Wartsila Supply Chain Management Essay Example For Students

Wartsila Supply Chain Management Essay A global leader and a provider of lifestyle power solutions in the energy and marine market. They began their operations in the year 1834 With the manufacturing Of large combustion engines. As the company started progressing they diversified their portfolio by including power plants that range up to 500 Maws, oil and gas industry solutions and support services to better serve their customers. The company has spread their operations across 70 countries and has employed more than 18900 workers with annual revenue of ? 4. 72 billion. Wrists main aim is to improve the environmental and economic performance of its power plant by focusing on the latest technological innovation and incorporating them to attain efficiency in their operations. It wants to provide its customers with products that are highly efficient and are reliable tort long-term usage, To manufacture products those are low on emission and suitable for grid stability and effective services. Its environmental solutions cover scrubber, selective catalytic reduction, oxidation catalyst, water treatment system and condition monitoring which proves that the company is echo-friendly. They have now started to focus a lot on the services industry by building a service network Of over 5000 professionals to improve the performance Of their and based power plants and ship installations. It provides services, spare parts, maintenance, upgrade and fuel conversion solutions for medium and low speed gas and diesel engines. Inventory Management It is common knowledge in all organizations around the world that if you want to form a successful supply chain management networks then the companies should mainly focus on inventory and inventory control. Wrists was facing a similar problem with regards to the inventory management so they were now focusing on reducing the logistic cost along with examining the supply chain cuisines of their archival in the market. They emphasized a lot on the customer service, as they wanted to be differentiated from their competitors so they withheld inventory for two main reasons i. E. To reduce cost and improve customer service. Now the company had to balance the problem of having too much inventory that could lead to high cost v/s too little inventory which could lead to losing a current customer or sale. The shared perception and experience offertories upper management formulated a belief that the company was able to save a lot when they ever able o manage their inventory efficiently. They had an effective transport system to support their goals of managing inventory and satisfying their end customers. The deregulation also lead to further reducing the inventory cost and transportation cost. The company also came up with a strategy were they tried to understand the nature Of the product and supply chain capabilities to bring down their inventory cost. In addition they were also concerned with production scheduling and used flow management, which increases their responsiveness to changes and helps in reducing the inventory on hand. Flow Management helps n getting the inbound inventory associated with the changes in demand, supply and inventory policies. It manages the ever-changing inventory policies and aligns it with allocation and warehouse execution process. The advantages of using flow management within your supply chain are: k Demand Forecasting: Optimizes the demand prediction of a product and helps in better managing the inventory across all the channels. It eliminates the product proliferation which makes it easier for Wrists to predict the demand for their products. * Replenishment: There is collaborative planning and strategy ruination in the company which certifies that you have the right amount of inventory at all levels thus depleting any cost with regards to additional inventory. It ensures there is faster flow of inventory during the product lifestyle. Supply Chain Visibility: A single and real time view of the entire global supply chain improves inventory control, optimizes the fulfillment channels and reduces variability in the time of the product lifestyle hence encourages lower safety stocks. Warehouse Cost: As inventory is efficiently managed the cost Of storing it reduces which increases the profitability Of the company . In he year 2008 Wrists came up with their most expensive project till date that was to centralist their distribution and storage centre to improve their flow management process. This reduced their cost and gave them an edge over other competitors Who were not focusing on the warehouse management. Demand Forecasting Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including hot informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test arrests. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market. Few points on Writers demand forecasting: for Wrists when it comes to demand, forecasts are made based on the past trends and accordingly growth projections are made to meet the expected demand. An example of efficient forecasting by Wrists: India had been one of the global economic best performers: in 2006, GAP growth was 9. 6%, in 2007 it was 9. 2% in 2008 it was 6. 6%, in 2009 it was 9. 2%, in 2010 it was 10% and in 2011 12%. The forecast for 2012 was more than 7%. To maintain such a rate of increase, India had to invest heavily in infrastructure especially power generation. Electricity is certainly one measure of todays quality of life. Modern society simply cant function Without it, and a solid foundation is essential. Growth in power generation was a record 2. 