Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply...

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Delivering Value Together to Achieve Competitive Advantage Public Tim Millwood 26 th June 2016

Transcript of Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply...

Page 1: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Delivering Value Together to Achieve Competitive Advantage

Public

Tim Millwood

26th June 2016

Page 2: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Agenda

Cummins Supply Chain Transformation

Organization Changes

Cummins Purchasing Strategies

– Supplier Risk Management

– NPD Engagement & Innovation

– Supplier Relationship Management

Dependability and Supplier Quality

Page 3: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Cummins Supply Chain Transformation

Working together across our businesses to

provide the best supply chain for our customers

DBU PSBU EBU CBU

Page 4: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Our Supply Chain Vision

Establish reliable market driven supply chains to enable profitable growth

Market Driven Reliable• Focus on customer

requirements

• Alignment of lead times from

source to delivery

• Emphasis on globalization

• Coordinated integration

between businesses and

functions

• Provides adequate capacity,

scalability, speed and

responsiveness

• Establishes capacity ahead of

demand

• Effectively addresses

complexity to significantly

reduce risk

Page 5: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

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Complementary BusinessesGlobal Power Leader

Power

GenerationComponents DistributionEngine

Cummins Business Unit Structure Change

EnginePower

SystemsComponents Distribution

Four unitscomplementary business

2015

2016

Page 6: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Cummins Purchasing Organizations – ABO’s

China ABO Purchasing

South America ABO Purchasing

India ABO Purchasing

EMEA ABO Purchasing

Latin America ABO Purchasing

Page 7: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

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asin

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Sta

ff

Tim MillwoodVP-Purchasing

Ben McGibbonNRP

Xiang YongdongChina ABO

Manoj SolankiIndia ABO

Angela CuellarLatin America ABO

John WolfeSupplier Quality

Mike Kirsch

Function

Excellence

Steve AntcliffCollaboration &

Governance Director

Ginger WhiteFinance

Paul MaloneLegal

Kerrie BreedenExecutive Admin

Support

Priscila MendesIndirect Purchasing

Rebecca OsbaldestonEMEA ABO

Jenny MondayHuman Resources

Michelle TaylorDiversity

Procurement

Scott MannEBU

Gaurav BansalDBU

Nitya RaoCBU

Mike GonsalvesDirect Purchasing

Con O’SullivanPower Systems

Page 8: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

EBU Purchasing Team Scope:

Engine Business (HMLD) & Power Systems (HHP)

ForgingsBlock & Head

Castings

Assemblies

Overhead & Power

Cylinder

BOF Fuel Systems

Scott MannEBU

Page 9: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Power Systems Purchasing Team Scope:

Skid / Base Frame

Alternator

Controls

Engine

ControlsControls

Engine

Radiator

Enclosures Filters & Aftertreatment

Transfer switches

Parallelin

g

Networking

& Software

Con O’SullivanPower Systems

Page 10: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Purchasing Requirements

Supply Chain Excellence requires:

Category strategies meet market needs (responsiveness, flexibility, cost, etc)

Manage supplier risk proactively

Drive aggressive cost management

Align category strategies across functions

Page 11: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Functional

Excellence

Foundational

Transformational

Purchasing Strategies

Page 12: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Functional

Excellence

Supplier Risk Mgmt

Foundational

Transformational

Purchasing Strategies

Page 13: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Evolving Supplier Risk Management at Cummins

2014 2015 2016 2017+

Team Formation

Annual Assessment

Expanded Global

Participation

Mitigation Tracking

Risk Segmentation

Improved Financial

Due Diligence

Mitigation Playbook

Risk Management

Culture

Cummins suppliers need to pursue risk

management with your tier 1 & 2 suppliers

Page 14: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Functional

Excellence Early NPD Engagem

ent

Foundational

Transformational

Purchasing Strategies

Page 15: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Cummins delivers power through our innovation

We must recognize when we need to disrupt a market, even

when we are the market leader.

----Jennifer Rumsey, Chief Technical Officer

“ ”

Page 16: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Investing in the right technologies

$700M+R&D investment New and updated

products in 2015

Focused on delivering technology that is

clean sustainable dependable

Emission

Standards

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Cummins needs our supply base to bring innovation and invest in

technology development to:

- Sustain our current market leading positions

- Provide opportunities to win new business

Page 17: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Functional

Excellence

Increased Collabora

tion

Foundational

Transformational

Purchasing Strategies

Page 18: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Supplier Relationship Management Theme for 2016

Delivering value together to

achieve competitive advantage

Page 19: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Restricted Confidential

““Dependability goes beyond product performance or response to a service event. Dependability means the customer can count on Cummins to do what we say we will do.

Live the Brand of Dependability.

Page 20: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

0

200

400

600

800

1000

2010 2011 2012 2013 2014 2015

Supplier In Plant PPM

Improvement has stalled for past four years !

EBU Supplier OEM PPM (2000-2015)

Page 21: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

What help do we

need from

our suppliers? All parts meet Cummins Specifications

Drive strategy to achieve ZERO defects

Supplier corrective actions expedited

Invest in world class processes & testing

“Don’t think low defects, think NO defects!”

ZERO PPM IS ACHIEVEABLE!!

Page 22: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Cummins Expectations From Our Suppliers…

Make safe work environments for employees a priority

Drive a zero defect mentality in your company

- Invest in world class processes and testing

- Expedite solutions when problems occur

Mitigate supplier risk in your supply chain

- Drive risk assessments of your sub-tier suppliers

Page 23: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on

Cummins Expectations From Our Suppliers…

Bring innovation and technology to NPD

– Invest in engineering & manufacturing resources

– Proactively share new ideas & concepts with Cummins

Drive continuous improvement in efficiency and

productivity to remain cost competitive globally

Actively engage in the supplier relationship process

Page 24: Delivering Value Together to Achieve Competitive Advantage26th June 2016 . Agenda Cummins Supply Chain Transformation ... Alignment of lead times from source to delivery Emphasis on