transforming supply chain harish bawari - hero motocorp may 2016
TRANSCRIPT
Using IT to Strengthen Supply Chain Planning
Tuesday, 10th May’2016
Harish Bawari
External - General e-Material Flow
• The world’s largest two wheeler manufacturer
• Presence in 30+ countries outside India • 6500+ Customer Touch points in India • 4 Manufacturing Plants in India • One in Columbia • Overseas Assembly operations: Kenya, Uganda, Tanzania, Bangladesh
Hero MotoCorp Ltd.
External - General e-Material Flow
Supply Chain is about…
Flow of products and services from
–Raw materials manufacturers
–Component and intermediate manufacturers
–Final product manufacturers
–Wholesalers and distributors and Retailers
–Finally to Customer
External - General e-Material Flow
And Supply Chain Management is about…
Design and management of seamless,
value-added processes across
organizational boundaries to meet
the real needs of the end customer
External - General e-Material Flow
Key Focus Areas in Supply Chain Management–Improving Service Levels and
efficiency
–Cost reduction
–Continuous Improvement
through automation
External - General e-Material Flow
Today we want to Share a
Project we have done in IT to
Strengthen Supply Chain at
Hero MotoCorp
External - General e-Material Flow
Business Scenario
• We have grown tremendously in our operations, resulting in
complex Operations and Supply Chain
• The flow of materials is a key factor in making sure that
production is smooth and streamlined
• The material and information at the right place and right
time is very important
• It flows through various points in the operations chain
• The cycle of transfer of information ends up being too
complex owing to the scale of operations and the Bill of
Materials
External - General e-Material Flow
So, we implemented a System
External - General e-Material Flow
The system was conceptualized and
designed to make sure that the
supply chain becomes more
efficient, cost effective and
information is easily available
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External - General e-Material Flow
e-Material Flow
Business Objectives
External - General e-Material Flow
To have smooth material flow at optimum costs
across the Supply Chain based on JIT principles
– Inventory management
– Production Sequencing and scheduling
– Uniform communication to all vendors and
the Shop floor
– Enhance quality and productivity -
removing NVAs
External - General e-Material Flow
• To streamline the Supply Chain by making
available the right information at the right time
to the right stakeholders
• Enabling real time visibility of production status
to the vendors as well as shop floor to enable
the right people to act in time
• Proactively get alerted in case of any
abnormality in Operations
External - General e-Material Flow
e-Material Flow
What was done…
External - General e-Material Flow
• The project entailed using the SAP ERP system and
integrating it with various other systems to achieve
the objectives
• The solution was designed in SAP system for making
the delivery schedule available to the vendors online
based on the production
• Automation in assembly lines with initiatives like
scanning of SKU, hanger and VIN number at different
stages
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External - General e-Material Flow
• Scanning at the time of Gate entry and goods
receipt, etc. were done which added to the overall
automation of the chain
• To streamline SC, the delivery schedule is made
available online to the vendors based on production
forecast and detailed planning
• Further automation has been done through this
system in the related processes such as Gate entry
and GR to create synergy in the entire material flow
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External - General e-Material Flow
EMF System is integrated with multiple systems :
– SAP EP – for delivery schedules publishing and bar coded tags printing
– SAP BI – for analytics to improve the abnormalities
– Extensive integration with the barcode system so that the processes are automated across the Supply Chain
– Gmail for communication of exceptions/alerts – SMS system for sending alerts
– Empty Return system to reduce efforts of duplication
– Truck Turn Around Time system
External - General e-Material Flow
External - General e-Material Flow
Enhanced HMCL-Vendor Interface Portal• Information flow through the portal
• All schedules uploaded in the portal which vendor can access-no
emails
• Vendor prints all tags (Vehicle Tag, Receipt Tag, Bin Tag) from
portal
• Only those material for which schedule is given can be printed
• All acknowledgements & discrepancy note, if any, generated
through the same portal & can be seen on real time basis
• The vehicle entry time and exit time can also be viewed by
vendor on real time basis from the portal
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External - General e-Material Flow
e-Material Flow
How the Way of Working has
Changed
External - General e-Material Flow
PPC
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# Before emf system After emf system
1 Plan is issued monthly and inconsistently Plan is being issued fortnightly and on time
2 Colour wise plan is issued very late after the start of month
Production plan is being released at SKU level
4 All work is done manually/in excel and then loaded in SAP
System generates the plan
5 Frequent changes in production plan, no rules are set for the changes
Minimum changes in the production plan as per set rules and due approval
6 Plan if not completed by month end is treated as cancelled
Plan once issued will not be cancelled but shifted
External - General e-Material Flow 21
# Before emf system After emf system1 Monthly schedules are sent indicating
total requirementFortnightly day wise/line wise schedules are sent
2 Day wise schedules are not sent Daily day wise schedules indicating time & unloading location
3 Vendor usually supply material in the beginning of the month
Vendor can supply day wise required material only
4 Plan is issued to vendors. Vendors do their own manual calculations
Daily System generated part wise schedule are released.
5 Daily meetings & constant follow up to ensure supplies
Time wise schedule will take care, monitoring screens are available. Auto alerts available in case of deviation.
