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Supply Chain
Management

We are a management consultancy that specializes in supply chain management: the interaction between different companies in the supply chain is becoming more and more complex and frequently embraces the entire globe. We help you bring transparency to the extensive actions of your supply chain: with a clear view on decisions concerning location, suppliers and the right IT system as well as forecasts on sales volume and scheduling of employees.

 

 

1/6Planning and
forecasting

 

All parts in stock, except the one you need? A typical problem caused by inaccurate planning and forecasting. Forecasting is one of the most difficult and also one of the most crucial tasks in your business, because the effects of planning errors compound with each further step along the supply chain. That quickly becomes very expensive, and can lead to production standstills or stock surpluses that can threaten your company's very existence.

A real-world example

A global manufacturer and distributor of construction formwork had around 160 venues on five continents. Most of those facilities had their own warehouse, which led to overflowing, but unfortunately uncoordinated inventories in the company. Despite its huge excess stocks, this client suffered from poor availability of materials. As so often, the problem here was defining the "right" inventory!

Barkawi Impact Story Special

By introducing a custom-tailored sales and operations process (S&OP) and restructuring the demand planning process, we succeeded in generating forecasts that do the word justice: the right amounts at the right place at the right time – nothing more and nothing less!

In order to obtain transparency throughout the supply chain, we set up a "control tower" with the aid of an ingenious software solution. It collects all the inventories from the various locations and coordinates them, recognizes shortages early and simulates different supply scenarios, enabling us to perfect and largely automate the planning process.

Together with the client, we reduced the worldwide inventories to the ideal amounts while at the same time improving the service level, because finally the right parts were in stock. A textbook example of less is more! Flawless parts availability boosted customer satisfaction, and costs are down around €30 million a year! Now that is what we call win-win!

In another case, the "right" inventory is found by a smart software tool in the cloud that automatically fills the virtual shopping baskets of 700 worldwide dealerships of an agricultural machine manufacturer with exactly the parts they require. It even includes the weather and harvest in its calculations – important variables for farmers and their expensive machines!

Here too, we were able to massively reduce stocks. Parts that lie around in the warehouse gathering dust are now a thing of the past. Furthermore, with our clever cloud platform "ClearOps", 20% less capital is tied up in warehouses around the world. And not only that – in addition to the improved service at lower cost, the dealers are now reporting 8% more sales in their spare-parts business.

Innovative companies even take that all a step further. Digitalization and remote monitoring make predictive maintenance possible, and that prevents machine downtimes even before the machines come to a standstill or the damage occurs. And that in turn enables an enormous increase in service quality!

How does predictive maintenance work? Large numbers of interconnected sensors continuously deliver status data from the machine or plant, with the objective of ensuring maximum machine availability and reliability. The status analyses, the remaining service life of spare parts, etc. are provided in real time and permanently give the service team information on what they will have to do next – before the need even arises. A fantastic basis for ensuring you keep the "right" inventory and for flawless forecasting and planning!

Figure Part availability
Figure Excess inventories

2/6 Modern procurement
and partner management

 

López was once a star. The Head of Procurement at VW oppressed suppliers, was a merciless negotiator and forced prices down relentlessly. That considerably cut VW's production costs, and his tactics earned him the unflattering yet somehow awestruck nickname of the "Wolfsburg Strangler".

Suppliers as partners? Collaboration? Connectivity? Foreign concepts in that day! Modern purchasing is different. Today, production lines stop moving if the supplier and manufacturer don't work as partners, and not only at VW. Business periodicals in August 2016 bore headlines such as: "VW supplier dispute affects 28,000 employees, assembly lines stand still because parts are missing". Two angry suppliers had stopped delivering components to the company because they had had enough of López' tactic.

Suppliers are partners with which modern, high-performance companies have a very close relationship. "Supplier integration" are the magic words. Data, information, costs and successes are all shared! Collaboration and connectivity generate a digital unity of suppliers and manufacturers that benefits everyone! Digitalization creates fantastic new options here!

Procurement is of the greatest strategic and operational importance. Why? Mistakes made at the start of the supply chain not only extend all the way through to its end, they tend to potentiate with each step and can lead to costs going through the roof.

Two case examples

A company has numerous buyers at various venues. The Finnish buyer negotiates with the same supplier as his Swedish colleague, but they don't come together to exploit the synergies that bundling their needs would achieve. Companies with modern purchasing, on the other hand, generally do a pretty good job of that!

