Bill Stankiewicz Schneider Electric


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Best Regards,

Bill Stankiewicz
Vice President and General Manager
Shippers Warehouse of Georgia
Office: 678-364-3475
Sustainable Consumer Packaged Goods member
CPG Branding and Forum Member
Please consider the environment before printing this e-mail
“Change doesn\'t start on the surface. It\'s generated from consciousness.”
Deepak Chopra

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Bill Stankiewicz Schneider Electric

  1. 1. Supply Chain & Logistics From Downstream Logistics to Supply Chain From operations excellence to customer intimacy JM Fallet – SVP Supply Chain & Logistics
  2. 2. Schneider Electric A world leader in Power & Control Electrical Automation Distribution & Control # 1 worldwide # 2 worldwide “Make power “Control and monitor safe, available machines and installations, and reliable” protect people” Energy management “Ensure uninterrupted and high quality power, optimise energy consumption” SC&L – JM Fallet - September 2007 2
  3. 3. Close to you with strong local operations Sales and employees by geographical region Schneider Electric Europe in figures North America 47% €13.7 billion 27% 48 500 revenue in 190 countries 26 000 105,000 employees* Local presence in 106 countries more than 200 factories Asia-Pacific 6,500 R&D people in Rest of the world 25 countries 18% Source: 31/12/2006 8% 23 000 *workforce including permanent and temporary employees 7 500 31% of revenue in emerging countries SC&L – JM Fallet - September 2007 3
  4. 4. An international leading team Chairman of the Management Board (1) Management board & CEO (2) Executive committee Jean-Pascal TRICOIRE (1),(2) Chief Financial Strategy, Customers Strategic resources Central functions Officer &Technology and organization Pierre BOUCHUT (1),(2) Eric PILAUD (2) Jean-François PILLIARD(2) new² Globalization Global Quality Company program Serge GOLDENBERG & Industry Human Resources Alejandro SOLIS Hal GRANT (2) Karen FERGUSON (2) North America Automation Renewable energies Dave PETRATIS (2) Business units Michel CROCHON (2) Claude GRAFF (2) Europe Building Automation Power Julio RODRIGUEZ (2) Arne FRANK (2) Eric RONDOLAT (2) Critical Power & Asia-Pacific Services & Projects Russell STOCKER (2) Cooling services Eric PILAUD (2) Laurent VERNEREY (2) Installation Systems International Customized Sensors Christian WIEST (2) Operating divisions and Control Chuck TREADWAY Jean-Pierre CHARDON SC&L – JM Fallet - September 2007 4
  5. 5. A unique offer in four markets Energy & infrastructures Industry Buildings Residential availability, safety, productivity, flexibility, comfort, communication safety, comfort, Cost effective safety, traceability safety, operating costs communication 16% of sales 32% of sales 37% of sales 15% of sales electrical networks, food & beverage, offices, stores, single-family homes, water treatment, automobile, factories, hotels, apartment buildings airports, tunnels, electronic, packaging, hospitals, museums, telecom, data centres pharmaceuticals schools, universities SC&L – JM Fallet - September 2007 5
  6. 6. A unique offer in the management of power and control Power Control core and historical Industrial activities Low & Medium Automation and Control Voltage Building Automation Installation systems & Home control new activities Energy management critical power and cooling services / energy efficiency Services integrated, communicating and smart products, equipment and systems SC&L – JM Fallet - September 2007 6
  7. 7. Partnering with & for our customers to serve end-users Schneider Electric Wholesaler prime contractor global project owner strategic account engineering firm power utility installer contractor panelbuilder systems OEM integrator electrician End user SC&L – JM Fallet - September 2007 7
  8. 8. What is Supply Chain ? Michael Dell definition In December 2004 the MIT Supply Chain 2020 Industry Advisory Council visited Dell Computers. The Council discussed the future of supply chains and talked with Michael Dell about his company’s supply chain- driven success. SC2020 How has the Dell business model contributed to the company’s success? MICHAEL DELL Lots of work goes on behind the scenes to shape demand and supply, and adjust to the optimal outcome. There have been disruptions. We had the West Coast dock strike, which was a big one. But it caused less of a disruption for us than for our competitors. That's the opposite of what you'd think, but it's because of our flexibility, reaction time, planning and anticipation. The ability to fundamentally alter a lot of outcomes in a dynamic fashion based on what is going on around us. SC&L – JM Fallet - September 2007 8
