Success Story: Supply Chain and Operations Transformation (CS217a)
Accelerating measurable, sustainable improvements in operations excellence and procurement in a high-tech, low-volume production environment.
This story is for CEOs who:
- Operate in a complex, high-tech, low-volume engineering and production environment
- Need to break through functional silos and align the business to deliver an enhanced customer service experience
- Want to transform their supply chain and operations to accelerate and drive change and improve EBITDA
Oxford Instruments is a leading provider of high technology products and services to the world’s leading industrial companies and scientific research communities to image, analyze and manipulate materials from the micro down to the atomic and molecular level. For over 60 years, the company has empowered customers to accelerate their applied R&D, increase productivity and make new scientific discoveries; providing the basis for innovation across a range of markets and industrial sectors. This has enabled: the shift to a greener economy; improved healthcare; increased connectivity; development of advanced materials and leaps in scientific understanding.
As part of its new strategic direction, Oxford Instruments' senior management and the board recognized the need to improve operational and procurement performance across its business units in the United Kingdom. The organization had recently announced its new 'Horizon' strategy, which focused on delivering customer-centric solutions to drive long-term sustainable growth and margin improvement. However, leadership were aware that their organization did not have the internal bandwidth to drive change at the pace they wanted to achieve. As a result, they decided to seek an outside partner to help develop and install a new supply chain founded on fit-for-purpose cross-functional, S&OP, manufacturing and procurement processes, while maintaining world-class innovation capabilities.
"Working with our leadership, middle management and on-the-ground teams, Maine Pointe helped us deliver significant improvements in operational excellence and implement strategic procurement across our UK businesses. They brought the operating practices and the experience we needed to achieve measurable results for our business and our people.” Ian Barkshire, Chief Executive Officer
Developing a pragmatic journey for rapid improvement
Maine Pointe’s analysis team found opportunities to improve the processes and capabilities in both operations and procurement (below level two on the five-level maturity pyramid). There was minimal cross-organizational collaboration in the UK business units and Oxford Instruments did not have many of the processes in place it needed to drive alignment. The ‘innovation culture’ in the businesses was causing inefficiencies in both operations and procurement. Maine Pointe’s team worked hand-in-hand with our client's people to address these issues and help realize the multimillion-pound savings and improvement opportunities our analysis identified. The key focus of the engagement was to develop and install an enhanced approach to the supply chain founded on a fit-for-purpose cross-functional, S&OP, procurement and operations excellence environment.
"We are very happy with the outcomes of our work with Maine Pointe. By working with and alongside our teams you have helped us to rapidly develop the capabilities to sustain and build on the improvements we have delivered together in the first six months.” Vicki Potter, Group HR Director
Improving throughput to increase growth opportunities
Oxford Instruments was faced with some challenges to reliably deliver products to customers resulting in a significant backlog at one of its major plants. They needed to optimize operations and overcome inefficiencies to improve output and maximize production.
Working closely with the Oxford Instruments team, Maine Pointe helped achieve significant labor efficiency and throughput improvements across the business, resulting in:
- Increased capacity in one plant to enable 27% growth in the current financial year and potential for a further 20% in the next financial year, representing tens of millions of pounds revenue generation
- Achieved 27% improvement in throughput on the production of a family of high-speed confocal microscopy products
- Achieved 25% throughput improvement on the production of a family of high technology cameras for microscope and laser applications and eliminated a 15-week backlog (these two product families are responsible for 96% of a key business unit’s output)
- Achieved 16% throughput improvement at another plant, specializing in dispersive spectroscopy
We want to thank the Maine Pointe team for their efforts. We are very happy with the results achieved and can safely say that the engagement had a positive impact on our financial performance.” Gavin Hill, Group Finance Director
Improving procurement competitiveness
The goal was to establish a group-focused approach to strategic sourcing and install a process to deliver annualized cost reductions across the group with a revised fit-for-purpose procurement structure that maintained Oxford Instruments' reputation for innovation. Maine Pointe performed a market analysis to identify potential suppliers and gather data on the current climate before taking the key categories to market via a strategic supplier forum. This exposed incumbent suppliers to a competitive environment and has driven significant percentage savings and strategic input in all five business units (double digit in most cases and as high as 30%).
Maine Pointe and Oxford Instruments worked together to establish a supplier conditioning protocol and build a customized training plan to elevate the procurement acumen of the cross-functional teams.
- Enhanced procurement competitiveness and drove double-digit savings across five business units
- Installed a procurement management operating system to enhance sourcing performance
The work of Maine Pointe’s procurement team has been outstanding, without it we would never have been able to take so many categories to market so quickly with such positive results.” Jason Williams, Head of Strategic Sourcing
Improving forecasting, management visibility, KPIs and control
At the beginning of the engagement, only one of the business units had a recognizable sales & operations planning (S&OP) process in place. Maine Pointe helped implement an enterprise-wide S&OP approach. This has led to enhanced customer on-time-in-full (OTIF), improved forecasting, better utilization of working capital and improved categorization of inventory. We reviewed the parameters through which inventory is planned and put in triggers to identify potentially obsolete inventory and mitigate it. Moreover, the S&OP process has enabled lead-time improvement in the supply chain and helped create a more level demand.
Working closely with the in-house data and information processing team, Maine Pointe used data analytics tools to define new KPIs and re-categorize data. This enabled the creation of a standard management dashboard to establish key measures of performance and unify them across the business to make faster, data-driven decision making.
In addition, Maine Pointe carried out competitive analysis on DSI (day sales of inventory). This provided insights into the company’s position against market competitors, forming the basis of a methodology and unified categorization for inventory and parts management going forward.
Maine Pointe's operations support enabled my business unit to achieve record output and beat its annual budget." Gary Wilmot, Managing Director, Andor
Improving people and processes
The management operating system (MOS) and procurement management operating system (PMOS) Maine Pointe helped develop and implement provided Oxford Instruments with the tools, structure and behaviors to improve the maturity of its operations and people. Upgrading the capability of supervisors and line managers means they are able to use this system to effectively balance production by improving operations planning, resource allocation and product costing.
Our people now have enhanced skills to enable them to sustain the improvements we have achieved through our partnership with Maine Pointe and to realize additional savings and improvements in the year ahead.” Simon Holden, Managing Director, Nano Science
As part of its new strategic direction, Oxford Instruments' senior management and board recognized they needed a partner to help accelerate operational and procurement performance across the company’s divisions in the United Kingdom. In this highly complex, low-volume, nanotechnology environment, Maine Pointe worked side by side with Oxford Instruments to achieve the following results:
- Increased revenue by 27% in one plant and 16% in another by improving throughput to capitalize on growth opportunities
- Enhanced procurement competitiveness and drove double-digit savings across UK business units
- Improved forecasting, management visibility, KPIs and inventory control as part of an enterprise-wide sales and operations planning (S&OP) process
- Infused operational excellence and procurement best practices by implementing new procurement and operations management operating systems
- Developed a common cross-functional and cross-organizational approach and structure to support corporate strategy, focused on improving operational excellence and customer intimacy
- Enhanced the supply chain maturity of people, processes and capabilities
- Achieved a 3:1 engagement ROI in year one leading to a 5:1 ROI in year two
Lessons learned for other executives
- Allowing innovation to lead your business can lead to inefficient behavior
- If you have an innovation-led business and want to move to more market led, you need to encourage engineering to work in cross-functional teams
- Your engineering teams need to be able to provide clear data and drawings in order to drive rapid change in procurement