But sometimes the case is a little more complex: the three railways of neighboring countries often use the same trains. But each country purchases not only the locomotives and wagons individually, they also procure millions of the same replacement parts separately, the prices of which vary greatly depending on how well the country negotiates, leading to big discrepancies between them.

But a comparison of the three countries' purchasing terms showed that they had all bought thousands of components at the very worst of conditions. Building up a large data base made it possible to identify the best price for millions of spare parts, to mathematically optimize the purchasing model and to enormously reduce the procurement costs by means of a common-part strategy! Transparency rules!

For us, transparency is the fundamental basis that stands at the start of any purchasing project. We help reduce costs not only in calls for tender, but also by establishing strategic purchasing with the right organizational structures within your enterprise. To do so, we connect your procurement instance with adjoining divisions such as product development, production, logistics, warehousing, etc. as a key function in a close-knit collaboration.

By combining expert know-how with individually customized digital solutions, we generate results that last. Our project teams comprise strategic procurement advisors, industry experts and digital supply chain professionals. We realize savings while viewing your purchasing activities within the context of the overall value chain.

A plant engineering company grew constantly over the course of many years through corporate acquisitions in various countries. With each added subsidiary, the purchasing volume increased, but sadly, so did the complexity and costs. Procurement was not coordinated. There was as good as no transparency with regard to the companies, venues, costs or product groups, with the result that procurement costs skyrocketed.

When we delivered clear data to the client, there were some very surprised faces: prices varied significantly for identical services and products, and there were far too many suppliers. The first step was to bundle needs and introduce just-in-time delivery. But we weren't willing to leave it at that!

We went a step further, and an in-depth analysis led to an astonishing but unequivocal result: that it was far more efficient overall to manufacture in Europe than in a low-cost Asian country! So we moved the final processing step back to Europe – a classic case of "re-shoring"! The key: viewing procurement costs in isolation is not enough. What might seem cheaper at first glance can cost the company dearly.

Only networking all disciplines and appraising them end-to-end delivers a comprehensive picture. Purchasing and procurement are integral parts of a chain of value-generating steps that dovetail like the cogs in a precision timepiece. Only then can the clock keep the right time – and procurement and supply chain management work as they should!

3/6 Production as the heart
of supply chain managements

 

In former times, the word "production" referred to a company's own machines. Smart experts in the fields of REFA and Lean perfectly arranged and optimized the processes, runtimes and capacity utilization using stopwatches, and Six-Sigma-Black-Belt professionals ensured highest quality and process precision. But for us, production is much more than that.

A case example from the real world

A maker of mobile phones was in danger of being removed from retailer lists because it always delivered the wrong numbers of the wrong products to the wrong place at the wrong time. The issues, which it called "logistical challenges", could be followed all the way back to its production.

It informed its manufacturing contractors far too late about the launch of new phones, which meant these companies had to hire thousands of new staff with the applicable qualifications within the space of just a few weeks, in order to be able to deliver. The pressure on them caused by the mobile phone company's negligence led to innumerable consequential problems throughout the entire supply chain.

And in production itself, the issue wasn't just how to optimize machine run times, as had been the case in the past: the often very well organized contractors do that themselves nowadays. No, this kind of project is more about the cooperation with the manufacturing contractors. Modern enterprises realize that with clever digitalization:

  • Is a product launch planned in detail together with the contractor, so that it can go off smoothly?
  • Are the planning data shared in a digital network?
  • Is the granularity of the data the same at both the client and the contractor?
  • Are sales figures transmitted to the Production division in real time?
  • Do the inventories match the production figures?
  • Does the handover from Production to Distribution go smoothly, with Distribution already in the starting blocks and ready to go?
  • How does production change while in full swing – for example in reaction to a large number of DOAs (dead on arrivals)?
  • Do component procurement, bundling before production, etc. take place in reliable and smart steps, for instance in a well-structured inbound hub?

These and many other questions go far beyond an isolated consideration of the production activities, as does the topic of production footprint: Where is production done? By whom? Make or buy? In what global production network? How are the factories and their inventories connected up with Sales and Distribution, etc.? We provide the strategic and operational answers to these and many other questions – and not only that!

For our mobile phone manufacturer, we set up a future-proof technical solution that eliminates all the problems with one blow: all the relevant numbers, data and facts are now gathered and processed in real time in an innovative control tower. All disciplines are interconnected, end-to-end, and all pull in the same direction. Then, having the "right" KPIs finally enables it to be proactive instead of trying to rectify things after the fact.

Because as we have said: production is much more than simply a perfectly functioning machine park for us – it is the heart of the supply chain!

