- Client challenge
- Benefits to client
The client is a tier one automotive seating supplier supporting a global network of more than 200 manufacturing facilities in over 30 countries. It needed to improve supply chain planning processes, data, technology, governance, service delivery model, and organization.
Decentralized and manual supply chain planning processes resulted in disconnected strategy and operations, suboptimal capacity, and rising expedited freight costs. A critical North American business unit was losing money and premium freight cost had grown astronomically, generating a push to improve margin by cutting cost.
There were also exacerbating challenges in data and technology. The company was utilizing a variety of excel-based tools and lacked timely and accurate data. The planning resources were not centralized and did not have clear issue prioritization. This was made worse by a service delivery model in which planners were not executing the same processes across the organization. When KPMG reviewed the service delivery model against its value delivery framework for supply chain planning, the client demonstrated 15 of 18 typical planning challenges.
Benefits to client
KPMG identified the central planning opportunity during a broader supply chain operating model assessment and design program. The client retained KPMG to support the transformation, which began with determining and communicating a target operating model, the foundation for process and technology improvements.
With KPMG's guidance over many months, the client no longer works in disparate systems with siloed planning groups. KPMG's team helped ensure that manufacturing sites successfully supported the transition by incorporating four key enablers: KPIs, system write-back, change management, and governance. The client has also benefited from improved data quality and the ability to identify long term capacity issues.
By the end of the first phase of the implementation, the client realized significant benefits including:
- 75% reduction in premium freight
- 30% improvement in planner efficiency
- 10% inventory offset.
The first year of implementation generated over 12 million US dollars in savings.
Centralized planning was a key strategy KPMG recommended to the client, enabling them to move from a reactive environment to a proactive environment that facilitates taking control of supply chain costs. KPMG designed the target operating model (TOM) for the end state with the client and developed an excel-based pilot program to prove out the future state. This pilot demonstrated the value of a centralized planning model and built client buy-in for future phases.
A value-driven pilot program
The project team recognized that moving from existing processes and technologies to a new technology suite and harmonized planning processes was a considerable change. A key tactic to mitigate the change risk was the use of a pilot program.
KPMG configured its proprietary Excel Supply Planning tool to provide a low risk introduction to the future state. Use of the pilot tool improved visibility to inventory, empowered planners to identify issues more quickly, and supported faster issue resolution and prevention. Throughout the six month pilot phase, the KPMG team worked with users to identify what functions were needed in the technology solution.
Planning for a successful technology-driven transformation
The pilot also informed the team what scenarios to use to evaluate the technology vendors. After a structured evaluation and negotiation process, the client selected Blue Yonder (formerly JDA). With a baseline of requirements in place and the technology partner identified, the pilot provided a head start on the detailed design phase.
Understanding that executing this type of technology-enabled supply chain transformation—replacing existing systems that are not well integrated and tackling significant data challenges—KPMG focused on five success factors to keep the team focused on issues that could affect project delivery: executive support, technology strategy, case for change, proven transformation methodology, and effective governance.
After reviewing the learnings from the pilot program, KPMG and Blue Yonder entered into several weeks of design sessions with the client. The KPMG team brought leading practice knowledge to guide the client to standardized, better processes and a centralized planning function.
Comprehensive testing and training
The design sessions established the functional requirements and KPMG with Blue Yonder developed the appropriate technical solutions. Before testing began, KPMG clearly outlined the types of testing, goals, required participants, and success criteria with the client. Client superusers participated in UAT (User Acceptance Test) and the client core team ultimately signed off on the tool functionality.
After testing was completed, the integrated team moved on to formal training. The KPMG team created tailored, detailed training documents that carefully explained each aspect of the process and how the tool would support it. KPMG-led in person training used a "train-the-trainer" approach. During this phase, KPMG’s change management practice was brought in to conduct change impact analysis, facilitate training, and develop launch communications. These communications kept users aligned to the program timeline and helped generate excitement for the business go-live.
Business go-live and further phases
The initial go-live was focused on the pilot phase business unit, which also had the greatest cost improvement opportunity. By executing a business go live, the team enabled the functions of the new technology and, more importantly, had users executing the central planning processes.
Following soon, there were three North America launches that added functionality and more firmly established the centralized planning function. A subsequent phase also introduced the Blue Yonder Inventory Optimization tool to address excessive inventory and associated costs. KPMG worked with the client to develop best in class inventory optimization processes.
More North American business unit launches are in progress. European operations will be the client's next focus.