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Provisur Technology Strategic Sourcing – Overview Engineered Components. Achieving Operational Excellence Through Continuous Improvement. August 11, 2011. Overview. Strategic Sourcing – Overview General Mokina Topics Long Term Contracts w/ Price downs Brazil / Local Sourcing

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provisur technology strategic sourcing overview engineered components

Provisur Technology Strategic Sourcing – OverviewEngineered Components

Achieving Operational Excellence Through Continuous Improvement

August 11, 2011

  • Strategic Sourcing – Overview
  • General Mokina Topics
    • Long Term Contracts w/ Price downs
    • Brazil / Local Sourcing
    • Asia Sourcing
    • Europe Sourcing
    • Kitting
  • Slicing Topics
    • Knives
    • Nortura
    • Kraft
    • Next Project – being communicated
    • Rollers - Kickoff
  • Forming Topics
    • Slide Plate Pump Fed?
    • Next NPD Projects?
    • Asia Sourcing / Qualification Process
path to supply chain optimization
Path to Supply Chain Optimization

Achieving Operational Excellence Through Continuous Improvement

Supply Chain Optimization

36+ Months

18-24 Months

Strategic Sourcing


Tactical Purchasing/Supply Chain Planning



Achieve Operational Excellence Through Continuous Improvement – Key Tenants

  • Supply Chain Optimization

The supplier base will create opportunities by increasing their ability to add value to supply chain execution and implementation which is becoming more complex and will require scalabilityto support Provisur’s growth

  • NPD Collaboration

Provisur’s efforts to align Sourcing, Supply Chain, the supply base, and engineering, to improve the collaboration, teamwork, and speed to market for new product launches under the Staged Gate process

  • Strategic Contracting and Cost Management

Continue efforts to drive cost out of the system through tensioning the current business model and provide opportunities for core suppliers to garner long term contractson current business, out-sourcing of non-valued added activities, and securing NPD contracts

  • Globalization of Supply Base

As Provisur grows we will develop an international supply chain and expand our supply base globally to meet the challenges in our new markets

2011 key initiatives
2011 Key Initiatives
  • Award $20M in multi year supply agreements to core suppliers
  • Develop supply agreements to effectively communicate requirements with supply base and ensure steady state of business given performance.
  • Map Provisur supply chain to improve tools and processes to manage requirements with suppliers
  • Invest in human capital, processes, and tools to improve supply chain and Sourcing
  • Engage suppliers upfront in New Product Development Staged Gate Process
  • Right size supply base to provide opportunities for key suppliers to garner larger share of Provisur business
  • Secure $1.3M in cost containment
transfer conveyor outsourcing project
Transfer Conveyor Outsourcing Project
  • Project Title: Transfer Conveyor Outsourcing Project
  • Project Leader: Tim Hahn / Steven Call
  • Project Team: T. Hahn, W. Jackson, R. Sdano, J. Johnson,

T. Dillemuth, M. Sisko

  • Steering Committee: M. D’Amico, R. Hancock
  • Mission Statement: Outsource all Transfer Conveyor Manufacturing
  • Background:
    • All transfer conveyors have been “Custom Design” activities tying up both valuable engineering and manufacturing resources. It is recognized that transfer conveyor manufacturing in itself is not a “core competency” but a key component in linking entire systems together. The value Provisur brings is the ability to design and specify an entire protein handling system.
    • Roughly 50 Belt conveyors to be manufactured in 2011
  • Project Goals:
    • Finalize a “standardized” conveyor with a menu of options and sizes that will
      • Allow the sales team to easily quote and specify
      • Permit the engineering team to specify key attributes w/o having to commit design resources
      • Allow a supplier to build ahead standardized parts and quickly react to customer orders
  • Project Plan and Deliverables:
    • Set up a cross-functional team with defined roles and responsibilities Aug 2011 - COMPLETE
    • Finalize standardize designs for the variety of conveyor options Aug 2011 - COMPLETE
    • Finalize a “labor +” contract with the supplier June 2011 - COMPLETE
    • Complete a design review with the team and outside supplier September 2011 - COMPLETE
    • Complete first conveyor build meeting cost, quality and delivery targets - Est. Oct 2011
implementation team structure
Implementation Team Structure

Oversight Committee (2)

D’Amico, Hancock: High level guidance, expectation setting, monitoring

Project Coordinator (1)