4/6 Perfectly organized distribution:
network and supply chain under control

 

Several dozen warehouses around the globe, more than ten different sales channels, 40 delivery regulations and new ones constantly being added because customer demands never stop increasing. And then there are the hundreds of contracts with external service providers that take care of your fulfilment at countless locations, for example as CEPs.

That is a complex network in which by far not everything is transparent and easy to manage. For instance, do you know your service level or fill rate? Your cut-off time for your various products? The percentage of on-time delivery, including OTD, OTDR and OTDC? All that and much more are key data that are often outside your control because network partners take care of them. And yet it is you who are responsible for what happens in your network.

To make sure complexity doesn't lead to inefficiency, we help you make bring transparency to your network. Starting with your customers' demands, we analyze together with you what logistical capacity is best: does customer X really need four days of lead time, and does it pay for it? Should expensive premium services also be made available to C customers? We get your product developers to think about the repair cycle, already at the designing stage. We help you choose the right partners by defining service classes such as just-in-time, 24 or 72-hour delivery. Smart supply chain management perfectly integrates all partners and service providers – in house and outsourced – into your value chain and molds it to a coherent overall concept! And carefully selected KPIs ensure that you can measure the improvements.

In our project teams, strategists and industry experts with many years of experience work together hand in hand. Whereas many management consultancies are so busy gathering and analyzing data that they lose sight of the big picture, or only develop theoretical strategies because they lack practical experience, we at Barkawi not only plan strategic restructurings, we also execute them; and not only at top-management level, but also down on the factory floor. We roll up our sleeves so that you get your network and supply chain under control. Any place, any time. What that means in real terms can be seen in an example from our business:

Barkawi Impact Story Special

Adhesives are needed everywhere. Large trucks are covered in foils, rolls of paper that will later become newspapers are joined together with adhesive film, the insulation for medical devices is affixed using adhesive. On plasters, window insulation, in the manufacturing of everything from motor vehicles to shoes – adhesives are omnipresent!

But every adhesives customer is different. The corner news agent only orders small amounts by parcel. The discounter, on the other hand, needs truckloads of full pallets. The carmaker wants 24-hour lead times, while the drugstore is happy with eleven days. And it is the same all around the world.

Our adhesives manufacturer "solved" this problem with a complex central warehouse that supplied 30 national warehouses, but resulted in logistics costs that couldn't be passed on to the customers because of tough competitive pressure. And that although it was always optimizing its infrastructure by outsourcing to partners, with central scheduling, cross dock and lean warehousing.

Our solution:

Our analysis began with a customer segmentation, which we then implemented step by step. 30 central and national warehouses became six central ones, and now our customer can face up to the competitors:

Less expensive, more efficient, leaner and more individually tailored thanks to an innovative and holistic network and distribution concept!

5/6 Operational
Excellence

 

As a management consultant, we specialize in perfect supply chains with lean and ideally organized processes. For many companies, process optimization is a synonym for lean management or lean operation, but lean alone is not enough for us – we want operational excellence.

That means activating all the levers after an in-depth analysis of the entire company – at the strategic, organizational and process levels. Because if you want to lead your enterprise to sustainable success, you have to prevent wastage from the start, and not simply try to curb it later on, so that your company runs like a Swiss watch while still remaining lean. That is what we call operational excellence!

How does one achieve operational excellence?

The goal is operational excellence. The way to get there passes through various tools such as

  • Complexity management
  • Process driven organization
  • Lean production/operations
  • Continuous Improvement Process (CIP)

What does operational excellence mean in real terms?

Growth is a wonderful thing. Actually. But it usually brings with it complexity, and hence higher costs. An example from consulting practice: A leading global electronics wholesaler has been a supplier to trade, industry and retail for a hundred years. In 2016, the rapidly growing company generated sales of more than € 800 m. Its product range includes everything from cables to lighting technology and household devices. Its customer base is very broad and extends from little one-man workshops to housing enterprises with major construction projects.

The company was growing fast, the processes were becoming ever more complex, and the costs were increasing disproportionately. To cut costs, our case company implemented a "co-loading" transport concept together with a partner it chose, but instead of lower costs, it found itself confronted with additional transport costs to the tune of € 3 million per annum.

Then there were difficulties with its new, proprietary logistics center, which in addition to design errors such as functional spaces too small to fulfil their purposes, also had major problems with its organizational structure and processes. The result was that not all orders could be processed on the day received.

