The document summarizes an approach to developing suppliers through competitive supplier development programs. It discusses forming clusters of companies and implementing continuous improvement structures. Training and practical implementation would follow to build skills. Benchmarking findings show that while some firms improved, others deteriorated or changed minimally, calling for a holistic lean manufacturing approach across core areas and supporting elements. Leadership, management commitment, and sustainability of improvements are also emphasized.
1. JETRO Supplier Development Forum Creating Capacity for Localisation
Approaches to Competitive Supplier Development Programmes
NkumbuziBen-Mazwi
AIDC
14 September 2011
2. FACTS ABOUT AIDC
•A Gauteng Provincially owned Government service organisationproviding best practice solutions in industry and Government projects
•Established:
–October 2000 in Gauteng
–November 2003 in Eastern Cape
–August 2005 in the North West –operates from GP Offices
•Staff complement: 100 people with significant experience in OEMs, component supplier base and Government projects
–predominantly Project Managers with Engineering academic background
•Projects implemented with
–all major OEMs
–many large, medium and small manufacturers
–Local, Provincial and National Government
–Government agencies (e.g. ELIDZ, Merseta, INW, etc)
•Offices in Tshwane (Pretoria) and Port Elizabeth
4. The Good…………
•SA has moved up four places to 50thposition in the World Economic Forum’s 2011-2012 Global competitiveness Index.
•SA remained the highest-ranked country in sub-Saharan Africa and the second highest among BricsEconomies
The bad…………….
•SA’smanufacturing output fell by 6% year on year in volume terms in July, compared with a revised 0.8% increase in June, Stats SA said. FACT……………..
•This means SA has a very sound Environment holistically for Economic growth, the focus should be on striking the balance and be consistent on achieving good results.
COMPETITIVENESS AND POLICY
8. CASE STUDY –STATUS OF SUPPLIERS
BEFORE:
Stairs, lift for tanks,… AFTER: Leaktester in final position, floorlevel: no platform, no lift, no forklift.
9. CASE STUDY–STATUS OF SUPPLIERS -FOUNDRY67%
33%
Molding (Suspension Clamp)
Process operation
Idling
10. CASE STUDY – STATUS OF SUPPLIER - FOUNDRY
7.40m
Assembl
y Bench
Grinding
Bench
21.45m
19.8m
Band Saw
3.1m
Melting
furnaces
Melting
Furnaces
Melting Furnaces
Melting Furnaces
Press Machine
Press
Machine
Casting
Machine
Casting
Machine
Casting
Machine
Scale
Tool Shelves
Casting
Machine
Melting
Furnaces
Melting
Furnaces
Press Machine
1
2
3
4
5
7
8
6
Office
117.5 sq m
Office
32.2 sq m
Saved Space
Saved Space
Savings
Space Saved = 149.70sqm
Distance Saved = 47m
Productivity = 50% increase
11. CASE STUDY –STATUS OF SUPPLIER –SMMEUNSAFE : DRUM HANDLINGBEFORE
BEFORE
AFTERAFTER
12. FURTHER RECOMMENDATIONS
Proposed Solution :Elevate vessels for extraction from the bottom of the vessel. The stand should be high enough to accommodate a standard drum on ????
Problem: Extraction method of products from large vessels is unsafe and leads to some of the product being left behind in the vessel:
13. AEROSPACE SUPPLIER DEVELOPMENT PROGRAMME
OBJECTIVE OF PHASE 2
•Implementation of ISO9001:2008
•Implementation of AS/EN9100/9120
•Implementation of Lean Manufacturing
•Continuation of assessment of suppliers across the entire supply chain including suppliers to the OEM’s such as Denel Aviation
14. AEROSPACE SUPPLIER
DEVELOPMENT PROGRAMME
0
1
2
3
4
5
6
7
8
9
10
0
20
40
60
80
100
120
140
160
180
Average TAT in days 8.32 9.13 7.75 7.47 8.32 7.70 8.59 6.53 6.48 5.59
Qty Received 68 63 117 103 151 138 148 94 165 96
FEB MAR APR MAY JUN JUL AUG SEP OCT NOV
0
1
2
3
4
5
6
7
0
20
40
60
80
100
120
140
160
Average TAT in days 5.79 3 3 2 1.3 2.0 1.2 2.0
Qty Received 57 74 152 139 103 111 122 80
Jan-10 FEB MAR APR MAY JUN JUL AUG
Technical planning process
optimisation of TAT in days
(ERP routing)
Before
Average
7.5 days
Average
2.5 days After
15. FUTURE VSM
Future State Value Stream Map –Company LevelOSIS
TechnicalDA Programme
Office
Processing of RFP's/RFQ's/ DA MRO's
-
RW BU
-
FW BU
-
COMP BU
-
Eng BU
DA MRO's
Material
PlannersDA MRO's
RW: Production
PlanningCOMP: Technical Planning
SUPPLIERS
Expediting
feedbackEurocopter
CMIProcurement
OSIS
Materiale
E
1
STOREe
-
mailFirm orders with no
stock in E
1
storeRFQ
Purchase OrderCustomer:
ARMSCOR
Consumer:
SAAFDA Support Functions
-
Quality
-
Supply Chain-Finance
-
HR
-
ICT
ScheduledMRO ACTIVITY
Unscheduled
MRO ACTIVITY
Lockheed
Martin
SAAF SQN
Stores
DocDocMRO planners issue/receive
work packs/ routing
Hardcopy
RW: Doc
COMP: To
update
OSIS
Supply
Q
-
MUZIK
ROTARY WING MRO
Non Value
Added
Time: Value Added Time: Total Lead Time:
One way electronic information flow
Manual information flow
Two way electronic information flowMaterial flow
CFE
(Customer Furnished Equipment)
(Serviceable Components)
CFE
Customer Furnished Equipment
(Unserviceable Components)
RETURNSCommercial
Q
-MUZIKDoc
-
Quotation approved by Programme Office
-
Authorization of procurement from SAAF
Parts collected
by production
controller
Doc
DeliveryCOMPONENT MRO
Non Value
Added
Time:
Value Added Time: Total Lead Time: Value added: (Ave) 43 days
Non value added:
(Ave) 25 days
Reduce by
30%
16. International Transportation
APPLICATION OF LINE BACK PRINCIPLE IN ANY SUPPLY CHAIN
16
Inbound Collection Services
Receiving / Kitting / Sequencing / VMI
End to End Supply Chain Visibility
Savings Opportunity
