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ISSUE 100 ÂŁ3.50 Early edition

ESCM EUROPEAN SUPPLY CHAIN MANAGEMENT

gets

data Big

bigger By harvesting unstructured data, companies can glean insights that will enable them to keep ahead of the competition

The cloud makes it clearer

Opening up simulation capabilities to a wider market through cloud computing has massive potential Page 7

Business transformation

A new ERP and voice WMS system has brought multiple benefits to a leading UK wholesaler Page 12

Adapt to change

There are some key principles to follow when you are creating a robust supply chain Page 14


ESCM

Editor

CHAIRMAN ANDREW SCHOFIELD GROUP MANAGING DIRECTOR MIKE TULLOCH MANAGING EDITOR LIBBIE HAMMOND STAFF WRITERS kirsty birkett-stubbs MATT HIGH jo cooper Art editor & Advertising Design Jenni Newman PRODUCTION MANAGER FLEUR CONWAY PRODUCTION ADMIN studio@schofieldpublishing.co.uk EDITORIAL ADMIN EMMA HARRIS SALES DIRECTOR DAVID GARNER BUSINESS DEVELOPMENT MANAGER MARK CAWSTON HEAD OF RESEARCH PHILIP MONUMENT EDITORIAL RESEARCH MANAGERS LAURA THOMPSON TIM EAKINS EDITORIAL RESEARCHERS ryan sadler dawn foord ADVERTISING SALES MANAGER ROB WAGNER SALES MANAGER GRAHAM ALLINSON SALES JOE WOOLSGROVE FINLAY JOHNSON Darren jolliffe

A date with data Across all the titles I work on, the topic of ‘big data’ is something that is recurring time and again. It’s not surprising, considering the amount of information that is generated by businesses on a daily basis. According to Tim Minahan in this issue’s lead story, best-in-class companies are deriving extraordinary value from this data by mining it for hidden insights on their customers, products, and business activities. Of course, new technology is also springing up to handle this amount of info and get it to the people that need it. As Tim concludes: “It’s a powerful proposition.”

OFFICE MANAGER TRACY CHYNOWETH

libbie hammond editor libbie@schofieldpublishing.co.uk

© 2013 Schofield Publishing Limited 10 Cringleford Business Centre Intwood Road Cringleford Norwich NR4 6AU T: +44 (0) 1603 274130 F: +44 (0) 1603 274131 www.europeansupplychainmanagement.co.uk please note: The opinions expressed by contributors and advertisers within this publication do not necessarily coincide with those of the editor and publisher. Every reasonable effort is made to ensure that the information published is accurate, but no legal responsibility for loss occasioned by the use of such information can be accepted by the publisher. All rights reserved. The contents of the magazine are strictly copyright, the property of Schofield Publishing, and may not be copied, stored in a retrieval system, or reproduced without the prior written permission of the publisher.

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ESCM Features 3

3 Big data gets bigger Traditional relational or structured data may serve as the foundation for analytic efforts. But by combining it with unstructured information, companies can gain additional insights that enable them to make better business decisions 7 The cloud makes it clearer The cloud offers almost infinite computing power negating the need for high performance hardware. This means that complex multiple simulation tasks can be carried out in parallel, enabling users to study a large number of design alternatives 10 Stop chasing the tail From its experience working with dozens of companies, Accenture has found that tail spend comprises at least ten per cent of a company’s indirect spend. For a company with £1 billion in indirect spend, the tail is likely to be £100 million or more 12 Business transformation The Health Store realised that a fully integrated warehouse management and ERP solution could replace all of its systems with one integrated solution. BCP’s Accord emerged as being most suitable for the business 14 Adapt to change Many companies have already woken up to the value good supply chain management brings to business, even in a period of austerity. They know their focus on supply chain delivers them efficiency and effectiveness in day-to-day business

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Profiles 14

18

18 Holemans Specialists in the production and marketing of gravel and sand, family owned Holemans Group has developed its expertise and successful corporate activities steadily since 1873 20 Schmitz Cargobull Schmitz Cargobull (Danmark) is a subsidiary company of the German-owned Schmitz Cargobull Group, the biggest and leading manufacturer and supplier of semi-trailers in Europe 22 Mölnlycke Health Care Mölnlycke Health Care is one of the world’s leading providers of single-use surgical and wound care solutions to the professional health care sector, and takes a holistic and caring approach to the patient

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IT

gets

data Big

bigger Tim Minahan confirms big data is getting bigger. But so too are the possibilities for businesses that effectively harness it

Nearly 14 billion years ago, massive forces of gravity and friction converged to spark the big bang that gave life to the universe, as we know it. Today, the same type of convergence is occurring in the business world. After years of technological innovation and aggressive IT investment, companies now sit atop a vast volume of data on their business activities. The sea of structured data on production, marketing, sales and pricing, HR, finance, facilities and operations, and other internal matters is matched by transaction-level data from supplier, customer, and partner relationships. Best-in-class companies are deriving

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IT

l The Facebook ‘Like’ button - now pervasive on websites

Tim Minahan Tim Minahan is senior vice president, network strategy and chief marketing officer at Ariba, an SAP company. In his role with Ariba, Tim is responsible for the strategy behind the Ariba Network, the world’s largest and most global business network, and for the design and execution of effective messaging, go-to-market programs, and marketing initiatives to fuel its growth. He is also a widely recognised expert on cloud, supply chain management, and business-to-business networks and technology issues.

extraordinary value from this data by mining it for hidden insights on their customers, products, and business activities. But the convergence of major technology shifts like cloud computing, mobility, and social and business networks has sparked an explosion of a new class of ‘unstructured’ data texts, tweets, blog posts, web-based videos, and other social postings – that now greatly exceeds traditional data types found within most organisations. According to a study by independent research firm Aberdeen Group, the vast majority – more than 83 per cent – of the information companies now have is unstructured. And companies that effectively harness such information stand poised to gain unique insights that give them significant advantage over their peers. Online networks have been key enablers of the first-wave of globalisation, making it as easy and transparent to conduct business with a partner on the other side of the world as with one across the street. Consumers tap into personal networks like Facebook, Twitter and Amazon.com to learn, share and shop better. Leading companies leverage business networks to collaborate more efficiently with their employees, customers and other trading partners. But networks are about more than just connecting companies, people and processes. Their real power lies in what goes on inside them - all the interactions, transactions and commentary - and the massive amounts of unstructured data that they generate. It is from this data that the next wave of innovation and business productivity will come. Traditional relational or structured data may serve as the foundation for analytic efforts. But by combining it with unstructured information, companies can gain additional insights that enable them to make better business decisions. And with the right technologies, they can do it in real time. Consider how consumers are already benefitting from the convergence of structured and unstructured data: l Amazon.com harvests the buying patterns (transactions)

of its customers to recommend complementary products for up-sale. It also uses community-generated ratings and tips to further guide buying decisions. l Twitter and Facebook mine unstructured comments to develop psychographic profiles of users and deliver highly targeted advertisements (e.g., promoted Tweets) that have much higher conversion rates than traditional advertising approaches based on demographic segmentation alone.