Barkawi Impact Story Special

Barkawi soon recognized that the company hadn't chosen the best co-loading partner for its needs. It turned out that the route overlap was only 0.14% – so the synergies with the partner were practically zero! What was more, both partners competed for the same time slots for delivery to the customer: 45% of the stops were between 7 and 10 a.m., while midday and the afternoon were virtually unused. This led to poor vehicle capacity utilization and even additional transport costs caused by the "set daily price per vehicle" concept, because additional vehicles had to be leased for the mornings. In addition to highlighting the drawbacks incurred by the choosing the wrong partner, Barkawi also succeeded in showing this client that co-loading was the right decision that can cut costs by more than 12% (trip costs) if you do it right.

The biggest lever for cutting the costs per stop were found in the time windows for delivery. Due to the tough competition, the logistics services requirements in the electrical wholesale business are very demanding: each customer was allowed to choose its "desired time window", irrespective of the value of its order, profit margin or strategic benefit to the company. So additional vehicles were put into the trip schedule, and routes changed, because even deliveries worth only € 10 had to be made between 7 and 7:30 a.m.

In order to ensure that the cost-intensive service levels went to the "right" customers, Barkawi first carried out a customer segmentation. For large industrial customers, solutions like KANBAN and order consolidation were important – while emphasis was removed from next-day deliveries and time windows. Plumbers, on the other hand, preferred a delivery the next day – often with in-car delivery. These measures all led to a 32% deduction in trip costs.

And taking a look at other process issues paid off as well. Parallel to the transport optimizations, Barkawi performed a warehouse audit to improve the storage processes. It freed up 400 square meters of space in the warehouse, and a change to the main incoming-materials processes radically reduced the process time, enabling the elimination of the interim storage stage before the final warehousing of the goods.

Summary: All together, the measures taken cut processing times and costs massively, while the ability to deliver the desired products on time improved, leading to more customer satisfaction.

That's what we call operational excellence!

6/6 Optimizing working capital:
cash and liquidity in supply chain management

 

Liquidity, working capital and cash flow are major issues in supply chain management. Companies launch working-capital programs to free-up liquidity, but that means they have to have an end-to-end overview of the supply chain, because the cash flow can get bogged down at numerous stages of it. Dealing with these problems in isolation leads to piecemeal improvements at best, while perhaps even worsening the situation on a company-wide basis.

That is why our working-capital projects cover all relevant parts of the supply chain, such as inventory management, demand management, network design, throughput time reductions, process optimizations and much more. We have a combat-tested tool box at our disposal, for instance for analyzing the cash conversion cycle, working-capital benchmarking and our Cash Health Check, which includes an optimization of the claims and liabilities management process, for example.

One important question is that of "OtC" or Order to Cash: This indicator looks at the entire process of monetarizing an order and is an important KPI in not only logistics and the entire supply chain, but also in cash management, i.e. corporate financing and customer satisfaction. Order to Cash measures the time from the customer placing the order (e.g. in the call center) to when the money arrives at the bank. This figure is a large-scale appraisal of the process and customer satisfaction based on a very simple but decisive measurement variable at the end of the process: the customer is happy, and pays the bill!

What other clever ideas for digitally supported cash management are there? One example from industry practice: Tractors simply mustn't break down, least of all during harvest time! And for precisely that reason, agricultural machinery manufacturers keep tens of thousands of different spare parts worth several million euros in stock. The 700 dealerships of a market leader in the agricultural machine industry kept more than half a billion euros in their warehouses – many millions of parts, and yet it still had machines out of commission because required parts were not available. And at the end of the year, it had to make big write-offs for parts it held but no one needed.

Our solution:

With our ingenious cloud platform ClearOps, 20% less capital is tied-up at the 700 dealer venues, and the number of machines waiting for parts has been cut in half. And not only that: in addition to the far better service at lower costs, the dealers are reporting big increases in their spare-parts sales.

Things like the "right" inventory secure competitiveness when replacement parts are very expensive or parts stocks are very large, and put a smile on the face of any businessperson. Because innovative supply chain concepts transform dead, tied-up capital back into agile working capital.

Because: cash rules!

Barkawi Ansprechpartner für SCM - Supply Chain Management

Reach out for the perfect
Supply Chain

Get in touch:

Wolfgang Schürholz
Managing Partner
moc.iwakrab@zlohreuhcs.gnagflow
Phone +49 89 - 749826 - 849

Barkawi Management Consultants
Office München
moc.iwakrab@ofni
Phone +49 89 - 749826 - 0