  9. 9. What was the situation of the Schneider Electric Supply Chain 3 years ago ? Countries independent and managing both Business and Operations No visibility Local option & Micro-optimization Re-invent permanently the wheel No SC organization, only downstream Logistics in countries Poor competencies in planning and international transportation Silos between Front office, Logistics and Manufacturing Low performance Service Rate on lines below 93% Costs on Logistics 7% of P&L 93 days of inventory, no forecast accuracy in place Customer surveys pointing Logistics as a main weakness for SE SC&L – JM Fallet - September 2007 9
  10. 10. The first questions I’ve asked to my team How many customers have you met ? 1 to 3…. We are process makers How many suppliers have you met ? None… Purchasing responsibility How many KPI’s for SC&L ? 53…. We need to know What is the cost of transportation ? Nobody knows…. Local vision How many DC’s Nobody knows…. Local vision How many gates between Plant and 2 to 4…. Close to the market Customers How many sku’s Nobody knows…. The marketing decides SC&L – JM Fallet - September 2007 10
  11. 11. Define a Strategy Missions : a Supply Chain for what ? To convert into solutions the customers expectations To make sure that the right resources are available all along the supply chain from suppliers to end user customers delivering the goods, services & information at the right time in the right location To execute operations with optimum level of quality relative to costs and assets management To manage end to end flows of information To ensure that our actions fit into the criteria of Sustainable Development while improving continuously our environmental health and safety performances increase our competencies and develop the Continuous improvement process with the contribution of all employees SC&L – JM Fallet - September 2007 11
  12. 12. Complexity is increasing 1st of Jan 2007 figures 20% growth a year 215 Plants (40 moves in 3 years to support the rebalancing plan) 135 DC’s (50 closed in 3 years and 35 new one linked to acquisition) 700 applications to run operations > 880 000 ref 115 Brands (70 brands 3 years ago) 16 000 suppliers (of which 856 carriers) 36 000 000 lines shipped 800 000 tons 2,8 Bn€ inventory 1,2 Bn€ Spent SC&L – JM Fallet - September 2007 12
  13. 13. Strategy Main orientations & Projects Increase & strengthen Customer satisfaction thanks to accurate and proactive information to our customers : BOOSTER project Simplify & shorten the logistics network Organization of Logistic Territories Transportation network with end to end visibility : T² Project Standardization of execution processes Develop Supply Chain Planning & Inventory Control Management: SLICE project Create demand/ supply planning process Integration of Product Life Cycle management Communication throughout the Supply Chain SC&L – JM Fallet - September 2007 13
  14. 14. Strategy Organization G&I Hal GRANT APC-MGE APOD Jay GUIMOND James KEEGAN Supply Chain & Logistics I & I OD Strategy EOD Gérard JORGE Bernard PESSO Jean-Michel FALLET Design NAOD Supply Chain Design Chuck GERARDI Jean-François GROLLIER Human Resources Support Zita PATONAI Financial Control Bridge Controller Christophe GALLET Hervé LE MAREC Supply Chain Supply Chain Execution Customer Relationship Operations Planning Transport - Warehousing Management Planning Logistics Network Customer Satisfaction Projects Hervé GALON Jean OBERLE Xavier GAUVAIN SC&L – JM Fallet - September 2007 14
  15. 15. SC&L Corporate and OD’s relationship Global strategy and Arbitrage Share vision & tactical approaches, Co-design the implementation Market intelligence Intercontinental Transport Plan SC&L Committee 3 times a year with SC&L OD’s VP & Central SC&L Networking and community reinforcement Main projects review & Transversal processes Functional WW People review / Competency development SC&L OD’s Business review 2 times a year Business Review : results, organization, priorities, action plans OD’s best practices Skill Network & Program Management Main global projects Standardization and simplification of processes Performance measurement : KPI & Commitments Execute missions & projects : do with them High level of expertise on specific missions Share and deploy best practices SC&L – JM Fallet - September 2007 15
  16. 16. Coherency Global vision from strategy to concrete actions Strategy KPI’s Projects Skill Networks BOOSTER (CRM) OTDS C Increase & strengthen Customer OTDC2 satisfaction thanks to accurate Logistic Offer R and proactive information to our M customers S Simplify and shorten the logistics T² (SCE) network Transport C Organization of Logistic Territories LCS Transportation network : E2E visibility Warehousing E Standardization of processes SLICE (SCP) Develop & deploy Supply Chain DIN Material S Planning Management C Create demand/supply Planning process Demand Integration of Product Life Cycle Mgt P Communication throughout the Supply Chain Planning SC&L – JM Fallet - September 2007 16
