49
SPARE PART SUPPLY CHAIN STRATEGY AT ATLAS COPCO Stijn Vandaele
SPARE PART SUPPLY CHAIN
STRATEGY AT ATLAS COPCO
Stijn Vandaele
AGENDA
1. Facts in Brief
– Compressor Technique
– Financial performance
2. Profitable growth
– Presence
– Innovation
– Service
– Operational excellence
– People
3. Summary
2
1. Introduction in Atlas Copco
2. Supply Chain Strategy
1. People
2. Service Excellence
3. Operational Efficiency
4. Distribution Network
3. Future
INTRO TO ATLAS COPCO
3
Established 1873 in Stockholm, Sweden
Five focused
business areas
Compressor Technique
Vacuum Technique
Industrial Technique
Mining and Rock Excavation Technique
Construction Technique
Global presence Customers in 180 countries
Employees Close to 45 000 in 92 countries
Revenue1) BSEK 101 (BEUR 11)
Facts in brief
4
1) End of December 2016, continuing operations
Customers everywhere
5
South America
North America Asia/Australia
8%
Africa/Middle East
24% 29%
Europe
29%
30%
30%
9%
7%
24%
Figures show percent of revenues 2016.
Compressor Technique
Vacuum Technique
IndustrialTechnique
Mining and Rock Excavation Technique
Construction Technique
Revenues by business area
SUPPORTING A WIDE VARIETY
OF INDUSTRIES
6
11%
36%
15%
25%
13%
Atlas Copco Group - New structure from January 1, 2017
Figures show percent of revenues 2016.
(Vacuum Technique and Compressor Technique restated figures)
Innovative products and service
7
COMPRESSOR TECHNIQUE
8
FACTS IN BRIEF
9
Atlas Copco
Compressor Technique
The Atlas Copco
Group
Employees 15 276 Close to 45 000
Annual revenues BSEK 36.4 (BEUR 3.9) BSEK 101 (BEUR 11)
Operating margin 22.3% 19.5% %
Figures from the annual report 2016. EUR average rate 9.44
Founded in 1873 in Stockholm, Sweden.
Presence in 180 countries.
COMPRESSOR TECHNIQUE BRANDS
10
Compressors
COMPRESSOR TECHNIQUE
Compressor Technique
Atlas Copco Capital Markets Day 2016
11
Medical Electronics Chemical /petrochemical …and more
Textile Wood & paper Food & beveragesAssembly
Air treatment & gas solutions
SERVICE
12
Service anytime anywhere
13
Always close Monitoring and control Proactive maintenance
SERVICE AS A STRATEGIC GROWTH PILLAR
Before 2008 From 2008 onwards
Division 1 Division 2 Division 3
Service Service Service
Division 1 Division 2 Division 3 Service
Division
SERVICE DIVISION
MarketingSales
OperationsTechnicalSupport
COMPRESSOR TECHNIQUE DIVISIONS
15
Atlas Copco Compressor Technique
Gas andProcess
AirtecProfessional
Air Medical Gas
SolutionsIndustrial
AirOil-free
Air
Compressor Technique
Service
COMPRESSOR TECHNIQUE
16
Service offering
Genuine Parts Lubricants
Customer
Support Plans Air Optimization Monitor & Control
GLOBAL SERVICE SUPPORT – 24 HOUR OPERATION
Responsive support anywhere and anytime
Energy management & air optimization
Superior solutions to reduce operational
cost and increase up-time
Committed, trained and experienced people
Close, long-term customer relationships
17
“A complete lifecycle offering”
DIAGNOSTIC CENTERS
CONNECTIVITY
19
>80.000CONNECTIONS
SERVICE LEADSMORE
REVENUEADDITIONAL
LOYALTYCUSTOMER
UPTIME
>98%
SUPPLY CHAIN STRATEGY
21
SUPPLY CHAIN / LOGISTICS MISSION
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
PEOPLE & ORGANISATION
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
COMPETENCE MAPPINGCompetence Level aligned with supply chain network set-up
InsufficientBelow standard
ExecutionRun general logistics operations
Shipping of orders/stock keeping/placing purchase orders
Sales Companies
Small operation supply
chain units, part of sales
team
Advanced ExecutionImproved logistics operations
Take lead in transport tenders/improvement projects/availability increase
Local DC’s
Consolidated with non compressor logistics
Operates Locally
Competence CenterSet new standards, innovate to reach new level of service excellence & operational efficiency
Advisor/auditor/trainer
Global Common DC’s
Supply chain centers
Operates Globally
COMPETENCE DEVELOPMENT IN SALES COMPANIESLogistics Manager is Strategic Role
NEEDS PER ROLEDEVELOP SUSTAINABLE
Training packages
Seminars
Master classes
The competence portal
The way we do things in
logistics
2 3NEEDS PER ROLERECRUIT
Employer branding for
logistics
Recruitment and pipeline
management
1
26
27
SERVICEEXCELLENCE
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
SERVICE EXCELLENCE
Machine DataMachineMonitoring
