In
1997, my company, West Marine Inc., acquired an East Coast
competitor, E&B Marine. The consequences were quickly
apparent: Sales fell by almost 8 percent, and peak-season
out-of-stock levels rose more than 12 percent compared to the
prior year. We soon felt the effects on the bottom line: After six
years of steady growth, net income dropped from $15 million in
1997 to not much more than $1 million the next year.
Fast-forward
six years to 2003, when we purchased our largest competitor, Boat
U.S. We successfully integrated their distribution center in just
30 days and their in-store systems inside 60 days. During the 2003
peak season, we had no supply problems in any of our warehouses or
stores, and the acquisition was accretive in the first year.
What
changed? Two words: supply chain. Into the late 1990s, West Marine
had not fully recognized the value of effective supply chain
management. After the tough E&B acquisition, our management
team realized we had to make a significant cultural shift.
Traditionally run by “boaters first and businessmen second”
(as one manager put it), the company now had to be run with
discipline. Part of the transformation involved overhauling our
supply chain operations internally and with our suppliers. A
crucial element would be the development of a supplier
collaboration program based on collaborative planning,
forecasting, and replenishment (CPFR) principles.
The
company’s approach has also led many of our key suppliers to
shift their own views of supply chain management beyond the goal
of improving retail in-stock rates. For some, this shift has been
nothing short of transformative. I’m glad to report that the
changes at West Marine and its collaborating suppliers are not
one-time events. Together, we have developed a sustainable process
of supply chain performance improvement.
This
article will chart West Marine’s supply chain overhaul,
showing how we absorbed CPFR principles and procedures into our
operations. Importantly, I’ll emphasize how we worked toward
and achieved what we might call “full-strength”
CPFR—an embrace of everything that the collaborative
principle can do to create and sustain an adaptive,
high-performance supply chain. I’ll also describe the “how”
of what we do to make it work—the techniques we used and
still use to secure buy-in from suppliers and to ensure that their
commitment sticks.
From
Anchors to Wetsuits Founded as a mail-order
firm in 1968 by avid boater Randy Repass, West Marine opened its
first retail store in Palo Alto, Calif., in 1975. Three
years later, the company created a separate sales channel to
commercial customers such as boat yards and boat dealers. In 1987,
the company published its first retail catalog. Today, with more
than 400 stores and annual sales of $690 million, West Marine is
the largest boating-supply retail chain in United States. The
retailer sells more than 50,000 products through its stores, Web
site, catalog, and commercial sales arm—from stainless steel
propellers and anchors to life jackets and wetsuits.
The
after-effects of the E&B merger alarmed the board. It was
clear to founder Randy Repass that West Marine needed deeper
management bench strength. In late 1998, Repass and his fellow
directors brought in a retail veteran, John Edmondson, as CEO,
with Repass as chairman. Edmondson reinforced the senior
management team and set in motion sizeable investments in new
systems and processes. He hired David Schenk, an 18-year IT
executive, as CIO. Pat Murphy came aboard as senior vice
president of logistics; I arrived in 1999 to head planning and
replenishment. Like my newly hired colleagues, I came from a
Fortune-500 company; I’d been leading the supply chain
planning team for Kmart Corp.’s $8 billion apparel business.
It was at Kmart that I’d first learned about CPFR, and I
could envision its value to my new employer. We’d run some
early CPFR pilots at Kmart. But I’d also attended a few
conferences of the Voluntary Interindustry Commerce Standards
Association (VICS), the body that oversees, upholds, and advances
the CPFR standards and owns the CPFR trademark. I’d been to
several of VICS’ CPFR Committee meetings and presented at a
few. Through my VICS activities, I’d met and worked with
VICS president and CEO Joe Andraski; with Jim McLaughlin, Procter
& Gamble’s vice president of process and support
services; Fred Bauman, JDA Software’s vice president of
collaborative solutions; Matt Johnson, then Syncra’s chief
technology officer; and with other thought leaders who knew plenty
about collaborative supply chain practices.