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ranging from online stores to leading news media outlets to political blogs - offers far more accurate (and quicker) insights into buyer preferences and public opinion than traditional focus groups and straw polls. l New online and mobile banking options from startups like Square are capitalising on the convergence of mobile, cloud, and social to foster entirely new payment models, where a consumer’s mobile device can, using geo-location information, detect when its owner is in his favourite coffee shop, use the Cloud to automatically place an order, and virtual financial networks to settle out between the customer, the shop’s register and the bank. If the consumer is so inclined, he can include a tip and even post a rating or comment on his visit via integrated social channels. This new ‘internet of things’ is not only making our lives more efficient, it’s unleashing a host of new data that can be used for everything from social research to targeted marketing to post-sale service. Leveraging the hundreds of billions of dollars of financial transactions and transactional data along with relationship history that resides in business networks, for instance, buyers and sellers can make more informed decisions by detecting changes in buying patterns or pricing trends and provide confidence and qualifying information on a potential – yet unfamiliar – trading partner. And, when combined with community-generated ratings and content, they can glean not only real-time insights, but also recommended strategies for moving their businesses forward. So things like performance ratings where buyers rate suppliers and suppliers rate buyers. Others in the community can use this information to help determine who to do business with or to help detect risk in their supply chain. By accessing the real-time insights into invoice approval status married with historical data on payment patterns of given buyers that business networks provide, banks and other service providers can remove the risks from receivables financing, allowing them to offer more competitive rates and new services to network members that increase revenue. Innovative companies are already on the bandwagon, harvesting the information inside the communities they participate in to deliver new insights and capabilities. For example: l When looking for alternative sources of supply, Plaid Enterprises, a mid-sized manufacturer of do-it-yourself products used a business network to uncover potential suppliers. The network not only provided a directory of suppliers that met Plaid’s requirements, but offered up insights into each supplier – such as how many other buyers the supplier was doing business with on the network; how many RFPs it had been invited to and won within the past year; and how other buyers rated the performance of each supplier – all drawn from structured transactions and unstructured comments and ratings from other network members. l Accessing real-time insights into invoice approval status available on a business network, Mediafly, a fast-growing mobile marketing solution provider, has not only been able to


view its outstanding invoices and know when they’ll get paid, but make offers to secure early payment. Mediafly CFO John Evarts says such network-based ‘dynamic discounting’ has helped him manage the business differently: “We can now get access to capital at favourable rates when we need it, allowing us to hire new developers so we can take on new projects and grow the business.” Evarts says the transparency and control afforded by the network has even helped Mediafly put off the need to take a new round of funding. Cases like this make clear that the so-called ‘big data’ served up by networks will inherently change the way and speed at which business gets done. Armed with the right tools, companies can get the right information to the right people in real time on any device, fuelling better business decisions and results. Demand for such real-time insights is at an all-time high. A growing number of business executives are fed up with lagging indicators and feel the lack of access to timely information is negatively impacting their personal decisions and the performance of their business. Case in point: 35 per cent of the companies surveyed as part of the Aberdeen study say data is too slow to access. Forty seven per cent indicated that they need information within an hour of a business event, but that they achieve this goal just 71 per cent of the time. To fill this void, a new breed of technology has emerged. Known as in-memory computing, it increases processing speed by 100 per cent or greater by loading data directly into

Random Access Memory of a server. When combined with a mobile platform, it enables companies to serve up the right information to the right people in the right places in real time. It’s a powerful proposition. And companies that embrace it will be able to make the most of their big data by bringing structure to the unstructured and gleaning insights that enable them to deliver game-changing gains in collaboration, productivity and insight that vault and keep them ahead of the competition.

Ariba Ariba is the world’s business commerce network. Ariba combines industry-leading cloud-based applications with the world’s largest web-based trading community to help companies discover and collaborate with a global network of partners. Using the Ariba Network, businesses of all sizes can connect to their trading partners anywhere, at any time from any application or device to buy, sell and manage their cash more efficiently and effectively than ever before. Companies around the world use the Ariba Network to simplify inter-enterprise commerce and enhance the results that they deliver. For further information visit:

www.ariba.com


First retailer to try system

Just the ticket

Live home delivery tracking
 :

:

IT News

Newly expanded contract

Fashion manufacturer Just Jamie, one of the UK’s largest suppliers of tailoring products, has agreed a deal with fast-growing logistics provider Advanced Supply Chain (ASC) for the provision of freight forwarding services of its direct imported product. As a longstanding partner of Just Jamie, ASC already handles pre-retail work and UK distribution for the business. The new 12 month rolling deal is the final link in providing the business with a complete, end-to-end supply chain. Working with ASC more closely will allow the company to benefit from improved service levels, greater visibility of product and lower all round costs when compared to other multi-provider options. Robert Godfrey, managing director at Just Jamie, said:“It was an easy decision to expand our existing contract with ASC as the company has continually delivered excellent service, proactive system improvements, and a willingness to go the extra mile to fulfil our needs. This latest deal is testament to the success of our relationship over the past six years. “We pride ourselves on supplying clients with precisely what they need, when they need it, which means that an efficient logistics operation is absolutely vital.”

Leading online fashion retailer ASOS is aiming to transform the home delivery experience by becoming the first retailer to enable customers to track their home delivery in real-time, thanks to a new live-mapping service and provide customers with a 15 minute delivery slot window. The new service, called Follow My Parcel, will allow customers to effectively watch their delivery driver on his round as he makes his way to their property and will countdown the time to their delivery to give an accurate 15 minute delivery window. Provided in partnership with DPD, the Follow My Parcel service will send ASOS customers a text or email message on the day of delivery to inform them of their initial one-hour delivery timeslot. Customers will then be invited to live-track their delivery in real-time using the very latest GPS software and online mapping technology via web and mobilefriendly interfaces. The customer will then be able to watch the progress of their delivery driver on his round and see a real-time countdown to their own delivery to give them an accurate 15 minute delivery slot, so that they know exactly when to expect their parcel. ASOS customers can, at any stage on the day of delivery, request the parcel is delivered to a neighbour or rescheduled for a different day by simply using their smartphone.

www.justjamie.com

www.dpd.co.uk

Businesses must prepare

Real threat of havoc :

Businesses of all sizes are currently facing a serious threat to their IT security and functionality as the first major software expiry event of this decade approaches. In April 2014, six of the most popular Microsoft products used in UK businesses will go ‘end-of-life’, meaning that Microsoft will no longer release or support updates for these products. Without updates, this software, as well as the systems, information and processes connected to it, will rapidly become vulnerable to outside dangers. These dangers can range from invasive malware, which can steal data and spy on activity through to highly destructive viruses like ‘worms’ and ‘Trojan horses’ that can wreak havoc in an unprotected IT infrastructure. Should businesses be concerned? Possibly. If a company has any of the below software in its IT environment, then it needs to begin planning now: l Microsoft Windows XP l Microsoft Office 2003 l Microsoft Exchange 2003

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Microsoft Live Communication Server 2003 Microsoft SharePoint Portal Server 2003 l Microsoft SBS 2003 Robert Rutherford, managing director of QuoStar Solutions, comments: “The looming upgrade issue is one that every business needs to be aware of. This topic has typically been swept under the carpet as an unwelcome back-office expense, but time has now elevated it to the status of ‘business critical’. There are thousands of companies in the UK that are unknowingly steaming towards this iceberg and by the time the dangers have presented themselves, it will most likely be too late to prevent any damage. This is not scare-mongering, these threats are real.” l l

www.quostar.com


Manufacturing

cloud The

clearer makes it

Simulation capabilities are now integrated with CAD solutions – and the cloud is helping to open up the opportunities for all, says Colin Watson

Colin Watson Colin Watson is business development director, Symetri. Colin has been involved in CAD and digital design throughout his career and has played a key role in the growth of Symetri. He joined the company in the late 1980s, when it was Imass, after graduating from the University of Newcastle in computer-aided engineering and working for Intergraph UK Ltd as a training consultant. Since then he has held the role of business development director, overseeing the business through various acquisitions and mergers and the launch of Symetri Consulting Services, founded in recognition of the changing nature of digital product design and the growing need for broader expertise and guidance.

