IMPLEMENTING SUSTAINABLE SOLUTIONS FOR SUPPLY CHAIN EXECUTION IN A - PowerPoint PPT Presentation

IMPLEMENTING SUSTAINABLE SOLUTIONS FOR SUPPLY CHAIN EXECUTION IN A GROWING BUSINESS Michelin low cost division 1 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

LEAN NOT CHEAP BACK TO BASICS . IOT, 4.0, big data, cloud computing, AI : Sorry, not here ! 2 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

THIERRY GAUDET DIT TRAFIT VP SC, LOGISTICS & ISIT – LOW COST DIVISION Master in industrial Engineering – CPIM - 55 years old – Married – 4 children – French http://th.linkedin.com/pub/thierry-gaudet/17/826/765 Past 30 years : • Supply chain • Logistics • Manufacturing • Systems • Projects • Mostly automotive and textile industry, but also pharmacy, food & electronics • 14 years in Asia (Philippines, Singapore, Thailand), 5 years in Hungary One of the founders of the low cost division of Michelin (world perimeter) : • design a disruptive and customer centric business model • creation of the business processes supporting it : coherent, lean and effective manner across all the functions • design and implementation of the ERP • Launch & management of the operation with successful outcome since 2013 3 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

AGENDA • Michelin low cost division : brief history & context • A specific business model • Customer centricity & sustainability • The winning battle of SC : tactical horizon • The excellence in execution • Conclusion / Key take-aways 4 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

Michelin low cost division Brief history & context 5 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

TYRES MARKET 2017 : TIER 3 MARKET BIGGER THAN T1 ; T2 & T3 MARKETS GROW FASTER THAN T1 A WORLD LASTING TREND OF THE PAST YEARS ZONE EUR - YTD 09-2017 ZONE EUR - YTD 09-2017 MARKET GROWTH MARKET SPLIT BY TIER 4% 3% T2 2% T3 +3.9% T1 TOTAL +3.2% T3 1% 39% +0.8% 43% 0% -1% T1 -3.1% -2% T2 18% -3% -4% . 6 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

TIER 3 BUSINESS CAN BRING A DECENT MARGIN . 7 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

TIER 3 COMPETITIVE ENVIRONMENT MOSTLY SIZABLE ASIAN GROUPS - 200M PIECES TYRES ASIAN OVERCAPACITY MOST OF THE WESTERN MANUFACTURER ALSO HAVE AN OFFER . 8 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

TIER 3 COMPETITIVE ENVIRONMENT MORE THAN 170 BRANDS . 9 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

LOW COST DIVISION MANDATE FROM MICHELIN GROUP SINCE 2012 Provide growth & value creation on T3 segment Create competition on the battle field of Asian Tigers Maintain credible complete offer to our distribution partners . 10 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

ANSWER TO THE MANDATE = A NEW BUSINESS MODEL METHODOLOGY & MAIN POINTS Blue ocean strategy method Reliable supply of Quality budget tires Supported by Easy and • Customer interviews : pains Profitable & gains Business • Competition mapping offers • Distribution mapping • Economic simulations  Conception of complete coherent vision : sales, marketing, SC, logistics, finance, industry, … . 11 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

SUSTAINABLE SC ALIGNED WITH BIZ MODEL - EXAMPLES Biz Customer pains & model Reliable SC – Short lead time – Value creation gains Key success factors Low stock MT Flexibility & ST reactivity xx xx Full use of factory capacity SC & Biz principles Products standardization – Specific customer’s contract = Make to Late differentiation order capacity reservation + forecast with tolerances on mix Holistic consistent processes Industry – sales - … processes SC processes Monthly demand review Product & process design to maximize flexibility Go to Market / distribution model Monthly capacity planning in each plant / Flexibility planning . Commitment / reservation of production by order Allocation of stock by priority of order / commitment Full truck only shipment to customers / mono or multidrop 12 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

SC winning battlefield : tactical horizon 3 key highlights • Demand management • Capacity planning • S&Op 13 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

MONTHLY TACTICAL PROCESS : INTERNATIONAL BEST PRACTICES ADAPTED WITH BIZ MODEL SPECIFICS Time in 6-10 10-15 15-20 1-6 20-25 each month Supply / stock / service Executive S&Op Monitor & ST Central Demand Sourcing planning meeting : choices arbitrations division review Cost & investment options & arbitration Pre defined rules Vs S&Op Management team key choices moment every month : Country / Local demand not a plan but a risk / region planning Execution Post S&Op = opportunity planning device (Qty & €) commu- nication MT Capacity Execution Factory planning Sales owner of data / SC owner MRP2 type geared at of process flexibility anticipation Partially constrained by division objectives / available capacity 14 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

Excellence in execution : operational horizon • SC, Logistics & customer service • Lean & respect of biz model promises 15 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

AUTOMATED DEMAND CAPTURE AND PROCESSING Lean customer service & digitalized SC B2B portal Customer centricity Commitment that can be executed Automated supply planning Make to order Portal Supply planning • Order management • Short term sourcing & stock netting • Contracts and invoices • Prod planning by plant / workshop (2-4 months horizon) • Stock planned availability • Commitment to customer by priority • Product catalog & evolution • Marketing material • … 16 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

THE INTEGRATED ERP SUPPORTS ALL Consistent data / paperless • Quality system : • Process described • ERP fully integrated and aligned with processes & Biz model • Specific Devt only on core of biz model, absolutely standard elsewhere Ex : WMS • Classical Storage management : every pallet identified + FIFO / date of production (fresh tyres required in some markets) • Traceability of customer delivered for every tyre • Allocation of tyre by order / customer in respect of priority • Invoice generation when picking completed / truck loaded 17 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

EXECUTION CONTROL The operational team members are empowered Central team manage only the exceptions • Weekly process • Participation of customer service, factory planning, warehouse manager, central supply planner • Led by sales assistant 18 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

SOME EXECUTION RESULTS • EMEA market share doubled since 2013 • The division creates value now and supports the amortization of the massive capacity creation investment 19 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

Conclusion / Key take-aways 20 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

SUSTAINABLE SOLUTIONS FOR SUPPLY CHAIN • Required in any kind of business, especially if growing and very competitive market • Plan and finance the required projects (Logistics, planning systems, flexible factory, …) • Part of a strategic vision of the company • Must implement consistency • Strategy & business model / tactical /operational • Engineered & documented processes implemented through ERP • All company functions aligned / not only SC • Based on international SC standards • Well know but often not implemented : back to basic • Specific adaptations only for core functions of the biz model • Implementing / developing it is a process / long project • Chose the priorities with the rest of the business : agile method • Digital is tool not an obligation : be selective 21 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page

THANK YOU Questions ? 22 File ref./subject Author/Dept.: Date created: Classification: D3 Retain for: WA Page