68% in India last year. But thats nowhere near sufficient to satisfy the voracious appetite for power. The majority of the electrical power generated in India (153 GO on 31 July 2012) is produced using coal (53%), followed by hydrophone (24%), gas (1 1 and renewable (10%). And while India is the worlds fifth largest electricity producer, the energy shortfall recorded in 2008 was 85 billion kHz and it keeps increasing every year. The value associated with so many lost opportunities is enormous. To eradicate poverty, Indians GAP has to grow at an annual rate tot 8-10% for the next 25 years. And electricity generation capacity will have to increase by five or six times to almost 800 GO by 2031. Until now, Wrists has been a fairly small player in the oil and gas sector, focusing mainly on electricity generation and occasionally participating in pipeline and storage projects. The forecasts indicating growth in investments in oil and gas distribution facilities have led Wrists to the conclusion that there is a substantial growth opportunity in pumping and compression applications. So without losing its hold on power generation it has now decided to expand its operations to oil and gas sector as well. And looking at their efficient forecasting in the past, the probability of this decision of expansion might work in the companys favor. Procurement: Supply Chain Management Wrists has pre-defined criteria for selecting its suppliers, determining their acquirement and developing supply relationship. It Offers mutually beneficial partnership to its suppliers, which strengthen the market standing of both parties. Wrists believes in maintaining an open and transparent dialogue With its suppliers to ensure fair business dealings. The company also collaborates with universities for its research and development activities. As a supplier it is important to meet the requirements set by Wrists in order to get a supplier status. These requirements include general features and issues related to environment management, occupation health and safety, quality, product pacific requirement. Wrists makes sure that the suppliers abide by these requirements by monitoring their performance on a regular basis. The company also uses its Supplier Management System to manage and assess its suppliers wherein it evaluates the supplier based on three parameters: pre assessment is done for new suppliers before supplier relationship begins, Audits are carried out for new suppliers and for those whose performance is not up to the companys standards and lastly, performance reviews are done in order to find out and solve any deviations from the set requirements. In 2012, three suppliers were banned due to non-compliance vivid Writers requirement for occupational health and safety, environment and legislation. The company has more than 3,700 active suppliers most of which are located in Europe where they have their main production unit. Supply Chain Collaboration In order to widen its global capabilities, Wrists entered into a joint venture with Handy to produce and assemble engines in South Korea. Mentors EssayOne of the worlds leading logistics company, CAVE manages the storage floor operations. Even though many operations are managed by CAVE Wrists personnel have frequent quality checks of the parts and also manage the handling of the more restricted goods. Due to the enormous expanse of the inventory, having an outsider manage the quality checks and control would not he feasible. Not to forget, that because of the CO, and having the entire inventory at one place, quality control is all the more important. A few facts about the Central Distribution Centre at Sampan k Built-up area of 37,000 mm * Possibility to expand k Warehouse for all parts from very small to extremely large, such as engine arts over keg * Partly automatic and partly manually operated k Over 60,000 pallet locations and over 60,000 totes in mini-load *Wrists has its own quay at the Extraordinaire, with sea transport possibility * Next to NON highway and the river Sessile, for road transport k Total Investment of approximately RUE 70 million k Good logistics connections to Rotterdam, Hamburg and to Siphon (Amsterdam) airport * Location Will reduce emissions from transportation Customer Service The key element indicating Writers performance is customer satisfaction. It customizes it services according to the customer preferences and needs when t comes to designing, Start up and operation Of the equipment and systems it delivers. Engaging with customers is of prime importance when developing its products and services. Wr ists aims at maintaining and strengthening relations with its customers. It customizes it services according to the customer preferences and needs when it comes to designing, start up and operation of the equipment and systems it delivers. Engaging with customers is of prime importance when developing its products and services. Their customer initiatives include organizing Customer Days (performance-management-SCM)existing and attention customers. In order to strengthen their customer-focused mindset Warts use an integrated customer feedback process (CROP), It aims at achieving an excellent long-term relationship by listening to the customers and acting upon their feedback, Also, they have a program called Voice of the customer in which they conduct in depth analysis of customers need and expectation. Every year they receive almost 3000 feedback forms during various interfaces and out of those suggestions are sorted out and directly sent to front line personnel. Wrists measures customer satisfaction by maintaining regular contact with he customers, providing after sales services throughout the life Of a product. In order to stay updated with the changing customer needs, they organize seminars and conferences where they get an opportunity to interact With their customers in person. They have customer interaction forum on their website where the customer can be in touch with the company regarding all the updates and issues regarding the product. Performance Management Planning and target setting forms an integral part of performance management in Wrists. The achievement of targets and related activities are