As products become more complex, so do the methods used to design them and the supply chains that drive their development and production. Pressures rise, competition heats up and, if nothing is done the first casualty tends to be quality and in its wake, safety. But necessity forces innovation and new, more efficient methods for tasks such as testing and analysis have emerged from these demands. As a result, the time-consuming serial design-prototype-test-redesign cycle is becoming a thing of the past.

Testing methods that are integral to the design process are emerging in its place. Rather than being a check at the end of the design workflow when change needs to be kept to the minimum to avoid further cost and delay, analysis can now be used to influence the design. Computerised simulation methods are nothing new. They have been used for around 40 years to predict the performance of new products and to investigate and remedy the failure of older models. But simulation has remained an expensive, timeconsuming and complex add-on to the design process. The analysis of even a single component could take a month or more and was often only used after the product had already failed. Simulation became seen as a specialist skill with a substantial price tag. Only large manufacturers could afford to employ inhouse experts who honed their knowledge to fit particular types of products. Attempts to make simulation more mainstream have been made but abandoned. Early tools could only carry out simple linear analysis on single components and the experts dismissed them as over-simplified. So the specialists have continued. As product complexity has increased, there has also been an issue with the levels of computing power needed to perform multi-physics analyses. The fact that it often exceeds the scopes of normal desktops and workstations has added to mystique surrounding simulation. Meanwhile, work has continued to find a way to enable

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Manufacturing

engineers to use simulation as a seamless part of their day-today design work and thankfully all the factors are now in place to do this. The first step was the growth of digital prototyping; the development of 3D models which not only look like the real thing, but also act like it too with the utmost accuracy. The next has been the integration of simulation tools within mainstream geometry creation software. For example, the 3D geometry that enables digital prototyping can, in most cases, be used by the automatic meshing tools in finite element analysis (FEA) software. Further analysis tools such as computational fluid dynamics (CFD) have also been added. Working with integrated CAD and simulation tools enables associativity. When the model is changed the simulation model and analysis are revised accordingly. This immediately opens up the possibility of experimenting with different design variants without going through a lengthy updating process throughout the entire design and documentation process. The final piece of the jigsaw is the cloud, now set to drive the widespread use of engineering simulation more than ever and to enable firms of any size to take advantage without a substantial capital investment. The first simulation in the cloud solution was launched onto the market last year. This means that instead of relying on the conventional server-based set-up, simulation tools can be offered as a service, sitting on someone else’s server. The cloud offers almost infinite computing power negating the need for high performance hardware. This means that complex multiple simulation tasks can be carried out in parallel, enabling users to study a large number of design alternatives. This analysis can run on a large number of computers in the cloud so that in the same amount of time that a single analysis would take on a desktop, the cloud delivers results for all iterations providing extensive scope for design optimisation. Because cloud capacity is bought on a ‘pay as you go’ basis,

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using it for simulation is far more affordable than previous methods. Rather than involving high-level meetings to justify capital expenditure, it can be switched on by the users themselves and paid for as an operating cost. There is also no lengthy implementation process, only the need to purchase pre-paid ‘cloud units’, which give access to a range of multiphysics simulation tools without requiring specific licences. But, perhaps one of the main benefits of cloud-based simulation is that it can be accessed remotely from anywhere in the world. This makes it ideal for helping multi-national teams collaborate on the development of designs and gain the buy-in of widespread stakeholders. While experts will always be needed for in-depth analysis of certain products, opening up simulation to a wider market can only be good news. It could mean fewer delays in the supply chain caused by last minute component faults; it could certainly help get end products faster to market. And, as it’s affordable for every business, it could help smaller businesses get a foothold in new markets too.

Symetri Symetri is an Autodesk Platinum partner, operating in the oil, gas, nuclear, transportation and manufacturing sectors, supplying 2D and 3D CAD design software, as well as specific third-party software applications. In addition it is an Autodesk Consulting Services partner, has achieved Autodesk Simulation Specialisation status and was recently the first in the world to be awarded Autodesk PLM 360 Specialisation status. Symetri Consulting Services was launched early 2012 in recognition of the evolving nature of digital product design, digital prototyping, data and product lifecycle management (PLM) and its customers’need for broader expertise and guidance.For further information, visit:

www.symetri.co.uk


First Lean Academy

:

Companies looking to make improvements within the workplace that will make a real difference to overall efficiency and profit levels should look no further than the Lean Academy. The Lean Academy, launched and run by Gosport-based Lean Business Specialists Fedden USP in conjunction with MIT Skills, aims to train individuals to become lean champions and facilitators geared with the life-long skills, knowledge and confidence required to make significant changes that will benefit businesses in their on-going journey towards continuous improvement. Neil Fedden, principal consultant at Fedden-USP, says:

“Businesses that want to excel in today’s competitive climate need to look at ways of improving their bottom line performance, lead times, productivity levels, customer service levels and workplace organisation. But perhaps more importantly, how to sustain those improvements and continue to make changes that benefits the organisation, its people and its end-users/customers – this is where the Lean Academy can help.”

www.fedden-usp.co.uk

Interest in distributor finance programmes

New research :

Large corporates are showing increasing demand for distributor finance (DF) programmes to enable downstream business in international supply chains, especially in emerging markets. In parallel, global banks are confirming their growing interest in offering DF solutions to their clients. These are the findings of Demica’s latest qualitative research on the distributor finance market, conducted amongst a sample of international enterprises and selected global financial institutions. Many SME distributors in high growth regions are confronted with high cost of funding, exacerbated by sellers’ pressure to increase sales. DF programmes support the working capital needs of a corporate seller’s distributors and gives them access to affordable finance, enabling them to increase sales and grow business volumes with lower capital requirements. This in return allows sellers to expand into new or under-served regions/segments and unlock sales potential. In most existing DF structures surveyed, receivables are purchased by the financier and form the main financeable asset. Corporate respondents all exhibit rising interest in DF

products, largely due to their ambitions to expand into emerging markets. Their primary objectives for implementing DF solutions are: to increase sales in high growth regions without applying more of their own working capital; to give the offered product a competitive advantage; and to reduce SME distributor risk. Eastern Europe, Asia and Latin America are seen to be the focused regions for the introduction of DF programmes. Global banks surveyed are generally keen to offer DF solutions as they witness an increasing desire from their corporate clients to provide efficient financing instrument to their distributors. While some banks promote DF as a major flagship product or are increasing focus in this area, others regard this as a complementary product for key clients. The majority of the banks rely largely on sellers for due diligence of distributors and seller risk sharing is often a prerequisite for many banks, though some might put a heavier emphasis on supply chain linkage.

