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Supply Chain and Procurement

In addition to being competitive levers, Supply Chain and Procurement have become strategic elements in companies’ capacity for agility, responsiveness and innovation.

 

Managing Supply Chain and Procurement has become increasingly complex:

  • Globalized communication in an increasingly interconnected world
  • Exponential increase in the complexity of information and material flows
  • Growing volatility of all parameters, particularly in a crisis situation
  • Balances need to be found (e.g. service rate vs. stock level, reduction in procurement prices vs. optimization of supplier panel)

Finding the right balances means activating the levers for change both in and outside the scope of the company:

1.Tools and processes that help to anticipate and reinforce the link with operations (e.g. planning)

2.Analysis and development of data (e.g. customer demand, ERP data)

3.Clear definition of the organization and the ‘extended’ management

4.Skills and commitment from all internal or external stakeholders

Assets

CYLAD can identify the areas for improvement in your Supply Chain and Procurement, and following this provide an appropriate change approach, using proven methodologies and tools, with expert consultants capable of adapting to your context and challenges.

  • A team of experts capable of understanding the supply chain end to end, and up to date with the latest developments and existing trends, in all industrial sectors
  • Quick diagnosis tools for supply chain and procurement (maturity checklist, flash analyses guide) to build a shared vision of the current situation
  • Ready-to-use methodologies and Cylad training modules for implementing procurement strategies, production schedules, performance management or stock management
  • Smart data expertise embodied through:
    • A team of data scientists
    • Extraction, analysis and data feedback tools and sustainable solutions (e.g.: Procurement online mock-up)

CLIENT FEEDBACK

"I will call CYLAD again when I need a very flexible team that can crack complex problems with feasibility for implementation in mind."

Head of Service of an Industrial Electronics OEM

Client cases

Program management interfaced with suppliers

Reducing short-term procurement costs

Planning Cascade for Supply Chain and Visual Management of Performance

Getting suppliers and partners on board with the program management approach – Aerospace industry.

CONTEXT

Due to new developments, our client must manage projects produced by its suppliers, which means:

  • Finding the right balance between control and autonomy
  • Adapting its method of interaction to the suppliers’ capacities
  • Putting in place methods to monitor the maturity of suppliers in terms of program/project management
  • Intervening in delayed projects, both to support immediate operational needs and to transform suppliers’ capacities

Our client therefore wanted to set up a team to support its suppliers with program management (i.e. project management in every phase of the life cycle, from design to series production support, via the series phase, with production ramp-ups).

 

APPROACH

Our approach tackles all five areas simultaneously:

1. Definition of a methodology to produce a diagnosis of the supplier’s ‘program management’ performance, and to carry out an improvement plan

  • Three-day audit with a pragmatic ‘case study’ approach based on recent, actual results
  • Definition of an improvement plan with the supplier to resolve the identified malfunctions
  • Joint management of the improvement plan, until completed, via expert workshops: planning, governance, indicators, managing product modifications, etc.
  • Operational implementation of methodology, with over 20 suppliers

 

2. Joint definition of the client / supplier interface:

  • Co-building the working method: governance, sequence of meetings, set of management indicators, etc.
  • Formalization of a joint ‘Program Management Plan’

 

3. Support with recruitment and upskilling the team

  • Training in methodologies
  • Training in Program Management techniques
  • Definition of a skills grid and the related training pathway
  • Innovative recruitment method, with a case study

 

4. Putting in place an approach to capitalize on team knowledge by collecting good practices observed from the different suppliers

  • Structuring knowledge by sector
  • Implementing the capitalization process, with regular routines for each end of mission and overall management

 

5. Putting in place support for internal project managers interacting with suppliers

  • Setting up a community
  • Sharing good practices to avoid reinventing the same solution several times
  • Collection of recurring irritants to provide a comprehensive solution

 

RESULTS

The team was set up and now has 15 members, carrying out 30 supplier audits per year, plus the resulting improvement plans. This helps to:

  • Significantly reduce the risks associated with aircraft development projects
  • Increase the maturity of suppliers in terms of program management
  • Benefit from cross-fertilization by proposing good practices observed from other suppliers

Revitalizing a procurement cost-cutting program – Aerospace industry.