A
word about CPFR: It’s a business practice that combines the
intelligence of trading partners to improve the planning and
fulfillment of customer demand. CPFR links best practices in
sales and marketing to supply chain planning and execution
processes in order to increase availability while reducing
inventory, transportation, and logistics costs. The concept
crystallized in 1998 around the consensus that it was not enough
to coordinate the supply chain within the boundaries of a single
organization.
In
its first phases, CPFR was interpreted as a linked sequence of
nine business processes, backed by industry standards. But in
practice, CPFR wasn’t as linear as the nine steps implied.
So today it is viewed as a wheel that can be entered at any point,
as depicted in Exhibit 1. The implementation does not need to
embrace every element to realize value.
Un mot au
sujet de CPFR: C'est une procédure de gestion qui combine
l'intelligence des partenaires commerciaux d'améliorer la
planification et la réalisation de la demande de client. CPFR lie
les meilleures pratiques dans les ventes et le marketing aux
procédés de planification et d'exécution de chaîne
d'approvisionnements afin d'augmenter la disponibilité tout en
réduisant le inventaire, le transport, et les coûts de logistique.
Le concept s'est cristallisé en 1998 autour du consensus qu'il
n'était pas assez pour coordonner la chaîne d'approvisionnements
dans les limites d'une organisation simple. En quelques ses
premières phases, CPFR a été interprété comme ordre lié de neuf
processus d'affaires, soutenu par des normes d'industrie. Mais dans
la pratique, CPFR n'était pas aussi linéaire que les neuf étapes ont
impliqué. Tellement aujourd'hui il est regardé comme roue qui peut
être entrée à un point quelconque, comme représenté dans l'objet
exposé 1. L'exécution n'a pas besoin d'embrasser chaque élément pour
réaliser la valeur. The
Path to CPFR Tackling our
post-acquisition challenges in late 1999, most of our executive
team thought we had four supply chain problem areas: the
distribution centers (DCs), transportation, replenishment, and the
systems supporting these operations. So logistics chief Pat Murphy
set out to establish reliable DC operations and on-time
transportation services. CIO David Schenk made sure the existing
system infrastructure delivered timely and accurate data
processing. I concentrated on our replenishment performance
(especially the in-stock levels in our stores), bringing it up to
mid-90-percent levels and above—at par with most retailers’
results at that time. As things stabilized during 2000 and
2001, management’s perspective on our “supply chain
problem” changed. Although our execution improved, suppliers
were still having problems filling our orders. We also realized
that West Marine was carrying too much inventory to make up for
supply shortfalls. Supplier on-time order fills were a dismal 30
percent.
There’s
a crucial point to make here. Up to 2001, world-class thought
leaders in CPFR wouldn’t have considered our few initiatives
to have been representative of what this technique could achieve.
Although I’d begun articulating the benefits of CPFR not
long after I joined West Marine, I knew it was a huge step for the
management team to take. It would take time—and education.
West Marine did approve moderate investments in IT systems to
enable CPFR. But it took a further realization—that we
actually had a vendor fulfillment problem—to reveal what was
constraining our plans for growing the business. It was that
realization that caused West Marine’s management team to
crystallize around the concept that would improve our suppliers’
shipping performance.
Our
first CPFR pilot program kicked off in January 2001. We recognized
that for us to become a great supply chain company, we needed to
change our core culture as well as execution. What was CPFR’s
role? The business practice clearly showed how we could improve
performance using cross-functional and intercompany processes
supported by enabling technology.
Now
jump forward to late 2004, by which time we had 200 CPFR
relationships, our suppliers’ on-time order fills had
improved to nearly 80 percent, and we were delivering 96 percent
in-stocks during our peak season. Once again, West Marine’s
management team had to shift its perspective on the company’s
supply chain problems. We now saw that we had a supply chain
planning problem in concert with our vendor partners. We
wanted our supply chain to deliver better solutions, programs,
products, and promotions. Because of our commitment to CPFR, we
had moved from a push supply chain model to a pull model. We had
implemented technology programs that established West Marine as a
leader in supply chain execution. Yet excellence still eluded us.