Supply Chain
External - General e-Material Flow
Supply Chain
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# Before emf system After emf system
06 Inventory adjustments are possible only at month end
Inventory adjustments are done on daily basis based on actual production
07 Due to uncertainty vendors keep inventory of all items for all models
As schedules are fixed therefore vendors to keep inventory of required items only
08 Inventory norms are fixed for all items No Inventory norms. Material will be available as per advance time
09 Line stoppages due to component shortages
Minimum Line stoppages due to component shortages
10 Segregation inside the plant No Segregation inside the plant
External - General e-Material Flow
Stores
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# Before emf system After emf system
1 Exact time of receipt, unloading location & consumption point is not known
Time of receipt, unloading location & consumption point is mentioned on tags
2 Manual punching at gate, Manual counting of trolley/bins & GRN creation etc.
No manual punching. Every entry, counting of trolley/bins, GRN creation is through the reading of the bar-coded documents
3 Any material in any quantity is sent by the vendor
Material can be sent only as per the daily schedule
4 Vendor persons inside the plant to take physical stock etc
No need of vendor persons inside the plant
5 Real time information of dispatch of material, GE and GR not available
Real time information is available
External - General e-Material Flow
e-Material Flow
Key Benefits Achieved
External - General e-Material Flow
The project benefited the organization in multiple
ways. The key benefits that we realized post
implementation
• Inventory carrying cost reduction - parts and engines
• Lesser instances of line stoppages, helped in
increased production and lot of savings in the labour
cost
• Manpower savings which resulted from automation
across the supply chain, store and planning
departments
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External - General e-Material Flow
• Truck Turn Around Time reduction and in turn,
increase in the logistics efficiency
• We also realized a lot of other benefits as a
result of streamlining of the Supply Chain and
the automation at various levels
• Benefits which we reaped from this project -
way surpassed the cost of the project
• RoI within 6 months of the launch owing to the
scale and the effectiveness of implementation
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External - General e-Material Flow
Benefits to Suppliers
• To the minute firm scheduling system helped Suppliers -Optimise human resources -Inventory optimization -Reduction in manufacturing losses -No requirement calculation from rolling plan -Simpler material reconciliation at both locations -Standardize production lot size and economise on logistics costs
• Real time information of truck entry, acknowledgement, discrepancy if any, return of empties and truck exit etc.
• Reverse logistics management is simpler and efficient • The number trolleys/bins in circulation reduced • Truck TAT improved
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External - General e-Material Flow
e-Material Flow - AchievementsParticulars Before EMF @6600VPD After EMF@9100VPD
No. of filled trolleys 2200 nos. ~700 nos.
Avg. Inventory of emf parts
15 Crore 9 Crore
Avg. engine inventory 3200 Nos. 2700 Nos.
Line stoppages Avg. 3073 Min/Mth Avg. 1350 Min/Mth
Production plan changesAvg. 75 /Mth (Unplanned)
Avg. 10/Mth (Approved)
Manpower in Stores 184 148
3PL operators (stores + vendors)
244 112
Manpower in PPC 231 201
No. of 3PL trucks 102 85
Truck turn-around time Avg. 130 Min Avg. 90 Min
External - General e-Material Flow
e-Material Flow - AchievementsParticulars Before EMF @6600VPD After EMF@9100VPD
Schedule adherence No day wise schedule Avg. 95% for daily schedules
On-time delivery NA 87% on time achieved
% Lot segregation 1.2% 0.04%
Accuracy-BOM 86% 100%
Minor injuries/Annum (PPC + Stores)
50 16
Visuals/FIFO No Visuals/FIFO Day-wise colour tags and emf layout ensures FIFO
Information flow Slow: combination of manual and emails.
Fast: Combination of real time reports and Auto alerts
Total 2.83 Crores/Annum recurring cost has been saved from one plant.
External - General e-Material Flow
e-Material Flow
Key Business Challenges Faced
External - General e-Material Flow
The complexity of the project was huge.
There were so many areas which the project
touched and hence the challenges. Top 3
Challenges :
• Physical changes on shop floor ( stores
layout changes without stopping
production ) Overcome by Detailed planning
for contingency and top management drive
External - General e-Material Flow
• Cultural changes (Change Management)
Adherence to MRP (legacy System) –
Overcome by involvement of key
stakeholders in testing and suggestions
during the project
• Availability of business experts for sufficient
and quality time – Overcome by calendar
planning and top management involvement
External - General e-Material Flow
e-Material Flow
Key Technical Challenges Faced
External - General e-Material Flow
The system is unique. The challenge was high
risk on account of system failure. Top 2
Challenges:
• Since the system was evolving, the iterations
were more and to be done within stipulated
time frame. Overcome by Rigorous testing of
all scenarios and training to users before Go-
Live and building of robust fall back systems
for each and every process
External - General e-Material Flow
• Development and support capability of internal
and external (Consultants) teams. Overcome by
motivating both teams (Business & Technical)
and involving external process experts to
achieve a unique and effective integrated
solution/system for complete supply chain, to
work as single team and complement each other
External - General e-Material Flow
e-Material Flow
Next Steps
External - General e-Material Flow
The EMF Journey Continues
• Continue to implement e-Material Flow System in all
our manufacturing plants - existing and upcoming
• Our endeavour always is to make sure that
–Technology is used in the most optimal way
–Functional processes designed efficiently
–Proposed benefits reaped thoroughly
Thank You