Transcript Bridgestone Corporation

Yves Kerstens, Vice President Logistics & Supply Chain Management
Supply-Chain Council European Conference, 11 October 2007
Global Organisation Bridgestone
Bridgestone
Corporation
Head Office: Tokyo, Japan
Bridgestone America
Holding
Bridgestone Europe
NV/SA
Regional HQ in Nashville,
USA
Regional HQ in Brussels
 4 technical centres
Tokyo, Japan (2), Rome, Italy & Akron, USA
 57 tyre factories worldwide
 98 plants for other products
 Sales network in more than 150 nations
and territories around the world
2006 Key Data:
 Employees, worldwide
 Consolidated subs
 Financial results
 Net earnings
123,000
440 companies
25,1 billion US$
714 million US$
Activities and Products
Tyres
(80 % of our total activity)
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Passenger cars and recreational vehicles
Trucks and buses, heavy and light
Commercial vans
Agriculture
Off-the-road vehicles
Motorcycles and scooters
Aircraft
Subways and monorails
Racing, go-karts, motorcycles and
scooters
Tyre Market Sales - Evolution 1986 – 2005
Millions of US dollars - Source: Tire Business, August 28, 2006
18 333
17 888 17 920
18 000
16 150
16 000
16 750
13 751
13 465
14 000
12 000
14 800
17 500
15 150
13 600
12 300
10 000
8 000 6 800
6 000
4 000
2 000
5 600
6 100
6 350
4 043
4 513
4 796
6 000
2 693
2 200
2 000
3 255
2 717
2 922
02
03
3 150
3 616
1 700
0
86
88
90
92
Bridgestone
94
Michelin
96
98
Goodyear
99
01
Continental
Pirelli
04
Sumitomo
05
06
Passenger Car Tyres: Original Equipment Market
20,000
18,000
25.0%
Bridgestone evolution in the European OE market
19.3%
Bridgestone basically
supplies tyres to all mass
market manufacturers in the
world
16,000
17.9%
14,000
12,000
15.0%
12.9%
18.2%
18.2%
19.6%
20.0%
18.3%
20.0%
15.4%
13.5%
15.0%
10,000
8,000
11,605
13,129
13,518
15,249
15,332
15,238
11,691
6,000
10.0%
15,759
16,687
16,806
17,231
4,000
5.0%
2,000
0
0.0%
2001
2002
2003
2004
2005
2006
2007 Est 2008 LTP 2009 LTP 2010 LTP 2011 LTP
Passenger Car Tyres: Replacement Market

For the replacement market, Bridgestone Europe produces
tyres for small city cars up to exclusive super cars. Tyres
are sold through retail channels such as: tyre dealers,
auto centres, gas stations,
hyper markets
and car dealers.
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Bridgestone Europe has a market share of around 13% in
Europe with a target to reach 15% by 2008.
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Bridgestone Europe sells mainly following brands:
Bridgestone, Firestone and Dayton, following the
multibrand strategy: good-better-best.
The Supply Chain Management Policy
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A Network structure in line with market
requirements, competitors and new
European environment
European Borders are fading, supporting
cross border business flows
Central control of Finished Goods
inventory to improve customer service
Provide a consistent 24 hours service to
almost 95 % of the customers in Europe
Implementation of Pan-European
strategies in the area of warehousing and
distribution resulting in a lower cost base
Consistent measurement of our integrated
performance to be able to benchmark and
define improvements
A European LSCM organization with
people acting on a central, regional and
local base
Gain Competitive Advantage
Business plan objectives
 Customer Service improvements
 Reduction of Cost To Serve (-10 %)
 Functional Excellence and Organisational
Synergies
 Reduced Asset Base and Working Capital
Produces
Integrates supply chain
& delivers
Sells & defines
customer needs
MANUFACTURING
BSEU LSCM
SALES
PLANTS
Economies of
Scale
PLANT
DISTRIBUTION
WHS
WHS
Customer Service
Cost to serve
Minimise costs
CUSTOMERS
Differentiation
Customer Focus
Our Supply Chain Vision
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The supply chain division writes the music, directs the orchestra,
but has some musicians being employed by third parties
Bridgestone
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One of the major drivers: the increasing affordable accessibility
of information and communication technology (ICT) that enables
the execution of the supply chain
The How ?