As our own view of the “problem” evolved, the lines
also began blurring between supply chain improvements and business
strategy optimization. It became clear that a rudimentary
“textbook” approach to CPFR would not be sufficient.
In effect, we had to look at, understand, and fully embrace the
spirit of collaboration. That might sound flakey, but it’s
not. It meant addressing cultural issues just as much as business
processes.
For
West Marine and many of its key suppliers, CPFR is a core business
process that provides a path to accelerated performance
improvement. Its role is similar to the organizational
improvements wrought by corporate and supply chain programs in
quality improvement, lean/Six Sigma, the Supply Chain Operations
Reference (SCOR) Model, and sales and operations planning. Such
programs provide specific process maps and an integrating
philosophy that help organizations to become more adaptive and
performance-driven. We identified 10 performance-improvement steps
that reflect our “full strength” approach to CPFR:
1. Seek long-term, holistic solutions, not quick
or myopic fixes. 2. Reconcile conflicting goals
and metrics. 3. Pursue inclusive problem-solving;
do not depend upon “experts” who don’t have
accountability for the business. 4. Instill
collaborative processes that encourage idea creation, shared
problem solving, and high adoption rates across organizational
boundaries. 5. Use a disciplined and iterative set
of methodologies such as CPFR, SCOR, or Six Sigma to help teams
define issues, root causes, and solutions. 6.
Develop a culture of continuous improvement, particularly at the
customer-facing associate level, because those employees are most
likely to know what’s needed. 7. Create
clear accountabilities and assign authority with a focus on core
business processes rather than on traditional organizational
“silos” or loyalties. 8. Commit to
technology enablement for execution, communication, exception
management, and root-cause analysis. 9. Reduce
decision cycle times. 10. Implement rapidly.
While
these 10 elements could come from any number of sources, Hau Lee
and Jason Amaral’s “Supply Chain Management
Performance” paper from the Stanford Global Supply Chain
Management Forum has been particularly useful. The article refers
to the “adaptive organization,” which ensures a
continuous focus on the right things through responsiveness and
balance. The entire organization is performance-driven; it sets
goals, addresses root causes, and leaps on competitive
opportunities. This is what West Marine is striving to become.
The
Right Replenishment System Technology
enablement was an essential precondition for our CPFR successes.
To our knowledge, West Marine is the first consumer-goods retailer
to implement an aggregate ordering or “multi-echelon”
replenishment process. A “multi-echelon” replenishment
solution integrates the forecasting and replenishment solutions in
a retailer’s stores and warehouses. Data such as seasonal
forecasts, promotion stock levels, and future assortment changes
are automatically calculated so that the retailer gets a reliable
projection of its future orders and so that suppliers can
continually deliver accurate, on-time orders to the DCs. The
resulting order forecast is in the form of machine-readable data
that can be entered into a supplier’s materials requirement
planning (MRP) or enterprise resource planning (ERP) system to
represent a key customer’s demand. While third-party
solutions are available, very few retailers have completed similar
installations as of this writing. This is something of an enigma,
given how long CPFR has been around and how much it has been
discussed. (I’d once predicted that retailers would quickly
embrace new replenishment systems. But I think I underestimated
the ability of companies to hang onto the status quo.)
Retailers’
conventional installations of automatic replenishment and
forecasting software run on parallel but unconnected systems at
store and warehouse levels. The store system uses actual
customer-purchase data to forecast future customer purchases and
what the store needs to order to support retail-service levels and
in-stock levels. But the warehouse system uses actual
warehouse-shipment data to forecast future shipments and what the
warehouse needs to order to support their service and in-stock
levels. In other words, the warehouse system has no data about
store-level overstocks or understocks, and promotional needs must
be forecasted in both platforms. Changes in demand—caused by
product-mix changes in the store, for example—aren’t
communicated systemically to the warehouse-level replenishment
system. Imagine a situation in which last year’s major store
promotion will not be repeated this year. Using the disconnected
replenishment model, the historical-shipment information might
still include last year’s promotional-inventory build, and
the warehouse-replenishment system would purchase according to
last year’s demand, thus overstocking the DCs. It happens
all the time.
