SUPPLY CHAIN EXCELLENCE IN WIDEX June 2016
AGENDA 1. Presentation of Widex 2. The first year Creating a solid base 3. The second year Stabilizing the performance 4. The next steps Unleashing the competitive advantage and extending customer reach
AGENDA 1. Presentation of Widex 2. The first year Creating a solid base 3. The second year Stabilizing the performance 4. The next steps Unleashing the competitive advantage and extending customer reach
WIDEX IS A GLOBAL COMPANY Head Quarters in Vassingerød, Denmark 3700 employees all over the world 105 countries with distribution networks 2,5 million items shipped every 3 production sites in Denmark, Estonia and Poland month 3,8 billion DKK in revenue 33 Sales Companies 18.000 material numbers
AGENDA 1. Presentation of Widex 2. The first year Creating a solid base 3. The second year Stabilizing the performance 4. The next steps Unleashing the competitive advantage and extending customer reach
A WAVE PLAN OF THREE WAVES WAS DEVELOPED Current state 1.Creating a solid base 1. Stabilizing 2. Stabilizing the performance 3. Unleashing the competitive advantage and extending the customer reach Timing Wave 1: 2012-2013 Wave 2: 2013-2014 Wave 3: 2015-2017 Key deliverables Reorganizing the supply chain Implementing the Positive Factory Establishing performance measuring on aggregated level Setup clear roles and responsibilities Execute on the 26 task program Move from produce to inventory to produce to order Control global freight Establish Global S&OP Establish Global Sourcing Defining service concepts and enabling customer centricity Expanding the customer reach Accomplishing best in class cost level
THE STRATEGY WAS LINKED TO THE OVERALL WIDEX CORPORATE STRATEGY... Corporate Strategy INCREASE EBITA FROM THE CURRENT 5-6% TO 20% DECREASE NET WORKING CAPITAL TO 20% GROW TOPLINE TO 4 BILLION DKK INCREASE MARKET SHARE FROM THE CURRENT 8% TO 10% Supply Chain Strategy
ALL AREAS UNDERSTOOD THEIR OWN AND OTHERS STRATEGIC FOCUS Global supply chain Global sourcing Supply chain planning Assembly Global logistics Global S&OP Cost savings Planning stability Assembly lead time Delivery performance Predictability Cost savings Securing supply Spend control Payment terms Supplier lead time Plant utilization Production rescheduling Optimize HQ inventory Production lead time Assembly lead time Resource utilization Productivity On time deliveries Optimized warehouse Delivery quality Forecast accuracy Global delivery performance Optimize sub inventory
TO ENSURE READINESS AND INVOLVEMENT OF THE ORGANIZATION, THE POSITIVE FACTORY WAS INTRODUCED What was the outcome of the positive factory? Customer focus A high degree of maturity Interdisciplinary understanding Unity
IN 2014 EMPLOYEE ENGAGEMENT SURVEY REVEALED A SUPPLY CHAIN WITH SATISFIED EMPLOYEES AND STRONG LEADERS A positive side effect of having happy and motivated employees
AGENDA 1. Presentation of Widex 2. The first year Creating a solid base 3. The second year Stabilizing the performance 4. The next steps Unleashing the competitive advantage and extending customer reach
SALES AND OPERATIONS PLANNING WAS IMPLEMENTED TO IMPROVE FORECASTING, INVENTORY LEVELS AND DELIVERY PERFORMANCE Sales and operations planning process and outcome
THE PILOT INITIATIVE WAS LAUNCHED TO INCREASE COLLABORATION BETWEEN HQ SUPPLY CHAIN AND WIDEX SALES COMPANIES The pilot strengthened the collaboration with Widex sales companies (SC) to realize strategic goals Why pilots? Performance towards each other are important levers in realizing impact reducing stock and shorten lead time, while keeping a high delivery performance Forecasts Limited order fluctuations Decrease inventories Widex SC Widex HQ High performance delivery Minimum lead time HQ Supply Chain has currently launched 9 Pilot initiatives with frequent status meetings and evaluations. Austria Germany France UK Australia Japan US Canada Nordic ROW 2014 2015 Q2 Q3 Q4 Q1 Q2 HQ Supply Chain communicates with the pilot countries in a frequent matter and on different levels. Communication with Pilots: Pilot introduction, kick off, mid term evaluation, final evaluation Ad hoc communication through Customer Service Monthly forecast input Montly status VC meetings Weekly backorder list 6/8/2016 13