 Working Smarter: Process optimalisation
 Operational excellence
 Continuous Improvements
 Standardization
 Working Cheaper: Cost optimalisation
 Creation of Center of Excellences
 Outsourcing to create synergies
 Virtual organization
 Working Bigger: Scale optimalisation
 Organic growth
 Shared operations
The How?
 Drivers for outsourcing operations and business processes
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Create visibility and control over service levels and costs
Support a flexible network structure to adapt changes in the markets -Variable cost base
Cost reduction via more efficient operations (use 3PL experience/buying power)
Lack of local experience
Focus on core activities
Standardization
 Outsourcing components
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Transport (FTL)
Distribution (Milk runs)
Warehousing operations
Real estate
Warehouse & Transportation Systems
Planning – Control tower (Track & trace)
Invoice control
Contract management
Inventory management
Strategy is to outsource operations but keep limited number in-sourced to
keep operational experience and internal benchmarking possibilities
Outsourcing of Freight Invoice verification
Context
Solution
Carriers consolidation in Europe
(2004-2007)
 Central negotiations and
standard contracts in place
 Ownership of all transportation
contracts shifted to BSEU
 Compliance follow-up needed
(Maverick spend)
 Outsource this process to a third
party with automatic control of
pricing and posting of invoices
into ERP
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Avoid invoice duplication
Reduce overbilling (2-3%)
100 % Rate check
100 % Execution check
Correct accrual setting
 Outsource because of
Organisation of invoice verification,
booking and payment needed to be
improved and aligned
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Dedicated and experienced team
LSCM Focus on service
Timely & Accurate reporting
Quality / Control / Audit
Cost Reductions
Visibility improved management
capabilities
Business issues
ISSUES
BENEFITS OF CENTRALISATION
Difficult to control freight costs and accruals, since
automatic accruals have to be made on a line item
basis
Based on agreed rates a pre-invoice is checked by the
carrier and accruals are automatically uploaded in
SAP
Concern that SAP posting are being made by many
different people around Europe who have open access
to central accounting
Limit access to central accounting as key job is
outsourced, which will reduce control risks
Upload invoice data electronically
Reluctance by some local operations to perform this
duty, therefore we cannot guarantee that invoices are
processed on an ‘accurate and timely’ basis
BSEU will pass responsibility to an independent 3rd
party & free up local resources
How to control if transporters are over billing ? (we
check only a % of invoices)
Potential cost savings for LSCM from stopping over
billing via 100% checking and economies of scale /
systems use to reduce working hours involved
Time consuming to book numerous freight invoices
into SAP (+- 10.000/year)
Potentially save money from economies of scale &
systems. Permit staff to focus on their ‘core’ jobs
Waste time when vendors call concerning unpaid
invoices
Outsourced & centralised in 1 location where all info
is available for quicker response + pro-active control
of invoices as they are received
Partner selection
A
B
C
D
++
+++
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-
Pre-billing
Invoice Matching
Invoice Matching
Invoice Matching
IT Innovation
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++
+
?
Confidentiality
+++
---
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Maturity (Experience on the market)
++
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+
+
Flexibility
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++
+
-
Communication Flow
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++
++
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Business knowledge (BSEU requirements)
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+
+
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Main Business (yes=***/ no=*)
Yes
No
No
No
Audit Process (Criterias audited)
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-
Issue resolution Flow
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++
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Continuous Improvements (proactive
collaboration)
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+++
?
