the technology giant’s research into digital transformation and how its diverse range of services can benefit the manufacturing industry. “In the last 15 years we’ve had the internet, the iPhone and the emergence of the likes of Airbnb. Now we’re trying to envisage what will happen in the next 15 years, beyond 2030,” she explains.

We also grab some time with Lean Enterprise Leader Marcia Brey from GE Appliances who explains how an improved ownership experience boosts the bottom line.

Elsewhere, Greg Carter, CEO of Growth Street, discusses the difficulties many SMEs face when accessing working capital, and the importance of placing people at the heart of your business, whilst our operational excellence slot advises business leaders on how to prevent their supply chains from entering a death spiral.

As if all that wasn’t enough, we also rank the top 10 chemical manufacturers in the world and highlight the biggest manufacturing events of 2018.

Enjoy the issue!

www.manufacturingglobal.com www.bizclikmedia.com

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L E A D E R S H I P & S T R AT E G Y

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Manufacturing Strategies DELL TECHNOLOGIES

PEOPLE

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The future of lending

TECHNOLOGY

16

Productivity GE APPLIANCES

S U S TA I N A B I L I T Y

32

Operational excellence

TOP 10

42

Chemical manufacturers

60

Rubie’s Costume Design USA

72

Flowserve USA

84

50

Events

Stabilus

Latin America

Disrupting Your Business Will Protect Its Future Dell Technologies is combining the traditional might of big business with the innovation of agile startups to embrace digital disruption. We spoke with Claire Vyvyan, Senior Vice President for UK & Ireland, about Dell Technologies’ research into digital transformation and how its diverse range of services can benefit the manufacturing industry Writ ten by DAN BRIGHTMORE

M A N U FA C T U R I N G S T R AT E G I E S

M A N U FA C T U R I N G S T R AT E G I E S DIGITAL TRANSFORMATION IS really nothing new, according to Claire Vyvyan, Senior VP UK&I at Dell Technologies. “In the last 15 years we’ve had the internet, the iPhone and the emergence of the likes of Airbnb. Now we’re trying to envisage what will happen in the next 15 years, beyond 2030,” she explains.

“The pace of digital disruption and the speed at which change is happening is getting faster because of the technology available, because of the way people write code today and because customers of all businesses, small and large, expect a different kind of service than the one they received as little as five years ago. These factors are driving digital transformation to achieve a better product, service and customer experience. Combined with new technology, data and insight, it’s this digital disruption that has the power to transform business.”

From the server room to the shop floor, technology is changing the most critical functions within the manufacturing industry at a faster rate than ever before. Engineers are modelling, simulating, testing and improving new products even before they create a physical 8

February 2018

prototype. Manufacturers are becoming more predictive around maintenance, quality and efficiency.

Whether your role involves data science, digital manufacturing, engineering or IT, Vyvyan maintains companies like Dell can be relied upon to provide the right solutions to keep manufacturing operations moving forward.

Vyvyan runs the company’s UK&I commercial business, looking after medium sized businesses and publicsector clients, and has two colleagues who handle larger businesses and entrepreneurial startups respectively.

Dell EMC spans the globe, helping its largest customers to innovate while powering startups’ acceleration into the market. “We cover the market from consumers to new startups, all the way through the mid-market to the largest enterprises,” confirms Vyvyan, who advises: “Disrupting your business is a big way to go about protecting its future.”

Smart factories Dell recommends manufacturers embrace digital disruption by adopting smart factory solutions and products that can streamline

“IT is really starting to drive business and its less about function and more about how you bring new products and services to market for your customers” - C LAIRE VYVYAN, SENIOR VP UK&I, DELL TECHNOLOGIES

an organisation from the ground up.

Predictive analytics and advanced condition monitoring (ACM) can be harnessed to fix breakdowns before they happen and optimise repair/supply inventories. A focus on manufacturing, order management, inventory management and logistics by integrating systems from top floor to shop floor can make the smart factory a reality by embracing

accelerated processes to leverage fast and focused innovation. To that end, Dell and Bosch have jointly developed an Industry 4.0 jump start kit to help manufacturing customers implement IoT projects quickly, enabling them to realise faster ROI. The kit consists of multiple Bosch XDK sensors, a Dell Edge Gateway, readyto-go use-cases, cloud integration and software, all preconfigured.

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M A N U FA C T U R I N G S T R AT E G I E S A recently published UK government review found the positive impact of the faster innovation and adoption of Industrial Digital Technologies (IDT), such as IoT, robotics and AI, could be worth billions across the globe, creating hundreds of thousands of jobs. However, not everyone in manufacturing feels suitably confident when it comes to digital disruption with many, according to Dell, feeling that they don’t have the skills, knowledge or budget to be able to move forward.

Vyvyan says that this is where Dell Technologies comes in. “Are their IT teams capable of driving digital disruption to bring new products and services to market? ‘Shadow

“Businesses that seize the opportunity to transform and own the disruptions happening around them will be the ones to succeed” - C LARE BROWN, MANUFACTURING SALES DIRECTOR, DELL EMC 10

February 2018

IT’ can be worrying from an IT team point of view in terms of corporate governance and the new legislation such as GDPR coming downstream.

“We see two types of CIO in the marketplace today. In one half of the industry the IT team is providing a platform and launchpad on which others deliver innovative products and services are built – including the likes of Dell Technologies. But in other businesses, IT is the catalyst and driving force for innovation.”

Vyvyan’s colleague Clare Brown, Manufacturing Sales Director at Dell EMC, echoes this sentiment: “It’s essential for manufacturers to review their business processes and look for the small wins that have the opportunity to drive significant successes within the business, before moving onto more substantial change. Businesses that seize the opportunity to transform and own the disruptions happening around them will be the ones to succeed.”

On the quest for innovation Dell Technologies works closely with companies like Engenesis and E-Spark to horizon scan for entrepreneurial startups so it can always find solutions for big

Introducing Dell Technologies business manufacturers. “It helps us map big business to small business,” reveals Vyvyan. “When you think about the UK plc (public limited companies) economy you want both to survive. You need the entrepreneurial innovation allied to the big legacy companies to expand and thrive because they drive our pension funds, move the economy and employ thousands of people. It’s not about one at the expense of the other, it’s actually about helping both to transform.”

Indeed, with the right technology choices one can transform the factory floor. As the velocity of techdriven change in manufacturing rapidly increases, companies are realising the need for a collaborative relationship between operational and information technology. Dell can help manufacturers make the connection across key areas. Analytics machines can produce valuable sensor data which can be combined with ERP (enterprise resource planning) and other database sources to 11

CAPTION THIS IMAGE

“It’s essential for manufacturers to review their business processes and look for the small wins that have the opportunity to drive significant successes within the business, before moving onto more substantial change” - C LARE BROWN, MANUFACTURING SALES DIRECTOR, DELL EMC

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M A N U FA C T U R I N G S T R AT E G I E S create actionable insights. Mobility mobile and rugged technology can reduce manual processes and support your team as well as providing comprehensive security solutions. Cloud and virtualisation is replacing physical, and endto-end cloud client-computing solutions enabling advanced tool, facility and process simulations.

Efficiency is key To help businesses get to market more efficiently, Dell offers a range of OEM (original equipment manufacturer) solutions via a network of partners.

These partners (including the likes of Unicom Engineering and CAE Technology Services) complement Dell’s offering providing valueadded services such as custom hardware and software integration, final assembly and test, financing options, inventory management, consolidation and shipping, custom support engagements and supply chain solutions.

Efficiency in energy use is also paramount. Global enterprise Arrow Electronics has used the Dell Edge Gateway Model 5000 in a technology bundle ranging from the edge to

the cloud to collect, process, store and analyse energy management data in a smart facility application scenario. This IoT solution enabled near real-time insight and offered the benefit of a blueprint for a broad range of applications. “By understanding our electricity usage, we can make changes to reduce cost,” explains Arrow’s Corporate Supply Manager Roland Ducote.

“Once we have that information regarding our utility spending for all of our 460 global facilities, we can gain increased purchasing power.”

However, change isn’t always king, and Vyvyan believes that while being agile enough to adapt to new developments like IoT, it’s important to balance the needs of the resisters in your own legacy system, that mature asset driven customer base, with your emerging pay-to-play offering and transformation goals. “The ultimate goal is simply to listen really hard to what customers need and make sure we’re delivering technology in a way they want to consume it,” she says.