www.demica.com

Unnecessary costs

Damage deterrent measures stepped up :

Manufacturers and carriers of goods in the UK are being encouraged to step up their damage deterrent measures to drive out unnecessary costs caused by mishandling during transit with the launch of four new additions to the ShockWatch range. The self-adhesive indicators affix directly to goods during transit, providing a user-friendly and costeffective method for detecting – and deterring – exposure to unacceptable temperatures or impacts that can ultimately result in defective stock. Temperature sensitive goods can be monitored by a choice of three new products - WarmMark2, ColdMark2 and Cold Chain Complete - providing users with a clearly visible indication of temperature breach, while the ShockWatch2 range of impact indicators respond to bi-directional impact designed for a multitude of impact sensitive equipment during shipping and handling. The IMC Group, which represents US-based ShockWatch in

the UK, believes the products offer a highly accessible and low-cost solution to the issues around the handling of goods in transit. IMC Group managing director Ian Robinson said:“Incidents of damage in transit, whether due to sudden impact or exposure to unacceptably high or low temperatures, are a real headache for operators in the logistics sector. The ShockWatch range provides cost-effective solutions to these issues in two important ways – deterring improper handling by their very presence on packages and helping to confirm culpability when damage does occur. These latest additions to the range provide even greater scrutiny, but in a very affordable and fast-acting format.”

www.the-imcgroup.com www.europeansupplychainmanagement.co.uk 9

Manufacturing News

4 July launch


Cross category purchases Multiple invoices

Supplie r pric e inc ons iste ncy

Maverick spending

Co ns um ables Low val ue purcha ses

Stop

chasing the tail Tail spend management - the opportunities & challenges. By Rob Woodstock

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Every year, companies make millions of purchases that are too small to be handled by strategic sourcing or too infrequently purchased to be included in catalogue systems. It’s what we call tail spend. Almost always, this ‘tail’ falls outside of the purview of managed spend. But neglecting it could potentially drain tens of millions of pounds annually from a company’s coffers - at a time when the procurement organisation faces pressure to add yet more to the bottom line. Tail spend is a complex and costly challenge. In a single company it includes tens of thousands of low-value, hightransactional purchases across a daunting range of categories - everything from painting a local office to purchasing sophisticated measurement devices. These purchases are fragmented and can involve hundreds of different suppliers. From our experience working with dozens of companies, Accenture has found that tail spend comprises at least ten per cent of a company’s indirect spend. For a company with £1 billion in indirect spend, the tail is likely to be


Supply Chain Strategies £100 million or more. Accenture has also found that the waste in tail spend ranges from 15 per cent to 20 per cent. Thus a company with £1 billion in indirect spend is probably throwing anywhere from £15 million to £20 million out the window every year by not effectively managing the tail portion of its spend. An eye-opening example provided below illustrates this. A UK-based pharmaceuticals company was trying to balance speed to market with the efficient purchase of materials. The company discovered that its supplier of general lab equipment was taking advantage of its lax tail spend oversight. While conducting a rapid a request for proposal, the company realised its supplier was charging different prices to different company sites, for the same equipment. The waste was more than £200,000 annually. The recent volatile economic climate in Europe has created more focus on cost and the need to extend control over more of the total expenditure. Many CPOs now have tough cost reduction targets to achieve, which requires them to look beyond strategic sourcing programmes in high value categories of spend. Therefore, in the UK and across Europe, we are seeing increasing interest from consumer packaged goods (CPG) manufacturers and pharmaceutical, telecoms, food and drink companies in focusing on controlling manufacturing consumables, office costs, and R&D-related and any other low value (not necessarily low importance) purchases to reach these targets. Naturally, the next question for organisations is whether to build this capability internally or to partner with a service provider. One factor in this equation is cost - the fully loaded cost of a procurement professional can be as much as £100,000 per year, and companies prefer to focus these expensive resources on large-scale purchases. The other challenge is the broad spectrum of categories and items, in which professionals need to develop spot buying expertise in order to support the sporadic purchases that make up the tail portion of spend. For these reasons, we are seeing an emerging trend of companies buying tail spend management services from third parties in the UK. These providers have been able to build a ‘tail’ expertise and are capable in achieving a scale and efficiency in handling these purchases that most internal procurement organisations could not efficiently replicate. Ensuring that all one-off purchases are channelled to a specialised tail spend management desk (often in an off- or nearshore location), service providers are able to efficiently apply the relevant policies, category instructions and sourcing tactics to execute these requests at fast turnaround times in a cost effective manner. For example, at Accenture, instead of asking our clients to commit to a long-term outsourcing deal, we offer a modular approach, using key elements of the traditional outsourcing service to provide tailored tail spend management services over three to five years. It becomes more of a compliment to the existing strategic purchasing rather than a replacement, causing little disturbance in the existing ‘Procurement Organisation.’

Rob Woodstock Rob Woodstock is managing director, operations practice, Accenture UK&I. Rob is a senior executive in Accenture’s Management Consulting Practice in the UK & Ireland. He is a specialist in sourcing and procurement. In over 18 years with Accenture Rob has led supply chain transformation assignments in the UK and internationally across broad range of industries including public sector, financial services, airlines, aerospace, industrial equipment and utilities.

A company with £1 billion in indirect spend is probably throwing anywhere from £15 million to £20 million out the window every year by not effectively managing the tail portion of its spend The pressure is still on companies to reduce costs and boost profits – and there is no sign of that pressure letting up. With significant resources being wasted in the tail portion of a company’s indirect spend, management of this area represents an opportunity for procurement officers to make substantial savings. Tail spend has traditionally not been a focus because of the costs versus the benefits of companies trying to manage it themselves, but the emerging trend of purchasing tail spend management from third-party companies offers a significant alternative, that can achieve the scale and expertise in the often one-off purchases that comprise the tail. The result? Today, the suggestion that low value spend is merely ‘administrative’ is a thing of the past. With the right skills, policies and technologies, companies can encourage corporate discipline, demonstrate significant efficiencies, and allow professionals to look at and influence the totality of their spend.

Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 261,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. For further information visit:

www.accenture.com


Business

transformation An ERP solution and Voice WMS solution from BCP has brought multiple benefits to Health Store

The Health Store is one of the UK’s leading wholesalers of natural and organic products to the independent health food trade. Founded as a cooperative in 1932, the company now operates from a 75,000 sq ft warehouse in Nottingham, supplying retailers across the UK mainland, Ireland, Europe and into the Far East with over 9000 products, ranging from organic seeds, nuts and pulses through to natural body care, vitamins and supplements. BCP (Business Computer Projects Ltd) is one of the UK’s top suppliers of specialist supply chain software to the food and drink wholesale industry and has been a leader in introducing Voice directed WMS to the UK market, installing the first wallto-wall Voice WMS in the UK food and drink sector in 2002. Clients include BWG, Musgrave, SPAR, ADM Londis, T Quality and Creed Catering. Aware that it needed to improve pick accuracy, The Health Store had been considering investing in Voice technology for some time, initially looking at either a middleware solution or a full Voice WMS. As investigations progressed, however, it became clear that the company’s incumbent wholesale solution was no longer adequate for its needs and that the project should be extended to include replacement of that. BCP’s Accord emerged as being most suitable for the business

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as Tim Ryan, Health Store MD, explains: “We realised that as a fully integrated warehouse management and ERP solution we could replace all of our systems with one integrated system from BCP which would make running the whole business far more straightforward.” The decision to invest in Accord was sealed by two factors – the introduction of a new Accord manufacturing module and seeing the Accord solution and fully integrated Voice WMS live in action at another BCP client. Said Tim: “Accord Voice WMS outclassed specialist standalone warehouse offerings and it was incredibly impressive seeing how the system operated as part of a fully integrated Accord solution and the benefits that that company had seen from its implementation.”

