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I interviewed Fuat A. Kaplan who discussed Lean Manufacturing Insights.

 

 

 

 

 

 

It’s good to speak with you today, Fuat. Today I’d like to learn more about some of your insights regarding some experience and opinions about supply change management. Maybe you can talk a little bit about some of the things you’re doing in your part of the world. Can you start by providing a brief background of yourself?

 

Well, I’m a graduate of Technical University of Istanbul first. This was my undergraduate study. And then I got a scholarship from the Turkish Government to study in Germany, where I did my master’s degree, except for my thesis. For that reason I went to the United States to do rest as a so-called exchange student. I wrote my master’s thesis at New Jersey Institute of Technology, again in manufacturing technology. Back in Germany I got my diploma. Even though I started a company in the United States, it was not so successful as I wished to. In 1995 I returned back to Turkey.

 

I guess you are interested  with more professional side of my background. I’m going through, as I said, just into my professional life: I started with Coca-Cola, Central Asia Operations. I was the Site Manager there, for the installation and  commissioning of bottling machinery. I did two projects;  Azerbaijan and Kazakhstan, the project management of the site and the machinery,  i.e. installation and commissioning of the machinery  and erection of the facilities. This continued until 1997; I left the company in the same year.

 

Then I started, again, a Turkish company operating in Kazakhstan. This time agricultural machinery production. This was my first practical experience in terms of lean manufacturing  since many theoretical topics like factory organization, production planning, ergonomics were the courses during my master’s degree, I mean my specialization . This was a Soviet-Style organization, a very large unit, operating for whole Soviet Union during the Soviet Era. After the collapse of the Union, the company was bought  by a Turkish company in the frame work of Kazakh Government.

 

We tried to reorganize the factory into cost centers and small business units redesigning/regrouping assembly lines and production centers according to different product groups. Also, downsizing the personnel. Production planning included also localizing the  raw materials and semi-finished goods, i.e. creating alternative supply chains. This continued until 1999, since the Turkish Company and the Kazaks Government could not agree on some financial and risk issurance issues. The company dissolved. In 2000 I started with Robert Bosch Germany – Diesel Systems. At that time they started  this Common Rail project, first with magnetic actuation system afterwards piezo effect.

 

This was actually my real start with lean manufacturing experience, in terms of project management, line management, where I was responsible first for a group of machinery; like turning, washing, thermal deburring, 3-D measuring. There we started first choosing the machine concepts, this included also Simultaneous Engineering Team meetings with specialists from various departments within Bosch at manufacturer’s site. During machine build up phase, I executed the project management for whole machinery at various manufacturer’s locatiions. Following the build up we commissioned the machines with pre-and final acceptance studies. After product release by various customers, the serial production started. Parallely  the improvements studies, i.e. kaizen studies started as well. These studies were done until 2003 mostly according to rules of Toyota Production System.

 

By mid 2003 R. Bosch decided starting own production system, called BPS, based mostly on TPS. BPS can be considered in two categories; production system design and production system transformation. Major principles were choosing standard/multi-purpose machinery;  min. lead time; min. stock on RM, WIP, FG; layout design with min. space requirement, i.e. min. human & part movement; multi-machine operation, i.e. min. personnel. Mid 2003 I was project manager for the whole line and the principles implemented much more intensively, since we created the basic foundations of BPS and the real project management at the same time. The cycle was the same as mentioned before, difference was the scope of machinery, i.e. I had to take all the machinery in the line into consideration. Following the principles of BPS in terms of production system design, and product releases by customers (in this respect BMW, Mercedes, Volvo, even Toyota were our customers) serial production (SOP) started. After that the improvement/optimization phase began. Improvement (kaizen) processes had two aspects: one is the capital improvement processes, as cycle-time reduction and setup-time reduction.

 

The other is operational cost reduction, like measures for extending tool life, localizing dies & fixtures, reduction of general consumption materials. I did several projects for both aspects of improvement processes, and reduced investment and operational cost in six digit figures. To undermine maybe is that these improvement projects included also the production system transformation of BPS for the existing lines, according to the same principles. After that I left for an Italian company in 2008, manufacturing parts for appliance & automotive industry. At this position I dealt mostly improving man-hour efficiency, reduction of machine-downtimes and non-quality, i.e. failure cost. I introduced some measures to reduce the downtimes, and rate of failure cost; with the combination of optimized takt-times and initiated bonus system for blue collars, we had drastic changes: Sunday work and 3. shift were eliminated.  Ratio of failure cost to total manufacturing cost was down under 3,2%. We reached a total improvement of 25% in terms of operational cost. Following job with a Turkish company, manufacturing special cables for marine and off-shore applications.

