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Automation & Process Improvement Strategies
Onno Maliepaard The Goodyear Tire & Rubber Company
Agenda
• Intro Goodyear Tire & Rubber Company • Organisational design principles behind Purchasing
set up • Automation as lever to increase effectiveness &
efficiency of purchasing • Business Intelligence as outcome of automation • New measures of efficiency and effectiveness
Our Early Years
• Founded:
– In 1898 in Akron, Ohio by industrialists Frank and Charles Seiberling.
• Named:
– In honor of Charles Goodyear, discoverer of the vulcanization process for natural rubber.
• Products:
– Bicycle and carriage tires and rubber goods. Developed the “Straight-Side” tire and first tire building machines.
– Developed pneumatic airplane tires in 1909 and began work on airships (“blimps”) in 1910.
Frank Seiberling
Early Milestones
• Became the world’s largest tire company on the basis of sales in 1916.
• Opened its first plant outside the U.S. in 1910 in Bowmanville, Canada.
• Sales reached the $100 million mark in 1917
• $1 billion in 1951
• $5 billion in 1974
• $16 billion in 2009
In 2011…
72,000
180 million
$343 million
$22.7 billion
Tires Sold
Worldwide Associates
Net Income
Net Sales
Global Facilities…
World Headquarters: Akron, OH
Global Technical Centers: Akron, Luxembourg, Hanau
Global Manufacturing Facilities: 57 Manufacturing Footprint: 23 countries, 5 Continents
Global Consumer & Commercial Sales with Leading Brands
Overview Leading Market Positions and Brands
Brands
European Union Latin America
Asia Pacific North America
Market Position #1 #2 #1 #2
Goodyear Purchasing Org
Strategy and Compliance § Supply Management Strategy & Leadership § Compliance
Expertise-based Activities § Sourcing: Category Management and Spend
Analysis § Sourcing: Supplier Evaluation and Negotiation § Supplier Performance Management § Contract Management § Supplier Collaboration
Transactional Activities § Requisitioning § Order Processing § Material Receipt § Financial Settlement § Supplier Data Management § Supplier Enablement
Drive Efficiency
Drive Effectiveness &
Efficiency
Drive Effectiveness
Leadership STRATEGY
Expertise Based Activities
Transactional Activities
Operational support
3 Pillar Organization established
Goodyear Internal Business users
Suppliers
2) Regional Operational Procurement* LUXEMBOURG SSC + COUNTRIES, WHEN -no language leverage - continuous local supplier engagement
1) Expert Sourcing & Category Management*
REGIONAL OFFICES
LUXEMBOURG
2) Local Operational Procurement
3) Transactional Procurement* Near Shore Intramural
Source-to-Pay Process Automation
Request Source Contract Order Receive Pay
Strategic Transactional
Operational
eProcurement eSourcing
Supplier Portal
eInvoicing eProc / MRP
VMI / VMOI
Procurement Requester A/P Requester
SIS
A/P Workflow
CLM / eCat
eProcurement tightly links Requester with Procurement
Business Intelligence to drive Process Performance Optimization
Request Source Contract Order Receive Pay
Monitor Shopping Carts (SCs) Monitor Requisitions
Define Strategy Plan Provide Sourcing Support Provide eSourcing Services
Define SRM Strategy Optimize Contracts Perform Contract Admin
Define P2P Strategy Manage Cost Center
Optimize Supplier Performance Receive Goods and Services
Optimize User Compliance Perform Invoice Processing
ü Overview of approved SCs ü SCs by requester ü SC approval steps and approval time ü Overview of overdue MRP requisitions
ü Key Performance Indicators (commercial + process)
ü Spend classification based on standardized product hierarchy at line item level
ü Vendor performance evaluation (commercial)
ü Vendors per product category, per POrg ü RFx and Auction documents per product
category, per Porg ü Elemica Optimizer tool for raw materials
ü ABC vendors via VMD spend analysis ü Contract Lifecycle Management ü Elemica Optimizer tool for raw
materials
ü Performance cycle KPIs ü Workload per POrg ü SCs/POs per cost center ü PO document details ü Elemica VMI/VMOI reporting for raw
materials
ü Vendor performance evaluation (process) ü OTIF “on time in full” tracking (late PO
deliveries) ü Tracking of quantity mismatches ü Goods Receipt document details
ü Invoice-PO compliance reporting
ü Tracking of price mismatches
ü Invoice document details
Circle back input for Sourcing: avg payment days, avg cycle time, avg pricing, etc
Process KPIs to drive Continuous Process Improvement
KPI Target Actual
Spend concentration (Indirects)
>60% spend covered by 300 suppliers
65% spend covered by <300 suppliers
Portal usage (Indirects) Note: RMs via VMI Portal
80% actively managed suppliers defined on portal 75% of PO transactions via portal
25% actively managed suppliers defined on portal 65% of PO transactions via portal
Handsfree procurement Indirects: >70% Raw Materials: 100%
Indirects: 72% Raw Materials: 100%
eSourcing usage Note: RMs via offline process
50% hands-on shopping carts 20% hands-on shopping carts
eInvoicing usage 28% Jul 2013 49% Jan 2014
30% Jul 2013
Compliance Indirects: 97% Raw Materials: 100%
Indirects: 97% Raw Materials: 100%
Transactional Center Balanced Scorecard to industrialize shopping cart handling
Focus Area KPI Target Actual
Efficiency Transaction cycle time
<3 work days per PO avg <1.5 work days
98% processed <3 days <1 day avg cycle time
FTE loading >25/FTE/day 18/FTE/day
Effectiveness Handsfree >70% 72%
Price errors <5% <0.3%
Sustainability Turnover rate <30% <10%