The implementation The 60-user system encompasses the complete Accord software suite from Purchasing through Sales Order Processing to Financials, Manufacturing and Voice WMS and was implemented in two main phases. The first phase was the main Accord system where the company wanted to ensure continuous operation, switching the old system off and Accord on in a single day. “It was the most seamless implementation of an ERP system I have ever seen,” says Tim. “When we switched the old system


Case Study off Accord came up live and we went straight into stock take.” Once everyone was familiar with the Accord system the company moved to the second phase of the implementation – Voice WMS. This was done over the period of one week, starting in the goods receiving area and then working through the warehouse, finishing up with Picking.

The results

Accord has also transformed reporting in the business, “giving us fantastic ability to slice and dice data to show us exactly what we need to know about the business,” says Tim.

“Accord has really transformed our business,” says Tim. “It’s brought us into the 21st century. The key benefits are data accuracy, visibility, scheduling and efficiency.” Accord has improved accuracy throughout the business from goods receiving, to stock through to picking where accuracy is now way above 99 per cent and, said Tim: “Those errors which do occur are usually simple human ones which are often unavoidable.” Members (customers) have commented upon how much more accurate orders are since the implementation of voice, claims have dropped massively – by over 60 per cent and levels of trust have skyrocketed. Visibility of data within the business is now much better. For instance, in telesales there is now confidence in the information in front of the operator to be able to guarantee that stock is available and also to upsell product or to sell substitutes or alternatives. Accord has also transformed reporting in the business, “giving us fantastic ability to slice and dice data to show us exactly what we need to know about the business,” says Tim. With the previous paper-based system people had to manually decide which pieces of work should be done in which order. Accord now does this, scheduling work in the most effective order for the business. “By being able to see the exact quantities of work in each area, we are able to move people to the best effective use of their time,” says Tim. One of the biggest efficiency gains has been in Picking, where: “we are now picking more orders with fewer pickers than we were before we implemented Accord,” explains Tim. The Health Store has developed a very close working relationship with BCP, who’ve shown they’re very interested in developing the system to meet the needs of their customers. Through special interest groups the Health Store has been able to input into future developments of Accord, a good example of this being the Kitting module where BCP worked very closely with the Health Store to develop the module to meet its exact needs. Tim concludes: “Now that Accord is fully implemented in our business we are delighted with the results and absolutely convinced we made the right decision. The investment was substantial, but it paid for itself within just nine months. It’s improving efficiency throughout the business, both in the offices and in the warehouse, making our business – and those of our customers – much more competitive. Plus, it’s scalable, so we’re already seeing other opportunities to use it to further improve our business.”

www.bcpsoftware.com • www.thehealthstore.co.uk

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Best Practice

Adapt change to

Best practice in procurement & supply chains. By David Noble

Whether it’s the horsemeat crisis or a collapsed factory causing deaths in Bangladesh, if it impacts a well-known UK business or worse UK consumers, you can be sure it will be topping the news agenda. Consumers vow never to shop there again and businesses involved promise wholesale changes. A few weeks later the fanfare dies, customers return, firms shelve their plans to change and business as usual returns. Supply chains and the procurement practices that control them fade into the distance. Until next time, that is.

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There is an alternative. Many companies have already woken up to the value good supply chain management brings to business, even in a period of austerity. They know their focus on supply chain delivers them efficiency and effectiveness in day-to-day business. It also gives them the assurance that when difficulties do arise, disasters with reputational and business implications are averted through contingency plans and well-established processes for implementing them. The irony is, those businesses with the most robust contingency plans, are those most likely not to have to implement them,


David Noble David Noble was appointed chief executive of The Chartered Institute of Purchasing & Supply on 1 June 2009. Previously he was group supply director at IMI plc, a FTSE 250 UK multinational company specialising in advanced engineering technology and responsible for £1billion spend. A key achievement was pioneering Category Management and Strategic Sourcing at Motorola in the mid 80s.

as the process of identifying risk is the first step to eliminating risk. Such an approach ought to be an aspiration for every business and is something that can be achieved if the following principles are adhered to.

Align procurement strategy to business strategy China, Japan and India offer opportunities for creativity, innovation and a fast, agile workforce to match. This is appealing to many Western organisations, but the results can be long, complex supply chains, open to disruption. Shorter supply chains are on offer in Europe and the UK, but come with expense and rigidity, which can be difficult to overcome. The key is to ensure supply chains match business strategy. Involving the whole organisation makes sense and getting the support of the CEO vitally so. CIPS’ recent survey of senior supply chain managers found that more than a third of chief executives are disengaged with their supply chain. Similarly, our Time to Take Stock report highlighted the lack of prioritisation placed on supply chain management compared to CSR issues for example and we have seen those chickens come home to roost. There have been some improvements, with the influence of supply chain professionals on the increase. A recent report from KPMG noted many executives are increasingly looking to procurement to engage the business in strategic conversations. The two should work in harmony, as they are inextricably linked. Thankfully, there is growing evidence procurement departments are growing into this role. AT Kearney, for instance, recently found that two thirds of companies are

seeing their procurement functions reporting directly to a C-suite executive. A trend we all should welcome.

Build relationships Though procurement and supply chain management is predicated on finance and hard facts, best practice also requires a thorough understanding of who your suppliers are. Many procurement professionals will be confident they have this understanding, but this knowledge must stretch all the way along the supply chain beyond first and second tier suppliers to prevent nasty surprises later on. The horsemeat saga is a case in point, and the recent Primark child labour case is a further demonstration of what can go wrong. Close relationships are critical in ensuring clear sight of supply chains. Understanding suppliers’ needs and vice versa, how to survive now, and how to grow in the future will make you a ‘customer of choice’ when you need your supplier the most. It’s no longer buyers having the upper hand- it’s a twoway street.

Minimise risk Risk does not always have a negative impact on an organisation. Risk often comes with opportunities and a chance to change and innovate. Risk is only a threat when it is unexpected and out of control, which is where risk mitigation strategies are crucial. Supply chain initiatives such as outsourcing, low cost country sourcing and lean supply have exposed us all to new risks but with due consideration of the four areas of risk management – risk recognition (identification of potential risk); risk analysis (probability of

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Best Practice

risk); risk assessment (likely impact) and risk mitigation (plans in place to reduce impact) it’s mostly covered. The recent CIPS survey discovered that just over 40 per cent of companies do not have a comprehensive supply chain risk mitigation strategy in place at all; a worrying figure given the propensity of risk in the world currently. However, pockets of best practice do exist. Toyota, Aston Martin and Jaguar Landrover, have collaborated to reduce risk in their supply chains. By working together they’re developing a tool that will map out their supply chain network that will help them respond more quickly to disruption and prepare for uncertainties ahead. By increasing transparency they will troubleshoot any emerging problems before they paralyse their supply chain.