Span of ControlProduction / Light Assembly / Plant Logistics
Potential Improvements via Supply Chain Value AssessmentSource: UTI
17. APDPKEY ELEMENTS
Tariffs
Local Assembly Allowance
≥50 000 unit plant qualification
20% in 2013
19% in 2014
18% in 2015 till 2020
Applicable to all vehicle production
Current DFA of 27% of locally produced domestic sales remains till 2012
Production Incentive
•55% in 2013
•1% annual reduction
•50% in 2018 till 2020
•Additional 5% for specified firms
Automotive Investment Allowance
20% of qualifying investments
10% additional for strategic investments
•Allow participation of suppliers
•Fund outside duty pool
•Payable over a period of 3 years
Source: the dti
18. COMPETITIVE SUPPLIER DEVELOPMENT PROGRAMME(CSDP) The CSDPempowers the SOEto drive supplier development based on management’s perceptions of opportunities and constraints. Essence of the approach is to leverage SOE procurement to create an conducive environment for investment and learning in supplier industries
21. •Irrespective, the overall as well as individual benchmarking findings conclude that there needto be a holistic approach to lean/WCMproduction at the firms.
•This must include a focus on the core areas of lean/WCM, namely, JIT, TQMand CI, as well as the various supporting elements that exist (i.e. SMED, kanban, etc.)
•In support of this required focus, it is imperative that the necessary lean/WCMknowledge, as well as a commitmentto change, is present at firms at all levels, especially management. Until this is achieved, limited real and sustainable progress will be made. Source: B & M Analyst
MAJOR BENCHMARKING FINDINGS
23. WHAT IS THE AIDC’SAPPROACH IN PARTNERSHIP WITH UNIDO?
Company 1Company 3
Company 5Company 4Company 2Implementation of the Continuous Improvement StructureFollowed by Training and practical implementationCluster of companies is formed
24. BASIC APPROACH
The first step in continuous improvement is understanding the current level of adoption of lean toolswithin the organisation.
This is followed by an understanding of the key metricsrequired to measure success of implementation.
Next a training needs analysisis completed to gauge the level of understanding required by the workforce on the relevant tools.
25. CLUSTERING
•Clusters and business networks have become keywords in the policy debate in industrialised and developing countries.
•They are regarded as tools to promote poverty reduction and the development of competitive industries.
•However, several bottlenecks may hamper their performance.
•Focusing on the specific challenges faced by developing countries, UNIDO has formulated a six-step approach for the promotion of clusters and business networks.
26. CLUSTERING : THE APPROACH SIX STEPS TO PROMOTE CLUSTERS
The UNIDO methodology is based on the following steps:
•Cluster selection, which entails the identification of the cluster(s) to be assisted;
•Diagnostic study, an action-oriented analysis of strengths, weaknesses, opportunities and threats of the cluster(s);
•Vision building and action planning, which refers to the formulation of a vision and a corresponding development strategy shared by the entire cluster;
•Implementation, i.e. the management and coordination of the activities outlined in the action plan, including the establishment of horizontal and vertical networks;
•Monitoring & evaluation(M&E) of the qualitative and quantitative outcomes of the project.
27. NETWORKS
•Networks are alliances of firms that work together towards an economic goal. They can be established between firms within clusters but also exist outside clusters. Networks can be horizontal and vertical.
•Horizontal networksare built between firms that compete for the same market, such as a group of producers establishing a joint retail shop.
•Vertical networks, particularly supplier development schemes, are alliances between firms belonging to different levels of the same value chain, such as a buyer assisting its suppliers for upgrading.
28. CLUSTER & NETWORKS DEVELOPMENT PROGRAMME
•Clusters and networks are different yet linked phenomena.
•Clusters are agglomerations of interconnected companies and associated institutions.
•Firms in a cluster produce similar or related goods or services and are supported by a range of dedicated institutions located in spatial proximity, such as business associations or training and technical assistance providers.
•Vibrant clusters are home of innovation oriented firms that reap the benefits of an integrated support system and dynamic business networks.
29. EXAMPLE OF GLOBAL
CO-OPERATION
• Joint Ventures
• Third Country Collaboration: Use each
other's advantages to co-operate to gain
entry/grow in third countries (e.g. Duty
preferences; geographic locations)
• Production sharing: Where companies
make similar products and rationalise
production at both countries, to save
complexity.
• Technology Transfer
Source: Daily Times
30. COMPONENTS OF VLFM
Source: CII (Confederation of Indian Industry) C
A
B
D
Programme for CEOsProgramme for Senior Managers
Programme for Junior
ManagersProgramme for SMEs
32. LEADERSHIPHands off management
Driving an organisation just by targets –policy deployment
Self-directed work teams
No involvement on the shopfloor
Improvement done by specialists
Infrequent communication –only one wayMentor/mentee approach
Mentor/mentee relation for each employee
Mentor is guiding through the improvement process –not pointing out solutions
Mistakes are part of the process
Learning by doing in a team