 

They manufactured order based small quantities of specially designed cables mostly for export. It was a company operating basically as a machine shop, i.e. there was no organizational clear division as departments and their job scope. Sales people dominated the activities of whole plant. I started first creating the departments and definition of their job scope in a conventional sense –inserting production planning department as well. Basically the flow of order taking, scheduling, manufacturing and shipping was reorganized and taught to the personnel at every level. What we made there in terms of production system transformation was that a) created flow type lines based on cycle & setup times b) production & material planning c) visual management , 5S and Milk-run to secure the min. handling and  transportation of the WIP and FG d) reduced failure cost by introducing counter measures e) integrated ERP system to plan, analyze and follow all the parameters, including the KPI’s for purchasing, logistics, warehousing, production and production planning.

 

Finally we included also the process improvement projects on certain weak points to increase throughput and reduced machine down times by fundamental TPM applications and worker trainings. We reached again a combined 20% improvement in terms of human & machine efficiency. In 2011 we could not go any further as I wished to in terms of management style with the board, so I left. After that there was no interesting job, say, and I also wanted to listen the suggestions of friends and & associated that I should start consulting. We started with some associated as solution partners since then. Currently I am managing 2 projects, including the inbound & outbound logistics organization of 5 plants and warehouse management, what you see now. Should I go through like this, Dustin, or do you want to ask some special questions?

 

Yes, my final question is: Do you have any recommendations based on what you’ve learned about lean manufacturing?

 

I would say of course, check your product and industry spec’s first,  i.e. lean manufacturing refers mostly to the automotive industry, this fact has to be kept all ways in mind. Since the principles of production system design, as min. lead time; min. stock on RM, WIP, FP; multi-machine operation; min space usage; etc. cannot not be directly transferred to other industries. Special care  has to be taken in terms of very needs of the specific industry. Other than that if possible, from the project phase on, i.e. from the erection of the facilities and choose of the machine concepts, the  production system design rules have to be followed, what mentioned previously.

 

Of course based on the pull system and focus on each process step in the flow, i.e. no parts move further if it does not meet the quality standards. To mention also the visual management and 5S tools must be included to control production. To increase the up-times of the machinery, an effective maintenance has to be carried out, i.e. TPM methods. Milk-run, supermarket concepts, etc. has to be included to optimize the dock-to-dock operations. If some parts are outsourced, the same rules have to carried on to suppliers also in order to practice the JIT or ship-to-line concepts from the inbound supply chain perspective.

 

To speed up and carry out error free the warehouse management systems and transfer of the parts must be done by utilization of bar-code or even better RFID  systems. Outbound supply chain as FG warehouses, palleting, putting into containers and finally shipment must be done again in a proper way in order to realize the tracebility. Of course supplier development and logistics concern like clusters building, outside milk-runs, consolidation centers, cross-dock operations, returnable containers, etc. have to be studied separately in very detail to complete the lean manufacturing operation.

 

What I am trying to say in sum is that we have to plan every thing upfront according to the rules of production system design and execute, and revise until desired level reached.  In case of already existing lines, i.e. production system transformation, capture first the current status and afterwards define future status, i.e the desired status. Again with the guide of the production system design principles, set the priorities and mile stones, define the work packages with responsibles and time table and decisively execute.  Most importand of all these, of course, creating the CIP mindset and keeping it alive. For that reason the training of the personnel and the social & compensation sides of the HR policies have to be implemented very carefully and very detailed.

 

Thank you for sharing today.

 

Thank you, Dustin.

 

 

 

 

About Fuat A. Kaplan



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Fuat A. Kaplan


Lean Manufacturing (Operations Excellence) Consultant

 

LinkedIn Profile

I interviewed Håkan Andersson, Establish Inc. who discussed some of the less talked about but massively important factors to consider when deciding where to locate your DCs for supply chain network optimization. It is not just about cost. Positive factors including service, the benefit to the natural environment and the negative factors such as human behavior which resists change; also play a major role in the decision.