ServiceContracts
UrgentBreakdown
Service JobAllocation
ConnectedNavigation
Voice Picking
OvernightDelivery
Daily DirectDelivery
OptimizedTravel Route
Service JobExecution
Service JobReporting
PARTS
98 %
20%
4%
D
C
B
A
Increase customer
satisfaction
Increase
profitability
Op
era
tio
nal
eff
icie
nc
y
Service excellence
TACTICAL MATRIX
To
tal lo
gis
tics
co
st
(% r
ev
en
ue
s)
Reliability (OTIF%)
ON TIME IN FULL
Customer fulfillment
CUSTOMER
SUPPLIER / 3PL
PRODUCT COMPANY TRANSPORT COMPANYDISTRIBUTION CENTER
Supplier / 3PL performance
Availability
Warehouseperformance
Transportperformance
On time in full @ customer
MEASURING
ON TIME IN FULL
ACROSS THE
ENTIRE SUPPLY
CHAIN
Availability Delivery at first promise @ DC
SPEED AND RELIABILITY
SPEEDAverage lead time to end customer – Delivered date vs requested date
RE
LIA
BIL
ITY
On tim
e in f
ull
–D
eliv
ere
d d
ate
vs p
rom
ised d
ate
Improved stock management
Days
%
Reliable information end to end from
supplier to customer
SUPPLY NETWORK
33
For Compressor Technique Spare Parts
Global / Regional DC
Regional / Local DC
Local DC
DISTRIBUTION CENTERS
• Warehouse-in-warehouse
• Product affinity
• Family grouping
Smart location management
• Consolidation release points
• Change order logic
• Levelling of order release
• Merge pick-pack
• Pre-packing of back-orders @ 3PL
• Pick-in-box
Fast packaging processAdvanced picking strategy
• Increased picking density
• Less driving distances
• Elimination non-value activities
• Capacity planning
RECEIVING PUTAWAY SHIPPINGPICKING PACKINGShorter Time To Customer
OPERATIONALEFFICIENCY
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
98 %
20%
4%
D
C
B
A
Increase customer
satisfaction
Increase
profitability
Op
era
tio
nal
eff
icie
nc
y
Service excellence
TACTICAL MATRIX
To
tal lo
gis
tics
co
st
(% r
ev
en
ue
s)
Reliability (OTIF%)
TOTAL LOGISTICS COSTSAlways look end to end and optimize Total Logistics costs
1 Transport 2 Logistics admin. 3 Inventory 4 Scrap & obsolescence
1
1
1
1
1
1
1
1
1
Customer
Supplier
Distribution Center
3 42
Customer Center
3 42
Shipping
Transport
Management
2
Production Company
2
COST COMPOSITION
TOTAL LOGISTIC COST
Total logistics cost = sum of all costs that can be
controlled/influenced by the logistics departments
Transport costs Inventory related costs
Logistics admin costs
DISTRIBUTION
NETWORK
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
People & Organization
Process
SERVICE
EXCELLENCE
OPERATIONAL
EFFICIENCY
Distribution network
IT systems
DYNAMIC ORDER ROUTING
Optimal is set as
– Cheapest order flow for standard orders, based on:
purchase,
warehouse,
transport,
import duties cost
– Fastest order flow for breakdown orders (BD), based on:
stock in the network
express transport,
custom clearance time
A Continuous Periodic (6m) exercise establishing the
most optimal order flow
What
40
41
Customer center
ASC NSC CSC
DISPATCH IntranetCall database
Order flow
Goods flow
Information flow
Invoice flow
ORDER ROUTING FLOWS
PROJECT ROLL OUT
42
17 countries in scope
Airpower
Service
Center
(Antwerp) Asia Pacific
Service
Center
(Shanghai)
07/2014 South Korea
Indonesia
09/2014 Japan
11/2014 Australia
Chile
Hong Kong
India
Malaysia
Peru
Philippines
Singapore
Taiwan
Vietnam
South Africa
Thailand
04/2015 Saoudi Arabia
US
1
2
What : cross department and service center alignment
Who : key members from respective departments. Customer
contact ASC, CSC; Inventory (when required), Purchasing CSC, Shipping
CSC, global team ASC , finance (in practice ICOS PTM members)
Why : good way of day to day working AND status actions
related to “close the gap”
Lead : ASC global team
ANALYSIS & REVIEW CYCLE
m+6 m+12m+9m+3
R
R
R
What : review excercise and general status
Who : preparation and analysis by key members from
respective departments with approval and guidance from
ICOS Steerco
Why : progress and impact report , priority setting
Lead : ASC global team
RESULTS
44
FUTURE?
45
FUTURE?
Expand geographical scope of dynamic order routing
Automating planning aspects on global level
From forecasted to planned demand
From planned demand to predicted demand
46
CONCLUSION
People Make It Happen!
Measure On Time In Full (OTIF) across the full Supply Chain
Focus on Total Logistic Cost
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THANK YOU
COMMITTED TO
SUSTAINABLE PRODUCTIVITY.