“We listen to customers of every size and scale in 180 countries around the world – from startups to fortune 500 companies – then we innovate. One 13

THE POWER OF EIGHT Dell technologies works with digital disruptors worldwide – companies like airbnb, uber and amazon – driving digital transformation across many industry sectors. It’s an area where the tech giant can offer a diverse palette of skills because dell technologies (following the dell emc merger) is the consolidation of eight companies, each bringing a vital component to the group’s offering.

These companies include: dell (the brand behind traditional end point devices – laptops, tablets, desktops, workstations and also iot driven devices); dell emc (the back end infrastructure across networking, server and storage – both in core data centres and on-premise, and in the cloud); vmware (helping companies build hybrid and multicloud environments offering virtualised storage & networks and security management); secureworks & rsa (two brands important for digital innovation security with the number of end points now heading into the trillions); pivotal (helping people code with agility in cloud foundry to be run in a container or natively in many environments); virtustream (a cloud environment for mission critical applications) and boomi (to join up cloud environments to offer a single universal data view).

Caption 1 4 F e bto r uthe a r y image 2018

of the things that is unique about the Dell Technologies family is that we innovate based on what we hear and not just for innovation’s sake, across all the tech stacks from basic end points to massive cloud data centres.”

Making a difference to people’s lives is something Dell Technologies is primed to achieve with people like Vyvyan pushing the boundaries of what’s possible. She has always worked in tech and describes herself as ‘old school’. “I started in

M A N U FA C T U R I N G S T R AT E G I E S

the mainframe era writing code, real code where you punched cards and fed them into machines, so I’ve got a programmer background,” she explains. “Only big business could afford IT at that point in time – it was complex. Then I worked through the Client Server era where IT became pervasive but in a basic sense. Most businesses of all scales got what I call base IT: HR and finance systems…

CRM systems… ERP systems… Now we’re living through a third platform

world, and we can see fourth platform world on the horizon, where IT is really starting to drive business and its less about function and more about how you bring new products and services to market for your customers. I’m lucky to have lived through the years when it started and see what IT has become. If I reflect back on the last 15 years, I don’t even want to think about what’s going to happen in the next 15 years because the art of the possible is just becoming possible.”

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M A N U FA C T U R I N G 4 . 0

GE APPLIANCES

Imagining a full lean enterprise

Lean Enterprise Leader Marcia Brey outlines how GE Appliances is coming together to improve the ownership experience and its bottom line Writ t en by M A RC I A B R E Y 17

M A N U FA C T U R I N G 4 . 0 AT GE APPLIANCES we are on a journey to become a Lean Enterprise in all aspects of our business. This demands that we “go see” to discover, learn and elevate how our teams work together. As Lean Enterprise Leader, I imagine an even more nimble and responsive organisation that applies lean thinking to everything we do to improve the ownership experience for our consumers.

What can a full lean enterprise look like? The following are glimpses

of the vision we are pursuing within our factories, offices and other facilities as we strive to succeed together and approach problems through the eyes of our customer.

PUTTING THE OWNER FIRST We are building microenterprises (think miniature lean enterprises) that put the owner first in prioritising what actions are implemented. We call this “zero distance to the customer” and task our team members to walk

Ideas that matter: Lean Enterprise goes company wide with Marcia Brey 18

February 2018

in the shoes of our owners, retailers and service technicians to truly understand and empathize with problems and see for ourselves the obstacles and opportunities before us.

We are working cross-functionally to solve problems because success must be defined at the system level, not the functional level. Simply put, no one individual or data set can see a problem from every angle. When each function – from sourcing to manufacturing to sales – understands its influence on the others, the decisions we make cooperatively can take our lean strategy to the next level by helping us think about the many dimensions of a problem.

“We are delivering leading products profitably and at the pace of market demand by focusing on winning definitions, determined by owners and our commercial teams, as the first step in our new product introduction (NPI) process”

NEW PRODUCT INTRODUCTION We are delivering leading products profitably and at the pace of market demand by focusing on winning definitions, determined by owners and our commercial teams, as the first step in our new product introduction (NPI) process.

This demands an outside-in focus, where each function within the value stream executes against the same high-level strategy. For instance, our marketing team may identify one of our

MARCIA BREY Lean Enterprise Leader GE Appliances

M A N U FA C T U R I N G 4 . 0 owner segments as the ‘Traditionalist’ who values highly durable and simply designed appliances. This owner is also price sensitive and takes longer to reach a purchase decision.

Using this data, all functions from product design to distribution must pool their knowledge and create a cohesive plan to meet the owner segment’s need. What style of refrigerator is our Traditionalist asking for? Where will we manufacture it?

Which quality materials are essential?

What added features are not? Can delivery be improved? Component costs cut? And what messaging

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will connect with this owner?

To take lean thinking beyond the manufacturing environment, a team-centric, systems-thinking approach is necessary to ensure the problem or issue you are solving is, in fact, the same one the customer is experiencing.

OPTIMISING THE SYSTEM We are shaping a supply chain where pace is purely dictated by the pull of orders from our customers.

When each function in the system is operating together to reduce total system lead time (as opposed to

optimising the individual functional processes), it streamlines workflow and reduces the opportunity for errors.

Required is a product design, sourcing and assembly strategy that speeds the order to delivery without sacrificing quality. Key to this effort is modularity for NPIs that will give consumers more options while creating more opportunities to simplify assembly. Also critical is the connected factory that tracks the owner’s order completely through the supply chain and distribution, ensuring we deliver the right product at the right time with the right quality.

Segmentation and mass customisation, versus a “one size fits all process,” are fundamental to differentiation within the marketplace moving forward.

A THOROUGH PROCESS We are enabling microenterprises where all team members can “see” data instantaneously from our ordering process, inventory flow, factory production, and even our suppliers.

When we know how people are using our products in real time, we can respond to imminent problems and often before owners feel the pain.

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M A N U FA C T U R I N G 4 . 0 “Segmentation and mass customisation, versus a “one size fits all process,” are fundamental to differentiation within the marketplace moving forward” MARCIA BREY Lean Enterprise Leader, GE Appliances

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February 2018

A $38mn GE investment turns a vacant US factory into a vibrant, high-tech manufacturing operation

Or when parts ordering is automated, it creates efficiencies across the entire value stream from seamless sourcing to maximising productivity in the plant, meaning timely deliveries and lower logistics costs.

This digital transformation does not happen overnight, but the incremental steps we make as a systems-minded organisation can become the foundation of our future connected enterprise.

Ultimately, linking our people, processes and technologies leads to greater collaboration, and immediate access to data informs faster, more confident decision making. The result is an optimal outcome for our product owner.

It’s an exciting time to be part of GE Appliances as we have a chance to imagine a new generation of products that enable happiness and wellbeing in every home. To do that, we must think and act in concert regardless of job function, replacing silos of information with systems that allow us to freely share and easily disseminate knowledge throughout the enterprise. We look forward to making our vision a reality with every associate playing a critical part.

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PEOPLE AND SKILLS

Behind the numbers THE FUTURE OF LENDING IN MANUFACTURING GREG CARTER, CEO OF GROWTH STREET, DISCUSSES THE DIFFICULTIES MANY SMES FACE WHEN ACCESSING WORKING CAPITAL, HIS JOURNEY WITH THE COMPANY AND THE IMPORTANCE OF PLACING PEOPLE AT THE HEART OF YOUR BUSINESS Written by MARK SPENCE

PEOPLE AND SKILLS

IT’S NO SECRET that small and medium-sized businesses in the UK struggle to access the financial support they need to grow. The traditional relationship between banks and SMEs is one that has failed to evolve over the last few decades. But the lending landscape is changing rapidly with more viable, attractive alternatives available. At the forefront of this 26

February 2018

lending revolution is Growth Street.

Started three years ago by Greg Carter, Growth Street’s mission is quite simple: to provide SMEs with the flexible financial products they need to help them grow and develop. “I led the founding team at Growth Street three years ago but I’m not actually a banker. I started my career at Betfair, the innovative online betting company. I looked at taking

HEADLINE

their technology into new markets and new verticals and it was there that I really got the bug for working with fast-growing companies. After Betfair I worked for a venture capital on a business called Arts Alliance that has been investing in fast growing profitable businesses in the UK for the last 20 years. It was there that I came across a real challenge that businesses were having accessing

“ ONE THING THAT FRUSTRATES BUSINESSES ABOUT MOST LENDERS IS THAT THEY DON’T TAKE THE TIME TO UNDERSTAND THE BUSINESS IN DETAIL. EVERY BUSINESS IS UNIQUE” – GREG CARTER, CEO, GROWTH STREET

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PEOPLE AND SKILLS

flexible finance from banks.”

