Can the right Supply Chain organization turn an industrial organization upside down?
At least, it can play an active part. KAILLE, a small business with around 100 employees, which
manufactures large air conditioners for professional use in Dunkirk, would like to prove this. Its clientele is
mainly one of opportunity (local SMIs as far north as Paris, as well as medium-sized and small businesses),
with no clearly established marketing strategy (from the bottom to the top of the range, KAILLE adapts to
each case by negotiating extensively; this is also what the boss, Jean CIVE, likes to do). However, over the
past 2 years, spurred on by the market and by the boss’s son, who is due to take over the management
reins, KAILLE has been keen to move into the consumer market and thus become a supplier to specialist
retailers such as Boulanger, Darty, Castorama, Leroy Merlin… except that the latter are very demanding in
terms of adaptation, customization, price and volume…
Consequently, to capture these new markets, the company would like to optimize its overall
organization. Jean CIVE has recently read in the trade press that many companies have overcome
difficult situations by completely overhauling their organization in order to produce more cost-effective
products that are better adapted to demand. What’s more, the current period is very favorable for
“Made in France”. So, as a rare pearl with your IAE training profile, you were hired in this difficult
context, as a Project Manager with general skills in distribution, management, auditing, information
systems and naturally in supply chain management, which is supposed to “encompass everything”.
The site covers an active area of 10,000 m2. Management would like to see the company’s overall
organization completely redesigned, with the emphasis on fluidity of flow. The director’s aim is to reduce
stocks, particularly of finished products, and to improve the organization’s productivity by implementing
supply chain management. At present, Kaille produces at the same rate throughout the year, whatever the
level of demand. As demand fluctuates widely and is often lower than expected, Kaille accumulates stocks
and the problems associated with them.
The company operates almost exclusively as a parts assembler, outsourcing production to suppliers who
are more or less reliable in terms of quality (albeit with a 5% return rate…), but who often fail to meet
deadlines (1 in 3 deliveries does not arrive “on time”!). However, KAILLE has always “made do”, as you may
have heard on several occasions during interviews with Jean CIVE and key executives!
Jean CIVE explains the reasons for this upheaval: “At present, the European air-conditioning market is
relatively stagnant. What’s more, competition from Asia is fierce. But current global warming and the
potential for more heatwaves are foreshadowing a significant and gradual increase in demand (from
businesses and private individuals). The recent (December 2023) disappointing results of Cop 28 in Dubai
reinforce, unfortunately for the environment, this upward market forecast. And let’s not forget periods of
confinement and the development of telecommuting, which has led many individuals to air-condition their
offices and homes, and who have since acquired a taste for cool air in their homes as soon as the outside
temperature rises. We have new products that are likely to gain market share and interest from the general
public, but we need to produce more, much more, without investing in any production assets. What’s more,
we have to produce them quickly and
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deliver in accordance with the requirements of our current and, above all, potential future customers of the
“We’ll even have to adapt our production to special requirements. If possible, we’ll even have to adapt our
production to special requirements. The solution? Given that 60% of the plant’s floor space is devoted to
the manufacture of sub-units (electrical boxes, motors, pumps, etc.), the company has taken a radical
decision: to further outsource the production of sub-modules in order to refocus on its core business – the
manufacture of refrigeration components and the assembly of finished products. “Our aim is to increase
production by a factor of at least 2.5, not only by transforming sub-assembly manufacturing areas into
assembly areas, but also by eliminating all – or almost all – storage areas in favor of production alone”,
explains Jean CIVE. KAILLE has also been approached by a major retail group interested in manufacturing
consumer and semi-professional air conditioners under its own brand names for its various banners (for
Auchan, Boulanger, Leroy-Merlin, Brico-center, Aki, Weldom, Bricoman…). This distribution group is very
demanding in terms of responsiveness and :
– as it has experienced serious setbacks with Asian producers in recent years,
– as weather variations become increasingly random: extreme heat can occur unexpectedly (see global
warming, discussed above),
– as transport costs (notably by container) have risen sharply, especially for very heavy products such as
air conditioners (incidentally, the price of a barrel of oil is rather high in this month of March 2024, and
forecasts are still rising, especially with the threat of the Ukrainian-Russian conflict spreading),
he decided to study the feasibility of models with KAILLE, who was very interested in this customer
diversification.
