Supply Chain in Action Equals Reduced Lead Times
When major upholstery supplier QFC recognised the need to improve its supply chain, it got together with one of its main customers and its key suppliers to tackle the issues involved.
To lead the process and to bring some lean thinking and best practice to the table, they decided to engage Oneflow. After an eye opening experience for all involved, this supply chain group found a 41% reduction in lead time, and that's just the beginning.
With Argos refreshing products every 26 weeks for new catalogue launches and offering short delivery lead times to its customers, the pressure on the supply chain to get it right in the shortest time without building in stock and cost is considerable.
The objective was therefore to reduce the current lead time of the whole supply chain to make it more responsive. At the launch meeting of the project the supply chain team set out some specific common objectives;
- Reduce overall lead time
- Support Argos in maintaining their Lead Time promise to the end customer of 7 days
- Increase reliability of supply to the end customer - delivery on time in full
- No increase in cost to customer to achieve short term lead times
- No to increase stock in the chain as this equals a risk of obsolescence, increases costs and will take up more space
- Efficient total supply chain
- Understanding all parts of the process and how can work together
For products and services to be competitive, the whole supply chain needs to collaborate together with a set of common goals. Oneflow's approach is to work with the companies along the supply chain as a group to develop the strategies, skills and capabilities that will enable them to achieve sustainable continuous improvements, drive costs down and ensures quality and delivery performance targets are achieved.
For this project the group included the customer (Argos), QFC themselves and 4 of their European suppliers who supply the fabric, the cut and sewn covers and the wood for the frames.
Over the course of the project the group visited all the manufacturing sites, including Argos's distribution centre, to create a Value Stream Map of the supply chain. The purpose of using the 'value stream map' is to create a common picture of what is currently taking place.
It shows how an order flows through the system from an Argos customer through QFC and out to the supply chain and back through the manufacturing and supply chain process to a final delivery. This is set against a timeline and key data such as demand, lead time, processing time, process performance, information flows and logistics information are included in the map.
After some initial lean training and discussion the team met regularly at each of the sites and completed the supply chain value stream map. It helped them identify some important measures of the performance of the supply:
- Mapped lead time: 68 days or 13.6 weeks was greater than the planned lead time
- Total processing time: 66 minutes or less than 1% value adding time
- Total Transport time: Approx 9 days + final customer delivery
- Days of Stock in pipeline: 59 days or 11.8 weeks
By using the map and the knowledge the whole supply chain now had of all the processes involved, the team was able to identify that key issues around information flows and planning could have a huge impact on areas from New Product Development, stock management, levelling demand, reducing lead times and adhering to current schedules and achieving delivery on time in full.
The team identified improvements that could be made and implemented:
- Improved visibility of sales data across the supply chain improving responsiveness and reduce the risk of slow moving inventory
- Improved control of schedules - timeline for issue, improve how data is presented
- Identification and sharing of other product and demand data that suppliers can use to improve their scheduling
- Changes to the Purchase Order system to allow controlled cover and materials to be pulled through the supply chain
- Identified milestones up front in New Product Development where suppliers and customers need to engage with each other to ensure correct designs and launch dates are hit
Through simple actions and finding new collaborative ways of working, the team have reduced the combined lead time down to 8 weeks, a 41% reduction over the current actual condition.
Beyond the reduction in lead time, the team identified many other ways they can work together, particularly in developing new products and introducing those as well as methods of sharing data about current production.
QFC are now a Platinum Supplier to Argos, the highest status that can be achieved.
Follow up and future
Since completing the initial project, QFC engaged Oneflow again to do further work with its cut and sew supplier and found another weeks reduction in lead time. Oneflow also supported an internal project at QFC to help improve the despatch function to Argos, another important step in the supply chain.
Other opportunities were identified in the project and the customer is developing new systems to reduce lead times and to work with QFC to reduce the supply lead time from ordering the raw material to delivery to a customer home with minimal amounts of stock.