These challenges would soon form the basis for the launch of Growth Street. “I talked to business owners and got very similar stories, time after time, about six-month conversations they’d have with banks around finance that would eventually end in a ‘no’ or a product that wasn’t useful. I saw that businesses were having real trouble getting the flexibility of products they needed that were simple enough to use in its day-to-day operations, so we set about building a product that, today, we call GrowthLine.”

GrowthLine is an interest only, revolving line of credit up to £1mn that operates like a large overdraft facility so a business can borrow and repay as often as they like, when they like, within their limit. “The limits themselves are based on the size of their working capital assets, for example, things like unpaid invoices and stock,” Carter adds, “This means the limits will grow with the business and it gives the owners confidence that they’ve got access to a really useful amount of cash when they need it. When they don’t need it, they can simply pay it 28

February 2018

“ I REALLY BELIEVE THE CONSENSUS IS A LOT MORE PESSIMISTIC THAN THE REALITY, PARTICULARLY WHEN YOU LOOK AT THE MANUFACTURING INDUSTRY. MANUFACTURING IS NOT ONLY SURVIVING – IT’S THRIVING” – GREG CARTER, CEO, GROWTH STREET

back and not pay for funds they’re not using. It’s a really simple and easy to use but flexible product that suits the needs of growing small businesses.”

Growth Street and manufacturing With the Funding for Lending Scheme expiring in 2018 and net lending to SMEs having declined by around £7bn since it was first introduced, it’s clear businesses will face a massive challenge to access the funding they need going forward. Speaking specifically about the manufacturing industry, what kind of issues has Carter seen?

“There’s a real correlation between the problems manufacturing businesses have in getting access to capital and our productivity challenges in the wider economy,” Carter continues. “One of the things we often find with manufacturing businesses is that they’re looking to access funding to invest in plant and machinery to drive productivity improvements. I was talking to a second-generation cardboard box manufacturing business recently that’s looking to borrow a significant amount 29

PEOPLE AND SKILLS “ T HERE’S A HUGE AMOUNT OF OPPORTUNITY FOR MANUFACTURING BUSINESSES AT THE MOMENT TO TAKE ADVANTAGE OF SOME OF THE CURRENT ECONOMIC CONDITIONS. WE’RE REAL BELIEVERS IN THE MANUFACTURING INDUSTRY AT GROWTH STREET” – GREG CARTER, CEO, GROWTH STREET

of money to improve its operations and allow it to unlock a 50% increase in turnover over the coming year.

This is a business struggling to get access to the capital it needs to expand and drive productivity growth. It’s a common challenge.”

So what examples are there of Growth Street providing financial assistance in the manufacturing industry? “We have a really interesting business that came on in the spring of 30

February 2018

2017 and it’s been using GrowthLine to expand their stock positions.

They manufacture valves for heavy industrial machines, principally within the power and energy sector, and by utilising GrowthLine it’s been able to expand its stock position and invest in new assets such as industrial power generators. They’ve then been able to sell those on to companies in the UK looking to protect themselves against power outages.”

The people behind the numbers For Carter, Growth Street is about people as well as product, “We’re a modern business and we believe in using technology to make our customers’ lives as simple as possible, but we don’t take the attitude that we should replace humans in the customer process,” Carter says. “One thing that frustrates businesses about most lenders is that they don’t take the time to understand the business in detail. Every business is unique, they all have particular aspects of their business model or their growth plans that a lender really needs to understand and that can only be done through personal interaction.”

So, building and maintaining personal relationships are very much at the heart of the business? “Yes,” Carter answers emphatically. “It’s very different to how many modern lenders approach things because machines tend to take over everything and there’s a real lack of human interaction. SMEs in the UK account for around 5.5mn businesses and what we’re trying to do is focus on the 130,000 that are the most impactful

and actually have a unique set of needs. It’s only possible to serve those businesses with people.”

Looking ahead As our conversation draws to a close Carter has a message for businesses in the manufacturing industry, “We live in a news environment where there’s a lot of pessimism about the UK economy and manufacturing. I really believe the consensus is a lot more pessimistic than the reality, particularly when you look at the manufacturing industry. Manufacturing is not only surviving – it’s thriving.

“The cheaper pound has spurred a big surge in orders. We’ve seen increase in labour demand across the sector.

Manufacturing in Q2 has the largest growth in vacancies of any industry in the UK. There’s a huge amount of opportunity for manufacturing businesses at the moment to take advantage of some of the current economic conditions. We’re real believers in the manufacturing industry at Growth Street. We’re really keen to encourage businesses to approach us if they need support for growth.”

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IS YOUR SUPPLY CHAIN IN A DEATH SPIRAL?

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A report by Accenture shows companies that rely on outdated supply chain cost models are failing to reduce costs, performance or growth. We examine the findings and look at the benefits of adopting a zero-based supply chain approach to deliver a future-focused solution Written by DAN BRIGHTMORE

O P E R AT I O N A L E X C E L L E N C E

W

hile growth slows in consumer markets, competition is intensifying and product life cycles are speeding up.

There is now added pressure on companies to boost their budgets and target growth through a combination of acquisitions, product innovation and digital technologies.

According to a recent report by Accenture, with half of a company’s costs in the supply chain or cost of goods and services (COGS), reducing 34

February 2018

supply chain costs has become a major focus. However, Accenture warns companies are not realising cost savings for competitive agility.

“They eke out three to four percent in category reductions year after year,” notes the report. “But most never make a sustainable bottom line impact on COGS, with most companies seeing no or minimal change in COGS-to-revenue ratios over time.”

Confidence in the perceived ability to transform is clearly lacking.

For example, Accenture’s report found that just 33% of operations executive see their cost intervention initiatives as durable, while only

I S Y O U R S U P P LY C H A I N I N A D E AT H S P I R A L ?

18% think leadership has the right initiatives for cost reduction targets.

Executives have not turned a blind eye to systemic supply chain issues, but most are simply not achieving sustainable results. “An analysis of 20 leading products and consumer companies shows that since 2010, most have seen COGS as a percent of sales remain stable or increase, even though almost all have continuous improvement and COGS-focused reduction programs,” states the report. The top companies have seen only two to three percent improvement says Accenture, which found that because “many organisations work

in functional and geographical silos”, it’s often impossible to know who is spending what, where and why.

The challenge of targeting this problem is already being addressed with the zero-based budget (ZBB) – which means going back to the drawing board with your budget on a regular basis to justify every expense.

It’s an approach companies with huge supply chains, like Coca-Cola and Kraft-Heinz, have embraced to save money through the axing of thousands of unnecessary jobs, the closure of inefficient factories, the sale of corporate jets – and even going as far as requiring workers 35

O P E R AT I O N A L E X C E L L E N C E to ask permission before making colour photocopies. This might appear extreme but it’s catching - last autumn, telco giant Verizon revealed plans to cut $10bn in costs by 2021 through the implementation of ZBB. “The reason this has become sexy again, in terms of corporations, is because everything needs to be approved,” says budgeting expert Neale Godfrey, head of educational organisation the Children’s Financial Network and former President of The First Women’s Bank. “Because zero-sum budgeting really makes you examine your expenses, you can see where you’re spending your money. So, budget items aren’t just automatically pushed through anymore.”

This forensic approach is being applied to the supply chain at Unilever to accelerate improvement in its operating margin. “We will continue to improve the mix of our business with margin-accretive innovation,” says Unilever CFO Graeme Pitkethly.

“With the extension to logistics and the roll-out to smaller countries, we expect savings from ZBB and the organisational changes to be greater than €1bn [$1.22bn] by 2019. We expect to be able to take more of our 36

February 2018

savings to margin, increasing our retention rate, while still investing sufficiently for competitive growth.”

So, how can businesses further respond to this ongoing challenge of beating the budget? “Leading companies are breaking this cycle with ZBSC (zero-based supply chain) – part of ZBx (zero-based mindset) – a way to drive profitability that emphasises the future over the past,” says Accenture. “ZBSC can help companies capture supply chain value in a rapidly changing world.”

