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Manoj Solanki
Winning at the Hand-Offs Manoj Solanki 1 Purchasing Functional Areas Commercial Functional Excellence Supplier Quality 2 Collaboration & Governance Purchasing Functional Areas Commercial Functional Excellence Supplier Quality 3 Collaboration & Governance Purchasing Functional Excellence Progression Partnering with businesses to make them more successful 4 Current Purchasing Organization Structure Manoj Solanki Purchasing Leader – India ABO N.S. Giri Guru Raj Purchasing LeaderPurchasing Leader PFE IPO Zaki Ansari Vipin Kaul Vijay Inamke TCL CIP IEBU Makarand Joshi DBU 5 Hemant Kunjir Hitesh Dang CES CTT Vikas Meel PGBU Shamsundar Kadoli NRPI/ Recon Proposed Purchasing Leadership Structure 6 7/18/2014 Cummins Confidential Subject Matter Expertise Progression - Castings Process • • • • Resourcing VPI projects Supplier Assessment Alignment with Global SME’s • Problem Solving • Training • Initiated Casting SME 2012 Q4 2011 Reactive • 40+ projects in Work plan • People & Skill development • Casting Council 2014 2013 Reactive + Proactive Proactive + Predictive Year2013 Casting spend (Mn $) Number of SQIEs for Castings 7 297 38 FC Year 2018 Growth Spend and Resources 600 50 Purchasing Functional Areas Commercial Functional Excellence Supplier Quality 8 Collaboration & Governance 2013 Spend by Commodity Excluding Inter-company purchases 9 Total 4743 Cr. INR Cost Reduction Initiatives – ACE III Distribution of cost reduction levers Packaging 1% Process Improvement 3% • ACE III kicked off in July 2011 involving 8 entities in India Logistics & Taxes 8% Indegenisation 37% • Structured 9 step TCO reduction program over 3 years • Cross functional team engagement led by Purchasing across India entities Negotiation 10% Resourcing 27% 10 Key Points • Conducted supplier workshops and tear down exercise to generate cost reduction ideas Value Engineering 14% ACE I ACE II ACE III Savings Target % of compressible spend 30% 20% 20% Savings Actual % of compressible spend 22% 14% 17% • Key Levers :Value Engineering, Re-sourcing, Indigenization, Negotiation & Logistics Commodity Wise ACE III Savings Engines Precision Machining & 3% Hardware 6% Overhead and Power Cylinder 2% Assemblies 25% SSF 6% Block & Head 6% Machined Castings 18% Forging 12% Elect & Electronics 17% 11 7/18/2014 Cummins Confidential Dual & Parallel Sourcing Total Value of Performance framework Comprehensive Risk Management system Enterprise supplier development process Risk Reduce Six Strategies- Reduce risk & Increase value extraction Increase Engagement with new product development Collaboration with internal & external stakeholders Reduce Increase Value / Performance 12 Purchasing Functional Areas Commercial Functional Excellence Supplier Quality 13 Collaboration & Governance Supplier Focused Six Sigma 2011 2012 2013 Projects completed by Cummins trained supplier belts 8 19 10 % of Suppliers trained on six sigma 1% 2% 4% % of Cummins employees* trained on six sigma 36% 40% 49% Supplier focused projects completed by Cummins Belts 24 21 21 Increase use of Six Sigma Operationalize it Execute Self Sustaining Programs * Exempt employees 14 7/18/2014 Cummins Confidential Tools-Process-Handling : T-P-H at all Hand Offs Why? Winning at hand-offs Journey towards zero defects What it means? Tools Right tools and equipment Nonadherence Contribution in Quality PPM 15 14% Process Right process for fit, form and function 58% Handling Right handling for dent and damage free products 28% “Improve your internal hand-offs” Purchasing Functional Areas Commercial Functional Excellence Supplier Quality 16 Collaboration & Governance Enterprise Risk Management Single Source Risk Tier II Supplier Risk AIAG CQI-19 sub tier supplier management process Operations Risk Competitors / Emerging Competitors Risk Employee Engagement Risk Information Technology Risk Product Reliability / Warranty Risk 17 7/18/2014 Liquidity / Capital Resources Risk Product Development / Disruptive Technologies Risk Compliance Risk Financial Reporting Risk Strategic / Market Discontinuities Risk Customer Risk Legislation / Regulations Risk C-TPAT Legal Risk Reputational Risk Joint Venture Risk Sustainability Risk Industrial Relations Risk Cummins Confidential Energy Price & Availability Risk Pension & Benefits Risk Prohibited and Restricted Substances How does Cummins communicate on our P&R Substances? 1. The Cummins Supplier Code Of Conduct (SCOC) requires P&R Policy Compliance 2. The Cummins Supplier Handbook requires P&R Policy Compliance 3. All Cummins drawings new or revised in the past 9 years have Cummins Engineering Standards (CES10903 and CES10908) listing P&R Substances 4. The latest list of Cummins P&R Substances can always be found at the Cummins Supplier Portal at www.supplier.cummins.com 5. This list includes Product Substances (in our products) and Process Substances (used in our facilities). 18 Minimum Insurance Requirement The minimum acceptable level of insurance that Cummins requires a contractor/vendor / supplier to carry in different circumstances that permits them to do business with Cummins. Spend Range (in USD) Less than $ 3 Mn Annual Spend $ 3 – 5 Mn $5 – 8 Mn $ 8 – 10 Mn $ 10 – 20 Mn $ 20- 25 Mn Above $ 25 Mn Revised CGL Limits for India Region For Direct Supplier MIR Commercial General Umbrella /Excess Liability Liability $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 Nil $200,000 $400,000 $800,000 $1,000,000 $1,500,000 $2,500,000 For more details, visit the AON exhibit 19 Corporate Social Responsibility Technical Education in Community (TEC): A global initiative that targets the technical skills gap through local vocational education programs TEC and Suppliers: Cummins suppliers facing similar skills shortages could be ideal partners to support TEC in our shared communities Water Neutrality: 20 7/18/2014 Cummins Confidential Diversity Procurement India Guidelines Inline with Global sourcing initiative, we plan to increase spend from QUALIFIED suppliers in India representing the following groups: 1. Small businesses - characterized as MSME Micro, Small and Medium enterprises as per MSME Act 2006 2. WBE - Women Business Enterprise 3. Disabled (Philanthropic) Engaging differently abled workforce 4. SEED - Socially, Educationally and Economically Disadvantaged Groups 21 Cummins Confidential To Summarize… TO: Selecting and managing suppliers to enable market focused supply chains Commercial FROM: Cost based supplier selection Functional Excellence Supplier Quality 22 Collaboration & Governance Expectations from our suppliers Safety First – Eyes Open Audit during ALL Cummins visit Open Communication on Constraints – No Surprises Cost Reduction – Support us in our effort to be a Low Cost Producer through ACE Capacity – Ensure timely capacity planning Quality – Embrace Six Sigma in journey towards Zero Defect Focus on T-P-H Risk management – Tier II management, Compliance, IR Collaborate – NPD – Early engagement, Bring Innovation and Creativity in Design Corporate Social Responsibility – TEC and Water Neutrality We appreciate our relationship – THANK YOU !! 23 Winning at the Hand-Offs