continuously viewed every month by board of management. With an integrated reporting tool called International financial reporting standards (IF-RSI) they have ensured the reliability and accuracy totalitarian reports through a centralized system. Writers offers a distinct method of supply chain management for its suppliers in order to develop a vigorous relationship. They offer an open dialogue partnership to suppliers, which help them in research and development, With the inclusion of an ERP i. E. Supplier Management System it is much easier for them to conduct supplier assessment. In this program, audit is conducted for ewe supplier so as to match the suppliers performance with Writers requirement Later, performance reviews are conveyed to recognize and resolve deviations, if any. Ultimately, these all factor contribute in Writers high performance and quality standards with respect to health and safety, environmental, quality plans and social performance. The responsibility of sustaining the performance lies on the shoulders Of board Of management Who issue the basic guidelines of principles and review them on regular basis. Their basic role is to set targets and invigilate the performance. However, coordination teen different levels of organization is also essential. As human resource, legal, quality, compliance, supply management also plays in supporting functions while forming the guidelines. Technology Technology plays a very vital role in Writers operations, from marine engine deployments to power plant management and even in their service solutions in energy sector. With experience in the industry and technical know it has become technological leader in energy industry, However, when it comes to Supply Chain Management even technologically advanced Wrists face few challenges, especially in their Italian plant. As companys operations were continuously growing in 2005 at rapid pace, it was unable to meet the increasing demand for their products. This resulted in supply chain shortcomings due to inconsistent production planning internally and erratic performance externally by their suppliers. Ultimately due to all these factors, the shipments were delayed and Writers reputation was at stake due to decreasing market share. At this point Wrists used their in house developed SAP solutions for supply chain management along vivid other Legacy tools, which were not integrated into Collaboration of Technology for better SCM After seeing the shortcomings at Italian plant the executive team decided to team up With Accentuate in management Of Supply Chain Technology at Wrists in late 2005. Accentuate focused primarily on Writers key areas to develop their IT solutions, they concentrated on production, planning procurement and material management. Accentuate was able to determine the root cause, which was lack of collaboration and communication between internal departments for which resulted in repetitive work at different levels. Accentuate created one forecasting tool, which was interconnected with all departments and later integrated with SAP system of Wrists. Accentuate also assisted Wrists IT department in making various other cross-functional collaboration tools for better production planning, scheduling, internal communication, which again were later integrated into companies ERP system. This resulted in cross-attitudinal involvement in every important area of business including Planning, purchasing, Strategic- Sourcing Accounts Receivables, Payable and Marketing as well. This technological advancement tremendously helped Wrists in boosting their productivity along with being efficient. 2008 numbers shows double production f engines in Italian plant compared vivid 2005. How Supply Chain Practice Changed Poor Wrists Services, the major change in their supply chain management in the last few years has undoubtedly been the transition from having eight different localized spare parts warehouses to one centralized distribution Center for most of their spare parts. The project has not just been Writers biggest investment project (Of 70 million ELLS), it has also been a gigantic task for the consolidation Of the processes, inventory and data. Thanks to the new CDC at Sampan, Netherlands, the company can now manage he entire flow of spare part materials right from order confirmation, sourcing to delivery to customers doorstep from one point. It is not just much more efficient for the company, it also shortens the transport distances for the materials and thus, in the end, a value add for the end customer as well, The company accepts that delivery times have reduced considerably as theres no problem spare parts traffic between different warehouses now, From the quality control aspect as well, the company can have a uniform quality assurance ranging trot very small parts like special screws to huge pistons for the combustion engines in the ships. Further Improvement Writers target is to be the leader in complete lifestyle power solutions for the global marine markets and energy markets. It does have that potential to achieve these targets considering their existence in over 60 countries as of today. As company expands its market, supply chain management becomes more complex and also crucial with increasing demand. Thus it has to look out for continuous improvements not only in their product and service lines but also in their supply chain management System, so that goods and services are delivered at right place and on right time. Extensive use of RIFF in Supply Chain Radio Frequency Identification also known, as RIFF is an automated tag identifying technology can benefit a lot in SCM. It can create real-time automation of reincarnating process through sensors-connected in manufacturing plant. By adding RIFF tags to every spare part, tools, resource and item of materials handling equipment, manufacturers are able to get better demand signals from customers and the market.