Download - Westinghouse Transformation
Supply chain transformation is becoming a critical element for driving business results.
THE GREEN MOVEMENT
In the years since Three Mile Island, not a single nuclear
plant has been ordered and built in the United States.
Nuclear power used to be the environmentalist's ultimate
pariah, but now the green movement has a new pariah -
fossil fuels and their carbon dioxide emissions. As a
result, some of the world's most ardent Greens have come
around to embracing nuclear power. In the last two years,
the US Nuclear Regulatory Commission has received 17
applications for 26 nuclear reactors. Proposals for six
additional reactors are pending.
HISTORY
Nearly 50 percent of the nuclear power plants in operation
worldwide, and nearly 60 percent in the United States, are based
on Westinghouse technology. Worldwide, the nearly 8,500
employees of Westinghouse Electric Company continue to
pioneer value-added engineering and services creating success
for customers in their increasingly demanding markets. The
three core businesses of Westinghouse — Nuclear Fuel, Nuclear
Services and Nuclear Power Plants — support this mission.
CALL TO ACTION
Westinghouse’s supply chain transformation story is about
continuous innovation and growth. The drivers for change at
Westinghouse included the global growth in demand for nuclear
energy, the development of emerging markets, the diverse
customer segments the company serves, and investor
expectations for improving margins. The Westinghouse
executive team challenged us to lower supply chain cost while
implementing the new capabilities needed to support the longer
term nuclear renaissance. The global growth projections for
Westinghouse looked like a minimum 3x growth rate with an
upside of 10x. This is a glide path greater than Starbucks coffee
shops. To prepare for this growth, a major initiative was
launched to retool the company for growth and value creation
immediately. The focus would include common global
processes, infrastructure and controls, new technology and
systems and alignment with a future state business model.
In February of 2008 a one month analysis team was formed to
identify synergy saving opportunities for the three separate
business units. A follow on team provided a more detailed
bottom up view as to where the savings would come. The
executive team quickly commissioned a new team called Global
Growth and Innovation to deliver the synergies and cost savings.
A supply chain core team was sponsored and nine teams across
three BU’s were chartered with leaders and teams to develop and
execute a plan to deliver $1.1 billion in synergy savings.
Our vision at Westinghouse was to create a world class SCM organization that would focus on
exceptional value creation for the entire company and for individual business units. The new
design would equip the organization with value creating, leading edge practices and
technologies to enable the supply chain to outperform the competition by significantly reducing
our total cost of goods while servicing our customers in the most efficient and effective manner.
Effective integration and management of cross business unit dependencies are essential, enabled by end to end, closed loop processes; information technology; and defined policies and management systems. Our discussions evidenced that it is critical to have a comprehensive strategy and clear goals to drive tactical and operational decisions, and that strong leadership with vision and conviction, may be the most important ingredient to success.
Supply Chain Transformation: Focus on Implementation & Initiatives Organization Design
People Competency Development
Change Management
Supply Chain Strategy & Configuration
Governance
SCOR Model Process Design
System Integration
Data Management
Configuration Control
Planning
Sourcing
Manufacturing
Logistics & Delivery
S&OP
TRANSFORMATION PROCESS
Once we gained agreement with the senior executive team
as to the goals, objectives and targets we agreed upon a
Supply Chain re-design process to develop the
infrastructure capable of delivering 10x growth. John
Kotter was hired to lead Westinghouse through the change
process. We began our journey by having each of the core
team members interview key thought leaders in the
organization. From voice of the customer interviews we
further refined our requirements for the new supply chain
organization. A benchmarking / best practices study was
conducted to assess our maturity. It was clear from the
results of the benchmarking study that we would need
additional investments in people, process and systems to
transform the organization. Based on our financial
constraints, we challenged personnel to join the team to
build a better future state, while performing their day jobs.
So, we created cross functional teams with global
representation to ensure that we gained the appropriate
insights into regions and also to build support for the new
team. Weekly team meetings to discuss issues and
opportunities were scheduled to focus on designing new
processes based on researching best practice companies.