West
Marine’s multi-echelon replenishment solution resolves the
store-warehouse disconnect. Warehouse replenishment immediately
responds to all store-level overstocks and understocks. Similarly,
all promotions and store-level assortment changes are planned in
the store system, and warehouse replenishment immediately responds
to them. The solution eliminates duplicate forecasting tasks and
creates more accurate supplier-order forecasts. (See Exhibit 2.)
In
contrast to many CPFR initiatives where ordering is constrained to
the forecast, West Marine issues orders in an unconstrained manner
each business day, as recommended by the system. That way, we’re
always purchasing optimally, based on the latest sales and
planning information. We set a requirement that all processing
needs to be accomplished nightly, recognizing that timeliness is
key to accuracy. Fully 97 to 98 percent of the items at West
Marine are managed through automatic forecasting and
replenishment, and we conduct our entire process, from
point-of-sale updating to supplier-order forecasting, every night.
Any change in store-level replenishment will automatically be
processed in the next day’s supplier order and order
forecast. Based on the robust forecasting capabilities of our
existing JDA/E3 forecasting systems, the supplier-order forecasts
we generate daily are by item, warehouse, and week for a year.
West
Marine’s choice of supporting IT systems sprang from a
decision to pursue a particular strategic approach to supply chain
collaboration. When we were launching our CPFR effort, many CPFR
pilot initiatives involved a limited number of items and
suppliers, with both the retailer and the supplier providing
forecasts. But an alternative CPFR approach—called “Option
A” in the list of CPFR alternatives shown in Exhibit 3—
envisions the retailer as the lead partner, providing the enabling
technology platform to generate sales and order forecasts that
suppliers can use to improve order fulfillment. The retailer has
primary responsibility for the reference forecast.
West
Marine is an unabashed proponent of Option A. It was our choice
because we believed it was more likely to deliver the improvements
needed to achieve a scale that would influence enterprise-wide
results. So we focused on getting our buyer-driven forecasts and
processes in line before reaching out to suppliers. Our position
has been that there needed to be a reference forecast at the
outset, and it’s the buyer who has to own that. Why
spotlight the buyer-driven forecast? Two reasons: (1) the buyer
usually drives the key events like promotions and assortment
changes that crack the “bullwhip” in the supply chain,
and (2) the buyer-driven forecast depends on only one technology
platform and is therefore scalable across many items and suppliers
with similarly accurate results.
However,
our advanced replenishment system did not relieve us of the need
to collaborate with suppliers with respect to changes in demand.
Each supplier and product presents different opportunities and
solutions. A supplier for a product featuring generic components
that uses short-cycle final assembly or packaging processes may be
able to respond to demand changes with reasonably short lead times
without the need to expedite or without production disruptions.
But a supplier of a product with individualized components or
specialized packaging cannot respond as quickly. In the world of
retail, longer lead-time products simply must be planned for and
fully forecasted ahead of their sourcing and manufacturing lead
times. For example, if the supplier’s order cycle is six
weeks and the demand changes occur inside two weeks, demand will
be satisfied only if there’s sufficient excess stock in the
supply chain to cover the new demand.
West
Marine has made a significant commitment to working with suppliers
to match supply and demand. We have agreed together to the goal of
planning demand accurately to accommodate their materials planning
horizons. For instance, our normal lead time for planning
promotional sales events is about ten weeks before the promotion
begins. If the products promoted are of import origin, the
supplier’s lead time is significantly longer. With this in
mind, most key promotional events are not only strategically
planned but entered into the forecasting system months in advance
to enable suppliers to fulfill them. Since this is a
collaborative engagement, the supplier is a full participant in
supporting and approving the forecast, which they receive weekly.
West Marine also measures our forecast accuracy in addition to
suppliers’ shipping performance and other metrics. To
make our commitment very clear to skeptical suppliers, we have
also guaranteed our forecasted purchases. Generally, our
suppliers believe in and act upon this guarantee.
