Supply chain transformation

1. Supply chain transformation Mahindra South Africa case study: Running with the big dogs, even if you’re small InSync Solutions

2. Savino Del Bene – Fast facts A multinational freight and logistics organization Employing in excess of 3000 staff Operating in 45 countries with owned offices

3. Savino Del Bene and InSync – An End to End Supply Chain Solution A Strategic Alliance with

4. InSync – Fast facts • InSync – from Integration and Synchronisation; two key principles for JIT logistics • Founded: 2006 • Majority shareholder: Resolve – an Imperial company • Logistics Solutions Provider: Design, implement and manage • > 900 Employees • 18 Grad Engineers , 6 Diplomats • Operational activities at 6 sites: • PE – VW SA , • East London – Mercedes SA, • Gauteng – SAB, SCJohnson, Mahindra, BMW SA InSync Solutions

5. Business requirements Why change? InSync Solutions

6. Strategic objectives • Improve CSI – brand value (service to dealers) • Platform for sustainable future growth • Flexible solution to support future growth • Minimum effort to administrate • Competitive costing InSync Solutions Improved Competitiveness!

7. Beating the trend…. InSync Solutions CostCost SizeSize • Inbound volume, # of lines • Outbound volume, # of lines • Distribution density - # of lines per distribution point

8. Beating the trend…. InSync Solutions CostCost ServiceService • Accurate • Reliable and predictable • Cost effective • Minimum effort for dealer network • Visibility of important information to all parties • …..

9. Beating the trend…. InSync Solutions CostCost Distribution frequencyDistribution frequency Pop-corn factor 1:7

10. Partner of choice • Single partner with end-to-end service offering • Specialised skills, processes & systems • Right size – take business serious • Experience • Flexible – adjust solution around Mahindra’s specific needs • Innovation to “beat the trend” InSync Solutions

11. Clarity of requirements InSync Solutions Mahindra Dealer as customer InSync

12. Solution requirements: Dealers Dealer must be confident to promise service and deliver on it: • Visibility of stock at warehouse • Simple ordering process • Accurate, reliable ETA for orders • Correct part at right quality • Quick turn-around for back orders • Empowered through information available at all times InSync Solutions

13. Solution requirements: Mahindra Service excellence to dealer network: • 100% on time in full delivery against dealer orders • Accurate inventory records • Quality assurance throughout all elements of the supply chain • High levels of automation of business processes • Secure business process reflecting Mahindra business rules • Real time, on demand reporting • Simple, pleasant experience with system for dealer network when placing orders • Information available to dealers to reduce basic queries • Industry best cost competitiveness • Automated workflow for return orders InSync Solutions

14. Solution requirements: InSync Ability to meet customer expectations effectively: • Full integration with Principal system • Clear, simple KPI’s agreed to reflect SLA, visible to all parties in real time • Stability in business rules supported by work flow • Flexibility to design & implement “best fit” solution based on our experience InSync Solutions

15. Designing the solution Some considerations InSync Solutions

16. Focus… “There is nothing so useless as doing efficiently that which should not be done at all.” – Peter F. Drucker VALUE: Any activity or process that the customer is willing to pay for. InSync Solutions Absolute clarity on customer requirements vital to understand VALUE.

17. Key focus: Waste elimination • MURI – Design and plan to prevent waste • MURA – Implementation of work design through system & equipment and elimination of fluctuation in work load • MUDA – Further waste discovered after implementation and focus of continuous improvement InSync Solutions

18. MURI – plan & design to prevent waste InSync Solutions Innovation SystemSystem ProcessProcess Customer requirements Customer requirements

19. MURI – plan & design to prevent waste InSync Solutions Management Philosophy and practices Processes Equipment, layout & facilities System Holistic solution Balance and integration more important than pockets of excellence

20. Creating value: Waste elimination • Waste of transport – distribution • Waste of space • Waste of excess capacity to cover for order fluctuation • Waste of motion • Waste of complexity InSync Solutions

