Supply Chain Management Award for Adva Optical Networking

ADVA Optical Networking, a Meiningen based manufacturer of telecommunication equipment focusing on fiber-optic transmission technology, is the winner of the Supply Chain Management Award 2013. ADVA Optical Networking is being honored for the end-to-end supply chain solution with which it has secured strategic advantages. The Supply Chain Management Award 2013 was presented at the inaugural Exchainge – the Supply Chainers’ Convention in Frankfurt on June 18, 2013.

 

Photo: Andre Baschlakow (Logistik Heute, 2013)

The jury was impressed by the systematic integration of the business model and supply chain model. “The development-driven company created an agile supply chain organization based on the needs of its customers. The result is that Adva Optical Networking can now serve its customers faster, with better on-time performance, and at lower cost than its competitors,” noted juror Harald Geimer,Partner at PwC, summarizing the reasons for the jury’s pick.

Efficient balance

“ADVA Optical Networking has succeeded in striking an efficient balance between the varying demands of suppliers and customers, establishing a critical competitive edge that allows this medium-sized enterprise to thrive among the big players,” remarked Petra Seebauer, Director of Publishing at Hussverlag in Munich and editor of the trade publication Logistik Heute, speaking of the winning solution.

“With this solution, Adva Optical Networking can offer valuable insights to other sectors,” praised speaker Pavel Krych, Director of Technical Purchasing at Deutsche Telekom, in his congratulatory speech. The supply chain solution from Adva Optical Networking is in a class of its own when it comes to planning and translating planning into production, says Krych, noting that ADVA Optical Networking found an elegant implementation of an innovative idea with its supply chain segmentation customized to the specific needs of the industry.

Paulus Bucher, Senior Vice President of Global Operations at Adva Optical Networking, was very pleased with the distinction: “Our industry is characterized by intense global competition. We thrive in this aggressive environment thanks to three key qualities that define who we are: innovative power, speed in addressing customer requests and new trends, and the ability to build long-lasting relationships of trust with our customers. Supply chain management plays an important role in addressing all three competitive advantages. The transformation was the logical culmination of this insight and required a great deal of commitment and elbow grease at all levels of our relatively small but global organization. It means a great deal to us to have all our hard work validated by this coveted award.”

Radical transformation

Adva Optical Networking built on its global supply chain strategy to standardize its processes and systems around the world, improving customer focus and establishing a strong competitive stance. End-to-end supply chain optimization that extended beyond development, production, and sales to include suppliers made it possible to establish a powerful and comprehensive supply chain. The pull-based solution that was implemented features an unprecedented level of flexibility and boasts measurable results, a wide array of customer-specific solutions, and best-practice processes. This led to a reduction in supplier lead time of over 50 percent, an increase in on-time delivery from 85 to 97 percent, and an acceleration in stock turnaround from 3 to 6 times annually. These improvements required a radical transformation at all levels of the supply chain that was achieved in less than 2.5 years.

The flexibility this yielded is key to the success of Adva Optical Networking in keeping both its customers and its suppliers happy. While the customers have the products delivered at relatively short lead times of 15 days on average, the suppliers have long lead times of 4 to 12 weeks.

Segmentation

The end-to-end and cross-enterprise segmentation of the supply chain – from the supplier’s supplier to the customer’s customer – is a unique innovation in the industry. Segmentation means defining and differentiating segments on the basis of the product portfolio and the existing demand structures. This makes it possible to effectively and efficiently serve distinct portfolios. Production and planning have also been decoupled. This two-stage approach enables late-stage customization – customer-specific product configuration and adaptation in the regional final assembly centers – enabling a quick response to changing customer demands and a high degree of flexibility to satisfy customer wishes. Close collaboration of this type between developers and suppliers makes end-to-end optimization possible.

“This so-called end-to-end segmentation of the supply chain in conjunction with decoupled production and planning is the key to customer-specific product configuration in the regions,” notes Geimer from PwC, explaining the innovative approach.

Differentiated planning groups make it possible to serve customers with optimized lead times – individually arranged by product group based on the customer’s specific needs. A prime example is the end-to-end planning model offering ten planning groups that draw upon more than seven different  distinguishing criteria as well as real-time planning optimization. This means that the regional account managers can immediately gauge the effects on time-to delivery and adjust the product configuration directly if needed, thereby providing input to the weekly planning process.

Two-stage production with the centralized manufacturing of product components and customer-specific configuration regionally also offers greater flexibility to the customers. This puts the business in the position to respond as late in the process as possible to changing customer requirements and manage stock and production times with flexibility. The end result is that Adva Optical Networking serves its customers faster, with better on-time performance, and at lower cost than the competition.

Top-tier finalists

Each year since 2006, the Supply Chain Management Award has honored the best value chain in the manufacturing industry. It is presented by PwC and the trade journal Logistik Heute in collaboration with the Institute for Supply Chain Management (ISCM) and the House of Logistics & Mobility (HOLM) to reward innovative solutions in supply chain management that have made significant contributions to competitiveness and paved the way for other companies. The award is presented to powerful end-to-end supply chain solutions and outstanding implementations within individual links in the value chain.

ADVA Optical Networking has prevailed in what was once again a strong competitive field. From two rounds of applications, four finalists ultimately emerged: The HealthCare Business Area of Bayer (Leverkusen), Intel Mobile Communications (Neubiberg), and Symrise (Holzminden), a global provider of fragrances and flavors. All the finalists presented compelling solutions, though they varied in their focus.

Bayer applied a comprehensive supply chain strategy to consistently optimize its end-to-end strategy from the supplier to the customer. Intel created an innovative, fully integrated solution for the entire supply chain of its Mobile Communications unit that supports a production network in a volatile market driven by the demands of applications and customers. Once installed, the solution achieved a high degree of automation and made it possible to significantly reduce stock.Symrise created an innovative, vertically integrated, farmer-to-customer supply chain for vanilla that fuels the company’s success in the market for vanilla fragrances.

An independent jury of 14 prominent industry experts, scientists, journalists, and consultants chose ADVA Optical Networking as the winner. Past winners are: Siemens Electronic Assembly Systems Division (2006), Siemens Gerätewerk Erlangen (2007), international packaging and paper group Mondi (2008), Henkel Laundry & Home Care Business Sector (2009), BMW Group’s Motorcycle Division (2010), BASF (2011), and Infineon Technologies (2012).

More information: www.beste-supply-chain.de