West
Marine supports its CPFR program by providing the following
reports to its collaborative supplier teams: (1) a weekly
automated e-mail containing our current purchase forecast by item
and week for a year, (2) a weekly automated e-mail containing key
in-stock and late-shipping information, covering the metrics
achieved and the items that failed to meet goals, and (3) a
monthly automated e-mail giving audit-level detail and performance
measurement on each supplier’s shipping record based on the
supplier’s advanced ship notices.
Multiple
Routes to Supplier Buy-In West Marine’s
supplier education program is the centerpiece of our strategy to
improve our performance. (See sidebar for an example of how one
supplier has embraced CPFR.) Prior to our CPFR program, the only
contact a supplier might have with West Marine (outside of the
traditional buyer-seller relationship) was usually with a
customer-service clerk. Today, all of our collaborative suppliers
join our monthly and quarterly meetings. Before a supplier can
enter a collaborative engagement with us, one of its senior
executives must sponsor the arrangement, and the supplier must
name a point person to partner with our “supply-chain
captain.” We encourage the point people on both sides to be
powerful collaboration champions in their respective
organizations. Some suppliers have appointed Six Sigma
Master Black Belts as their point people—a real vote of
confidence in the program. At least ten suppliers have dedicated
vendor associates located at West Marine’s facilities.
Our
CPFR program demands that West Marine and its suppliers address
supply chain performance as a cross-functional business process.
Fundamentally, CPFR has caused West Marine to adopt
cross-functional management and accountability, and it is
producing similar outcomes for our suppliers. As they adopt team
approaches to conducting supply chain activities with us, they
also start to harmonize conflicting “silo” goals and
metrics throughout their operations.
We
have several forums for our CPFR engagements with suppliers. An
engagement usually begins with a quarterly meeting. Since CPFR
aims at holistic, long-term solutions, participation in a
quarterly kick-off session requires us and the supplier to bring
cross-functional teams who all contribute to the results and who
are important stakeholders in the decisions that will be made.
These stakeholders must include senior sales, marketing, and
merchandising personnel along with the decision makers who manage
the relationships for buying, forecasting, inventory control,
production planning, distribution, and transportation.
The
quarterly meetings are held at our offices or at the supplier’s
location; they usually entail a half day devoted to supply chain
collaboration and a half day devoted to sales and marketing
planning. The supply chain portion will include a session on West
Marine’s bottom-up forecasting process and a wide-ranging
discussion of initiatives and opportunities. The initiatives are
detailed by our supply chain captains, who must manage the
solution process and timeline. Since senior executives are
present, each side is expected to commit to resources and
timelines for the improvements identified. We don’t advocate
a formal collaboration agreement, but we do expect a flexible
commitment to our mutual success from both sides. (In our
experience, bringing the lawyers into a contractual review often
creates an insurmountable hurdle.)
As
with the quarterly meetings, the “routine” or monthly
meetings have defined formats and expectations. The format is
usually a conference call attended at least by the two
partners—our supply chain captain and theirs. The meeting is
usually kept to about thirty minutes to make it efficient and
effective and to encourage other key participants to attend, since
they can expect the meeting will be concise, businesslike, and
productive. (The president of one major supplier has not missed a
routine meeting in over two years.) The agenda is three-part:
review results (performance metrics for both sides); report on and
manage current (or newly defined) initiatives by assigning clear
owners, accountabilities, and deliverable dates; and resolve any
supply chain constraints identified through review of the order
forecast.
A
special feature of our program is the twice-yearly Supply Chain
Summit. The idea came from our category managers (our buyers).
Once they learned about the structure of our collaboration effort
and understood that we were committed to helping suppliers deliver
the goods for their sales and marketing programs, they asked how
we could “jump start” the program with more suppliers
as soon as possible.
The
summit conference follows a three-day format at a West Marine
facility. It includes as many members of the collaborative teams
as possible, and suppliers’ senior sponsors and sales and
marketing associates are required to attend. The first and third
days are reserved for quarterly meetings with about 25 suppliers.