IMPLEMENTATION AND RESULTS
By deploying a Core Team and a set of 9 Extended Teams
(representing the main SCM processes) across the
business units, we built a business case and strategic plan
geared to generate value, while improving our
competitive position in the market place. This value
would come through increased leverage, synergies,
reduction of duplication, closing existing gaps, and
improvements of existing processes. Over the next 6
months the teams developed their transformation plans
which were ultimately approved by the Supply Chain
core team and the executive team. April 1, 2010 the three
supply chain organizations became one under the
leadership of Juan Molina. The annual savings targets
have been built into the business plan and the teams are
executing the transformation plans and making great
progress. Benefits include time-to-market, lower risk,
improved agility and a lower cost. I believe two critical
factors were instrumental to the transformation success:
Leadership and communication of the vision. Leadership
philosophy is exemplified through energy and passion,
trust as the base for conducting business, focus and drive,
active communication and flawless execution.
COLLABORATIVE TEAM WITH A COMMON MISSION
Juan Molina, Jack Lanzoni and Jim Dixon, each Vice President’s of their own BU supply
chains sponsored the transformation initiative for the Westinghouse organization. A core team
was later formed to include approximately 8 members in total. Nine teams were formed to
develop a high level plan consisting of key initiatives and a business case. The teams were
Inventory & Warehouse, Transportation, Brokerage, Packaging and Customs, Demand
Planning, Project Management, Operations and Performance Management, Requisition to
Check and Supplier Development and Localization. Benefits were calculated based on a 2007
baseline spend and the $30 billion revenue, ten year, growth model.
1. Baseline Assessment - Profile current performance vs. benchmarks and similar supply chains.2. Improvement Opportunities - Assess performance and maturity improvement opportunities
and the value of the improvements in cost, quality and service.
3. Vision & Targets - Establish fact based future state performance targets, and a business case.4. Supply Chain Future State - Redesign the supply chain and identify initiatives to improve
the current capability. Develop and align a future state supply chain strategy.
5. Roadmap - Develop a realistic, prioritized and achievable transformation roadmap.6. Self Funding Program - Identify quick-win opportunities to “self fund” the transformation.
44%
40%
8%6%1%0%
New Supplier Sourcing SourcingTransportation InventoryOps Effcy Req to Check
The iSCM Transformation Map FY2009 – FY 2012
Technology
People and Organization
Project Mgmt and Demand Plan
Sourcing and Supplier Mgmt
FY 2009 Milestones and
Deliverables
FY 2010 Milestones and
Deliverables
FY 2011 Milestones and
Deliverables
FY 2012 Milestones and
Deliverables
Web Enabled Buying
Dynamic Commerce
Content Management
Direct Material
Indirect M
aterial
Make/Buy/Acquisition
Organ
izatio
n Des
ign
Peopl
e Com
pete
ncy D
evelo
pmen
t
Chan
ge M
anag
emen
t
Qua
lity
Supp
lier C
olla
bora
tion
Inve
ntor
y M
anag
emen
t
Know
ledg
e M
anag
emen
t
“To Be” State
D&B Spend Map
And Data Mart
Evaluate Third Party
Content Options
(e.g., IBM LPS,
Worldcrest, ICG)
Develop Global
Long Term
Content Strategy
Revised FY02/03 FreeMarkets Full Service
Auction Contract
Evaluate and implement
Self Service Auction Model
Evaluate and Implement
Electronic RFQ (eRFX) strategy
Re-evaluate eProcurement Options and
CEP
eP Phase I Implementation (N.A. Indirect)
Begin eP Phase III Implementation (Direct Mat’l)
Integrated IT Strategic Plan– Westinghouse Technology Map agreed
eP Phase II Implementation
(European Indirect)
Develop and Implement
European Spend Map and Data Mart
Develop and Implement Common
Commodity Coding Project
Develop and Implement Capital
Project Management Strategy
Evaluate European eProcurement Options
Evaluate ROW
eProcurement Options
Continuous Integration of all Procurement Technology Solutions
Segment
Group Direct
Spend
Launch Wave 1 and 2
Direct Sourcing Teams
Develop and implement Direct
Material Centers of Excellence
Redesign Product Development Methodology to Focus on Standardization of M
aterials
Develop and Implement
Std Contract L
anguage
Explore Outsourcing
Of Indire
ct Materia
l Procurement
Commodity Standardizatio
n Program
ID Core
Competencies
And Assets by Plant
Worldwide
Develo
p Communicatio
n
Process
es ar
ound
Capita
l Plan
s, Ass
et
Disposa
ls, et
c,
Evaluate and Potentially Outsource Services Not C
onsidered Core
Process in Plac To
Identify
Supplier G
lobal
Capacity And Capabilit
ies
Launch Wave 2 and 3
Indirect Sourcing Teams
Launch Wave 1
Indirect Sourcing Teams
GPC “Dialin
g
For Dollars”
Campaign
GPC “Dialing
For Dollars”
Campaign
Implem
ent P
hase I
& 2
Benefi
ts Tra
cking
Macro
(Cen
ter Le
d / B
U)
Organ
izatio
n Des
ign
And Im
plemen
tation
Micro (
Site Lev
el)
Organ
izatio
n Des
ign A
lignm
ent
People
Yello
w
Pages
In P
lace Dev
elop
Compe
tenc
y Pro
files
and A
sses
s Wes
tingh
ouse
Wid
e Pro
cure
men
t Org
.
