Velux Anders Ellegaard 01

8/10/2019 Velux Anders Ellegaard 01

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Strategic development of theVELUX value chain from

supplier to finished goodsstock

Supply Chain Leaders Forum 2012

Anders A. Ellegrd / VELUX


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ContentVELUXOptimize Supply Network - FLOW project

Why FLOW? Strategic decisionProject targets and organisationRoll-outApproach and results

Learning's and new mindset


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The VELUX Group

Established in 1941More than 10.000 employees globally2.600 in DenmarkVKR Holding

Revenue 2011: 2,4 billion EuroNet profit: 140 million Euro

Sales companies in almost 40 countriesProduction in 11 countriesHead office in Hrsholm


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The VELUX Group

Anders A. Ellegrd

EducationCand. Scient. Oecon from rhusMBA courses from Henley

Back groundConsultant in MRP-systems

Worked for VELUX for 14 yearsWorking areas

Responsible for Lean in productionResponsible for Value Stream OptimisationProgramme management managing largercross functional/cross site improvementprojects - Quality and Flow


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Volatility in demand

The FLOW project was a strategic decision

Reduce lead time / through put time

Be agile, responsive and productive


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The supply network is complex with many flows ofmaterials

Windows Accessories

Supply network


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Conclusions from Supply Chain value stream mappingAS-IS assessment

24 weeks lead time (much money in inventories)

Increasing upstream fluctuations (cv 0,3 -> 1,5)

Decoupled planning loops and many inventory points

? ?Functional culture

Local KPIs / Sub optimization

Little compliance to plan, ReplanningLimited escalation/problem solving

Slacks (buffers, capacity) + Fire-fighting

No holistic planningLocal planning, Little transparency, No responsible

Conclusions from As-Is findings


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New Learning's and new mindset


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VELUX Strategypursue operational excellence

5% increase inproductivity peryear

Remove waste

Increase stability, predictability andproductivity

Improved delivery performance:- Finished goods: > 98%- Components: from 72-97% to 98%- Suppliers: from 26-85% to 95%

Reduce lead time and stocks:

- Total stock reductions (not FG): 50%- Reduction in lead time: 60%

Avoid replannings and fluctuations- no local / factory replannings- fluctuations lower than on sales

VMM GloBIZ

OptimiseQualitySystems

Optimise Supply Network

Best

Cost

Producer

Project targets

We decided to initiate a FLOW project to support agility,responsiveness and productivity


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The first step was to create and discuss an Ideal Future Statethis set our vision and challenged our mindset

Ideal Future State


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FLOW Comments from discussions

Our mindsets where challenged

The best people we haveare our fire fighters! What

should we do withoutthem?

Our suppliers willnever deliver 95% - we

are only minorcustomers

Big batches =low costs


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FLOW Project organisation

Mobilizationand planning

Sales & Operation Planning / Assembly loop

Factory loop

Supplier loop

Program and change management

High-level plan implementing the FutureState

Wave 1Proof-of-concept

Wave 2Parallel roll-out (up to 40% of

Velux)

Wave 3Parallel roll-out (up to 90-

100% of Velux)

SustainContinue roll-out (100%)

and sustain

Oct 10 Jan 11 Feb 11 May 11 June 11 Oct 11 Oct 11 June 12


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FLOW Change management

Strong coalition for change

Steering Group with CEO Meetingsevery 6-8weeks

Project accountable group CEO + Every week

(telephone)

Global

Focus Participants Frequency

Global

Strong project team Every weekEnd-to-endsupply chain

Factory project team Every weekLocal


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Montage

Komponent

produktion

FLOWBuffer

PULL

B

uffer

High-vol >80%

Low-vol


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Levelled plan Sales orders

Finished goods warehouse asbuffer

Levelled orders and frozen periods

Stability in factories noreplannings, MRP-ordering

Customer

Supplier

Ideal Future State for information flow for planningand ordering - predictable, levelled orders

Good forecasts fixedprocess

Holistic planning and ordering


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Results Delivery performance

Improved KPIs

Delivery Performance factory to sales companyDelivery Performance stock orders


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Sales forecast

Results forecasts and volatility

Improved KPIs

CV factor

Target: 0,4

Target: 0,25

Sales: 1,0


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Stability

Improved KPIs

Results component deliveries and replannings

Delivery Performance - internal


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FLOW Improved KPIs

Factory results from one of the factories

Lead time reduction

Stock reduction

Dashboard meetings in eachfactory -Business control- Supply chain KPIs- Follow up- Synchronisation


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DeliveryPerformance

Stocks

Results delivery performance from Suppliers

Improved KPIs


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FLOW Comments from discussions

Our new mindsets

Fire fighting isreactive, we wantto be proactiveand react asap

Fact based reactionsit is what we seenot what you say!

Do not hide problems/redKPIs. Make them visible and

use them as potentialimprovements


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The FLOW guiding principles

Reducelead time

CreateTAKT

Frequentdeliveries

Linkprocesses

Avoid decouplingpoints

Avoid decoupling points in theFLOW like stocks. Create FIFOflow wherever possible

Reduce lead time by focusing onstocks, processes, change over timeand batch sizes

Create takt in the flowby focusing on theentire value chain from customer tosupplier

Link processes internal aswell as between factoriesand suppliers. Use SAP tolink processes together

Transport is not a constraint for implementing

flow. With more frequent deliveries on highvolume products, transport costs could increaseon some flows. Overall however costs isbelieved to decrease

Agree principles before actions


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FLOW is a new mindset

Stay in control: Make deviations visible + Reactproactively + Respond fast

Continuously improve: It never stops

Work cross-functional: Site level (daily performancereview, weekly CI meeting), Supply Chain level (similar)

Top management commitment and support: Dont acceptwrong mindset, Follow-up and ask for FLOW

Think FLOW designing new products, productionprocesses, qualifying suppliers, etc. etc.

Change management

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