  17. 17. Supply Chain Reengineering Projects Management and KSF Be very ambitious Raise the bar : service rate from 93% to 97% Identify breakthrough opportunities : total redesign of transportation Recruit only the best Go outside and manage WW people review Manage competencies and knowledge as well & as fast the Cie manage the growth Limit the number of priorities : 3 or 4 no more Very clear deliverables with limited number of common WW Kpi's A project has to be a first step for DNA new structure of the Cie Pilots to be launched very soon : test and fail as a best practice SC&L – JM Fallet - September 2007 17
  18. 18. Work on a solid foundation The golden rules of SE Supply Chain Management SUPPLY CHAIN DESIGN 1. The Logistics Offer, part of the Commercial Offer, is the base of the Supply Chain design and performance 2. Logistics offer and stocking policy are defined before the launch of the products, and should be revisited during their lives 3. Supply Chain design has to comply with the Logistics territories structure 4. Simplify the logistics network and shorten lead-times. Any Supply Chain lengthening must be validated by SC&L 5. Supply chain decisions must take into account the desired level of return on capital employed. FORECASTING & PLANNING 6. Countries' marketing own the forecast process. They enrich the statistical forecast with their knowledge of market, customers and products 7. The forecast must be done in quantities to be understood and used by all the stakeholders 8. The Master Production Schedule (MPS) drives plants' ability to respond to demand, and is used to generate supplier forecast 9. Sales Marketing, Product Marketing, Operations and controllers must share formally and regularly assumptions, commitments and financial risks 10. The overall planning process Forecast, DRP, MPS, S&OP should run at least monthly. The outcome must be realistic and feasible FULFILMENT 11. Each entity is committed to a service level on first and second delivery date 12. Each entity makes information available prior to the delay 13. A reliable second delivery date must be given before being late 14. Each customer order must go through an approval process before execution 15. Transportation optimizations are to be weighed against inventory and lead-time considerations SC&L – JM Fallet - September 2007 18
  19. 19. One Priority and its global main project Supply Chain Execution : The T² Project - Context Ambition Set-up best -in class transportation practice at Schneider Electric through a global Transportation Transformation (T²) initiative Reduce energy consumption as well as CO² emission Objectives Improve significantly customer satisfaction Generate €40 million annual savings by end of 2008 Stakes 3,1% of sales (400 M€ in 2005) without customs clearance fees An ambassador of =S= for our customers A vital link between =S= and our suppliers A key input of infrastructure strategy tomorrow (sourcing, plants, warehouses) An activity to put under control before any outsourcing decision can be made A key activity for best-in-class companies (e.g. Toyota, Walmart, Dell) SC&L – JM Fallet - September 2007 19
  20. 20. Our starting point 18 months ago Dimension Weaknesses observed Assesment of maturity level 1 2 3 4 • Transportation cost-oriented and local approach derived from strong leadership of purchasing and country I Strategy management • Professional buyers in place II Organization • Almost no transportation mode experts • Operational role undervalued • Too many Indians, not enough leaders • Poor knowledge of supplier market and practices • Little integration of customs operations • Too few reviews of flows (competitive bidding, III Process optimization…) • Very little consolidation of flows • Objectives setting and target definition • No working relationships with transport suppliers IV KPIs & Performance • Service KPIs looked on a monthly basis Management • No visibility on costs • Poor carrier performance • Many diverse IT systems V IT Systems & Tools • No visibility tools SC&L – JM Fallet - September 2007 20
  21. 21. Transportation costs & service not under control Schneider Electric transport flows synthesis [2005, M€] With a total transportation costs of 400M€ (of which 104M€ are not tracked or managed) External suppliers =S= factory =S= IDC / RDC =S= RDC / LDC Customers 85 M€ 53 M€ 74 M€ 127 M€ (21%) (13%) (19%) (32%) =S= factory =S= LDC 60M€ (15%) Supplier flows = 85 M€ Internal flows = 127 M€ External flows = 187 M€ (21%) (32%) (47%) And… Road mode represents 73% of spent Domestic flows represent 62% of spent 9 Logistics Territories cover 87% of & 93% of volumes transportation expenditures Air mode for 19% spent & 2% volumes Intercontinental flows for 21% Of which France covers 31% Sea mode for 8% spent & 5% volumes Continental flows for 17% And US cover 30% SC&L – JM Fallet - September 2007 21