Skills
Enhan
cemen
t Pro
gram
Develo
p Cro
ss G
roup
Recru
iting
/Sta
ffing
Pro
gram
Wes
tingh
ouse
Com
mun
icatio
ns P
rogr
am
Core T
eam
Certif
icatio
n Pro
gram
Deve
lop
and
Popu
late
Best
Pra
ctic
es
Data
Bas
e
Wes
tingh
ouse
Proc
urem
ent
Polic
y M
anua
l
1st A
nnua
l
Wes
tingh
ouse
Gro
up
Proc
urem
ent
Mee
ting
2nd
Annua
l
Wes
tingh
ouse
Gro
up
Proc
urem
ent
Meetin
g
Intra
net B
ased
Wes
tingh
ouse
Buy
er
Desk
top
Deve
lop
and
Impl
emen
t
Glo
bal C
omm
odity
Inte
llige
nce
Data
Bas
e
Wes
tingh
ouse
Mob
ilizat
ion
Even
ts P
hase
s I &
II
Enha
nced
W
eb S
ite
Re-eva
luate
Organ
izatio
n Effe
ctive
ness
Dev
elop
Sup
plie
r C
olla
bora
tion
Stra
tegy
Eval
uate
and
Impl
emen
t O
ptio
ns F
or E
nabl
ing
Col
labo
rativ
e R
elat
ions
hips
Defin
e O
vera
ll
Wes
tingh
ouse
Gro
up
Sup
plie
r Met
rics
Deve
lop
and
Roll
Out
Com
mon
Wes
tingh
ouse
Gro
up C
ertif
ied
Supp
lier P
rogr
am
Dev
elop
and
Impl
emen
t Com
mon
Wes
tingh
ouse
Gro
up S
uppl
ier R
atin
g Sy
stem
Dev
elop
Sup
plie
r Por
tal f
or I
nteg
rate
d Su
pply
Cha
in E
ffort
s
Deve
lop
Com
mon
Gro
up A
PQP,
PPA
P,
DFM
EA A
utom
ated
Sys
tem
s D
evel
op a
nd Im
plem
ent W
estin
ghou
se G
roup
Vend
or M
anag
ed In
vent
ory
Prog
ram
Dev
elop
Opt
ions
and
Impl
emen
t Wes
tingh
ouse
Gro
up
Inte
grat
ed S
uppl
y Pr
ogra
m a
s ap
prop
riate
Deve
lop
Ove
rall
Wes
tingh
ouse
Gro
up
Supp
lier M
anua
l
Level 1 2 3 4 5
Supply Chain Transformation: Process Framework
Transformation Benefits Delivery Plan ... $1.1 billion
Jim Dixon!"#$%&'"(#)'$*
+'#,(#-*
./--01*23#4$*5/6/"7*.6#67*
84%4'$*#$,*!#"976%*
:,7$)&1*:(-"';7(7$6*<--'"6/$4)7%*
=#%704$7*>%%7%%(7$6*?*=7$@3(#"A4$9*