Accenture Strategy Experience research reveals ZBSC approaches can drive 5-10% rapid COGS savings and a COGS-to-revenue ratio of up to 600 to 800 basis points over time. With only 24% of operations executives affirming they have an agile operating model fit for purpose, it’s time to consider the building blocks towards a ZBSC solution which offers an end to endless loops…

CLOSED LOOP A closed-loop approach using forensic analytics and insight from company and industry best practices addresses true, not perceived, gaps and enables continuous renewal.

VISIBILITY

FUTURE FOCUSED

A single granular view of all cost elements and overall performance with an integrated set of optimisation levers lowers variable manufacturing and logistics costs as well as fixed costs.

Instead of reducing costs by an arbitrary percentage based on historical data, companies start at a zero base, asking what costs should be based on market realities and future needs.

COST-CONSCIOUS CULTURE

STRETCH PERFORMANCE

Hunting for isolated savings gives way to incorporating cost-cuts into the budget and establishes accountability and transparency to create a cost-conscious culture.

By creating benchmarks using digital technologies and sustainability strategies, companies can stretch organisational performance and targets aligned with growth goals.

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‘IT’S AN APPROACH COMPANIES WITH HUGE SUPPLY CHAINS, LIKE COCA-COLA AND KRAFT-HEINZ, HAVE EMBRACED TO SAVE MONEY THROUGH THE AXING OF THOUSANDS OF UNNECESSARY JOBS, THE CLOSURE OF INEFFICIENT FACTORIES, THE SALE OF CORPORATE JETS – AND EVEN GOING AS FAR AS REQUIRING WORKERS TO ASK PERMISSION BEFORE MAKING COLOUR PHOTOCOPIES’

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I S Y O U R S U P P LY C H A I N I N A D E AT H S P I R A L ?

So, if your supply chain is in a death spiral there is a way out, but as the report identifies, “breaking free requires making bold people, process, culture, and technology changes while embracing continuous improvement and embedding cost-consciousness across the organisation”. Accenture recommends starting with these fundamentals:

CREATE TRUE VISIBILITY Leverage financial and operational data to achieve complete visibility at a granular level to understand the current state against internal and external practices. This is key to open the gap, define the costs, and prioritise focus to unleash value.

FOCUS ON THE INTERSECTIONS Develop organisational incentives that encourage collaboration across geographies and functions to identify and target opportunities at intersections of the business where best practices and emerging trends are often hidden.

STRETCH PAST INCREMENTAL Think outside the box and embrace technology, analytics

and sustainability opportunities to set zero quartile goals and thus future-proof the supply chain.

EMBED A CHANGE MENTALITY Drive support from the top all the way through the organization.

Establish the right communications, incentives, tools and role modelling to make efforts part of the future fabric of the company – a closed loop – and not a one-time event.

As customers demand a diverse range of ways to buy their products the gauntlet is being thrown down to current supply chain models. Many companies have taken Apple’s lead but this approach necessitates lean processes to create stability and standardisation. Charles Kunkel, CFO at Harris & Ford LLC, a major chemical distributor in the US, works to improve the firm’s global distribution and logistics services to leading Fortune 500 companies in the food, pharmaceutical and industrial sectors.

He notes the trend in distribution of a shift towards ZBB. “Starting from a ‘zero base’, every function within an organisation is analysed for its needs and costs,” he says. “Last year’s results aren’t as relevant. It 39

O P E R AT I O N A L E X C E L L E N C E applies to people, facilities and supplies. Basically, you’re ‘cutting the crap’ out of the cost. Companies are not only practicing it for materials, but they are challenging all of the non-core competent services and functions that it performs. They’re asking, ‘Should we be doing this function?’ Supply chain is usually one of these functions.”

Kunkel notes the short-term gains from stripping back your supply chain could lead to long-term risks, so advises caution when outsourcing supply chain needs. “The thirdparty provider should fit into the client’s existing core process.

The client shouldn’t deviate from its existing process due to the investment and infrastructure behind it.” He believes there are two types of improvements companies will see when applying a zerobased approach: a superficial improvement that may look good on paper, but not remove waste and the more desirable “functional improvement towards reducing inventory and lead time to deliver a tangible benefit”.

Ultimately, it’s important to remember there is no magic wand, problems don’t simply go away. But by moving towards a new approach such as ZBSC you can manage them more efficiently.

Accenture’s report concludes: “Companies cannot afford supply chain trade-offs. For too many, cost optimisation, technology, growth and sustainability are mutually exclusive. ZBSC is a starting point to harmonise these goals. Finally, there is a new way to deliver superior supply chain performance at the right cost - while fuelling growth and increasing competitiveness.”

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I S Y O U R S U P P LY C H A I N I N A D E AT H S P I R A L ?

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Edited by ANDREW WOODS

T O P 10

AkzoNobel N.V. www.akzonobel.com

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Evonik Industries www.evonik.com

As one of the leading manufacturers of specialty chemicals around the globe, Evonik Industries holds interests in many sectors including mining, real estate, chemicals and energy. Evonik also holds its own mining operation, a company that does business under the moniker of RAG-Evonik. Under its specialty chemical subsidiary, Evonik holds six large business units that include Health and Nutrition, Inorganic Materials, Performance Polymers, Coatings and Additives, Consumer Specialties and Advanced Intermediaries. The numbers for 2016 are under audit, but the company routinely pulls down revenues around $15.56bn, as it did in 2014, with a profit of $684mn. Evonik Industries employs 33,412 people as of 2014, a number that has definitely increased as the company has expanded operations in emerging markets.

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AkzoNobel is the number one manufacturer of paint on the planet.

However, this is far from its only claim to fame. The company actually has three major divisions: Decorative Paints, Performance Coatings and Specialty Chemicals. Within these divisions, Akzo also produces salt and manufactures chemicals. The company has holdings in much of its own vertical production, using many of its raw materials to produce the more complex offerings that it brings to the market. Revenues hit $17.11bn in 2016 with a profit of $1.169bn.

46,000 people are employed by the company.

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Asahi Kasei Corporation

www.asahi-kasei.co.jp/asahi/en

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SABIC Innovative Plastics US www.sabic.com/en

When it comes to high performance polymers, SABIC Innovative Plastics is one of the top 10 companies in the chemical world. SABIC also holds an established presence in manufacturing computers, electronics, office equipment and automotive products.

Among its subsidiaries are Resins, Polymershapes and Lexan Brand. The company brought down revenues of $18.5bn with a net income of $989.7mn in 2016. SABIC Innovative Plastics also employs over 29,000 people.

Originally hailing from the Japanese chemical market, Asahi Kasei has expanded to become one of the top chemical producers in the entire world. Its operations occur in six segments: construction materials, electronic materials, medical products, prefabricated homes, the fibers unit and the chemicals segment.

Prefabricated homes and chemicals account for around 75% of company sales, although fertilizer is another big seller for the business that posted a 2016 revenue of $18.5bn.

07

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Air Liquide www.airliquide.com

06

Linde AG

www.linde.co.uk/en Within the world of engineering and petroleum, Linde AG is one of the most formidable companies with an international presence that spans more than 100 countries. Within the gas industry, Linde maintains four products that include bulk gases, gases for healthcare, on-site gas and cylinder gas. The company also constructs processing plants for the petrochemical, gas manufacturing and pharmaceutical industries.

Revenues expanded to $20.43bn in 2016 with a profit of $1.62bn. The company employs just under 60,000 people around the world.

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With interests in health care, engineering and chemicals, Air Liquide is a top industrial gas supplier to many companies within electronic and chemical manufacturing. The company also has operations in more than 80 countries because of its services within the medical sector. By revenue, Air Liquide is the number one industrial gas supplier around the globe. The latest numbers on the company show a revenue of $19.73bn with a profit of $2.12bn. The company employs around 68,000 people in total.

05

DuPont

www.dupont.com

04 Mitsubishi Chemical Holdings

www.mitsubishichem-hd.co.jp/english The brand is best known for its sleek and inexpensive cars, but the Mitsubishi Chemical Holdings company is just as formidable in petrochemicals.

Specialising in polyolefins, Mitsubishi Chemicals produces polyethylene, purified terephthalic acid, polypropylene and polycarbonate.

The company is by far the number one producer in Japan. Around the world, its subsidiaries Mitsubishi Tanabe Pharma and Mitsubishi Plastics help to expand company operations internationally. The latest numbers on Mitsubishi Chemical Holdings show a revenue stream of $22.8bn. In total, the company employs just over 54,000 people under all of its various umbrellas.

