Roberto Crippa: “If you try to manage new business with old rules you fail”

Until June of this year, Tecniplast, an Italian manufacturer of laboratory equipment and specialised plastics, did not have a formal supply chain. This was the stumbling block for this ‘pocket-sized, multi-national’ company with 30,000 m² of production and assembly facilities and sales worldwide.

The business and the mind-set of the company had already moved from one that used to sell products to one that manufactures and delivers complex solutions. Such a transition requires a profound redesign of the Operations in order to meet the challenges of increased complexity and volatility: this was the reason the company invited external consultants to analyse the problem and design a long-term improvement Roadmap. This immediately highlighted the need for an end-to-end process view of the supply chain. Roberto Crippa was the consultant involved, who having set up the supply chain was then asked to stay on and run it.

Located near Milan, Tecniplast runs two different businesses with different propositions and dynamics. One is the customised manufacturing of high quality design plastic objects such as tables and chairs. The other is cages and animal housing (including aquatics) for animal biomedical research. Here he describes his new supply chain agenda.

Q: What is the strategy of the Company (or Division/Supply Chain): Operational Excellence, Product Leadership or Customer Intimacy?

A: “Product Leadership and Customer Intimacy are two pillars that support our way of doing business.
Our typical customers are research centres of big pharmaceutical companies, universities or national health organisations. They are very sophisticated and demanding. Innovation drives our product leadership: innovation is key.
Operational effectiveness is a must. We have to be reliable with our deliveries because our solutions are often part of new facilities build-up, and we have to be able to keep our promises and be in synch with the whole installation phase. Operational efficiency is gaining momentum and will be key. The business is getting tougher as more and more professional buyers at Customer’s site are managing procurement and purchasing. They are more attentive in terms of costs, making tenders etc. More over, with different facets according to geography and product lines a “one-size-fits-all” Customer Value Proposition does not exist in our business. Our supply chain has to cope with that and must be designed accordingly. This is why the Customer Value Proposition analysis was at the foundation of the SCM organisation design and build-up.

Q: What is your responsibility regarding the supply chain?

A: “Supply Chain Director of this newborn department. It didn’t exist before June 2014. I designed it as an external consultant, and then I was invited to run it too. I’m having lots of fun! I am responsible for the end-to-end SCM organisation including

(1) Demand Management (demand forecasting, scarcity management and part of sales back office). I have to keep close contact with our subsidiaries and major customers because being able to squeeze more visibility out of the sales channel is crucial. I need to find the most appropriate moment in time when an offer or bid can be used for planning purposes. Because we have configurable products there are thousands of combinations, so we have to plan at a “product model” level.

(2) Supply Chain Planning (master & materials planning and plant scheduling). From a conceptual perspective, we deal with suppliers, contractors and internal plants in the same way. One of the tricky things in our business is that some technological manufacturing processes, like moulding, are shared by our two main business streams, and we have to keep an eye on both and plan and schedule for two different downstream supply chains.

(3) Logistics (inbound/outbound transportation, materials and finished goods warehouses). On one hand we are a small to medium enterprise working in a small specialised sector but on the other hand we are a pocked-sized multinational: We have manufacturing plants in Italy and the USA, and sales companies in the USA, UK, Germany, France, Japan, China, and Australia. We conceive transportation management in a holistic way: whether materials are coming from a supplier or a finished product is going to a customer, it’s about connecting the dots on a map and trying to optimise the total amount of logistical flow.

(4) Master Data Management, firstly the “manufacturing side” of product lifecycle management, all routing parameters, safety stocks, lead times etc, plus Item Masters. This is part of the supply chain organisation and if it is not working you cannot have appropriate control of flow and finance cannot have appropriate control of costs. It is crucial. In many organisations this topic is often overlooked.”

Q: What are the main business challenges that drive supply chain projects at the moment?

A: “The business is rapidly evolving toward an engineering/turnkey solution-oriented one. Product complexity is increasingly driven by more advanced functionalities, electronics and system integration. Visibility is fading away and the order book is shrinking. It used to be so that orders were confirmed months in advance. Nowadays, customers delay placing an order until their investment and funding is confirmed. This increasing uncertainty is shortening leads times and the whole business is operating in a more and more leapfrog-style. Break – accelerate – break.

This is very challenging for a supply chain. Some products may even need to be designed so we need to involve engineering in order to find a new solution to help the customer meet its needs and budget. However, if you operate as a pure make-to-order company you are dead. We need to carefully evaluate the risks we are taking because many components are costly and may only be used in very few products. Therefore we need sensors in the market, sensors that properly understand the market and the sales channel. All the above have a key role in driving all-round supply chain projects, ranging from CRM integration, to upstream/downstream collaborative planning, to Integration with R&D and finance.

Physically it is very dynamic, especially as I prefer to have direct contact with the shop floor, meet customers and talk to engineers about the product. It makes things more concrete. This business is also changing. The aquatic division is gaining momentum as the future of live animal research moves towards fish embryos. The facilities comprise large surfaces with robots supplying with appropriate diet and 24-hour per day monitoring.

The way in which we design the product variety affects very much the way in which operations can manufacture. The wrong decision made during the design stage can cause problems for the whole lifecycle of the product. A technician has a different perspective to the way in which the supply chain can manage variety. The secret is to produce perceived variety for the customer without increasing complexity in supply chain and manufacturing.”

Q: Which supply chain challenges keeps you awake at night?

A: “Decomplexing” and streamlining the system: When you move from an old-style manufacturing business to an engineeringoriented one, complexity explodes. If you try to manage the new business with the old rules you fail. You need to be mentally flexible. You have to understand what is the very essence of the problems you’re asked to solve. Why do we need to do that? Is it really a good solution for the business as a whole? This is where 26 years in the business comes in handy: System dynamics and system thinking helps a lot.

We do not have infinite resources and so it’s important to choose the right battles. You have to keep the target in sight but the battlefield is changing under your feet! We’re living in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world and the business is also VUCA. You can’t predict what will happen in a macroeconomic perspective in one, two or three years. If the economy slows down so does financing for research. Who knows, maybe Ebola the threat will increase research funding again and the cyclical pattern of investments will change its shape…”

Q: What do you do about these challenges?

A: “We constantly monitor the big picture. An extended SCM SWOT analysis was performed when the SCM Organisation was put in place, four months ago. Because the battlefield changes, it will be revised every six months to check long-term variations. We have weekly meetings and we’ve adopted a Triage-like technique coupled to quick risk assessment to capture, qualify, evaluate and monitor every arising issue. According to the Triage classification, issues are addressed with the appropriate action items (What/Who/When/How). All the above is shared and discussed in a weekly meeting with my department managers. We also share “worst practices” (i.e. what went wrong and why); quite often you learn more by examining worst practices that best ones. If you want to prevent a disaster you need to analyse the near misses and how to avoid them in future.

We also working to build resilience into the supply chain and structure ourselves so we are less impacted by adverse events. We try not to rely on single suppliers. Sometimes we have capacity shortages in supply so we need to find ways to mitigate that perhaps by having two or three alternative suppliers who can be activated when needed. Of course this sort of insurance comes at a cost, that needs to be carefully evaluated in advance. Some of the components are very specialised so cooperation is the key.”