Interview with Dave Clark, Director of Supply Chain for Concentric Group and David Kennington, Quality Manager for Rockford
Overview of the Supply Chain Project
Dave Clark, Director of Supply Chain for Concentric Group and David Kennington, Quality Manager for Rockford told us how improvements in the supply chain contribute to the overall performance of the Group.
Recently, Dave Clark as Project Sponsor and David Kennington, Project Manager, completed a global assignment to identify and benchmark current processes and outputs for the measurement of supplier performance. This required them to standardise supplier selection criteria – how a supplier is selected, promoted or deselected – and produce recommendations for a “Best Practice Global Process” to measure external suppliers.
Dave Clark said, “Concentric has a history of companies that have merged or been acquired and each site has adopted different methodologies, procedures and processes in handling their supply chain. This project has been an important step in controlling our supply base. We have had as many as 550 suppliers which is too many to manage effectively for a business of our size and our level of spend.” David Kennington continued, “We have listened to the needs of our business and our customers and created consistency in what we now measure on a regular basis. It will help us to identify our internal benchmarks – the best in class amongst our Group.”
Dave Clark and David Kennington have developed a standard supplier balanced scorecard. Each site reports the same information in the same way and everyone has visibility of the Dave Clark David Kennington reports. Dave Clark explained, “We have provided guidance in how to apply the process and allocate scoring. It is a living process. Over time, we will check that it continues to meet our needs and make improvements as needed.”
The process has provided a more objective way to identify which suppliers best meet Concentric’s needs and who are the top performing suppliers. This gives us the data to proactively manage our supply base and identify the suppliers with whom we want to do even more business. By controlling our supply base, spending more with the top performers and deselecting suppliers who do not meet our performance criteria, Concentric can take advantage of the benefits afforded by suppliers to larger customers.
How do we describe our best suppliers?
Dave Clark quickly pointed out “It does not necessarily mean the cheapest!“ He continued, “We have worked hard to disassociate cost as the primary measure. Of course it is important that our suppliers are commercially competitive but low cost is not always synonymous with best value for money.” David Kennington elaborated, “Other factors are vital too, such as the quality of the component – this is crucial and we have restructured how we evaluate suppliers to reflect this. Supplier delivery is also critical in determining supplier performance. The best suppliers enable Concentric to meet its commitments to customers. To run out of a material during production would cause complete chaos!”
What have been the benefits of this project?
For suppliers: Regardless of which Concentric facility they sell to, suppliers are measured in the same way by each site. Based on these consistent evaluations, a supplier can gain additional Concentric business. Dave Clark explained, “It allows us to build a deeper partnership with our best suppliers. Our process highlights those suppliers who run good, efficient businesses with good quality product and consistently high levels of service.”
For customers: Where we gain economies of scale with suppliers our pricing can improve along with reliable quality and delivery of our products. As we improve our supply chain processes, our customers can be confident in the quality and delivery of their Concentric product. In addition, the Engines design team have incorporated the supplier data into their processes so that new designs, product developments and applications incorporate materials from preferred suppliers.
For employees: Having a smaller number of suppliers to manage drives a whole host of benefits, for example, with fewer purchase orders there is less administration. This gives our supply chain employees more time to concentrate on their value adding activities for customers and undertaking more supplier audits. For our operators, they too want to work with suppliers who provide the best quality components (less than 250 ppm and 99% on time delivery) as this allows them to work without interruption to the production line and with less scrap.
For investors: The resulting improved operating efficiencies, increasing profits and top line growth together with the accompanying reputation for quality and service addresses the needs of most investors and contributes to a strong share price.
What results have you seen from this project? “Reduction in suppliers, competitive material costs and improved delivery performances are amongst the most notable outcomes.” David Kennington said. “The data allows us to have robust conversations with suppliers that we couldn’t have before because the data was not readily available; we now know what’s working well and where we need improvements, furthering our aim to partner more closely with our best performing suppliers.”
Sustainability in Action There are numerous benefits of a well-managed supply chain that support sustainability. On the environmental side, for example, if we do more business with one supplier instead of four, we have fewer freight deliveries. Admittedly this alone will not move the needle for the Paris Climate Agreement but these changes are contributing in a small way and improving us for the better. On the economic side, we can make clearer data driven decisions and improve our efficiency and margins through these supply chain improvements. This means more money is available to invest in R&D which is an important element of a sustainable future. Supply chain improvements help every part of our business either directly or indirectly.
Dave Clark commented that David Kennington was a great choice for this project. “As a quality manager rather than a purchasing manager, David looked at the challenge from a different angle. Through close collaboration with the Purchasing Managers around the Group, he was able to incorporate their feedback into the new process.”
This was a great development opportunity for David Kennington too. He had the chance to work with many people from all facilities, often with diverse interests and opinions. “Working with colleagues across the Group, we have delivered a new process which directly addresses the agreed objectives and delivers business benefit. I am very proud of the team accomplishment. By working with a smaller number of the best suppliers, Concentric will be able to leverage volumes and be a more competitive supplier for our own customers.” To conclude, Dave Clark added that one of the big benefits was the improved sense of teamwork across the function. “Whilst this element is difficult to put a cost benefit on,” he said, ”it is already helping to improve collaboration on other related topics. This has been a great start for group projects designed to give development experience to our employees.”