Supply Chain Conference 2016
Aspiring for Operational Excellence
Simon Jolliffe, Inventory Manager, H-D EMEA
1
Content
• About H-DMC
• Business Scenario
• Target SCM Solution
• Initiative Objectives & Deliverables
• Results
• Highlights
• Unexpected Outcomes
H-DMC
• Founded:
1903
• HQ:
Milwaukee, Wisconsin
• 2015 Revenue:
$5.3 B
• Motorcycles
• Parts & Accessories (PAC)
• General Merchandise (GM)
$4,127 M
$863 M
$292 M
• Employees:
5,700 approx.
• Dealer Network:
1435
• 2015 MC Retails:
264,627
• US Market Share:
50.2% (on-road 601+cc models)
Possible Opening Video
Touring by Harley-Davidson Touring by Harley-Davidson – YouTube to open
up with “About H-D”
H-D EMEA
• HQ:
Oxford, UK (2003)
• Subsidiaries:
France, GmbH, BeNeLux, Italy, Switzerland & Spain
• Sales Offices:
Czech Republic, Russia, UAE, Greece and South Africa
• Employees:
250 approx.
• Dealer Network:
378
• 2015 MC Retails:
43,287
• Europe
• Others
• Europe Market Share:
36,894
6,393
10.5%
data provided by ACEM, an independent agency.
• ERP:
SAP since Jul-2009
• Distribution:
Houthalen, Belgium
• 3PL Services:
Neovia Logistics
EMEA Operations
Operations Dir.
EMEA
Marketing
Mgr.
Simon Jolliffe
Inventory Mgr.
Senior S&OP
Analyst
S&OP Lead
GM
Senior S-CA
GM
S&OP Analyst
S&OP Lead
PAC
S-CA
PAC
S&OP Mgr.
MC
SAP SME (OTC)
Reporting
Analyst
Logistics Mgr.
• PAC & GM Supply Headcount = 3
• Appointed April-2013
• 98% PAC SKUs procured from H-DMC
• 50% of GM revenue is One-Time-Buy (cut to order biannually)
• ~42K active SKUs across PAC & GM Core
SAP SME (OTC)
PAC & GM
Administrator
Business Scenario
• Technical resources and funding focused on global rollout of SAP
• Rudimentary stock replenishment solution
• Fundamental flaws and capability gaps
• Average sales data
• No seasonality
• Service levels fluctuated
• International impacting domestic business
• Independently surveyed the market for possible solution providers
• Completed feasibility study of solution locally
• Pilot pending US approval
Target Solution
• A demand-driven, inventory optimisation and supply chain management
solution:
• Improve forecast accuracy at SKU level
• “Reduces” inventory while maintaining service levels >99%
• Modules include:
• Statistical Demand Forecasting
• Fulfilment
• Replenishment
• Functionality
• Plan promotions and/or step changes in demand
• Manage exceptions
• Simulate ‘what-if’ scenarios
Objectives & Deliverables
• Improve service levels and optimise Inventory
• Hosted solution without interfaces from SAP
• Cost Effective
• Low technical risk
• Defined KPIs by category
•
•
•
•
Stock Value
Fill Rate(s)
Backorders as % of Revenue
*SKU Count
• Define future business’ needs
• Aggressive implementation
• Key stakeholder engagement
• Global v Local without exception
July
Aug
Sept
Oct
x
x
Nov-Mar
Define/Analyze
- Establish SA w/ToolsgGroup
x
- Architecture analysis
x
- Design solution
x
- Build Solution
- Run proof-of-concept
x
Recommend
- Measure results
x
- Decision point on scalability
x
H-D EMEA File Flow Design
Weekly Load Files
Monthly Load Files
Supersessions
ZHDI_CUSTOM_MARC
MARM
ME80FN
On Orders
Item Master
MVKE
ZIM04
MARA
VAO5*1
Demand.txt
VAO5*2
OpenSales.txt
Demand
Outstanding
Orders
MARC
Item
Warehouse
MBEW
Current Stock
Ad hoc / screen based load
EINA4
Supplier
KNVV
KNA1
Micro
Areas
Custom
Attributes
BoM
Development of Strategy
• Reduced stocking criteria from 8 to 4 demand hits P/A
• Revised weighed purchasing logic:
Critical Consumables
Target = 99%
Spark Plugs
Brake Pad Kits
Air Cleaner Filters
Batteries
Oil Filters
• Now stocking to service level targets by category
• Initially constrained optimisation
Oil & Fluids
Tires
• ABC classifications extended to D&E during Pilot
• Annual reduction of 93,785 deliveries on stocked items = $750k est. savings
Pilot Results
• Data cleansing alone improved integrity of SAP
• High / growing line fill rates across all portfolios
•
Ttl Parts = 90.9%, SKU Parts = 94.3%, Crit.Cons. = 99.6%
•
Ttl Accs = 94.2%, SKU Accs = 94.6%, Key Accs = 98.5%
• High Order Proposal Placement
Of 2,214 only 10 investigated and all subsequently placed!
• Inventory modelling looked great
• High inventory value but healthy
• Days of Supply was stable
• Polar Vortex
• Lowest backorders for 5 years
realising 5% more revenue per month than prior year
• Facilitated sales growth
Additional Highlights
• True scalability of designed solution
• Efficient operation allowing time to explore CI opportunities
•
•
•
•
Vendor Managed Inventory initiative
Expand direct procurement portfolio
New supplier on-boarding process
Developing resources
• Improved engagement and boosted team moral
• Manual biannual re-stratification > automated weekly
• Expect inventory to increase initially
• Ability to proactively reduce or avoid backorders
• Assumes a perfect Supply-Chain
Unexpected Outcomes
• Reverting to SAP standard functionality
• Influence across S&OP process
• Global Inventory Management Team
• Centralised KPI reporting
• Making data driven decisions
• Cross functional user forum
• Greater global awareness and role
appreciation
Socialising the Purchasing Cycle
PROCUREMENT
(Purchase to Pay)
Payment
Receive
5 Rights of
Procurement
1. Quantity
2. Place
3. Time
4. Quality
5. Price
GTM / CHANNEL
Knowledge
Specification
Source
the
market
Order
Appraise
suppliers
Authorise
Select &
Requisition
Value-Add Contribution:
• Support Contract Management
Contract
SLA & KPI Measurement
Manage
ment
• Develop Supplier Relations
Award
Negotiat
contract
e
Early Buyer Involvement (EBI)
• Product & Relationship Lifecycle Management Facilitation
RFQ /
Tender
Analyse
& shortlist
SOURCING
Possible Closing Video
Meet our Custom Kings - Harley-Davidson Prestige Motorcycles - YouTube
to close session on.
THANK YOU