 

Hello, Dustin, thank you very much for having me here today. Today’s topic—where you locate your DCs matter more than you think—is a topic that I think is about the fundamentals in supply chain management.

 

 

The reason is that this is where you have the chance to really make things good and to change things from the bottom up. On a personal note, being a supply chain consultant is a very rewarding job. You get to see a lot, you get to learn a lot, it is very hands-on, and is something that you can understand. When it comes to supply chain or distribution, network optimization, you are providing the structure for making things right from the start instead of just improving what has been laid out before.

 

I’ve done this so many times now, and I know that it does save a lot of money. Typically, we would see cost reductions of somewhere between 10 to 25% That is really great. Normally, when you get new transportation routes, you would save an additional 10 to 15 percent in the negotiation phase with the carriers. You would typically see the cost reductions in transportation, warehousing, and inventory carrying.

 

When it comes to transportation, it’s kind of obvious that what you want to do is to minimize the number of miles that you have to drive and the number of shipments so that you get the most cost-efficient mode and a cost-efficient way of handling it. When it comes to warehousing, you would consolidate into the most efficient-located and the most efficient location salary-wise, incentive-wise, and real estate cost and everything taken into account. If you do this in the correct way, you would get a better service level with a lower inventory. You would have a win-win situation where, per low cost, you would get a better service. All of this is great, and those are the reasons why almost all route companies are doing this.

 

But there are other benefits that, to me personally, are more valuable. They very rarely show up in business cases, and very rarely are they a part of the recent way of doing this, and I think that’s a shame. I would get back to that.

 

The second thing is that when you are doing the network optimization, you have to fight a lot of rational and irrational obstruction and behavior. If we start with the positive side of this, we did establish that you would save a lot of money and reduce cost and you would reduce cost that would directly impact the bottom line, because most of the logistics cost that we’re affecting here are money right out of the company. It’s external invoices that we’re paying or paying less of in the future setup.

 

When I look at the other benefits—environment, the greenhouse emissions, that’s a huge thing, and we all try to do what we can to—ride fuel-efficient cars, hybrids, we would do recycling our stuff—but we know that according to EPA, 27% of all the greenhouse emissions in the U.S.A., they’re coming from transportation. Most of transportation is truck, commercial freight, and that is what we’re dealing with as supply chain logistics experts.

 

If we can set up a structure that minimizes the miles you have to drive the trucks and when the trucks are driving those miles, you can make sure that they are full so they’re not wasting any space and you can make sure that you have the right modes—you’re not flying something that could go on a truck or you’re not trucking anything that can go in water—you have reductions in greenhouse emissions that are far, far greater than what you can do on a personal level. This is something that very few pay attention to, but this is an area where the logisticians are the heroes.

 

We know that if we set up a good and well-balanced distribution structure, we know that the accessibility of the stuff that the customer wants, that goes up, which means that if somebody orders something, we can deliver it, and that has a huge impact on whether the customer will return to you. The way you set it up could also trigger a quicker response and a shorter delivery time.

 

The struggle that you would have is sometimes caused by very rational reasons, like if you’re afraid of losing your job because this is a more efficient structure; that is a very rational thing to be skeptical of and you will resist change. Or if you would have to move because there is another location that’s more attractive from a logistics standpoint; it’s not an easy thing to uproot your kids and family. Then you have the risk of being outsourced. These are things that we need to be very aware of and to take into account and respect.

 

The most frustrating is when you see obstructions for other reasons, like there are personal benefits from very long relationships with carriers or other suppliers or there are established truths—“things have always been handled this way” and “we’ve always been in this location; we can’t change,” or when it’s just down to personal comfort that you’ve been dealing with a company for a hundred years and it’s just easy. I see a lot of this; that’s the darkside of the logistics industry.

 

The way to overcome this is that we try to get people on board that are affected as soon as possible. We also see that younger persons, in general, have a more holistic view on things, and they can see the environmental, the service aspects, and can embrace change in a way that we elders don’t have. And when we have functions outside the supply chain, it also helps a lot.

 

When it comes to picking the locations, there are so many different aspects to it and there are so many different ways of looking at it, which makes it the more interesting if you're into logistics and supply chain.