  22. 22. Priorities and main projects Supply Chain Execution : The T² project - Main Deliverables Organization Federate Schneider Electric transportation community Standardize transportation organization Staff each logistics territory with dedicated transportation management and transportation procurement dedicated resources Set-up a centralized and dedicated team of project managers and buyers to manage all air and sea & express flows at group level Project Management 3-year roadmap (2006-2008) with key tactics, actions planned, roll- out by geography to manage transportation productivity Design under access of a program management tool to manage more than 150 transportation projects Control 100% of transportation invoices through a freight payment outsourcing project covering 80% of transportation expenditures Optimization of EOD road flows (€130 million scope) SC&L – JM Fallet - September 2007 22
  23. 23. 53 M€ annual productivity by EOY 2008... Productivity earnings by lever [2005-2008; M€] Annual Saving 39,4 M€ 27,6 - 14,0 493,7 - 4,6 - 12,3 80,4 - 8,8 - 13,7 454,3 399,7 +2,1% per year Pure purchasing T2 projects (included purchasing contribution) : reported +6,3% per actions : consolidated in detail in program management year in program management PROGRAM MANAGEMENT PERIMETER Transport Volume Price effect Purchasing Extrapolated Invoice Flow Intercon- Local Impact of cost 2005 effect Productivity baseline control optimization tinental initiatives productivity % of total in spend % of total productivity productivity 12% 31% 22% 35% earnings earnings Source: Data collection, June 2006 ; OD estimation savings ; Roland Berger analysis SC&L – JM Fallet - September 2007 23
  24. 24. 80% of costs are invoiced by 9% of suppliers Transportation suppliers Pareto Transport 100% Costs % 90% 80% 80% 70% 60% 50% 40% 30% 20% 10% # Active 0% 856 Suppliers 0 77 100 200 300 400 500 600 700 800 Source: Data collection, June 2006 ; OD estimation savings ; Roland Berger analysis SC&L – JM Fallet - September 2007 24
  25. 25. How to distribute responsibilities and leverage each available expertise? Air and Sea carriers Trucking companies Fleet Management Freight forwarders Freight audit and payers' Consolidators Control Towers … SC&L – JM Fallet - September 2007 25
  26. 26. Built internally a “plug & play” 4PL capability COST VISIBILITY Freight Audit & Payment SERVICE VISIBILITY Air & Sea Road Global Trade Management Road Tower Control • Transportation track events • Route optimizer • Customs (SKU, order, shipment) • GPS localization • Use of consolidators • Track & Trace • Direct negotiations with sea/air carriers • Driving hours and ton.kms SC&L – JM Fallet - September 2007 26
  27. 27. Benefits of a freight audit & payment system - 7 à 12% GROUP & INTER - DIVISIONS Cost Consolidation / Group -2 à 3% management Benchmark / Tender Budget Transport methodology 12- 24 months Transport/ SITE & INTRA - DIVISIONS Cost Consolidation / Group sales Benchmark / Tender -2 à 3% management Transport methodology Transport / purchase Double invoice Rate / Ship -3 à 6% Mistake tariffs & conditions audit Non justified shipments Inter sites Immediate Reallocation of internal resources Operations -0,5 et 0,7% (cost allocation, shipment registration, costs custom & transport invoicing, control) (3 months) Freight Scan + POD +0,5 à 0,7 % payment Audit + management cost Payment & reporting Price +1 à 5% evolution In place in the US, Starting in France ans Spain, next step Australia SC&L – JM Fallet - September 2007 27
  30. 30. In short : 3 Key Success Factors Processes Run the supply chain with processes that are clear, well defined and targeted with Few but global KPI’s Focus Focus the whole supply Chain on : – Customers – Speed – Profit Networking Coordinate the SC together with the whole Cie, through clear leadership Develop our people : be an emerger Benchmark, exchange, enrich permanently your knowledge SC&L – JM Fallet - September 2007 30
  31. 31. Conclusion We believe the supply chain must become more than a series of cost centers, transactions and negotiations it can and must be and engine for growth itself A.G. Lafley, Chairman, President and CEO, SC is transversal, Proctor & Gamble addressing global end to How to transform our Supply Chain and achieve end processes our Customer satisfaction goals ? … the 4T’s SC is focused on customer satisfaction and asset Trust management SC is strengthening its Teamwork professionalism SC is becoming a Bridge Time Transparency between Sales and From local single initiatives to processes Manufacturing From Experts in silos to Professionals in Network SC&L – JM Fallet - September 2007 31
  32. 32. My job If you ask me what I’m doing………. I will answer : proselytism 50% of my time to explain why and how to change SC&L – JM Fallet - September 2007 32
  33. 33. Supply Chain Replacing inventory with information for customer satisfaction Jean-Michel Fallet +33608558447 SC&L – JM Fallet - September 2007 33
  34. 34. Q&A SC&L – JM Fallet - September 2007 34