Call - TBD Sourcing Specialist

Responsibilities: Communication leader, Integration Strategy Team coordination, objective setting,

progress tracking, Oversight committee liaison, project management

Integration Strategy Team (6)

Sdano, Hahn, Dillemuth, Sisko, Jackson, Johnson

Responsibilities: Identify issues, communicate details to supplier, set timelines, oversee integration implementation

Planning /Purchasing

Leader: Dillemuth

Team Members: Sisko


Leader: Joe Johnson

Eng/Prod Mgt

Leader: Hahn


Leader: Jackson

Ind. Eng

Leader: Sdano

Key Contributors


Key Contributors


Key Contributors


Key Contributors

Sdano, Sisko

Key Contributors


engineered components spend agenda
Engineered Components Spend Agenda
  • Engineered Items Spend Overview
  • Our Customer Requirements & Goals
  • Case Study: Long Term Contracts
  • Case Study: Focusing on Local Sourcing
  • Case Study: NPD planning and quoting
  • FY12 Cost Savings Target
strategic sourcing engineered components
Strategic Sourcing – Engineered Components

Supply Chain SPEED is critical to Provisur competitiveness

The Engineered Components supply chain is challenging – we are in constant “firefights” to meet internal and external customer expectations

strategic sourcing engineered components1
Strategic Sourcing – Engineered Components

Provisur has an extreme part mix and very short lead times - requiring an extremely flexible and evolved supply chain

It is our job to not only ensure execution of our current supply chain, but to continuously improve our supply chain speed

strategic sourcing
Strategic Sourcing

The future of Provisur’ Supply Chain will continue to be a work in progress. There are a lot of ideas that will be explored and current good efforts to be expanded

Bottom line – we need to challenge our current paradigms and make fundamental changes



Stage-Gate Process

Dock to Floor


Raw Material Forecasting

Dual Sourcing

Blanket Orders

Capacity Planning



Dock to Stock

engineered components spend overview
Engineered Components Spend Overview
  • Total Spend: $41M
  • Number of Suppliers: 47 (Mokena) & 28 (Whitewater)
  • Number of Items: 21,000
  • Major Commodities:
    • Fabricated Sheet Metal Parts ($9M) 14 suppliers
    • Milling ($18.0M) 36 suppliers
    • Turning ($1.0M) 3 Suppliers
    • Broaching ($0.4M) 3 Suppliers
    • Hobbing ($0.7M) 3 Suppliers
    • Raw Material ($4.0M) 4 Suppliers
    • Miscellaneous ($12M) 17 Suppliers
  • Goal of Strategic Sourcing of Engineered Parts
    • To create a world class lean and flexible supply chain organization
supply chain customers a mix of requirements
Supply Chain Customers / a mix of requirements

$41M Spend – Four “Internal Customers”





  • $5M - Eng
  • $7M – Tact
  • $4M – Eng
  • $2M - Raw
  • $14M – Tact
  • $3M - Eng
  • $3M - Raw
  • $3M - Eng

Eng – Engineered “One Off’s”

Tact – Tactical – repeated purchases

Raw – Steel / Misc

Each Category needs different strategies

tooling made to order
Tooling – Made to Order
  • Type of Production
    • 100% “One-Off” Custom Engineered Production
  • Competitive Pressure:
    • Our Competitors are saying

“Provisur can not respond rapidly – since they do not make tooling”

