Wavin is the leading supplier of plastic pipe systems and solutions in Europe. The company provides essentials: plastic pipe systems and solutions for tap water, surface heating and cooling, soil and waste, rain- and storm water, distribution of drinking water and gas and telecom applications.
Wavin is headquartered in Zwolle (The Netherlands) and has a presence in 25 European countries, with manufacturing sites in 18 of those. The company employs 6,200 people and reported revenue of more than EUR 1.3 billion for 2011. Outside Europe, Wavin has a global network of agents, licensees and distributors and an office in China.
In the past, Wavin had launched a risk/ revenue-sharing cooperation with a number of suppliers. For the Tegra 1000, Wavin invested in the moulds and Supplier in an injection moulding machine. By means of a volume commitment, Supplier would earn back her investments with each delivery to Wavin operating companies
Supplier produces Tegra inspection chambers. This production is being initiated based on rolling forecasts, supplied by the various OC (countries). In daily practice, six OC are sourcing products from Supplier.
The forecasts sent to Supplier should enable her to minimize the production change-overs, to optimizing the supply chain and keeping a high service level towards the OC. In order to balance between make-to-order and make-to-stock, Supplier receives a compensation for goods on stock. In daily practice, Supplier claims that it incurs high complexity caused by ‘sudden’ purchase orders. They are forced to rent more stock area, while having problems with service levels on actual orders. This is to a large extend impacted by a low forecast accuracy.
Wavin has decided to introduce an extension of the Tegra program, while maintaining the old generation in the market. This increase in assortment has fueled new discussions between Wavin and Supplier on the set-up of their production & supply chain, including the responsibilities in the various areas, like stock management, obsolescence, etc.
Supplier has stated that the current way is working is insufficient to cope with the new, higher complexity. This resulted in a new approach on supply chain management (stock management and ordering / supply). It has been agreed to improve / formalize the communication of supply chain information and to make additional agreements on forecasting, planning, stock management, ordering and supply. This has been agreed on high level. Documented agreement which describes this in included in this document.
Supplier wants to receive a higher compensation due to the increased complexity. Wavin would expect lower rates now the volume has increased. To help Supplier in working ‘smarter, not harder’ a tailor-made, practical instruction shall be developed.
This assignment is supposed to be very pragmatic and execution driven. Every step can be implemented after approval by Wavin and Supplier and is a next step in the collaboration between Wavin and Supplier.
The goal is to transfer the medium term planning from Supplier to Wavin. This way we get more control over the supply chain, can take more responsibility and can reduce the compensation Supplier gets for stock management and stock keeping.
Success of the assignment is based on
- a tool to minimize unplanned production change-overs
- the availability of the products increased
- the total stock has reduced
- the investment Wavin has made is being paid by lower compensation to Supplier
Analyze the impact of the current way of working in terms of production planning, supply chain metrics (stocks, demand pattern, obsolescence, etc.) and costs
Further describe the required way of working in more detail, using best practice in the area of CPFR (Collaborative Planning Forecasting and Replenishment).
Develop a forecasting and forecast review process for the described assortment and determine the run strategy and required safety stock per material at Supplier.
Analyze the stocks in the supply chain and develop some recommendations to further decrease the stock in the supply chain.
Develop next steps in the collaboration between Wavin and Supplier. This includes recommendations on how to implement this into our Information system / planning tool SAP R/3, SAP APO.