 

  1. The obvious and most scientific ways to look for is center gravity, which means which location would minimize the number of miles that you have to travel. Typically, if you do that in a consumer industry, you would land somewhere west of Pennsylvania, east of Ohio, that area. When you have two points, you would typically get one in the northeastern U.S. and one DC in California, Texas, somewhere there. And then you add, if you’re going to have three DCs, somewhere in the Midwest, like Chicago. Then comes somewhere southeast—Georgia. And last, northwest, up in Oregon. We call them the Usual Suspect Five.
  2. There are other strategies that you could embrace here, and center gravity often is just a starting point. You could choose to be close to key customers. The most obvious thing here is if you’re in the auto industry, a supplier to the car makers, you want to be close to where they have their plants. Dell has taken that to its extreme that you have to have a DC practically on their premises. If you look at Amazon, they are now attacking the cities and having shorter delivery times to the cities, same-day deliveries; and then you need to have the locations close to the cities.
  3. The third approach here is to go for a low-cost operation, where you pick more rural, high-unemployment areas. You would have lower compensation levels, you would have lower cost for real estate, there would be local county/state incentives to establish your operations there; it could be tax reasons.
  4. The fourth and, I would say, very important strategy would be to establish yourself where you have logistical hubs, and this could either be where the carriers would have—you can see at Memphis Tennessee, Louisville, Kentucky; you would see other places where you have a lot of 3PLs. The reason why we do this is that you would want to be close to a lot of options so that you can change if you’re outsourcing your warehouse.
  5. A strategy that is not used often enough I would say is a place that is attractive for your employees to win the war for talent and get really hotshots to join your company.
  6. Then I would say the last strategy and probably the most used is that you stay close to where you have a production facility. This is a knee jerk reaction and an intuitively right way of doing it. It very often pays off to instead be close to where you have your end customers, because from your production side, you can very often efficient transportation, the first leg and then position yourselves where you can have a quick response to your clients, to your customers, and where you can get good reaction time.

 

I do want to say to finish this up that there is so much more to say about the network optimization, distribution supply chain network both inbound and outbound, but don’t forget that it’s more than a better cost: environmental reasons; the benefits from a service point of view are huge. Thank you very much.

 

About Hakan

 

Establish Inc.

110 Summit Avenue

Montvale, NJ 07645

Phone (201) 283-9000

I interviewed Thom Campbell who discussed Passion for Clients’ Business  in the Service Industry.

 

 

 

 

 

 

It’s nice to speak with you today, Thom, and today I’m looking forward to hearing your views specifically about passion and having a passion for your clients’ business, especially in the service industry. Can you start by providing a background and maybe a short story about yourself?

 

Sure. Thanks, very much, Dustin, and thanks for the opportunity to speak with you. My background prior to going into supply chain and logistics in the past 15 years was in finance. I worked for Morgan Stanley for about 10 years, and I worked on both the investment-banking side and the sales-and-marketing aspect of the business, as well as corporate governance. I had a university classmate, Jeff Keaton, who is a civil engineer, and he and his father have designed warehouses—in his father’s case, since the mid-’60s. Jeff went to business school with our CFO and third partner, and they came up with the idea to start a third-party logistics business, which we did, and it’s called Capacity; it’s at CapacityLLC.com. We offer third-party warehousing and order-fulfillment services, shipping orders to e-commerce consumers, EDI retailers, and anybody else the brands we work with wishes to ship to. We work with beauty, apparel, corporate clients ranging from ADP to Berkshire Hathaway, to tarte cosmetics, Korres Natural Products, Weleda, and some other brands in various categories and verticals.

 

Can you talk about why you believe it’s important to have a passion for your clients’ business in the industry?

 

Well, we tried very hard to create a best-of-breed offering. The things we focused on, naturally, over time are fairly predictable. They’re technology, the people, the structure, and SOPs that you create around a supply chain process and service-oriented business. One of the things we think really does distinguish a great provider from a good provider is that passion for a client’s business, for creating excellence in everything you do, and really, truly caring about your clients’ business, because the amount of control you have over their success, or lack thereof, is unlink almost any other industry.

 

You are literally touching every product before it gets to their customer, whether it’s a retailer or a consumer, so you’re enormously aligned with them. Those brands that we get excited about are extremely passionate about their business. I have worked with George Korres from Korres natural Products for almost 10 years. George is an admirable ambassador for his brand; he just loves the family and the Greek history of pharmacology that he comes out of.