Embrace technology Francis Bacon once said: ‘knowledge is power’. He was right and nowhere is this more true than in procurement. The collection and management of data is key to making informed decisions, whether on commodity prices or the manufacturing capacity of suppliers. This need will inevitably increase, so access to and interpretation of that data offers a competitive edge. Ways of finding and retaining customers are also shifting and social media plays a major part in this. McKinsey’s The Challenges Ahead for Supply Chains report, identified that a quarter of their survey respondents were expecting to invest in IT over the next few years and only ten per cent looked to social media to understand their customers’ needs. These figures are likely to have reversed somewhat, but social media offers further opportunity to track risk in supply chains, source more knowledge and improve efficiency. Marcell Vollmer, chief procurement officer and senior vice president of the global procurement organisation at SAP is an advocate of this approach. There are of course, welldocumented challenges that come with social media. Indeed these are common to its general usage, but the benefit of real time information direct from suppliers should not be missed and reinforces supplier relationships.

of the essential role sustainable procurement and supply management practices play, then the Japanese earthquake and subsequent tsunami must be that proof. Many businesses suffered severe disruption and were surprised at the depth of the chaos to their own business. Ford for instance could not fill orders, because they were unable to source a rare black metallic paint, showing that the smallest chink in a supply chain can have a major knock on effect. It also underlines the benefits of knowing your supply chain and having the flexibility to change suppliers at short notice when disaster strikes. Sustainability involves a wide range of environmental, social and economic consequences that need to be considered. Non-renewable material use, design, manufacturing processes, service delivery, logistics and recycling all have cost as well as environmental implications, both negative and positive. Managing waste in a more sustainable way for example makes even more sense when costs of disposal are high, which more often than not, they are. Ethical trading can offer a competitive edge and attract ethically conscious customers, and less wasteful energy use saves precious resources as well as reducing costs for the business itself. This is particularly important in a period where companies are increasingly under pressure, sometimes by law, to report their carbon emissions and that includes their supply chain. Organisations can be at the forefront of their sector in delivering on these issues and reducing costs or they can wait until legislation forces their hand. The London Organising Committee of the Olympic and Paralympic Games (LOCOG) was a pioneer in this regard. LOCOG adopted a sustainable approach to procurement and revolutionised supply management for many games to come saving £114 million in the process. One thing is certain, and that is change. Your business will undergo many unforeseeable challenges which is why these principles are so critical and so too is the flexibility to respond when things go wrong. Implementing these measures and changing the status quo, will enhance the value of procurement and will enable supply chains to respond in extraneous circumstances, whatever they may be.

Trained professionals Having skilled professionals in place with the right expertise and experience makes all the difference. Procurement is about more than just ‘buying’; it is understanding the full purchasing and supply management process. As well as having the competencies and skills to navigate the tendering process, creating and managing contracts with suppliers, understanding commodity pricing and the quality and value of a product, not just cost cutting. Specialist training is also critical, one of the reasons the MCIPS qualification is as highly regarded as it is, offering a global standard and peace of mind.

Be sustainable and ensure supply Sustainability remains critical, but it’s no longer simply the green agenda. It’s ensuring all the goods and services needed for an organisation to stay in business and flourish arrive on time, to budget as efficiently as possible. If proof were needed 16

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The Chartered Institute of Purchasing & Supply The Chartered Institute of Purchasing & Supply (CIPS) is the leading international body representing purchasing and supply management professionals. It is the worldwide centre of excellence on purchasing and supply management issues. CIPS has a global membership of 94,000 in 150 different countries, including senior business people, high-ranking civil servants and leading academics. For further information visit:

www.cips.org


Profiles Introduction As well as interesting features, ESCM is also your source to keep up-to-date with companies that form the backbone of the industry and the ongoing development they experience. It is also a chance to see how they are coping with the challenges within their respective marketplace and their burning ambitions to succeed, come what may.

Holemans Group Schmitz Cargobull Mรถlnlycke Healthcare

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Quality productions

Holemans Group Specialists in the production and marketing makes sure it of gravel and sand, family owned Holemans Group considers the has developed its expertise and successful corporate activities steadily since 1873. Today the group boasts environment when a turnaround of £30 million from its five wholly undertaking its owned, strategically located production units and sells sand and gravel approximately 3.5 million grains of sand and gravel per extraction activities annum. Among its 130 plus employees are highly skilled engineers, merchants, administrators, electricians and hydraulic excavator drivers, all working to exceptional standards to ensure the best quality products for the group’s long-term client base. “We have a long tradition with more than 100 years of history and a lot of our employees have a high level of expertise in the

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extraction and production of sand and gravel,” says Michael Willnes, sales manager at Holemans GmbH. “Our personnel can take the sand, clean it and take sand from zero to two millimetres and extract this part into another four parts, which means we have a high technical standard and can always meet the needs of our customers. We have a strong relationship with many of our clients, most have been with us for 50-60 years so we know exactly what they require.” The process of producing sand and gravel is in two parts, the first involves the extraction of the resource from the Lower Rhine floor at depths of ten – 40 metres. To do this the group uses extraction units such as large suction dredgers and bucket chain excavators


profile

before the raw materials are sent to Holeman Group’s production unit. “In the production unit we clean and separate the sand and gravel from all contaminants, including clay and wood, with high pressure water at five or six bar. Once this process is successfully completed we put the sand and gravel in different grading curves, each customer has their own grading curve with their own combination of sand and gravel; sometimes we sell only sand, sometimes only gravel, other times we mix both. For example, concrete needs 40 per cent gravel and 60 per cent sand. The products are then sent to customers in either ships or trucks,” explains Michael. With markets in Germany, The Netherlands, Belgium and Luxemboug, Holemans Group produces sand and gravel as an aggregate for the construction industry at five strategically located production plants in Germany, as Michael explains: “Three of our five wholly owned production units are located around the city of Wesel, while our main office and one of our big production units are based in Rees. These two cities are close to the river Rhine, one of the most important areas within Germany for extracting sand and gravel as it is one of the largest areas for this sort of processing. We also have another production unit in Cologne and intend to construct two further units in the near future.” The construction of two new production units is due to the steady growing group’s aim to conquer new markets by developing a client base in Damme and also the life cycle of its plants, as Michael highlights: “To increase our market share and grow a presence in new areas we are going to build a new production unit near the city of Damme, which is currently too far from our production units for us to get to. We have two ways of delivering to our customers, ship and lorry; customers who request our lorry delivery are a maximum of 100 km away from the production unit, but Damme is nearly 250 km away from Wesel or Rees. To gain new customers we must develop new production units, this is our strategy.” Although Europe has been hit by the recession, the group is confident about the future and keen to continue growing at a steady pace through taking well researched investments in new plants and its technical and quality capabilities, as Michael says: “When we first started we had one production unit; we were a small company but our history and tradition is all about smart and steady growth. There have been several years where we haven’t increased production at all, but we believe the real growth is in developing our technical capabilities and enhancing the quality of our products and services to our customers.” Optimistic about the long-term future of the group, Michael is focusing on the process of gaining authorisation for the development of its new production units, which is wrought with challenges due to the environmental issues involved in resource

Holemans

excavation. Aware of the importance of protecting the environment, Holeman Group redevelops the areas it excavates regularly, as Michael highlights: “We are responsible for the change in the environment from whatever area we extract resources, which is why we recultivate the area afterwards as part of our daily work. It is important to us to focus on environmental protection, which is why we won an award in the category of biodiversity at the German Sustainability Awards.” As each production unit newbuild takes between five to ten years to be authorised, constructed and approved, the group has a strategic and long-term view for its success in the future, as Michael concludes: “The excavation projects we are involved in can be on the market for up to 70 years, which means there is a lot of planning involved. My job is to plan for the generation after and a lot of the decisions I make related to the projects won’t be realised in one generation; this is why we make hard strategies and this is how we grow.”

