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Managing a global supply chain with the use of local sourcingSøren F. KnudsenSales and Marketing Director
EWEC, Athens, 1 March 2006 . Side 2
It has been said that arguing against globalization is like arguing against the laws of gravity.
Kofi Annan
EWEC, Athens, 1 March 2006 . Side 5
Globalising the industry
• Geographic market diversification
• Global wind turbine manufacturers
• Exchange rate differences
• Rising shipment costs
• Requirements for local production
• Optimising the supply chain
Stronger demand for global productioncapacity among sub-contractors
EWEC, Athens, 1 March 2006 . Side 6
Market growth outside Europe
2%
20%
53%
25%
2005E
Europe
America
Asia
Rest of the world
2%
7%
87% 4%
2000
4,496 MW
Approx. 11,000 MW
EWEC, Athens, 1 March 2006 . Side 7
Globalisation at LM Glasfiber
1%5%78%
16%
2000
15%
19%
30%
36%
2005
11%
15%
49%
25%
2005
3%
9%
76%
12%
2000
Europe
America
Asia
Rest of the world
Sales: Employees:
EWEC, Athens, 1 March 2006 . Side 8
Challenges
• International expansion strategy
• Organisation and learning
• Management of subsidiary
• Systems, flexibility and response times
• Supply chain
Our customers must be able to buyblades of a consistently high
quality everywhere in the world
EWEC, Athens, 1 March 2006 . Side 11
Partnering on the demand side
Before:• Standard blades for several customers• Annual negotiations • Fixed orders• Closed R&D
Now:• Custom-made blades• Framework agreements for up to ten
years• Forecast• Integrated development with many
iterations• Local production
EWEC, Athens, 1 March 2006 . Side 12
Partnering with a few major suppliers
Before• Many vendors• Short-term contracts• Looking for the best price performance• Vendor based R&D• European based vendors• Inventories in 3 locations
– Vendor, supply chain, LM Glasfiber
• Fixed terms/quantities• Order per delivery
Now:• Manufacturing close to our sites
– Plans for India
• Long-term contracts 2-3 years• Consignment stock• Joint development• Tailor-made to LM specification• Global production• 1 stock
– Consignment
• Electronic forecasting and EDI• Market share based
EWEC, Athens, 1 March 2006 . Side 13
Hardware and software in the supply chain
Hardware:• Components and materials specified
centrally by R&D• Local and global suppliers qualified
and audited in an ongoing process• Comprehensive access control at all
locations• Ongoing auditing to ensure
compliance with QA procedures
Software:• Local procurement and logistics
functions upgraded with respect to resources and know-how
• Training in joint LM standards and procedures
• Benchmark and knowledge sharing among our companies
LM Glasfiber sources a consistently high quality to all our plant locations from local suppliers or from global suppliers with a local presence, which is one of
the reasons why we can supply a uniform product worldwide
EWEC, Athens, 1 March 2006 . Side 14
Benefits for the wind turbine manufacturers
We optimise the supply chain for the wind turbine manufacturers by offering:
• Reduced market risk • Local supply opportunities in local
currencies • Local employment at the lowest cost• Reduced shipment costs• Lower working capital • Lower CAPEX requirements
Triple-Win situation for local area, wind turbine manufacturer and LM
EWEC, Athens, 1 March 2006 . Side 15
Partnerships lead tocomplext relations
Supplier WTMLM Glasfiber
Before
Now
Supplier WTMLM Glasfiber
KAM
R&D
Q
Logistics
Finance
Service
Purchase
R&D
Q
Logistics
Finance
Service
SB
R&D
Q
Logistics
Finance
Service
KAM
R&D
Q
Logistics
Finance
Service