Schneider Electric Hub Asia Director Long Pham says their own supply chain digitization initiatives taught them that success relies on a non-invasive approach to modernization, which they call, the lean digitization method.
By Long Pham
Across the globe, customers, regulators and the public at large are placing greater demands on manufacturers regarding product quality and their ability to track and trace product shipments. This is never more true in Asia, which is touted as the world’s manufacturing hub. In turn, manufacturers across the region are responding with a variety of strategies to both drive efficiencies and to help maximize their ability to respond to these customers’ demands.
Schneider Electric has responded to these requirements by transforming our own supply chain through a process we call the Tailored, Sustainable, and Connected 4.0 transformation. The transformation process involves not only improving our own supply chain, but also ensuring the solutions used internally are available to customers so that they, too, can experience the benefits of rapid return on investment and streamlined operations.
The initiative involves the application of lean digitization to global factories and distribution centers to create a Smart Supply Chain program. The success of the program is clear in the results of those seeking to improve their own processes.
Over the past two years, we saw our smart supply chain digitization investments bear fruit in the form of increased productivity and efficiency numbers. In our Sydney, Australia Smart Distribution Center, for example, we saved 9% in labor productivity and reduced our energy consumption by 5%. We also generated a 4% improvement in the Overall Equipment Efficiency (OEE) of our critical assets. In addition, 30% of our shop floor process issues are being addressed at a much faster rate. In our Shanghai, China distribution center, we demonstrated a 10% reduction in energy consumption and a 26% improvement in mean time to repair (MTTR) on conveyors that are running our critical operations.
Together with the Smart Manufacturing Adaptation Center, our Singapore Smart Distribution Center saved nearly USD 360,000 in operational efficiency through a mixture of full and partial deployment of digital tools. Some other notable savings for our Smart DC here in Hub Asia (Singapore) include 9% labour productivity, 3% reduction in energy consumption and improvement of +10% KE or coefficient of efficiency (Process Efficiency) since deployment of EcoStruxure Plant (Lean Digitization System).
In order to better understand these results and the applicability of our digital transformation efforts to the global supply chains of businesses across the APAC region, let’s take a closer look at how new technologies have allowed us to reinvent the way work gets done across our smart factories and smart distribution centers.
Our smart distribution center initiative consists of three key pillars, all of which are reflected in the name of our global supply chain process, the Tailored, Sustainable, and Connected 4.0 transformation:
We recognized that digital transformation investments had to address the needs and expectations of our customers. The “one size fits all” supply chain approach does not work for our varied customer segments. We needed to be flexible enough to accommodate different customer demands by aligning not to our business needs, but to their business needs.
By closely analyzing customer business requirements, we were focused on designing our supply chain facilities in a completely different and more tailored manner. Implementing this new approach meant introducing sophisticated QR code and serialization technologies that enabled end-to-end visibility and traceability.
For example, our distributor customers are looking for rapid pallet in/pallet out efficiency, a high level of traceability, and simplicity in handling the material that we are delivering to them. Our OEMs, on the other hand, require delivery of a solution that packages with contactors and pushbuttons under one order. When our shipment arrives in their facility, we enable them to quickly associate that shipment to the right project and machine assembly area.
In order to lower carbon emissions, and to help suppliers and customers to lower theirs, we developed best practices through high performance power monitoring. We also enacted a plan for rendering our internal sites carbon neutral by 2030 and by working only with suppliers who do the same by 2050.
We are also moving forward with providing our customers with green offers. This means providing them with information as to whether renewable energies have been used to create and manufacture our source products and whether our products are built from recycled materials.
It was important to use an open and dynamic approach for digitizing our facility operations. We rely on EcoStruxure for Industry, a fully open and interoperable platform that allows us to connect devices from a wide assortment of third-party manufacturers. For example, in our distribution centers, we were able to easily integrate third-party warehouse software and OEM material handling automation solutions. These connected solutions provide us with the level of visibility we needed to drive efficiencies and to perform predictive analytics.
Benefits of the lean digitization concept
Our own supply chain digitization initiatives have taught us that success relies on a non-invasive approach to modernization, one that we call lean digitization. As opposed to traditional rip and replace methods, lean digitization offers a measured approach that starts small, but that grows step-by-step as the level of confidence builds.
A huge, unexpected benefit that we encountered when rolling out this initiative centered around the level of employee enthusiasm and acceptance. From site-to-site, as our shop floor employees discovered the power of digitization, they immediately began to generate new ideas and to invent new ways of driving additional productivity and efficiency–approaches that were never even initially considered.
Once our people achieved a certain level of confidence, our performance numbers began to rapidly accelerate. Within three years we were able to digitize 60 factories and 20 distribution centers. We also attained a systematic payback of between 2 to 2.5 years across those facilities. These results, applied to manufacturers across Asia, can have a huge impact on the productivity and sustainability of the market in the region.
(Ed. Long Pham is currently the Schneider Electric Logistics Director of Singapore, Malaysia and Brunei cluster and International Distribution Center (Hub Asia). Pham has more than 20 years experience in supply chain management in Europe and Asia Pacific. Pham says he has a Masters of Automation and Manufacturing Engineering, France.)