I interviewed Amir Aziz who discussed Better Supplier Collaboration Improves Flexibility and Profitability of Your Enterprise.
1. Please provide a brief background of yourself
Hi Dustin, Thanks for giving me this opportunity to share my views and experiences on Supply Chain.
My Name is Amir Aziz and I have over 20 years of experience in Supply Chain with different multinationals in Oil & Gas and energy sectors.
I started my career in 1992 with Christensen (it was a division of Baker Hughes then), worked there for 3 years and joined Schlumberger in 1995 and worked with them until end of 1998.
In 1999 I joined Aggreko as Purchase and Inventory Manager. I was with them for over 12 years. I was with the company right from the start and set up the entire structure and management framework for the purchasing and stores functions. The remit was very comprehensive and included the setting up of a warehouse from scratch, developing processes and policies for procurement and inventory control, KPI's, developing a supplier network across the globe and providing support to our specific region (Australia, South East Asia, Middle East, Africa, South America) which covered over 100 sites.
I currently work with WASCO as Procurement and Supply Chain Manager since Feb 2012. In my current role I am managing end to end procurement, inventory, distribution and supply to the projects in the region and Jebel Ali.
I will talk about the topics below based on my experience
2. What is your experience with supply chains in general?
My experience in Supply Chain over the years has been very challenging and exciting, there is never a dull moment and every day brings a new challenge so you are continuously learning
A lot of companies nowadays have realized the importance of supply chain and understand how supply chain can really improve efficiencies and enable companies to perform better. An effective supply chain can increase profitability hence demand for efficient supply chain is the focus of many organizations.
There are many definitions of supply chain and every organization may see it differently. In simple words, A Supply Chain is the stream of processes of moving goods from customer order through manufacturing, distribution, retailers to end user. Managing this chain of events is called supply chain management. Successful supply chain is integrating all the different links of the chain as quickly as possible without having an effect on quality and without increasing cost. In addition, key to the success of supply chain is the speed in which the activities can be completed.
Basically a supply chain includes manufacturer, supplier, warehousing, inventory, and transportation therefore it involves mainly building co-operative relationships across the supply chain so that the whole chain works together and adds value to the organization, hence it is very important to have an effective and integrated process.
There are many drivers and key factors of supply chain performance i.e.
It is very important to align your supply chain strategy with your corporate and business unit strategy and to stakeholder’s needs and expectations. This can be done by taking into consideration what is important for your organization e.g. Quality, Delivery time, Cost and Innovation to support and enable the achievement of targets.
A strategic supply chain will contribute in
- Reducing waste (non- value adding) activity
- Reduce cost and total cycle time
- Improve response to customers (internal and external)
- Improve quality and service
- Provide better visibility and real situation
- Better risk management
- Develop strategic supplier
3. How do you bring in efficiencies in the process and operations?
There are quite a few things you can do to improve efficiencies in Supply Chain Management (it is worth bearing in mind that they may change from industry to industry)
In terms of process
- You should have a good software system
- Provide empowerment to your people and make them accountable for their work
- Cut down on over processing and non-value added steps in the process
- You can simplify your process and use VSM (value steam mapping – Swim Lanes) to identify waste in process and eliminate it.
- In procurement you can establish price agreements for your routine items (e.g. consumables, stationery, general items etc.); work on call off agreements or monthly or quarterly PO agreements. This will reduce your number of POs, receipts and invoices to process and will save time.
- For items such as steel, copper and oil you can do agreements with supplier and tie up your pricing mechanism with indices available.
- You can also look at your picking process and locate items in such a way that when your pick list is printed you minimize movement to save time and effort. Lists can be reviewed and stored in sequence so that they are picked in order.
Operationally you can look at:
- Implementing a Kan Ban system for workshop consumables
- Identify your bottleneck and critical items and key suppliers. Work with your key suppliers to guarantee the delivery of parts by having them reserve and maintain stock for you or guarantee lead times. This requires time and effort to establish and may take months or a year but can be worth the investment.
- Have consignment stock agreements in place with your supplier so you have parts available on your site all the time but you only pay for them when you use them
- Have an MRP system for inventory management so you can balance your stock and hold optimum stock levels. This will help you define the safety stock, re order points and quantities for parts and will also help you establish realistic lead times from your suppliers
- If you are in a multi-site operation then optimize inventory between the sites by setting up a hub and spoke system
- If you have bills of material for service items you can work with suppliers to pre pack the kits as per your requirement. The kits are delivered ready to use.
- Also you can implement JIT (just in time) agreements with your supplier to reduce inventory
4. How can you work collaboratively with suppliers to drive improvement in quality and performance
It is very important for organizations to have strategic suppliers who work with them in partnership to improve performance, quality and cost. The critical element for collaboration is trust which develops over time as you start to work closely with your suppliers and depends on both sides being true and transparent if is to work.
There may be many commodities that can be bought from several suppliers for which this level of process is not required. Instead organizations need to focus on a few key suppliers and work in collaboration with them to secure supply for bottleneck and critical commodities and to protect relationships with suppliers who represent the majority of the organizations spend
Collaboration is not just exchanging emails or meeting once in a while: it needs quite a lot more than this. True collaboration involves sharing our vision and forecast with key suppliers, showing them the ‘big picture’ and involving them at the early stages of the process. They play a key role in the decision making process collaboratively resolving any risks in supply chain. Our key suppliers are treated as part of our organization: this is the best approach to achieve the best results from today’s complex supply chains.
The need for regular communication and exchanges of information is very high in collaborative relationships covering topics such as changes in demand, supply, quality and cost. This determines the flexibility required of the supply chain and may add to the profitability of the company. By sharing more high-level information with our key suppliers and working with them more closely we can make quicker and better decisions to achieve more secure, long terms results.
To select or identify our key suppliers with whom we shall work in collaboration we need a clear picture of our supply structure i.e. Single Sourcing, Sole Sourcing, Multiple Sourcing and Delegated Sourcing.
Once we understand this then we can:
- Identify critical commodities
- Identify critical suppliers
- Meet with suppliers top management team
- Identify key projects i.e. what exactly the organization wish to achieve
- Define requirement/details
- Monitor status
Once we have identified the above we can also assess the supplier’s perception of us: whether they see us as Key / Core customer already or as an organization which could be developed into a key customer in the future. If we are a key customer we have a better chance of working with suppliers as a strategic partnership. If our business is not important to the supplier and we are not seen as a key customer it can be difficult to gain their commitment to a long term partnership. It is very important that both supplier and customer are committed to work together for mutual benefit.
Better supplier collaboration will improve the flexibility of your supply chain and the profitability of your enterprise.
By working collaboratively with key suppliers we can:
- Monitor and Improve supplier performance
- Reduce costs and resolve quality issues
- Improve business alignment between supplier and customer
- Be more efficient at procuring material
- Assess supply forecasts and corresponding commitments
- Recognize supply limitations and their influence on future supply needs and business performance
- Make faster, more cost effective decision and develop new routes to supply
- Can attain better long-term results.
- Evaluate engineering changes and the effect to inventories and schedule commitments
- Determine supply priorities and inventory buffer provisions
- Assess supply shortage risks
- Evaluate strategies and requirements for "large contracts"
- Manage data reliability related issues
About Amir Aziz
Procurement & Supply Chain
Manager at Wasco Engineering