21. Waste of transport InSync Solutions Cost Effort Impact on operations Frequency Reduced inventory Flexible inventory Balance?Moderate expectations

22. Waste of transport • 1 m3 flows in; 3-5 m3 flows out • 1,1 m3 per delivery point • Collection allowed at warehouse Network solution • Single National Warehouse close to COG • Single, daily delivery overnight to Gauteng and main centers • Lead time as per network to outlying areas • Vehicle off road orders for critical orders – Limited through rules and discount structures InSync Solutions

23. Waste of space InSync Solutions Data complexity Warehouse flexibilty Storage types Storage density Balance? Layout optimisation System innovation

24. Benchmark info InSync Solutions - 500 1 000 1 500 2 000 2 500 3 000 3 500 Op1 Op2 Op3 Op4 Op5 Op6 Op7 Inventory held for one orderline out Rinventory(ave)/Orderline(m) - 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 Op1 Op2 Op3 Op4 Op5 Op6 Op7 Sales generated per inventory unit RAnnualSales/R(Ave)Inventory - 2 000 4 000 6 000 8 000 10 000 12 000 Op1 Op2 Op3 Op4 Op5 Op6 Op7 Inventory density Rinventory(ave)/SQM

25. Waste of space • One part # per bin location required for process assurance • Accessibility by foot to be maximised • Maximise storage density (m3 parts/m3 racks and part # per sqm) • Storage types matched to product attributes and material handling requirements InSync Solutions

26. Waste of space InSync Solutions Volumeperpart BulkstorageBulkstorage LargepalletLargepallet SmallbinareaSmallbinarea SmallpalletSmallpallet LeanliftsLeanlifts #ofunitsin stock Part #’s

27. Waste of space InSync Solutions Lean Lifts Small Bins Cross DockCrossDock Lean lifts 362 bins/sqm 5427 bin locations Small bin area 14 bins/sqm

28. Waste of space • 2 Lean lifts installed • High security parts • Small parts for medium and slow movers • Strategic items (extremely low sales)

29. 27 bins per tray for bigger parts 54 bins per tray for smaller parts 75 trays per machine 5427 bin locations in 2 machines

30. • Standard light duty racking used • Boxes specially designed to fit into racks • Box size range determined by part sizes Waste of space

31. Waste of excess capacity InSync Solutions Operational complexity Excess capacity Unlimited capacity Multiple cut-offs Order flexibility Balance?• Business rules • System innovation

32. Waste of excess capacity: Order intake patterns InSync Solutions Cut-off 1 Cut-off 2 Cut-off 3 Time of day #oforderlinesperhr Day of month #oforderlinesper day Month-end Waste Waste

33. Waste of excess capacity: Order intake patterns InSync Solutions Cut-off 1 Cut-off 2 Cut-off 3 Time of day #oforderlinesperhr Day of month #oforderlinesper day Month-end Excess capacity Customer waiting or overtime Customer waiting or overtime Excess capacity

34. Waste of excess capacity • Single daily cut-off (16h00) • Daily order buckets limited to agreed capacity • Various order types with discount structure and rules – different lead time promise • Work pattern introduced InSync Solutions

35. Waste of excess capacity: Order intake patterns InSync Solutions Cut-off 1 Time of day #oforderlinesperhr Day of month #oforderlinesper day Month-end Fixed daily capacity Work pattern allows variation in capacity without additional cost

36. Waste of motion InSync Solutions Minimise moving distance Minimise handling steps Space considerations Racking limitations Balance?• Layout optimisation • Bin Structure optimisation • System innovation

37. Benchmark info - 1,00 2,00 3,00 4,00 5,00 6,00 7,00 Op1 Op2 Op3 Op4 Op5 Op6 Op7 Throughput per SQM Orderlines(m)/SQM - 2,00 4,00 6,00 8,00 10,00 12,00 Op1 Op2 Op3 Op4 Op5 Op6 Op7 Frequency in vs out LinesOut(m)/LinesIn(m)

