One of the world's largest manufacturers of fire detection solutions for commercial and industrial applications, Apollo Fire Detectors Ltd is a UK based manufacturing business offering leading-edge product design and development. The company holds in excess of 3,000 product approvals worldwide as well as a number of internationally recognised quality and environmental awards. Its factory, based in Portsmouth, has the capability to produce up to 50,000 devices a day and its in-house testing facility is one of the best in the industry, with testing carried out to international standards in each of its four laboratories.
Change management programme instrumental to growth
Despite Apollo's success and its position as market leader, the management team realised that to enable it to continue on its path of growth and meet the demands of the marketplace, it needed to make some fundamental changes to its business operations. With this in mind, it embarked on a change management programme that saw it update and refresh its business processes, including a change in its legacy ERP system. This in turn identified the need for an efficiency drive that would create a leaner, more cost effective supply chain.
Relying heavily on a roster of 150 preferred suppliers, of which eXception Group is within the top 3, Apollo realised the need for a review of each supplier that would enable them to be bought into line with its new directive which included: reduced stock levels being held on site; increased flexibility to cope with surges in demand; a single price point; less administration; reduction in 'fire-fighting';
eXception Group supply integral to Apollo's manufacturing facility
Delivering 4.8m PCBs (printed circuit boards) every year to Apollo, Tim Coletta, Supply Chain Manager at Apollo explains how integral eXception is to its manufacturing facility and why he felt positive they could step up to the challenge of coming in line with the new standards required by Apollo's new supply chain policies.
"eXception is a critical supplier, they supply us with a component which is fundamental to our products. With all our products manufactured in the UK for delivery to subsidiaries all over the globe, this predicates the need for good suppliers. Having worked with eXception for over eight years, we knew that they had the potential to meet the challenge we set them to increase efficiencies and deliver a service that met the needs of our improved operation."
Making improvements on service and delivery
Having recently gone through a process of change itself, eXception, led by a new management team, was delighted to listen to Apollo's suggestions for change, and work in partnership with the objective of improving its service and delivery to them. Having itself put in place new business practices and procedures to improve its offering to customers, especially in relation to supply chain management, Steven Healings, Supply Chain Director at eXception felt confident the company could match the high standards set by Apollo. "In any business relationship it is essential that suppliers listen to their customers and understand their key business drivers, and fundamentally be prepared to adapt their own process to meet new challenges, no matter how long you have been working as a supplier for that customer. You must never take a customer for granted", says Steven Healings. "In Tim Coletta at Apollo we have someone who can clearly express the new business challenges and set the right environment to work in partnership to achieving them."
eXception worked closely with Tim Colletta and the Supply Chain team at Apollo, proposing significant changes to working practices by devising a methodology that would instigate an approach to help it achieve the objectives and targets set.
Analysis of the current situation was key, so the eXception project team analysed the past, current and future demand profiles for all of the 150 product lines supplied by it. Products were split into runner, repeater, and stranger categories (ABC) and flexibility and liability levels were agreed. Through a number of joint workshops and scenario planning sessions, strategic buffer levels, re-order qtys and order horizons were all agreed and cemented in place via a new Service Level Agreement (SLA). The new SLA adopted a methodology which moved the pricing policy from one which was variable based on batches sizes order and logistics methods used, to a single price per product, further reducing complexity and administrative time.
Regular reviews are necessary to achieve continued success
This is an ongoing process and the respective teams meet on a quarterly basis to review performance, fine tune the processes and ensure that there are no surprise as the business requirements change.
Adoption of the new policies and methodologies has reduced the administration time spent by both Apollo and eXception in purchase order placement, acknowledgement, reschedule and cancellations. This in turn has freed eXception to manage Apollo's supply chain far more efficiently, including ordering in large batches, fewer Purchase Orders placed, a significant reduction in changes to Purchase Orders and the use of low cost logistics solutions. As a result, a large amount of the "fire fighting" approach to program or product changes has now been taken out of the supply chain processes. eXception has also been able to meet Apollo's cost reduction challenges, while improving stock availability and flexibility.
On time deliveries from eXception to Apollo are up from 96.7% in 2010 to 99.8% in 2011, and are expected to match or exceed that in 2012. Stock levels held at Apollo had fallen from around 20 days of supply to less than 5 days of supply with some high running parts averaging 2.5 days of supply.
Tim Coletta believes the transformation in the relationship the company has with eXception is truly exceptional. Since the new approach, it's seen significant savings over a 12 month period, and expects more significant savings in the next six months. He commented, "eXception met our needs in every way. Within the organisation they are now known as a 'whisper account' which means our buying personnel spend the maximum of 15 minutes each week over the phone. It's seamless, we have deliveries twice a week, hold far less stock, are able to quickly and seamlessly respond to spikes in demand. As such, our risk exposure has reduced significantly. We now have in place World class policies and procedures that we will continue to replicate with other preferred suppliers."