Holemans GmbH www.holemans.de Employees 130-150 Industry Dredging & production of materials

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Just more

success

Known as ‘The Schmitz Cargobull (Danmark) is a subsidiary Trailer Company’ company of the German-owned Schmitz Cargobull Schmitz Cargobull Group, the biggest and leading manufacturer and supplier of semi-trailers in Europe. The Schmitz is the market leader Cargobull Group has manufacturing plants in Germany, in its field Spain and Lithuania and employs over 4500 people. In the financial year 2011/2012, Schmitz Cargobull had a turnover of approximately 1.639 billion euros and produced more than 43,000 trailers. Schmitz Cargobull has made a name for itself as a leader in quality and innovation through a constant focus on research and development activities. The organisation has put together teams from a range of different technical sectors to closely work together with research institutes and testing facilities. At present Schmitz Cargobull’s research activities focus especially on safety, life cycle costs and weight reduction. Here it has, for example, set new standards with its in-house axle technology and trendsetting construction designs. Furthermore, it is also developing and enhancing such details as container locking systems. The results of its R&D efforts are constantly being incorporated into series production. This way, every single one of its customers profits from the company’s innovative technology – and can exploit new potential in the freight business. Trailers are the cornerstones of Schmitz Cargobull’s activities and each and every one of the company’s trailers is manufactured in a modular system. This means that it can meet customers’ wishes or industry-specific demands by selecting and combining variations on running gear, chassis and bodies. Using the diversity that these building blocks offer, Schmitz Cargobull can

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achieve maximum individuality in a quality-oriented industrial series production. On the new trailers side, the organisation has a wide range of trailers, semitrailers and bodies on offer, and there are models with all kinds of extras, depending what their intended final use is. The range is divided into five different areas – reefer, curtainsiders/platform trailers, tippers, container chassis/swap chassis and sliding floor. The reefers and dry freight vehicles manufactured by the company are a great example of the R&D efforts referred to previously, as its S.KO COOL vehicles are built using FERROPLAST panels with new NX17 foam technology, which provides even better insulation. The company develops FERROPLAST Insulation Panels and they are constructed in a sandwich like fashion made from highly refined metal coating layers enclosing a rigid foam core. The vapour diffusion-tight panels with their outstanding thermal properties help prevent thermal bridging and are highly durable, repairfriendly and especially safe. Trailer bodies made from FERROPLAST are energy efficient, hygienic, age-resistant and easy to repair. In addition to the benefits of FERROPLAST, S.KO COOL vehicles also have a unique semi chassis design. This sees the reefer models sitting approximately 100mm lower than competitor trailers, whilst maintaining the same internal working height dimensions. This reduction in overall height reduces the frontal area of the trailer by approximately 2.4 per cent, reducing aerodynamic drag force by the same amount. Tests show that this can result in fuel savings of around 1.2 per cent. In addition, the Schmitz Cargobull semitrailer chassis and vapour diffusion proof body


profile Schmitz Cargobull

benefits from the lowest possible weight. Another benefit of Schmitz Cargobull trailers is the option of adding its other ground-breaking technology, such as ROTOS running gear. ROTOS is the result of complex development work and field tests in the axle and brake technology sector. This running gear produced by Schmitz Cargobull reduces the temperature and wear and tear on the brakes – a definite plus when it comes to economy and safety. Having such a wide variety of new vehicles on offer makes Schmitz Cargobull a very attractive supplier, however the company also recognises that its customers prize flexibility and the need to react quickly to changes in market conditions. As a result, Schmitz Cargobull offers the facility for them to replace their trailer with a new one and trade it in part-exchange, or the ability to purchase a reliable used vehicle. Used trailers are available at 22 locations throughout Europe and those that meet strict quality demands receive the Trailerplus mark. In addition, the independent inspection company, DEKRA, thoroughly checks the vehicles from top to bottom. Customers can even check Schmitz Cargobull’s website for online vehicle sales.

Working in combination with the trailer side of the business are a number of additional services, which complete the Schmitz Cargobull offering: Cargobull Finance for leasing and lease purchasing; Cargobull Parts & Services for vehicle servicing and spare parts; Cargobull Service Partners for repairs and maintenance and Cargobull Telematics for trailer telematics. Schmitz Cargobull already holds a market leading position and its name is associated with leading technology and solutions designed to help customers be more efficient and cut cost. For the future the company is keen to maintain its dedication and further increase its presence in the industry. With this in mind, it has firm ambitions to focus on the continuous improvement of its core products and services, and ensure customers always receive a comprehensive, high quality service. Or as the company phrases it on its website: ‘We offer our customers ‘just more’ – and will continue on this successful path.’

Schmitz Cargobull www.schmitz.dk Industry Trailers

KH One Stop KH OneStop is the partner to Schmitz Cargobull to all new trailers before delivery. KH OneStop finalizes trailers from Schmitz Cargobull with tail lifts, decorations, Thermo King Reefer units, partition walls and other options. KH OneStop has been awarded Service Partner of the year in Scandinavia by Schmitz Cargobull. KH OneStop operates in the trailer market in close cooperation with manufacturers, suppliers and customers to optimize solutions and keep trailers on the road.

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profile Mölnlycke Health Care

healthy future A

Anders Klinton

Pierre Guyot

Mölnlycke Health Care is one of the world’s leading providers of single-use surgical and wound care solutions to the professional health care sector

The company has a long history, with its foundation starting in 1849, and a new chapter of its evolution began in 1998 when it commenced operations as an independent company. New developments arose in 2007 when Investor AB acquired it, and today its 7142 employees work in 22 offices across Europe, the Middle East and Africa; two offices in North America; and seven offices in the Asia Pacific region. Its plants are located in Belgium, the Czech Republic, Finland, France, Malaysia, Poland, Thailand, the UK and USA. www.europeansupplychainmanagement.co.uk

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Norafin Industries Norafin Industries is a producer of technical nonwovens providing all-encompassing product solutions to its global trading partners. The company services a diverse range of markets with its spunlaced and needlepunched nonwovens, including medical and hygiene applications. Norafin’s medical nonwovens offer a gentle touch, increased surface homogeneity as well as enhanced absorbency properties. It would like to thank Molnlycke Healthcare for the successful long-term partnership.