38. Waste of motion • Maximise picks on minimum distance corridor ( 92% picks) • Maximise picks by foot InSync Solutions Quaran tine Damag es Dealer Return s Receiving Bulk North Racking Lean Lifts Small Bins Palletized Racking Palletized Racking Dispatch Dispatch Cages Packing Stations WH Office Bulk South Racking Green Area Collect ions Cross Dock Cross Dock Minimum distance corridorMinimum distance corridor Fast moving, high volume partsFast moving, high volume parts

39. Waste of motion InSync Solutions Quaran tine Damag es Dealer Return s Receiving Bulk North Racking Lean Lifts Small Bins Palletized Racking Palletized Racking Dispatch Dispatch Cages Packing Stations WH Office Bulk South Racking Green Area Collect ions Cross Dock Cross Dock Fast moving, high volume partsFast moving, high volume parts Rapid fire zone O u t Small Medium Larg e

40. Waste of motion • Sequence picks to minimise movement distance • Ensure equipment layout, process and system steps align • Place parts at heights based on movement InSync Solutions D A B C

41. Waste of motion InSync Solutions Safety net High volume, fats moving parts (filters, etc) replenished into pick face on minimum distance corridor – pick by foot

43. Waste of motion • Sequence put away to minimise movement distance InSync Solutions Split by area Route by Bin location Route by Bin location

44. Warehouse layout InSync Solutions Quarantin e Damages Dealer Returns Receiving Bulk North Racking Lean Lifts Small Bins Palletized Racking Palletized Racking Dispatch Dispatch Cages Packing Stations WH Office Bulk South Racking Green Area Collection s Expansion possible Cross DockCrossDock Minimum distance corridor

45. Waste of complexity InSync Solutions Control Automation Efficiency Complex system Complex master data Complex process Balance?• Interfaces • Automated workflow • Simple processes • System innovation

46. Interfaces (key enabler) • To and from Host system (SAP) • Master/slave relationship observed to maintain data in one place • Real time for critical and daily for non- critical • Automated error handling, logging and notification InSync Solutions

47. Automated workflow InSync Solutions Dealer: places order DespatchDespatch Result SAP Courier Order info Invoice

48. Automated workflow • Credit control • Back-orders • Supersessions • Dealer returns (return logistics) • Invoicing (goods and courier costs) Information • Brochures, Training Manuals • Invoices • Order status • Warehouse performance reports InSync Solutions

49. Simple processes InSync Solutions • I see, I do • Simple menu steps in system • System driven routing to reduce decision making • Minimum process steps • Build-in mistake proofing – One piece flow – Never separate data and material – Scan where possible • No planning for standard material flow – work flow based • Reflect, support and enforce business rules

50. System innovation InSync Solutions • Portable printing to allow user to print at material • Work leveling of dealer orders into demand buckets • Dealer credit handling as part of ordering process • Configurable order type based business rules • Courier service levels interactive selection • Automated backorder and supersession handling • Rule based Return Order handling – work flow based with build-in notifications • Handling of multi client warehouse (Mahindra & SSangyong)

51. The results InSync Solutions

52. Results InSync Solutions • Improve CSI – brand value (service to dealers) • Platform for sustainable future growth • Flexible solution to support future growth • Minimum effort to administrate • Competitive costing

53. In summary InSync Solutions • Most important measure of success is impact on the targeted business strategic initiative • Subject all decisions to objective when compromises are required (customer response & cost) • Design warehouse layout for customer response (outbound speed & efficiency) • Design warehouse structure and processes for costs (storage density, automated workflow) • Optimise, optimise, optimise equipment, process and system integration during design phase to prevent waste in operation • Drive waste reduction as way of life after implementation • Serve warehouse operator as customer to the best of your ability during the project phase and warehouse operator will serve final customer to the best of his ability during operations

Supply chain transformation

Supply chain transformation

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Supply chain transformation