The 16th Century Country Estate provided the backdrop for the annual Oliver Wight Supply Chain Seminar on 8th May 2008. More than 30 companies were represented by the audience of senior executives from blue-chip organisations across a wide range of industries, including broadcasting, retail, pharmaceutical and brewing.

Opening the seminar, Oliver Wight managing partner, Liam Harrington said that in traditional supply chains, business processes are not integrated and not aligned with business objectives. Instead they are structured by function. People operate in functional silos and want to optimise their own function because that’s how they think and that’s how they’re rewarded.

“For the supply chain to work effectively, barriers have to be broken down so the supply chain can be aligned with the business objectives across the key functions of purchasing, distribution and manufacturing, as well as the individual business units; the focus then can be on value, ‘Lean’ and velocity,” said Harrington.

However, he also warned that companies have to be achieving 95% business performance in all areas of their own business before they can start to focus on developing joint improvement projects with suppliers, forming partnerships and establishing service level agreements. “You have to be in control before you start to look beyond your own four walls,” he explained.

Oliver Wight Managing partner, Les Brookes, said the mental picture many people have is of a supply chain which only includes suppliers, production, sales, distribution and the customer, but the Oliver Wight focus is the extended supply chain which includes the customer’s customer as well as the end consumer.

“The supply chain has to be managed from end to end to really drive costs down,” he said. “It isn’t easy but results can be dramatic,” he said, quoting the examples of a well-known beverage company, which has improved value stream velocity from 5% to 18% and reduced supply chain inventory by €1.8 million; and a paper manufacturer which has increased productivity across the value chain by 22%, improving customer service to a consistent 99%.

At potato processing company, Farm Frites, an Oliver Wight supply chain programme has delivered big benefits and has helped the company successfully implement a new ERP system.

Farm Frites has been a family-owned business since it was established in 1971. Headquartered in Oudenhoorn in The Netherlands, it is the world’s third largest potato processing company, with offices in 17 countries. It has 1,700 employees across eight manufacturing facilities.

Farm Frites board co-chair, Gerard de Bruijn, said the company embarked on its Class A supply chain programme because it wanted to get greater control over its own organisation, its customers and its suppliers.

“We wanted to determine what the world looks like, rather than our customers and suppliers dictating what we do,” he said. We had to change from being a potato- and supply-driven company towards a product- and market-driven company; and from short-term focused operations towards strategic long-term managed operations.

Farm Frites has a volatile supply chain - its raw materials come from the land and performance is subject to the vagaries of the weather.  Recently its business has been also affected by such influences as Jamie Oliver’s campaign for good food in schools and European smoking bans (responsible for a 2 per cent fall in demand for French fries)

So control is critical and just twelve months into the programme, Farm Frites has achieved Class A accreditation for ‘Capable Integrated Business Management (S&OP)’ and ‘Capable Planning & Control’. As well as successfully implementing its MFG/PRO ERP system, which is now at the heart of its integrated planning process, it has achieved a consistent schedule adherence of 98 per cent.

The company has improved the velocity of its new product, stage and gate process, allowing it to introduce a range of attractive new branded products, as well as making it more proactive with private label products.  And in a sector where the highest level of SKU accuracy is between 88 and 90%. Farm Frites has already achieved 80%.

“Our customers are already seeing the results with 95 per cent, plus, OTIF deliveries, an improved product range and a consistently higher quality product,” concluded de Bruijn.