    • Provisur offering 5 day service – Competitors offering 3 day…
  • Counter Measures to explore:
    • Kitting at suppliers (COMPLETE)
    • Overnight Plating / Treating (COMPLETE)
    • Current two step order process… Tool room & then Purchasing – can streamline to one step (save ½ day) (COMPLETE)
    • Ship Direct on “Critical Orders” (UPS Pickup) with label printing being done from Mokina (save 1/2 day)
    • Review Repetitive orders – And figure out how to build ahead
    • Faster generation of prints for duplicate orders possible
    • Standardize sizes with customers – drive away from everything “custom”
    • Need to map entire process and streamline
  • Type of Production
    • 70% “Repetitive Parts”
  • Competitive Pressure:
    • Inventory high – currently needed to maintain fill rates
    • Can not let our customers go to someone else
  • Counter Measures to explore:
    • Need to review inventory levels based on moving demands
    • Can we remove the non-moving “rocks”
    • Bring Lean - consignment to be increased
    • Supplier Lead time improvements
    • Finalize contracts to allow more “flexibility” when “one off” parts are ordered
    • Review what machine / parts should be obsoleted
production machines
Production Machines
  • Type of Production
    • Mostly repetitive production parts / mixed with some engineered “One Offs”
  • Competitive Pressure:
    • 10-12 weeks for machines… quoted to customers
      • Customer consistently want machines with shorter lead times
    • Many parts have longer lead times… so ordering and pushing/pulling in anticipation of sales is killing suppliers and the supply chain team
    • 1,000’s of parts per machine – all ordered and received separately and most ordered per sales order. A supplier may ship in 80 line items per machine / each received separate
  • Counter Measures to explore:
    • Single Pricing – 3 year contracts
    • Supply Chain Review by machine – determine optimal level of assemblies to bring in and what suppliers should manufacture the parts
    • Kit the parts by machine
    • Pull System / lead time reduction with suppliers
    • Blanket orders w/releases for production parts
    • Explore additional consignment
engineering projects
Engineering Projects
  • Type of Production
    • 100% Engineered “One Off” parts
  • Competitive Pressure:
    • Parts are never fast enough…
    • Communication for part timing not always ideal
    • Massive disruptions of the supply chain – without forecasting
    • No timing on the part level – tying to build timing
  • Counter Measures to explore:
    • Stage/Gate Process set up to forecast demand (Complete)
      • Plan part arrivals and priorities per timeline and build
    • Engineering purchasing in engineering area (Complete)
    • Hold regular supply chain update meetings (Complete)
    • Attendance in Engineering Planning meetings to manage supplier capacity planning
    • Set up “Prototype” suppliers that have rapid turnaround that does not interrupt production schedules
miscellaneous system improvements
Miscellaneous System Improvements
  • Measures to explore:
    • ABC analysis and fixing order frequencies to match
    • Suppliers – portal expansion
    • RFQ – can be shifted to on line pricing
    • Prints – to investigate share site
    • Hold Design reviews with suppliers for cost reduction / Lean ideas
case study supply agreements
Case Study: Supply Agreements
  • Worked out a 3 year supply agreements with three key partners
  • Identified as the source for certain product lines
  • Suppliers now has
    • Steady flow of business
    • Can plan raw material group purchasing & labor
    • Can proceed with expansion plans
  • Provisur now has
    • Achieve volume / cost savings reductions
    • Working to a pull system
    • Working on Kitting

Worked with Ace Metalcraft – savings totaled $340K / year…. w/ cost reductions

case study brazil local sourcing
Case Study: Brazil Local Sourcing
  • No aftermarket sales in Brazil – all locally produced by competitors
  • Provisur has competitive advantage with quality
    • Can not compete with Price (after Duty) and Lead Times
  • Strategy
    • Setting up presence in the country
    • Stocking high volume parts
    • Sub assemblies to be supplied from US suppliers – finishing in Brazil
      • This allows customization of parts to customer needs
    • Will come to supply base to determine the “best” level to manufacture and ship to Brazil
case study npd sourcing plans
Case Study: NPD Sourcing Plans
  • Past Practices
    • Quotes are for 1,3,6,12 quantities
    • No given volume forecasts
    • Each part purchased separately
    • Suppliers will supply up to 60 parts (with sixty line items) for each machine
    • Various pricing, volume etc. making for an accounting nightmare
  • Strategy
    • Quote parts by “Family of a Machine”
    • Complete Sourcing Strategy for each machine
      • Identify what assemblies, sub assemblies and kits should be combined
    • Quote 3 Year packages for parts and machines
future project machine components
Future Project – Machine Components
  • $30M / 3 yr program will be tensioned in upcoming months
    • This includes approximately $6M of new aftermarket parts from Weiler and Behive
  • 3 year supply agreements that incorporates the following:
    • Increase value
      • Assemblies, kitting, multiple processes
    • Reduce / stable cost through
      • Volume planning, inventory reductions, material handling
    • Lead us through lean fundamentals
      • Lead time, quality, waste reduction
  • Timing
    • Develop strategy and communicate to supply base by 10/2011
the keys for the future
The Keys for the Future
  • Suppliers need to be able to:
    • Articulate a vision for future plans
    • Proactively improve the supply chain
    • Add intellectual human capital to create value in the supply chain

Jointly we need to proactively bring solutions