It is hard to believe that DuPont – which today employs 52,000 people – was originally founded as a gunpowder mill. Today, it stands as one of the most evenly diversified companies on this list. DuPont chemical products include Tedlar, Vespel, Zytel, Nomex, Nylon, Orlon, Sorona, Corian, Kevlar, Kalrez, Mylar, Kapton and Zodiaq. It is perhaps best well known for the development of the polymer known as Teflon and the refrigerant Freon. However, it also develops Lycra, M5 fiber, Zemdrain and Tyvek polymers. The company hit a 2016 revenue of $25.268bn and employs over 52,000 people.

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“ DOW CHEMICAL PRODUCES HYDROCARBONS, AGROCHEMICALS, PLASTICS AND CHEMICALS ON A GLOBAL SCALE�

02 The Dow Chemical Company www.dow.com

Very few companies can compete with the Dow Chemical Company when it comes to integrated production. Dow Chemical produces hydrocarbons, agrochemicals, plastics and chemicals on a global scale and is the biggest chemical manufacturing company in the United States. It is second only to BASF as the top chemical company in the world. On top of this, Dow Chemical specialises in performance plastics 48

February 2018

that include engineering plastics and polyurethane. It produces almost all of the chemicals for its Dow Automotives subsidiary as well, and other companies use its chemicals in at least 6,000 finished products that are sold in 35 countries. Dow Chemical is the top producer in the world of chlorine and caustic soda. It is also a top producer of styrofoam, among many other products such as ethylene dichloride and vinyl chloride monomer. In 2016, the company brought down $48.158bn in revenue and enjoyed a $4.404bn profit.

The company employs at least 56,000 people as of 2016.

BASF SE www.basf.com

The number one chemical producer in the world is BASF SE. This company produces chemicals for at least 300,000 customers across five major segments that include Agricultural Solutions, Performance Products, Chemicals, Oil and Gas, and Functional Materials. The company specialises in many products, but is perhaps best known for its insecticides, battery materials, vitamins and paper products.

The company earned $69.31bn in revenue in 2016 and employs 113,830 people while enjoying a profit of $4.884bn.

“ THE NUMBER ONE CHEMICAL PRODUCER IN THE WORLD IS BASF SE. THIS COMPANY PRODUCES CHEMICALS FOR AT LEAST 300,000 CUSTOMERS AROUND THE WORLD”

01

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E V E N T S & A S S O C I AT I O N S

Events Manufacturing Global takes a look at some of the key events and conferences to attend across the globe this year Writ te n by S T UA R T H O D G E

E V E N T S & A S S O C I AT I O N S 2018 promises to be an interesting year in the world of manufacturing, but which of the vast multitude of global conferences, summits and events should we be keeping an eye out for in the coming months? This list takes you through some of the mustattend events in the year to come…

Industry 4.0 Summit

Manchester, UK 28 February–01 March We begin our tour of key global events in the UK where the Industry 4.0 Summit is being held in Manchester, starting on the last day of February. Delegates are invited to become part of ‘the 4th Industrial Revolution’. Whether we’re talking about smart manufacturing, digital factories or any of the other game-changing innovations that are changing the way products are manufactured forever, all of these topics will be covered at the follow-up to the UK’s first dedicated Industry 4.0 conference and exhibition was held in April last year, attracting 1,500 trade attendees. This year’s summit will provide “a great opportunity for manufacturers to hear from senior speakers from government, associations and technology and see industry 4.0 case studies from industry”. Speakers include Alan Norbury, CTO, Siemens UK, and Peter Scherrer, Deputy Secretary General, European Trade Union Confederation, amongst many others. www.industry40summit.com

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Global ManuChem 2018

Berlin, Germany 18–20 March

Global ManChem 2018 describes itself as ‘the calendar event for all chemical manufacturers in Europe’. This year will be the seventh annual Global ManuChem, bringing together over 150 production, SCM and engineering leaders responsible for process optimisation, lean manufacturing and business strategy in their companies.

Delegates are invited to exchange knowledge and share insights, something which is facilitated by the notably interactive event format, in order to be prepared for the upcoming challenges in the chemical industry. www.global-manufacturing-chemicals.com

The American Manufacturing Summit

Lombard, Illinois 27–28 March

The American Manufacturing Summit describes itself as ‘a leadership-focused meeting designed around improving plant floor operations and manufacturing strategy across the globe’.

The summit serves as an annual platform to exchange ideas around the impact of market dynamics and new technologies. This year’s will focus on examining case studies of how workforce management, lean manufacturing, process improvement and automation are being rolled out in the world’s best facilities. Speakers at this year’s event include Karl Weiss, VP, Material Handling and Underground Division, Caterpillar Inc; Gena Lovett, VP, Operations Boeing Defense, Space and Security, The Boeing Company; and Heather Remley, SVP, Petrochemicals North America, BASF Corp., amongst others. www.manusummit.com

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E V E N T S & A S S O C I AT I O N S The Africa Food Manufacturing & Safety Summit (AFMASS) Conference & Expo

Nairobi, Kenya 25–27 April

Now going into its fourth year, The Africa Food Manufacturing & Safety Summit (AFMASS) Conference & Expo provides the most important route to Eastern and sub-Saharan Africa’s food and beverage, milling and feed and hospitality and foodservice industries. Even though the event targets the industry players from Eastern African countries, delegates and visitors at past editions of AFMASS Kenya edition have come from four continents and over 40 countries from around the World. The conference sessions shall bring together 400-plus regional and international delegates and speakers daily in conference and panel discussion sessions.

A parallel exhibition, open to trade visitors, and where over 2,000 visitors are expected over the three days, will provide exhibitors and partners the opportunity to trade and reach out to the industry.. www.afmass.com

MTA 2018 (Manufacturing Technology Asia) conference

Bangkok, Thailand 16–19 May

MTA 2018 is an international precision engineering, machine tool and metal-working exhibition and conference which is growing year-onyear. The event had nearly 8,500 attendees last year from a total 38 countries. Exhibits will include anything from 3D Printing Systems to cooling and lubrication for machines and organisers hope that, with such variety on offer, this year’s event can be even bigger and better. www.mta-asia.com

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National Manufacturing Week

Sydney Showground, Australia 09–11 May This event is pretty much summed up by its slogan: ‘where Australia’s manufacturing value chain comes together’. National Manufacturing Week is an opportunity for exhibitors to network and do business, generate new sales leads, promote their company, products or services and launch new products and solutions. Visitors to the event can experience Australia’s largest showcase of manufacturing innovation, information and inspiration, focused on things like safety and industry 4.0.. www.nationalmanufacturingweek.com.au

2018 Canadian LEAN Conference

RBC Convention Centre, Winnipeg 04–07 June ‘Embracing Excellence’ is the tagline for this event where 1,000 leaders, managers and LEAN practitioners will come together to explore LEAN thinking, share enterprise excellence and learn LEAN best practices.

Organisers say: “Our vision is to provide conference attendees with a first-rate learning experience that will show them how embracing excellence and engaging people in continuous improvement benefits customers, employees and stakeholders alike.”

This year’s conference will include seven keynotes from highly acclaimed industry leaders, lean gurus and motivational speakers; 15 highly-interactive, in-depth workshops, given by proven LEAN experts; 36 practitioner-to-practitioner presentations, divided into four value streams; and 18 tours where you see hands-on applications of LEAN thinking in action.. www.embracingexcellence.ca

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E V E N T S & A S S O C I AT I O N S 14th Annual Manufacturing Leadership Summit

Huntingdon Beach, California 11–13 June

Back to the United States now, for this summer’s Frost & Sullivan 14th Annual Manufacturing Leadership Summit, an event which embraces the constantly-evolving nature of the industry.

Organisers say: “The global manufacturing industry is entering an era of radical change. Driven by new, transformative cyber-physical technologies, manufacturing companies around the world are now envisioning a future state for the manufacturing industry that will change the rules of competition, how work will be performed, how companies will be organised, and how leadership must lead.”. ww2.frost.com/event/calendar/manufacturing-leadership-summit

AME 2018 International Conference

San Diego, California October 29–November 1 The theme for this event is ‘Create Waves of Excellence’, and organisers says the AME San Diego 2018 International Conference will explore ways for individuals and organisations to accelerate their journey toward excellence. More than 2,000 attendees are expected at the event which will include speakers such as awardwinning innovation expert Jeremy Gutsche, entrepreneur and former NFL quarterback Joe Theismann and Billy Taylor, Director of Manufacturing, Goodyear..