DELIVERY PERFORMANCE HAS INCREASED AND STABILIZED - HEARING AIDS Delivery performance on hearing aids is high and stable on both availability and reliability. Reliability: the ability to meet the delivery date confirmed by the supply chain Availability: the ability to meet the delivery date requested by the customer
INVENTORY VALUE HAS BEEN REDUCED BY 49% EQUAL TO 185 MDKK OVER THE PAST 2 YEARS Total HQ inventory development Aug-13 to Aug-15 mdkk 400 350 300 250 200 150 378 353 357 339 329 328 313 292-185 (-49%) 266 254 256 259 261 247 255 247 243 240 233 234 193 186 185 187 193 A dedicated effort of reducing HQ inventory has resulted in a 49% decrease over the past 2 years. About 100 mdkk of the 185 mdkk reduction is due to inventory scrap. 100 50 0 aug-13 sep-13 oct-13 nov-13 dec-13 jan-14 feb-14 mar-14 apr-14 may-14 jun-14 jul-14 aug-14 sep-14 oct-14 nov-14 dec-14 jan-15 feb-15 mar-15 apr-15 maj-15 jun-15 jul-15 aug-15 The reduction is mainly driven by superblocks, hearing aids and raw material but all inventory categories have contributed. FY 13-14 FY 14-15 FY 15-16 Source: Axapta
OPTIMIZING PRODUCTION FLOWS AND PROCESSES HAS RESULTED IN SIGNIFICANT PRODUCTIVITY INCREASES AND REDUCED LEAD TIMES Productivity development and reduced lead time # of hearing aids 100 80 60 40 20 0 Finished Hearing Aids per operator per hour 57 +10% +30% +58% 62 74 90 2012 2013 2014 2015 Working days 14 12 10 8 6 4 2 0 13 Lead time pre strategy 8 Reduction 5 Current Lead time Productivity was increased and lead time reduced significantly through a number of initiatives: Assembly redesigned 5S widely used Focus on common goals and continuous improvements Customer oriented processes Leadership Assembly redesigned causing a significant reduction in lead time Global freight program implemented
AGENDA 1. Presentation of Widex 2. The first year Creating a solid base 3. The second year Stabilizing the performance 4. The next steps Unleashing the competitive advantage and extending customer reach
AUTOMATION WILL FURTHER DECREASE LEAD TIME AND COST Implementation of modern semi automated processes in HA production Benefits: Significant labor cost reductions Lead time reduction, from 5 days to 2 hours Secure high delivery performance, +100% production scalability Automated Workstations Manual Workstations Automatic Conveyer belt
IN ORDER TO REALIZE THE STRATEGY, GLOBAL SUPPLY CHAIN INTERACT WITH A NUMBER OF SALES COMPANIES THROUGH SEVERAL INITIATIVES Initiatives have been carried out to strengthen the collaboration with Widex sales companies in order to realize IMPACT goals Why pilots? Performance towards each other are important levers in realizing impact reducing stock and shorten lead time, while keeping a high delivery performance Why inventory deep dives? Transparency must be created in order to enable global inventory optimization, identify excess stock and create action plans on how to improve performance moving forward. Why Operations Optimization projects? Working together on optimizing operations processes in Sales Companies to reduce costs, optimize performance and create best in class operation processes. Widex SC Forecasts Limited order fluctuations Decrease inventories High performance delivery Minimum lead time Widex HQ
AND WE HAVE CARRIED OUT ONE OF THE MOST EXTENSIVE LAUNCHES IN WIDEX HISTORY Overview of Widex launch of the Unique platform Forecasting process on NPI was running 12 months prior launch showing significant increase in sales expectations Capacity were aligned with expectations and ramp up was managed and monitored to ensure availability at launch Cannibalization were defined and capacity ramped down to decrease inventories of cannibalized products