Supply Chain Management can achieve huge cycle time improvements and cost savings for companies willing to rethink how they do business with their suppliers, distributors and other trading partners – and how to share the benefits. However, if change is normally difficult in just one company, it is even more challenging to try to achieve breakthrough process improvements and cultural change across supplier and customer.

The supplier, a leading international manufacturer of folding cartons, had recently worked with Rath & Strong to reduce the costs of its process losses and reengineer its tow most important processes – all with dramatic results. The supplier then sought an opportunity to leverage its success into a new, more profitable relationship with a major customer. The supplier approached the manufacturer with a proposal to take time and cost out of their joint processes – and win primary supplier status. The manufacturer accepted the proposal on a trail basis and a joint work team was created.

Solution

Rath & Strong was selected by both organizations to facilitate an initial Opportunity Assessment. Together, the supplier and manufacturer assessed if the operational results to be achieved were significant enough to warrant the effort. They also gauged if the will existed to persist and make improvements in the working environment necessary to sustain the change. The Opportunity Assessment revealed a huge return on investment from Supply Chain Management.

Through the assessment process, both groups developed a joint commitment to the difficult work ahead. The companies walked each other’s processes and felt and understood the reasons behind their current problems. This discovery process forged mutual trust. The assessment gave both companies the impetus and confidence to create a long-term agreement even before the implementation phase. This was a critical decision. The manufacturer’s willingness to use only one major and one minor carton supplier was essential to simplify working practices and remove inventory.

During implementation Rath & Strong consultants trained the collaborative team on decision processes, roles and learning styles. They worked with the team to create an action plan and charter with measurable goals. This investment in team development saved time and ensured that team focused on measurable outcomes. Training the team accelerated its development as a self-managing group – a key to sustainability. Team sub-groups were charged with breaking down functional walls, so that the demand and constraint information was shared and non-value-added activities removed.

Simplifying processes became the Supply Chain mantra across both companies. They worked to establish the simplest most direct flow of information between producer and user, to ensure the simplest most direct flow of material from producer to user and to create the shortest reaction time to significantly reduce inventories.

Results

Within just ten months, the teams and the new supply chain processes achieved 100% availability of cartons, 100% conformance to quality specifications, 95% on-time delivery within a 30-minute delivery time frame, 60% reduction in pipeline inventories and 75% reduction in supply chain cycle times. Order cycle times were reduced from 4-8 months to 2-8 weeks. Response to unexpected requirements was slashed from 11 weeks to 5-6 days.

Equally valuable for the future, the two companies established direct lines of communication and a mutually profitable working partnership. The companies were confident they could sustain results and respond quickly and innovatively to the challenges ahead.

Learning Lessons

The heart of gaining supply chain improvements is not Information Technology – it’s actually simplifying processes. If you do not start there, you run the risk of overlaying the latest and greatest technology on deeply flawed processes.

Breakthrough operational improvement requires dramatically changing activities and behaviors. Start with suppliers who already have achieved breakthroughs with teams who see the value of partnership.

When those who manage daily processes identify improvement opportunities, it creates ownership and the urgency to change. Those who identify the opportunities should implement them.

"The heart of gaining supply chain improvements is not Information Technology – it’s actually simplifying processes."