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Building a Fast and Flexible Consumer-Driven Supply Chain, Stanley Black & Decker
The document outlines the strategic roadmap taken by a division of Stanley Black & Decker to build a fast and flexible consumer-driven supply chain. Key steps included establishing cross-functional collaboration teams, implementing sales and operations planning (S&OP) and production sales inventory (PSI) processes, and developing sales and demand management (SDM) to improve forecasting accuracy and customer fill rates while reducing inventory and costs. Benefits included over 10% improvements in forecasting accuracy and over 60% reductions in planning cycle times. Future plans include further S&OP process revamps and standardizing reporting.
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Building a Fast and Flexible Consumer-Driven Supply Chain, Stanley Black & Decker
- 1. Building a Fastand Flexible Consumer-Driven Supply Chain Wilfred Eijpen – Director, Supply Chain Johanne Tsui – Manager, Supply Planning
- 2. Company Overview Strategic Roadmap Consumer Driven Supply Chain – Benefits Sales & Operations Planning (S&OP) Production & Sales Inventory (PSI) Sales & Demand Management (SDM) Next Steps Agenda
- 3. Division ofStanley Black & Decker formed in 1989 – Acquired Kwikset 1989 – Acquired Price Pfister 1989 – Acquired Weiser Lock 2003 – Acquired Baldwin 2003 – Merged with Stanley National Hardware 2010 HQ in Lake Forest, CA in 2001 Sales over $1B annually Company Overview
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- 5. Denison, TX Reading, PA Charlotte,NC Mira Loma, CA Mexicali, MX Nogales, MX Lake Forest, CA Burnaby, CN Brockville, CN Xiamen, China Corporate headquarters Manufacturing & Assembly Distribution Global Sales Force Our Operations
- 6. Our Operations Key Challenges: •Lengthening supply chain • Multi-site dependencies • Cross Functional Communication • Promotional Activities • Commercial Alignment
- 7. Fast & Flexible ConsumerDriven Supply Chain Our Objective
- 8. Our Strategic Roadmap People Process Systems 2007 Revised9/25/08 2008 2009 2010 Customer Service Integration Channel Focused Teams Establish CPFR presence Supply Planning Collaboration Teams CPFR with Retail Customers SDM for Non-Retail S&OP Revamp Demand Planning for all accounts Master Planning for Major Manufacturing Plants Fulfillment for Supply Planning S&OP Reporting Production Sales & Inventory Planning
- 9. Customer OrderPrioritization Constrain demand at multiple levels in the Supply Chain Full visibility throughout the Supply Chain (Order to Production) Connectivity of Supply Chain Systems Manage by Exception Improved Productivity Reduction in workload Our Soft Benefits
- 10. Over x%Service Improvement to our Customers 11.42% reduction in components and finished goods inventory 19 ppt forecast accuracy for Canada & Weiser 10.4% improvement in forecast accuracy for US market Over 60% reduction in planning cycle times Over 80% reduction in financial estimate planning times Our Hard Benefits
- 11. Fast & Flexible ConsumerDriven Supply Chain Strategic Tactical Operational Sales & Operations Planning Production Sales & Inventory Supply Demand Management Our Processes
- 12. UNAWARE • Management reviewof the past – retrospective • Siloed meetings – data handoffs – limited/no integrated planning • Mid-level management involvement • Balance-of-year view AWARE • Follows basic structure of the S&OP process • Medium forecast view – 12-18 months • Supply and demand balancing with alternative generation • Senior management involvement • Storming and “norm”ing FUNCTIONAL • Valuation of gaps and alternatives – scenario presentation • Emergence of balanced scorecard • Issue-tracking and elevation expectation • Decisions and directions are built into the cycle • 18-24 month planning horizon • Team development • Metrics evolve with goals SKILLED • Plans drive budgets • Strong integration of strategy with tactical planning – guidepost setting • Broad project management and strategic tracking • Optimization is the message • Exceptions are refined • Reporting shows granular progress to corporate goals • Executive ownership TIME Process Maturity Template PROCESSMATURITY S&OP Process Maturity Scale
- 13. – Portfolio Review –Demand Review – Supply Review – Pre-S&OP Review – Executive Review – Continual Measurement Our S&OP Model
- 14. Definition • Balance Forecastversus Inventory • Inventory versus Production • Unconstrained versus Constrained Demand Primary Goals 1. 98% + fill rates 2. Achieve Inventory Targets 3. Minimize Plant Variances Gap Closure • Service Risk Mitigation • Customer Collaboration Our PSI Process (Supply Review)
- 15. PSI Customer Orders Forecast Safety Stock NPI/Promos Firm Production Actual Production Inventory On-Hand Leveled Production Resource Reqmts Materials Reqmts Background Reqmts Inventory Estimate PSI Inputs& Outputs U N C O N S T R A I N E D C O N S T R A I N E D
- 16. Consumer Driven SupplyChain Handshake Meetings Constrained Demand Review Unconstrained Demand Review PSI Process Overview
- 17. PSI Challenges &Improvements • Special Event Management • Weekly Tracking – Demand & PSI Trends • Summarize by PSI Categories Communication • Service • Working Capital • Production Smoothing Team Alignment • Standardize Process • Running Rules • Frequent Updates Exception Management
- 18. Supply Demand Management(SDM) 7 day LT commitment High Sku Count Long LT on Asia Products Customer Complaints on Long LT Long LT on Asia Components No Stocking Strategy The Challenge: Provide high service, in short lead times, to a fragmented, high mix market
- 19. SDM Weekly Adjustments 7 Day Lead Time 254SKUs Core System Generated 7 Day Lead Time 1,738 SKUs Tier 1 No Forecast Strategy 28 Day Lead Time 676 SKUs Tier 2 How? Collaborated w/ Sales & Marketing – Segment Product Offering Developed Exception Management Tools – Weekly Forecast & SS Tackled Past Due Backlog – Order by Order, SKU by SKU
- 20. Frequent review& measure Smaller changes Use visual tools Highlight big deviations fast Highlight trends over time Review category assignment over time New SKUs start in Tier 1 and earn Core status over time SDM Principles
- 21. Track & Measure CoreAvailability Report SKU Health Report
- 22. Next Steps S&OPRevamp for Entire Business Dedicated Product Life Cycle Management Resource Weekly Forecasting Weekly PSI report Inventory Balancing (Raw/WIP versus FG) Billing Debrief Meeting Standardize Reporting
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