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2018 Global Automation & Manufacturing Summit

McCormick Place, Chicago, Illinois 13 September

This time, rather than looking at the entire conference output, we’ve highlighted one event which is part of the International Manufacturing Technology Show 2018. It’s the 32nd edition of what is described as ‘the premier manufacturing technology show in North America’ and will host the 2018 Global Automation & Manufacturing Summit, with this year’s themes described as ‘connecting the dots’. Organisers say: “As implementation of Industrial Internet of Things (IIoT) strategy continues, manufacturers are looking for effective ways to measure and manage plant floor data and make it useful to improve their operations. “The 2018 Global Automation and Manufacturing Summit will update manufacturing leaders on where the industry is at in the journey to operational IIoT systems and will explore issues such as cybersecurity and operational change management.”

www.hannovermesseusa.com/education/gams

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February 2018

Future Manufacturing and Trade Summit

Dubai November 2018

Formerly known as the GCC Manufacturing Excellence and Technology Summit, this event has now been renamed and is currently the GCC’s largest manufacturing and trade conference.

The Future Manufacturing and Trade Summit 2018 will explore the technological developments, address key issues and showcase innovative manufacturing strategies within all manufacturing disciplines.

Organisers says: “The summit is the only dedicated platform to discuss cutting-edge manufacturing technologies, future trends in manufacturing excellence and strategies to boost this sector’s role in economic development. The manufacturing industry has been identified as one of the key economic drivers for both the country and the region and it plays a pivotal role in promoting economic growth and trade in the country.”

Across two days over 500 delegates from the manufacturing industry will come together for what is described as ‘a truly interactive discussion on the technological developments and innovative manufacturing strategies being implemented within multiple disciplines in the region’.

Speakers and exact dates and locations have yet to be confirmed for next year’s event, but it is expected to be held in November, in Dubai, and promises to be one of the key manufacturing conferences of the year..

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A STORY OF

TECHNOLOGY TRANSFORMATION

AT RUBIE'S COSTUME COMPANY

Rubie’s Costume Company is the largest designer, manufacturer and distributor of Halloween costumes and accessories in the world. Chief Information Officer Greg Tsirulnik explains how the familyowned company is using new software systems to stay ahead of the competition Written by Fran Roberts Produced by Andy Turner

R U B I E ’ S C O S T U M E C O M PA N Y

“R

ubie’s has been, and still is a family owned company,” reveals Greg Tsirulnik, Chief Information Officer.

The three principles of the Beige family continue to be intimately involved in the day to day operations and the growth of the company.

“They’ve created an environment that allows the employees to be creative and come up with a variety of interesting and out of the box ideas, designs for the products, as well as ways to improve already an excellent customer service. It’s clear that they put their heart and soul into everything that they do. They don’t just create a product for the sake of creating a product,” Tsirulnik states. “They take pride in what they do. It’s not just about the bottom line but also about the customer.”

This sense of pride and family involvement is seen throughout Rubie’s, which today employs over 2,000 people worldwide. “What I find remarkable is that there are several generations working in the company. It is not uncommon to see an individual with the company for 25, 30 years,

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“We’ve been here for 66 years, and I don’t really see us slowing down” – Greg Tsirulnik, Chief Information Officer and their offspring continue the tradition working for the company in various areas of business. It’s kind of cool and refreshing to see that type of love for the brand. Today there are several next-generation Beige family members that work in various departments: production, sourcing, sales, marketing and ecommerce.

The company is still young and growing and it’s evident of the younger generation impact on its growth.”

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“RUBIE’S HAS BEEN, AND STILL IS A FAMILY OWNED COMPANY” – Greg Tsirulnik, Chief Information Officer

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R U B I E ’ S C O S T U M E C O M PA N Y

‘Rubie’s Costume Company is the largest designer, manufacturer and distributor of Halloween costumes and accessories in the world’

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Embracing ecommerce Despite being nearly 70 years old, Rubie’s has moved with the times and embraced modern technology and industry trends to stay ahead of the competition. “I believe that the online industry is going to continue its growth. We’ll have to adapt to that to stay competitive. The industry is taking its direction from the online consumer. We are seeing more and more sales by marketplaces such as Amazon and eBay which we are actively working with,” explains Tsirulnik. “Ecommerce shopping is becoming more of a standard.”

The popularity of online shopping has also changed the way that consumers purchase products from Rubie’s. “People usually try to order as far ahead as possible using the online sites,” Tsirulnik reveals. “The trend has been that in the retail stores – whether it’s the several of our flagship stores located in New York or the customer stores throughout the world – it seems that customers order online and go to the store when it’s much closer to Halloween time so they can see the product, touch the product and buy

costumes when online stores can’t offer the shipping methods to get it in time.”

Enhancing its hardware is also key to keeping Rubie’s ahead of the competition. “We are working on advancing our business continuity planning as well as disaster recovery. A lot of solutions have already been implemented, but as you know technology’s always evolving,” acknowledges Tsirulnik.

“We’re now looking to the cloud and outsourcing to partners like Microsoft to better enhance the solutions that are already in place.”

Partnering prowess Rubie’s has already collaborated with some key software partners to more effectively manage the company’s operations. “One of the partners that we work with is NCG. We utilize their web PLM [Product Lifecycle Management] system. Through the partnership that we have developed, we use the system to create designs.

It’s an entire lifecycle, so from the concept to the actual design, to style adaptation, through different technical specifications, license approvals,

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R U B I E ’ S C O S T U M E C O M PA N Y

timelines and more,” details Tsirulnik.

All that information is entered into the collaborative PLM system that is being utilized across all the Rubie’s products – costumes, accessories, wigs, masks, hats – and across multiple brands as well. “The PLM system allows us to control the production approval process, designs, and standardize, as well as centralize, all that in one particular

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system,” comments Tsirulnik.

“The second partner that we utilize is Simparel. Simparel provides us with an enterprise resource planning system, an ERP.” Through that system, Rubie’s is able to control and track the entire sales, production, purchasing, and financial aspects of the business. Sales orders go into that system and production orders are placed against the

USA

demand or as part of replenishment, allowing orders to be tracked.

“We’re able to see what state the sales orders are in, what the demand is, what the top sellers are, and then respond to those demands accordingly,” Tsirulnik remarks. “We’re able to forecast and plan certain lines ahead of time and create the production orders against those and in a specific manner. It’s an

intelligent tool that allows us to run our business much more effectively.”

Exploring new territories While much of the company’s business occurs in the run-up to 31 October, Rubie’s offers a vast selection of products that extends well beyond Halloween, helping people around the world celebrate holidays and special occasions from

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R U B I E ’ S C O S T U M E C O M PA N Y

“We’re able to see where sales orders are, what the demand is, what the top sellers are, and then respond to those demands accordingly” – Greg Tsirulnik, Chief Information Officer

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RUBIE’S WORLDWIDE

Rubie’s is the world’s leading costume designer and manufacturer with offices around the globe

Easter to Mardi Gras, St. Patrick’s Day to Christmas, New Year’s Eve to bachelorette parties and everything in between. As an exclusive license holder in the US, Rubie’s has many of the most popular collections within its portfolio, including Star Wars and Harry Potter.

But what does the future hold?

“We will continue exploring new territories, partnering with different

businesses and seeing which markets we can penetrate, creating different partnerships with a variety of different companies, and just accumulating in the industry. We’re not going anywhere,” advises Tsirulnik.

“We’ve been here for 66 years, and I don’t really see us slowing down.

Rubie’s is Halloween, we are the trend and the pace setters.”

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FLOWSERVE 2.0 AND THE JOURNEY TO SUPPLY CHAIN TRANSFORMATION Flowserve provides products and solutions that solve global problems. Now it’s transforming its supply chain capabilities as it sets out the route for Flowserve 2.0 Written by John O’Hanlon Produced by Denitra Price

FLOWSERVE

S

pace is a premium commodity on a floating production, storage and offloading unit (FPSO). Offshore oil and gas is a key market for Flowserve, which leads the world when it comes to flow control, but outside that industry it’s not always understood what a critical role pumps, valves and actuators play on a production platform, nor the amount of room these take up on an oil rig.

