The KRACHT projectFirst Results & Conclusions

The KRACHT Project

Dr. Seth Maenen, Flanders Synergy

SEQUENCE / STEPS:1. Develop meaningful and sustainable industrial activity by redesigning value chains

2. Organize meaningful and sustainable jobs across the value chain

3. Give special attention to people with increased distance to the labour market

THE GOAL:← Shortage of Technical Craftsmanship

← Value Chain redesign to bridge the gap• Utilize available skills• Organize durable labor

← Availability of specific profiles• People with increased distance to labor market

Earlier experiences within organizationsThe transformation works

Traditional functional organizations

Innovative organizations

Environment typology:• Complexity of the Job• Variation of the work• Predictability of demand

LowLowHigh

HighHighLow

Profitability / performanceCoordination losses

Middle Management SqueezeAbsenteeism

Quality of Labor

Learning capability & Innovation

The question for KRACHT:does it work across organizations?

Traditional Value Chains

Innovative Value Networks

V.C. Participants• Dominant Player• Critical Player• Dependent Player• Stakeholder

Dominant player dictates the “heartbeat” and controls performance of individual players

Players co-operate in an open team towards optimal performance of the integrated value chain

Characteristics

Value Chain Losses:• Planning & scheduling• (mis)communication & systems• Buffers (inventory)• Overcapacity / Underutilization

• Flexible and optimal use of skills and capacity

• Common focus on the customer• Each Player avoids losses within the

value chain

Measuring value chain performanceA definition

• Economic performance– Customer Satisfaction – Supply Reliability– Profitability– Co-ordination Losses in the value chain

• Corporate Social Responsibility – Sustainability of the business and of the organization– Quality of Labor– Respect for stakeholder interests – Health, Safety & Environment– Employability of “people with limitations”

• “Total Value Chain Contribution”

“B-2-F workshops”:using KRACHT to create jobs in Flanders• Value Chain 1 - Greenfield:

5 cases of products / accessories / parts that currently are sourced “Globally”. Challenge to get these (back) to Flemish SME’s based on:– Competitive Costprice– Higher Return on Investment– Improved Customer Service

– Case 1:

• Value Chain 2 - Greenfield: Design and implementation of a new business model for logistics towards the Flemish market, later on to be expanded to the European market.

X 400.000 units

Cost Price Target -2€ Actual -6€

Invested Capital in the Value Chain

12 weeks 2 weeks

Customer Service Make-to-Stock Assemble-to-Order

Observations

• Multinationals are extremely “closed”– No “connection” whatsoever with Flanders (shut down Flanders)– Strict focus on own company goals, targets and processes– “Chauvinist Reflex” that overturns economic arguments

• Breaking the axiom of “customer-supplier relationships”– Value Chain Players are NOT customers/suppliers of each other. They are partners in

serving the actual end customer• The pitfall: “the customer is always right” = the supplier is always wrong• Impossible to define a common Value Chain goal by focussing on own individual profitability

– From closed to OPEN…• … innovation; … manufacturing, … competence management, … knowledge management, …

– Barrier to establish Local Autonomous Networks• Based on respect, trust and specific added value

• Sheltered Workshops moving in the wrong competitive field– Competition on activities of other suppliers, not based on own added value or exploiting

specific skills of their worker population,….– Price competition based on subsidies, not on actual performance

First Results

• Focus on businesses with sufficient decision autonomy in Flanders– Proximity is vital (Allen Curve)

• Definition of a “Value Chain Goal” is possible– Based on identification with the product and identification with the customer– Individual profit orientation must be expressed

• Working in “local autonomous networks” does work.– Product Design and Process Design become one and inseparable.– Innovation comes as a free bonus

• Way of working to develop LANs must be tailored on specific situation– Role of “dominant player” is crucial. Sets the “boundaries”– “Greenfield” is safer than “Transformation” (nothing to loose)– Currently: short specific workshops / Possible: search conferences

Next Steps

• Define a standard measurement of value chain performance

• Multiply to other cases and value chains

• Test B2F method for “Transition”-projects

• Refine Analysis-tool, together with Flanders Synergy

• Abstract approach towards methods, techniques and tools for generic use,

together with Flanders Synergy