The second day is for plenary sessions designed to inform and
support team-building and cultural change. We typically begin this
day at our nearby distribution facility where members of each
supplier team and their West Marine counterparts roll up their
sleeves and physically unload and receive one of their shipments
at our loading dock. Our DC team then leads a presentation on our
logistics compliance program. Our CEO or general merchandise
manager usually kicks off the afternoon to signal the extent of
our commitment to collaboration. Other sessions address
transportation management, electronic data interchange (EDI), and
supply chain planning. The summit closes with a dinner that
celebrates progress and partnership; attendees are invited to
recognize others whose collaboration has helped them to break
through silos or other barriers to improve performance.
There’s
one other collaboration forum that’s important. We have
initiated training sessions for key suppliers’ top
executives to develop insight and commitment to achieving what we
call “breakthrough” performance. West Marine has
picked 19 suppliers to participate. At the debut Breakthrough
Session—a two-day retreat that was professionally
facilitated—West Marine and the supplier partners signed a
broad and powerful statement that reads: “We commit to
breakthrough results for us and West Marine.” Each
executive agreed to commit his or her organization to the
agreement. We did not submit this statement to legal review but
did agree it would be placed prominently in our workplaces. At our
facilities, the statement has been posted in every conference room
where we meet with suppliers.
The
response to these executive sessions has been astonishing: Our
suppliers requested breakthrough training for all members of the
collaborative engagement. We agreed, and we’ve now held a
session for more than 100 of the breakthrough suppliers’
associates.
Internal
Collaboration Also Key It has also been
important to ensure that we are collaborating effectively inside
our own four walls.
That’s
been particularly true within the merchandising function.
Traditional retail merchandising organizations have two primary
organizational “silos”: buying and replenishment. For
years, we had co-located our buying and replenishment functions
and organized them as teams around product areas. But many silo
viewpoints and practices remained, impeding holistic decision
making and execution. Category managers and their assistants
operated primarily as sole practitioners. Merchandise planners and
replenishment analysts often dealt with supply chain management as
a downstream effort. Communication between the co-located
teams was often pretty poor. Merchandising associates owned sales
and margin. Replenishment associates were responsible for
inventory and service levels. Yet many of the specific
responsibilities were ill-defined and inconsistent. For
instance, since initial product forecasts and store-assortment
decisions were the purview of category management, some of the
most important determinants of inventory performance were not the
job of the inventory management group.
We
have now transformed our merchandising organization into a
best-practice model in which the perspectives of replenishment and
merchandising are equally valued and balanced. Associates are
expected to benefit from significant cross-training and career
paths that incorporate both replenishment and merchandising. The
category managers have given up tasks such as forecasting and
store assortments that we consider more appropriate for planning
and replenishment associates. Assistant category managers are no
longer junior buyers. They are responsible for administrating
product hierarchies, maintaining product information, and managing
trade funds. The merchandise planner is now the business planner,
responsible for financial plans and forecasts, key item forecasts,
store assortments, lifecycle management, and promotional
management and analysis. Meanwhile, our replenishment analysts
manage the supplier collaboration process, purchasing, and store
replenishment.
Another
key to our performance improvement has been the close working
relationship between logistics and planning and replenishment.
Logistics chief Pat Murphy and I are kindred spirits in
understanding the workings of the supply chain. We both recognized
that merchandise planning determines the timing and volume of
logistics activities. Early on, we established quarterly planning
meetings and a weekly combined staff meeting to develop strategies
and provide root-cause solutions. Of course, these groups
had a common resource in the rich forecast information coming from
planning and replenishment. They used this information to plan
strategically and tactically together. Among the key benefits
obtained were more standardized packaging for outbound
shipments, which affected over 80 percent of the DCs’
variable costs. Our use of standard packs has gone up from 15
percent to 55 percent.
Results
Speak for Themselves It has been a long, hard
slog to do what we have done to date. From piloting our CPFR-based
program with a handful of suppliers, we have now extended it to
200 suppliers and more than 20,000 items, representing more than
90 percent of our procurement spend. More than 70 of our top
suppliers are loading the West Marine order forecast directly into
their production planning systems. In-stock rates at our stores
have come close to our goal of 96 percent in every store every
week—even during our peak season. Forecast accuracy has
risen to approximately 85 percent, and on-time shipments are now
consistently better than 80 percent.