CONTEXT

Our client is a company in the aerospace sector, a leader in its market. The company has launched a change project aimed at reducing its internal costs, including procurement costs.

Having achieved its procurement cost-cutting targets in previous years, it is experiencing a significant slowdown in the savings generated. Achieving its targets for the current year represents a major challenge, due to:

  • The need to generate short-term savings
  • Two years of previous efforts to cut procurement costs, by negotiating with suppliers and using short-term improvement levers
  • A sector characterized by the difficulty of maintaining competition between suppliers due to high qualification and industrialisation barriers

 

APPROACH

Our approach is based on a combination of levers:

  • Production of a smart data tool that will analyze annual expenditure in several areas and quickly identify new levers for negotiation
  • Prioritization of negotiations according to suppliers’ backgrounds and business opportunities
  • Automated preparation of negotiation
  • Automated calculation of forecast gains, monitoring of negotiation schedules and checking of results

 

The tool developed by the team analyzed over 2,000 suppliers, 100,000 items and 3 million order lines over a 3-year period. The tool identified opportunities for gains such as, from price differences between contracts and orders, internal price benchmarks or price differences between series parts and spare parts.

150 suppliers were identified as sources of potential savings. Once the context and the relationship with each OEM/supplier was examined, 50 suppliers were invited to negotiations, prepared using the levers identified by the smart data tool. As a result we drastically reduced the lead times between analysis and negotiation, while improving the preparation of negotiations.

Finally, with the help of the tool, the team automated other time-consuming tasks such as gain forecasts, monitoring of negotiation schedules and checking of results.

RESULTS

The combination of business skills and Big Data capacities used in the project achieved tangible results for the client. Our business skills enabled us to select the relevant work areas for identifying gains, while our Big Data capacities enabled us to considerably reduce costs and lead times.

The project therefore achieved the annual target of reduction in recurring costs, over a procurement scope that however only covered the last 5 months of the year. The project’s return on investment can be estimated at an order of magnitude of 1 to 50.

Putting in place an industrial planning system to re-establish performance and secure client commitments – Aerospace industry.

CONTEXT

The company is experiencing a deterioration in its OTD (On-Time Delivery) due to:

  • High, unanticipated growth in production volumes (revenue over 40% higher than budget)
  • Restricted capacity of some suppliers
  • Difficulty in balancing priorities between ‘OEM’ and ‘after-sales’ flows

To re-establish its service rate, that is under pressure from its largest order giver, and also to secure its growth in the long term, our intervention has enabled the client to set up:

  • A robust industrial planning cascade: S&OP, MPS and feedback on actual demand
  • Collective commitment to industrial performance based on the contributions of each Business unit, including reliability of forecasts, supplier development, adherence to schedule, productivity improvement
  • Production management routines based on visual management of performance

 

APPROACH

Our approach is based on 4 pillars:

  • Setting up a demand management process / S&OP (Sales and Operations Plan)
    • Stabilizing demand forecasts
    • Creating a regular, systematic sequence and schedule for updating forecasts and forecast planning in the long term (Sales & Operations Plan), medium term (Master Production Schedule) and short term (Production Planning)
    • Balancing load and capacity based on proven capacities (internal = production, external = suppliers)
    • Setting up collaboration and mutual commitments from the sales, production and procurement teams to the S&OP, MPS and PP
  • Consolidating the procurement process: sending the procurement plans each time the MPS is updated
  • Focusing the workshop’s performance management towards problem solving (visual management and QRQC), by following the sequence of meetings and indicators
  • Describing the new way of working in a ‘Planning and Production Control Handbook’ produced in Agile mode: the initial version written in a few weeks, then enriched iteratively through a continuous improvement approach, resulting in gradual training of the teams involved

 

RESULTS

Joint implementation of the Planning Cascade for Supply Chain and Visual Management of Performance has significantly improved operational performance in six months:

  • The OTD has increased from 68% to 92%
  • The delay depth (quantity x days of delay) has been reduced by > 50%.

Contacts

Paul Archer

Partner / France

Paris

Alberto Buron

Partner / France

Paris

Dr. Peter Odenwälder

Partner / Germany

Hamburg

Patrick Sage

Partner / France

Toulouse