“The most expensive real estate in the world is the back of an offshore platform,” says Ronaldo Marques, Vice President – Supply Chain, and he should know, having over a 25-year career led strategic procurement and supply chain for some of the most recognized O&G companies.

These include Texaco, Chevron, and most recently Shell, where he was responsible for an annual spend of $9bn. He joined Flowserve in April 2017, attracted by the opportunity to make a real difference in a company that recognized the need to integrate its supply chain operations and bring this vital aspect of the business into the heart of its strategic decision making.

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Let’s look again at the FPSO example. Pumps and valves are the core of the equipment, but the smart part of the installation is the actuator which controls the flow.

More than a million of Flowserve’s Limitorque division actuators have been installed around the world, and some have been in operation for more than 50 years. Their ruggedness and reliability are legendary. Recently a client constructing a new FPSO found there was not enough space on the platform to accommodate the large conventional actuator selected to operate it. The Flowserve design allowed construction of the FPSO to proceed according to the originally planned layouts, with no need for costly and invasive redesign. It also ended up saving around 2,000 kg (4,400 lb) in weight. Usually, production modules on FPSOs are installed in close proximity, explains Marques.

“Because FPSOs carry refinery-grade heavy equipment on a marine vessel, managing weight translates directly into savings in capital expenditure.

Lowering weight by just one ton (2,200 lb) can result in construction

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Ronaldo Marques

Vice President - Supply Chain at Flowserve

“THE MOST EXPENSIVE REAL ESTATE IN THE WORLD IS THE BACK OF AN OFFSHORE PLATFORM” w w w. m a n u f a c t u r i n g g l o b a l . c o m

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FLOWSERVE

WORKING IN TIGHT SPACES The effort to custom design an actuator to work within tight space and weight restrictions demonstrates the capability of Limitorque to respond to critical customer needs, with unique and efficient solutions that combine technical excellence with economic practicality. The customengineered ‘Margherita’ solution revealed itself to be sufficiently innovative for immediate patenting, providing a new turnkey actuator solution where size and weight are critical considerations

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savings of $30,000 to $50,000.”

This result had everything to do with supply chain management, he points out. Not supply chain alone, but in alignment with engineering and suppliers. It’s quoted because it represents clearly the value proposition offered by Flowserve. “Because we work with engineering we save a whole lot on materials,” says Marques.

When he joined Flowserve, at the same time as its new CEO and President R Scott Rowe to whom he reports direct, the global organization was very fragmented. With 17,000 employees at 254 locations in 55 countries, and four major business platforms each under its own President , procurement was being carried out on a local, or at best national basis. There were some very good pockets of excellence but there was clearly a huge opportunity to be seized. He and Rowe were of one mind, that integration across the business could yield huge benefits, and noticeably better outcomes for its customers. Their plan has been to deliver strategic change through

supply chain transformation.

Marques’ enthusiasm for this task is boundless. “The important thing is that we are aligning ourselves with the business. As we transform our supply chain and integrate across all platforms and business segments globally, we will simplify processes and save a lot of money. We will eliminate waste from double handling, simplify processes and procedures, standardize, then automate big time. We need to refocus the local and global organization, work with robust leadership teams, and our human capabilities worldwide.”

The job of rationalizing the supplier base has already been started over the last 10 months, reducing their number but working with these in a more collaborative way. “Until now we’ve approached our suppliers from the inside-out, so to speak – we tell them what to do, sometimes not in a very collaborative way. We are going to change that to an outside-in, aligning people, processes and technology with our key suppliers to create value in a flexible strategic supply chain. We are going to deploy

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tools and systems to enable the supply chain data and then drive the accuracy and analytics, with a mindset of continuous improvement and the ruthless elimination of manual process.”

This is not reinventing the wheel, and he admits that eliminating duplicate activities, identifying and sharing best practices and encouraging the local teams to own these continuous improvements may look simple. But in a complex global organization it takes time to roll out these ideas. This plan was endorsed by the top leadership team from the get-go, and the roadmap to global supply chain alignment by 2020, the road to Flowserve 2.0, was an early outcome. “The most exciting thing is that nine months down the line we have full endorsement from every leader from corporate HR, IT, finance and so on, and also from the platform presidents of every division. It is no longer a supply chain plan: it is their plan – a Flowserve corporation plan. That is critical.” The value proposition is so powerful, he adds, that it has been bought into by the entire business. “Flowserve 2.0 is the turnaround of Flowserve and my job as part of the leadership is to transform Flowserve’s supply chain so it’s the most admired and competitive in the entire industrial manufacturing industry.”

The company already has a powerful suite of tools. The basic supply management system comes from a trusted partner, Zycus, with whom Flowserve has been collaboratively rolling out modules to the

FLOWSERVE

global sites. “We are leveraging that technology, which will give us valuable visibility, data storage, data analytics and the like. We have plenty of data within the company but what is it telling us? We partner with Zycus to drive improvements on top of the data whether elimination, simplification, standardization, supplier rationalization or renegotiation.�

Flowserve also uses Zycus for contract management. There is

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nothing simple about writing and executing strong, favorable and risk-minimizing legal contracts with suppliers. Many parties need to be involved, and the complexities multiply rapidly when contracting at enterprise levels – across locations, strategic business units (which are often distinct legal entities) and across global regions and sovereign borders.

The iContract system smooths out these complexities. Over the last six

USA

“WE ARE NOT DRIVING AN INITIATIVE, WE ARE DRIVING A FULL SERVICE STRATEGY” – Ronaldo Marques, Vice President – Supply Chain, Flowserve

FLOWSERVE

months Marques has visited every one of the company’s manufacturing sites in China, India, Europe and Australia to explain and facilitate the learning needed to get these systems working in an integrated way. Another good example of a vendor that assists integration and the taming of raw data to assist decision making is Mihlfeld & Associates (M&A), which makes sense of the huge bulk of logistics data that’s available. “We have more than a million logistics invoices a year so we work with M&A on technology to audit, analyze and pay these invoices – and we continuously improve on that,” Marques adds.

The plan is delivering. Flowserve

“I DON’T NEED TO TALK ABOUT SUPPLY CHAIN BECAUSE THE BUSINESS IS TALKING ABOUT SUPPLY CHAIN. THIS IS NIRVANA” – Ronaldo Marques, Vice President – Supply Chain, Flowserve

2.0 is on its way. 2017 targets were reached with two months to spare.

“We are not driving an initiative, we are driving a full service strategy. We are driving cross-platform change in areas like indirect spend and logistics.

We listened to the business leaders and the VPs, sales and operations people and the plant managers, and we adapted our plans to drive their plants. What’s not to like? On top of that we layered in the corporate initiatives, the cross platform initiatives and then the roadmap that I presented, together with the whole strategy, to the board. They gave us full and unanimous support.”

A major win for strategic sourcing was a drive to rationalize the global payroll. 46 countries were served by 38 different suppliers and internal HR resources, so consolidation was a must. The plan had been to make phased changes, with Europe, the Middle East and Africa sorted out over two years and Latin America following in 2019. “I got the guys together, and said why don’t we do this all at once?” Marques adds. The result was unbelievable, enabling not

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Hydraulic Power Recovery Turbines — Calculating Unit Efficiency and Power Recovery

only all the business requirements but also introducing automation, AI and other available technologies using a very disciplined process.

Impacting 15,000 employees, HR is now consolidated in one supplier, one system. The implementation is going to be 80% complete in 2018, saving 30% on the projected cost.” He is already working on how to reduce the cost to serve for the other corporate functions by similar margins, with direct impact on the bottom line.

So, Flowserve is well on its way to becoming a data-driven business, a business with growth on its agenda.

The supply chain plan will not be different from the corporate plan. At a recent Flowserve ‘summit’ of 100 leaders, the supply chain alignment story was delivered by the President.

“We drew up the presentation together,” says Marques. “I don’t need to talk about supply chain because the business is talking about supply chain. This is Nirvana.”

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FROM GERMANY TO MEXICO, AND THE

WORLD Written by Mateo Rafael Tablado Produced by Lucy Verde

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A

THE MANUFACTURING OPERATION CREATED

BY STABILUS IN MEXICO IS ONLY SECOND BEST TO ITS GERMAN HEADQUARTERS, SERVING NUMEROUS INDUSTRIES WORLDWIDE

fter opening during 1934 at Koblenz, Germany, as a family operated business, Stabilus’ product portfolio is constantly growing at the same pace as its quality, increasing the number of products and activities supported by the company’s premiere line of gas struts, springs and hydraulic vibration dampers, among other products.

