Here’s an interesting supply chain story in one graphic:
This comes courtesy of a Wall Street Journal story on how 3M has worked to simplify their supply chains (3M Begins Untangling Its ‘Hairballs’, May 17). The product in question here is a simple plastic hook that once logged over a thousand miles crisscrossing the Midwest in the process of being made.
Before the war on hairballs, the production process for Command hooks began at a 3M plant in Springfield, Mo., which made the adhesives. Those adhesives were shipped about 550 miles to a 3M plant in Hartford City, Ind., where they were applied to polyethylene foam.
The foam was shipped 600 miles to a contractor’s plant near Minneapolis, where the product was imprinted with the 3M logo and sliced into needed sizes. Then the product was trucked about 200 miles to central Wisconsin, where another contractor bundled adhesive foam with plastic hooks and put the product into blister packaging.
About two years ago, 3M consolidated these steps at its plant in Hutchinson, Minn., one of the super hubs, where Scotch tape, Nexcare bandages, furnace filters and other items are made.
That plant creates finished Command products for the Americas while sending giant rolls of unfinished sticky foam to Singapore and Poland, where they are tailored for Asian and European markets. The cycle time for making Command has dropped to 35 days from 100, Mr. Welsh says.
What I like about this story is the emphasis it puts on time. When we talk about supply chain management in the core OM class, we stress that improving supply chains is almost always about taking time out of the system. Long throughput times require longer forecasting horizon and complicate matching supply and demand. Further, our old friend Little Law kicks in and less time means less inventory. Stated another way, while an organization may want to reduce inventory, the only way to do that (assuming that sales aren’t reduced) is to reduce time.
3M’s goal has been to reduce flow times by 25% and they have been successful beyond plastic hooks.
3M’s Littmann stethoscopes used to be made in steps involving 14 outside contractors and three 3M plants. Now all processes are being brought into a plant in Columbia, Mo. The cycle time will fall to 50 days from 165, Mr. Welsh promises.
As these examples suggest, a main part of 3M’s strategy has been rethinking its network of facilities and contractors.
3M’s long-term plan is to have fewer, larger, more efficient plants, and spread them out around the world. More production will be done in what 3M calls “super hubs,” plants capable of making scores of products for a region of the world. 3M now has 10 hubs, including six in the U.S. and one each in Singapore, Japan, Germany and Poland. It plans at least six more, all outside the U.S.
By consolidating manufacturing into large hubs, they are able to eliminate the need for safety inventory at each stop along the way while also potentially reducing the batching necessitated in moving components from Point A to Point B.
This strategy, however, is not without challenges. Putting more and more products under one roof requires flexibility and careful management of on-site operations. That is, they are gaining simpler supply chains but may also be taking on more complicated shop floors.