 

The products that they create are truly innovative and truly interesting to their consumers and their retailers. We want to mirror that passion, because if we’re not aligned on the level of an intense commitment to delivering something that’s really excellent and really different, we’re not going to be easy to distinguish from our competitors. There are a lot of people in our space doing what we do, and it’s a very fragmented industry and it’s difficult to distinguish yourself, because a lot of people really compete on price, they compete by having a lot of square feet, a lot of people, a lot of assets. That isn’t our business model. We’re really interested in a non-asset-based value-added offering in which we can touch product at whatever level of detail after the manufacturing stage to rework it for new channels, to repurpose it for anything from HSN to QVC to create gift presentations, to create sets, to create assortments, to do anything you need to do to your product once it’s in your warehouse so that you can help your business succeed.

 

How did you develop your passion?

 

It was a little bit inadvertent to be honest with you. I was not passionate about the capital markets. I am not ashamed to admit that I enjoyed my time in finance very much and I learned a great deal, but I’ve learned a lot more owning and operating a business. One of the reasons that I was attracted to supply chain is that I had been in what I like to call the method business of finance; you’re operating at a fairly abstract level. I found that the things that I liked about finance the most were the relationships; either the relationships with really sophisticated institutional buyers like Yale University or Harvard, or individuals who had come up in the Louisiana oil fields and made their fortune or had sold a waste-carting business on Staten Island and made their fortune that way. I really like the people. I thought that aspect of finance was the most compelling to me, and the stories behind those people’s success are really what excited me.

 

In supply chain, I saw a way to get closer to some of those stories and to actually become part of the story. I think that it’s very difficult to get passionate about something that’s abstract; maybe if you’re a high-end mathematician or physicist, you can do that, but I am not such a professional. I’m much more engaged by and with people, so finding people who had product that they wanted to get to market or to their companies is something that has really created that passion over time. It’s not something that you just spontaneously combust, and all of a sudden, you’re afire with passion; it’s more something that you have to learn about yourself over time.

 

What I came away from my career in finance thinking was, as long as I can engage with people whom I genuinely want to work with and with whom I share a set of values, I can do just about anything and enjoy it. I don’t think that supply chain is just about anything; I think it appeals to a very data-focused, kinda geeky subset. But once you figure out it’s you, it is a very compelling platform for exploring relationships with people.

 

Do you have any recommendations?

 

Do you mean recommendations for other professionals trying to find the proverbial passion?

 

Yes, maybe specifically within the supply chain, supply chain professionals.

 

Sure. If you already know that you’re in that unique subset of professionals that is supply chain-focused, I think you’re well on your way. Most of the supply chain professionals I know are really passionate. I used to have employees at Morgan who would move to other firms for what I considered relatively small incremental financial benefit. I have seen people in supply chain who stick with a company they really believe in for 10, 15 years.

 

There’s an incredible dedication to it. If you have already got that you’re on your way. If you are interested in figuring out what your passion is, I think you need to get exposure to as many different areas of supply chain as possible. There are a lot of high-value-added opportunities, and there are a lot of fields that are viewed as more commodity offering.

 

For example, freight forwarding is viewed as a bit of a commodity offering, but, in fact, it’s incredibly value-added. If you cannot develop really strong relationships with your customers and your carriers and, most importantly, execute, you’re going to have a very hard time differentiating yourself. Discovering your niche in any industry is really critical. If you’re looking for a niche in supply chain, I think you want to look at the broadest possible range of activities from X works or postmanufacturing all the way to the point of delivery to the customer, and think carefully about what aspect of all of that appeals to you most.

 

For example, I used the example earlier in finance. One of the things I really liked in finance was working with private clients or smaller institutions because they had a little bit more personality. Some people I knew really enjoyed working with the large institutions; they liked the big numbers, they liked the big deals; that are what got them up in the morning and fed their passion. I think it’s just important to get the exposure to the different sides of the business and the different legs of transportation for manufacturing to customer so that you can figure out where your passion lies.

 

Thanks, Thom, for sharing your views today on both supply chain professionals, how they can find and develop their passions, and also, your story, your passion for your clients’ businesses.

 

Thank you very much, Dustin, I really appreciate the opportunity.

 

Thank you.


 

About Thomas Eldridge Campbell



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Thomas Eldridge Campbell


Chief Strategy Officer,

Founder,

Capacity LLC

 

LinkedIn Profile