Our
collaborative supply chain journey is by no means over. The
competitive landscape will change, our supply base will shift, and
our customers’ demands will be different a decade from now.
But we are pleased with where we are so far. The results, we
believe, speak for themselves.
Sidebar ______________________________________________________________________________
With
revenues ten times those of West Marine, it seems unlikely that
ITT Industries would have much to learn about business processes
from a boating supplies customer of its pump division. After all,
ITT leads Forbes Magazine’s December 2005 list of the seven
best-managed conglomerates in five-year total return.
Yet
ITT’s Jabsco division has incorporated West Marine’s
CPFR approach, coupling it with a lean/Six Sigma framework, to
develop an adaptive, high-performance organization that
collaborates across the extended supply chain. The results of
Jabsco’s initiative have been dramatic: In 2004,
manufacturing cycle time fell from 25 days to three days, overall
sales increased by 11 percent, labor hours were cut by 17 percent,
and on-time deliveries increased from 74 percent to 94 percent.
West
Marine is Jabsco’s largest customer. But in 2002, the pump
maker was in danger of losing the business. Its on-time delivery
was a dismal 10 percent, and it was struggling to comply with our
EDI program. Our in-stocks of Jabsco products were always low, and
the supplier didn’t seem to be able to manage its capacity
requirements predictably. Given ITT’s emphasis on business
process, observers could be excused for thinking there should not
have been a problem. ITT had invested more than $35 million on Six
Sigma training and had 350 certified Six Sigma Black Belts and
10,000 certified Green Belts.
The
change began after Nick Hill, then Jabsco’s president,
attended West Marine’s first “breakthrough”
meeting. Hill learned that his company seemed to be missing a
central tenet: the voice of the customer. Although Jabsco was
using lean manufacturing to emphasize efficiency—cutting
costs, controlling resources consumed, and reducing rework—it
was not highlighting effectiveness issues such as on-time delivery
and customer satisfaction. Jabsco lacked the processes to capture
demand information, let alone use it; managers didn’t
understand why customer-responsive processes were needed.
Hill
appointed Jabsco Six Sigma Master Black Belt Mike Feeney to
improve performance—and the relationship with West Marine.
Learning about CPFR from us, Feeney absolutely “got”
what we were trying to do. He championed the idea that CPFR and
Six Sigma are symbiotic, and he knew that Jabsco had to go further
than just putting in place cross-functional sales and operations
planning processes. Instead Jabsco needed to move by stages toward
advanced process implementations. (See exhibit 4 above.)
Today, Jabsco’s commitment to supply chain improvement is
evident in its investments in enabling technology, the largest of
which is a Web-based supply chain performance management
application. Used throughout Jabsco and by its own supplier base,
the system provides current demand and production visibility and
decision
support. ___________________________________________________________________________________
References “Is
Collaborative Planning, Forecasting, and Replenishment (CPFR) a
Best Practice?” ARC Advisory Group white paper, October
2003. “Joe Andraski Discusses Collaborative Planning,
Forecasting and Replenishment with Larry Smith of West Marine,”
an interview presented at the VICS CPFR Committee Meeting, October
2003. “West Marine Leaves Inefficient Supply Chain In Its
Wake: a Conversation with West Marine senior vice presidents Larry
Smith and Patrick Murphy,” Global Logistics and Supply Chain
Strategies, December 2003. “Wal-Mart, Gillette, West
Marine, 3M, and Manugistics Honored at VICS Award Ceremony,”
Retail Systems Alert Group Inc, May 19, 2004:
http://www.vics.org/. Hau
Lee and Lyn Denand, “West Marine: Driving Growth Through
Shipshape Supply Chain Management,” Stanford University
Graduate School of Business case study GS-34, April 2005. Hau
Lee and Jason Amaral “Continuous and Sustainable Improvement
Through Supply Chain Performance Management,” Stanford
Global Supply Chain Management Forum, October 2002.
|