Stabilus’ leadership takes the company’s products to 90% of the global auto market, and also into furniture and vehicles used in specialised sectors. Stabilus delivers a yearly count of 220mn gas struts to 22,000 clients globally, making the company the world’s largest supplier for these goods.

On May 2015, the company launched its IPO in the Frankfurt Stock Exchange at €42 per share (slightly over US$49), and on 22 September of this year, each share reached a price of €77 (US$90).

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Stabilus Production

The Stabilus Mexican flagship The company opened a production plant in Mexico back in 1992 in the city of Nuevo Laredo, Tamaulipas, border with Texas, USA. Two years later, this plant moved to Ramos Arizpe, Coahuila, less than 200 miles from the border location they still use as a gate to the US and the rest of NAFTA territory.

Stabilus Mexico is the company’s second most important operation worldwide and it’s currently certified under ISO:14001

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environmental standards, ISO:16949 automotive standards and OHSAS:18001 occupational hazard and safety standards.

“We are Stabilus’ second largest production plant, we sell more than 17mn gas struts annually, which adds to more than 29% of the group’s figures globally,” says Lorenzo Dávila, Sales Director at Stabilus Mexico.

Slightly more than half of Dávila’s 28-year career in the automotive industry has been productively spent at Stabilus. Dávila, an industrial

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“During the last 15 years we haven’t had any foreign Stabilus employees in our staff” – Lorenzo Dávila, Sales Director at Stabilus, S.A. de C.V.

engineering graduate from ITESM’s Saltillo campus (Monterrey Institute of Technology and Higher Education) worked in different positions for Magna International both in Mexico and abroad in locations such as Shanghai (China), Yakarta (Indonesia) and Detroit (USA). Dávila is also a

professor at Universidad La Salle (Saltillo campus), and he’s president of the PROEMPLEO non-profit.

“I consider myself a perpetual rookie due to my eagerness to keep learning. I’m always keen to acquire knowledge,” the executive said.

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In TS Tecno we lead the market with solutions to protect steel components against friction and corrosion wear, combining high technology and experience in thermochemical treatments and PVD coatings.

We are a partnership between TECNOTRAT and HEF Durferrit that seeks to satisfy the expectations of our customers as a fundamental part of our daily activity.

S TA B I L U S , S . A . D E C . V.

Global presence within specific sectors Throughout the years, Stabilus’ product portfolio has grown into four main divisions: · The automotive industry, mainly in vehicles’ hoods and trunks. · Chairs and commercial furniture, which includes office and kitchen furnishings. · The industrial division

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encompasses a wide array of applications, mainly for off-highway vehicles (construction, agriculture), aerospace, and other activities for clients such as Caterpillar, John Deere and Volvo, to name a few. · POWERISE, the spindle drive for single and double-sided applications is a Stabilus trademark since the beginnings of automatic lid drives. This feature is supplied exclusively to the

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1,500 Employees at Stabilus, S.A. de C.V.

automotive industry for clients such as BMW, FCA, FORD, GM and TESLA. Stabilus products manufactured in Mexico find the following markets: · 34% head to Europe. · 31% are distributed in NAFTA territory (North America Free Trade Agreement between

Canada, Mexico and USA). · 17% are sent to Asia. · 15% in other countries.

It’s remarkable that a high number of supplies sent from Stabilus Mexico to Asia end up in manufacturing plants located in China, where Stabilus already has two other

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“One of our most important assets is having our production machinery and equipment designed at the Stabilus headquarters in Germany. All the technology is deployed to every other manufacturing facility globally” – Lorenzo Dávila, Sales Director at Stabilus, S.A. de C.V.

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production facilities. “Our clients in the automotive industry trust and rely on the high quality and service we provide,” Dávila explains.

companies have resulted in Stabilus becoming a supplier in vibration systems, noise reduction control and damping,” Dávila says.

Growth through strategic acquisitions Stabilus’ product portfolio and reach have been increased by the acquisition of four key players in the trade: Fabreeka, Ace Distributors, Tech Products, and Hahn, which was once part of the competition.

“The acquisition of these

Global resources “One of our most important assets is having our production machinery and equipment designed at the Stabilus headquarters in Germany.

All the technology is deployed to every other manufacturing facility globally,” Dávila adds.

The Mexican operation is also

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supported by an SAP CRM and

by STAB3P proprietary software, involved in every new product release and re-engineering in Stabilus’ four divisions. For foreign trade purposes, Stabilus Mexico recurs to COFIDI software, supplied by PRODESA. Innovation and improvement Recent developments by Stabilus include a gas-filled damper used mostly in the solar power industry, a new business sector benefitted by the support of the company’s products.

Stabilus Mexico also produces the new Federbine device, used in SUVs; and the PTCV (temperature compensation valve) guarantees trunks working properly when weather is under 41ºF. Developing local sourcing Stabilus has a long-term plan with punctual goals set to become fulfilled between 2020 and 2025. One of the top priorities is to increase domestic sourcing, serving such purposes as reducing order delivery times, obtaining lower costs and increasing domestic contents in final products,

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thus improving local business.

A very important step to achieve this goal was taken two years ago, with the creation of the Purchasing Manager for NAFTA Territory position, in charge of developing domestic sourcing, helping local vendors comply with quality standards required by Stabilus.

Currently, the main focus in this area is reducing delivery times, an improvement area after most supplies had to be conveyed from Germany.

“A stocked domestic sourcing roster will increase our competitiveness in the industrial and automotive divisions. The support of a NAFTA territory PM is a very interesting step for Stabilus, since our operation in Mexico is already developing domestic suppliers and making decisions,” Dávila explains.

The “Attractive Employer” goal Since 2013, Stabilus engaged in a program able to position the company in the “Attractive Employer” rankings. Human capital became a main focus since Dietmar Siemsen became CEO for Stabilus globally.

From the company’s HQ in Germany,

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Anthony Haba President of NAFTA Territory for Stabilus

Stabilus sought for a specialised consulting firm, which worked on the company from the principle of counting with the right individual at the right moment in the right place.

“Our global CEO is the kind of leader that earns trust and respect from those under his leadership.

He possesses very clear vision, and we developed the conviction to follow him,” Dávila elaborates.

This involved scouting new talent and, before that, making Stabilus an attractive employer, able to sense every position’s necessities and

requirements, and able to create optimal development plants for every employee. Stabilus is also a partaker when employees need a flexible schedule and/or financial support to enroll in college or to finish different educational levels.

Achievements in company culture are evident already, climbing up to ninth from 18th in the best company rankings for the highly industrial State of Coahuila, just south of Texas, USA. Also, just last September, the

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Dietmar Siemssen Global CEO of Stabilus

company brought deserved recognition to more than 70 employees with 20-year plus seniority, and its payroll currently boasts several second-generation employees.

“This is a result of the place we’ve earned in our community, where a family’s second generation considers Stabilus as good employment option,” Dávila says.

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Bonds with the community The talent development process has led Stabilus Mexico to work hand in hand with CONACYT (National Council of Science and Technology) as well as with colleges and universities in the Saltillo, Coahuila area by opening internships and opportunities for students from different subjects such as foreign trade and engineering.

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Also, in an effort to reach out to distressed communities, the HR department at Stabilus Mexico created a campaign to benefit affected communities in the State of Oaxaca after last September’s earthquakes; for every wage (per hour) donated by company employees, the company would double that amount.

“We collected a very important amount of money which the Rotary Club’s chapter in Southern Mexico is delivering, to oversee and guarantee funds reach this purpose,” Dávila explains.

Future strategy The STAR2025 global strategy for Stabilus is providing key actions already followed by the Mexican division, focusing on aspects such as: • Introducing a risk management program with the implications of being

a key supplier to the aerospace, food, automotive, and healthcare sectors.

• Customer TouchPoint Excellence, a program created to focus on the end user’s experience, providing a link from the product creation, its functionality and the real-life experience of how it’s actually used, with the idea to improve products based on feedback.

• Stabilus E-business, which will take the company to the virtual world and onto the users’ and clients’ hand with the development of the company’s digital presence and optimizing existing mobile apps.

• Global Innovation Culture, an integral process to detect high-potential talent along with the already existing Rising Star initiative and the new e-commerce business strategies.

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