NL / Ukraine
NL / Czech
India /Europe
Europe
To be negotiated
Per activity
Headcount based
Per activity
Implementation process
Service Offered
Location
Pricing structure
ControlPay Process overview
(1)
Bridgestone
LSCM
3 PL
(2)
(2)
Execution
3 PL
(1)
FSE
(2)
Consolidation
of orders
Reporting
Pre- invoice
ETOF
Order details
Pre - calculation
& account coding
ISD
Match
(3)
No
Issue
resolution
Statement
What 3 PL
Should invoice
OK
Yes
Final
Invoice
(5)
(4)
ISDR
(6)
Approved final
invoice with
coding details
Payment
Bridgestone
Finance
(7)
Integrated process of planning, execution, audit and settlement
Expected Benefits
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Operational benefits
 Central rate database management : Carriers cannot be used without approved rates
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100% invoice line check including special costs like waiting times, gas oil surcharge,…
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Communication platform with carriers (replacing phone, fax,…)
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One Point of contact for our European suppliers with full traceability of issue resolution
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Visibility and Increased compliance
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Dedicated and experienced team
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Timely & correct accruals for month end closing
Compliance
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Sarbanes-Oxley (SOX) Compliance : Segregation of duties
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VAT will be invoiced as per agreed VAT rules as opposed to being accepted as billed by carriers
Costs Reductions
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Elimination of over billing errors (double invoices, 100% rate check, execution check)
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Administrative tasks no longer required (no extra resources required for growth in business)
Visibility and reporting
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Single location providing visibility to all parties (Carriers, BSEU, Claims, …)
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Improved cost allocation capabilities
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Share operational status visibility through Transportation Cycle
Initial Business Case
Estimate (*):
Area
Conservative
Realistic
Optimistic
Over billing reduction
€1431,850
€1879,510
€2419,750
Headcount Finance
€307,665
€356,625
€405,000
Headcount LSCM
€225,000
€270,000
€360,000
Carrier Selection Compliance
€876,000
€1035,500
€1095,000
€2,840,515
€3,641,635
€4,279,750
Total
(*) Adapted figures
Project is self funding after implementation cost
Initial Implementation Planning – 2 sessions
April
May
June
July
Aug
Sept
Oct
Nov
Preparation
Prepare
Implementation
• Collect Master Data
• Develop interfaces
• Setup new processes
• Carrier Communication
Wave 1
Implementation in
3 Pilot Sites
•ELC North: Zeebrugge
•MDC: Poznan
•RDC: France
Wave 2
Roll out solution to all other sites
Site Go live
Dec
Jan
Findings after 1 year operations (1)
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Full Truck Load business is 100% operational and process is stable
For “secondary business (17 countries) ” situation is diversified
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Some markets are 100% operational
Still some countries are not live
• Carriers refusing to participate
• Facing technical issues with some carriers
Some countries we encountered serious problems
• We ended up in paying invoices twice
• We had to make pre-payments to carriers
• Local people initially opposed, because they lost part of their power
Learning curve takes time (Table to be updated with YTD figures)
Findings after 1 year of operations (2)
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Involvement of multiple stakeholders requires strong project management
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Carriers
Central SCM & Local SCM
Finance
Invoice verification company
The local organisation needs to be prepared well
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Clear rules need to be established upfront and communicated
Training upfront and afterwards is key
The local people are not finance people
Realise and foresee at startup, this is not first priority for the people involved
Exception handling is under estimated ( returns, extra costs, …)
Findings after 1 year of operations (3)
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The process and system prove to be very effective
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After having the process effective, our current priority is to become
even further efficient by becoming
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more pro-active
follow the progress via KPI:
Current focus areas
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systematic and full control on the invoices
full visibility on the accruals for freight
Reviewing all new contracts from carriers by the Central Contract Team
Reviewing weekly the status by country and carrier (tracking report ).
Challenging all issues more than 5 days and ensuring that all issues
more than 25 days are closed (CP system used to monitor the issues).
Findings after 1 year of operations (4)
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Business case realisation
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Over billing reduction is clearly achieved but difficult to measure
Headcount Finance is realised, but does not result
in headcount reduction
Headcount LSCM is not realized. More focus is still required.
Carrier Selection Compliance : 100%
Data and accrual accuracy has improved significantly
Would we do it again ?
YES, but lessons learned :
You never communicate enough both external and internal
Thank you for your attention