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As Pierre Guyot, CEO explained, today Mölnlycke Health Care is primarily focused on two areas - surgical and wound care. He gave some more details about each division: “The Surgical division is where we develop, manufacture and commercialise a lot of innovative products that are needed for the operating room environment for surgical procedures.” These include items such as antiseptics, clothing, face masks, scrub suits, surgical gloves and surgical headwear. Pierre continued: “The other division is Wound Care and this is again designing, creating and selling products, this time those needed to deal with different sorts of wounds such as deep cavity wounds, infected wounds, chronic wounds or skin tears.” Innovative products from Mölnlycke include Safetac, a unique adhesive technology that doesn’t stick to wounds; and BARRIER EasyWarm, an active self-warming blanket. Overall Mölnlycke’s wound products are designed to provide a holistic and caring approach to the patient. Pierre noted that the culture of the entire company in fact revolves around helping the end users of its products: “This is what we feel good about,” he said. “We feel that we owe it to patients to make our products the best quality they can be and it gives us a sense of purpose.”

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Upholding this philosophy requires a very committed, engaged workforce, and a strong track record of innovation, and Mölnlycke has both. In addition, Pierre noted that it benefits from a strong owner, which has a firm vision on the long-term: “We have a balanced footprint both in terms of operations and manufacturing, and our main investor is a large financial holding company in Sweden, which is well invested in many big companies and concentrates on a long term commitment to its portfolio. Being a private company means we can take a long term view on the way we grow and develop the business globally.” This ability to plan into the future also adds value to product development, as Pierre noted: “First and foremost we invest a lot in research and development – I would say we spend more on R&D than any other expenses in the company, and innovation is a big focus area for us. Furthermore, we are quite connected with customers through advisory board meetings, and in these clients explain their needs and give us feedback about our products so we can ensure we are investing in the right areas and meeting their clinical needs.” He added: “Over the last few years we have also acquired technologies, because we can’t invent


profile Mölnlycke Health Care everything ourselves. In 2012 we acquired a company in the US called Brennen Medical, which provides complimentary products to our burns range, and we also acquired a German company, GerroMed, which makes electrical stimulation technology for wound healing.” By stimulating a hard-to-heal wound with small electrical pulses, it can create an environment where there is new cell and skin growth. “There is a lot more to do in this area, but we are always looking at new technologies as we want to be known as the world’s most innovative company in wound care and in surgical items,” said Pierre. Given Mölnlycke’s dedication to finding the most suitable solution to a wound or surgical problem, it will come as no surprise to find that the company also takes this approach with its own business processes, and continually strives to make efficiency improvements. In 2011 it was awarded Class A status by business improvement specialists Oliver Wight, after implementing Integrated Business Planning (advanced S&OP) and almost eliminating forecast bias as a result. As Anders Klinton, vice president supply noted, Mölnlycke Health Care worked closely with Oliver Wight in redesigning its business management flows

to achieve integration across the organisation’s complex structure. As well as improved integration, forecast bias was reduced almost overnight, and all financial reports are now generated from a single system, removing the potential for divergence of critical planning data. “We wanted to balance the supply chain end-to-end and improve the transparency of the supply chain so everybody knows where they stand. With Class A status awarded across the company, we now have a very firm and fixed process in place, which helps us achieve alignment and synchronisation across all functions of the organisation,” he said. This focus on a very efficient supply chain is also helping Mölnlycke as it expands into new markets. “As the supply chain of the company is growing so it becomes more complex and more difficult to manage,” said Anders, “so the main challenge for supply chain if you look end-to-end is to make it cost efficient but also flexible.” “When you consider our tactical aspirations, we are focusing a lot on the supply chain,” added Pierre. “We have also worked hard on improving our distribution footprint in Europe and that is another

SGL ‘Predictability’ is a keyword for SGL when developing customised solutions in supply chain management. That approach has convinced Mölnlycke to entrust it with its overseas freight. In close co-operation with Mölnlycke, SGL has established a supply chain solution that deals with the complex challenges all the way from production in Asia, Europe and the US until the goods are securely delivered. “Our ability to attract and sustain long term relations with huge SCM customers like Mölnlycke is based on our experience in aligning our customers’ expectations creating predictability and transparency within the supply chain,” explains Allan Melgaard, COO at SGL. “We make huge efforts in understanding all stakeholders and the different cultures within a company which is the cornerstone in making an overall smooth transition,” Allan added. Scan Global Logistics (SGL), a Nordic based company, established in 1975 and now with 90 stations on six continents, handles complicated supply chain solutions, as well as sea and air freight, aid & relief operations, industrial project and charter solutions.

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profile Mölnlycke Health Care We have been working with LCP Consulting since 2005, but more recently, they have supported us in the design and implementation of a completely new cross-business integrated supply chain and distribution set-up big focus for the year, stabilising and making our distribution model more robust. “We have been working with LCP Consulting since 2005, but more recently, they have supported us in the design and implementation of a completely new crossbusiness integrated supply chain and distribution set-up in Europe - with the objective to support our growth, further improve customer service, and to reduce cost. We’re now reaping the benefits of the changes we have made - a much more robust, flexible and cost efficient supply chain.” The expansion referred to above is also at the top of the agenda for the company as it enters the second half of 2013. Said Pierre: “We are now establishing a direct presence in Turkey, Indonesia and Saudi Arabia and we are also looking at achieving a presence in South Africa and Brazil by the end of the year.” Mölnlycke also has an important project underway in China and India. “These countries need help with specialist knowledge, and working there allows us to recognise local needs and create a portfolio of products that can meet them,” said Pierre. “As I said earlier, our mindset is about long term commitment, so we want to build sustainable partnerships in these countries. We discussed our ideas with the Ministry of Health in China and how can we help, and we discovered they didn’t have the skills they need in terms of nurses and doctors. So we have created the Mölnlycke Health Care Wound Care Academy, which is an education initiative to help nurses better understand wound management and aims to train 10,000 nurses over five years.” Mölnlycke also aims to collaborate with major hospitals and establish wound care centres of excellence in both China and India, which will serve as models and references for best practices. Throughout its evolution, Mölnlycke Health Care has remained proud of its Swedish heritage and the entrepreneurial spirit that has consistently fuelled its growth. It has established a track record of growing sales by eight to nine per cent per annum over the last seven years, and is determined to continue on this path, with a new US plant under construction and targeted financial objectives established for the year. “We are investing more in R&D than we have done historically, and we are aggressively looking

at technology from outside through acquisitions or licensing/partnerships opportunities,” concluded Pierre. “We recognise the world is changing very fast and we need to respond to the challenges, so whether it’s marketing, R&D, HR or finance, all our efforts are targeted towards continually improving and evolving.” Mölnlycke Health Care www.molnlycke.com Industry Single-use surgical & wound care products & services

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ESCM EUROPEAN SUPPLY CHAIN MANAGEMENT Schofield Publishing 10 Cringleford Business Centre Intwood Road Cringleford Norwich NR4 6AU T: +44 (0) 1603 274130 F: +44 (0) 1603 274131

Editor Libbie Hammond libbie@schofieldpublishing.co.uk Sales Manager Rob Wagner rwagner@schofieldpublishing.co.uk

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European Supply Chain Management Issue 100  

The latest edition of European Supply Chain Management

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