The only fly in the ointment is that such a reshaping will certainly generate a considerable increase in
material and information flows (multiplied by three, according to your estimate), which will have to be
managed much more finely than in the past. A high-performance information management tool is
therefore essential to support just-in-time work and “synchronized” supply chain management. This is
where new technologies and the creation of your job come in.
Based on a critical analysis of the existing situation, you will need to develop an optimized organization
using tools designed to provide information to suppliers and customers (professional distributors of KAILLE
products and potential mass retailers), who will need to be able to fine-tune the dates and content of their
deliveries (to their own customers) in order to reduce waiting times and, above all, meet promised delivery
deadlines. At present, the company’s various departments have a limited number of information
management tools at their disposal:
• Accounting and billing management: 2 separate software packages that are not easily compatible: a
billing employee who is a bit more “computer-savvy” is obliged to regularly export his billing data
with the Excel spreadsheet on a USB key; the accounting department retrieves it and imports the
data, but has to check everything because there are often errors.
• Planning: this is a solution developed from Microsoft Project, which has great difficulty in keeping
up with the reality in the field, which is subject to numerous hazards that distort the whole day’s
forecasts within an hour. Extract from an interview with scheduler Gary SITAMOB: “…for example,
all it takes is for a supplier to arrive a little late for the whole forecast to fall by the wayside; there’s
no way of integrating new elements in real time!”
• CAPM (Computer-Aided Production Management): the solution is highly technical, developed by a
specialist company, but unfortunately it cannot export or import in a format that can be
understood by Excel. Extract from an interview with Laurent BARRE, the CAPM pilot: “Every late
afternoon at around 4pm, Davy CONTRAIRE, who works in planning, brings me written documents
so that I can best prepare the programs and machines for the following day. But there’s no question
of last-minute changes, or even last-hour changes, or even last-half-day changes, ha, ha!
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• Inventory management: excerpt from an interview with Sandra GEFFROY, assistant: “The smooth
running of the system is due above all to the involvement of the people who work on it, because if
we had to rely on tools, we’d be in it all the time! It’s true that sometimes there are changes to the
nomenclature that we’re not made aware of, which means that we order parts or supplies that don’t
fit, but we rectify the situation afterwards! We can’t read the changes in a crystal ball if we’re not
told about them!
• Purchasing works on a fairly complete model still developed on Excel spreadsheets by the
penultimate purchasing manager, who was a “keyboard tinkerer”; this Excel solution is linked via a
classic internal network from the early 90s, to stock management and accounting, but for the latter,
with a middleware solution that is not always very reliable.
• Marketing has become more isolated over the years. The department’s 4 employees are mainly
involved in media communications, mainly with construction and real estate trade journals. The few
customer studies carried out are not exploited, due to the lack of an effective internal
communication system.
• As for the sales department, it has long since stopped actively seeking out new customers,
contenting itself only with maintaining existing ones and performing administrative tasks; a
customer file is kept, always on an Excel sheet.
Jean CIVE has heard of the big software companies when he attends trade shows, but doesn’t quite see
what’s “hiding” behind these behemoths, which scare him a little; however, he’d like you to dig into this
aspect, as he doesn’t know where to start. Of course, there are small developers of local solutions, but
what can you do? You’ll be sure to explain the reasons for your choice in your report!
In KAILLE’s production system, an important point is the nomenclature1
because the number of air-
conditioning system references is large; the ideal for suppliers is to know KAILLE’s production plan several
weeks in advance (up to 8); Jean CIVE finds these lead times very long compared with the competition and
the reputation of the KAILLE brand is no longer enough to keep customers in the face of the
responsiveness of Korean and especially Chinese producers who are very active in the air-conditioning
field.
Another very important factor is management’s willingness t o activate a
the “internet project”, particularly with suppliers: customization of the product according to the customer’s
desires, which are naturally much more important for manufacturers2
, customers of a system that must
provide greater comfort, than for private individuals who do not attach the same importance to it; having
said this, it is not impossible that the distribution groups we are targeting may have requests for
customization by brand (brands, power, functions…).); in fact, some foreign manufacturers have already
incorporated air p u r i f i c a t i o n functions into their air-conditioning models, which are supposed to
destroy 99% of any viruses present in the home; Jean CIVE therefore wants to move fast in order to “surf”
on this trend, which is more of a problem for you to manage than a support, as your various (admittedly
slight) experiences have clearly shown you that rushing into this kind of operation is the source of many
crashes.
One point that Jean CIVE is particularly concerned about is the security of information circulating on the
network, since industrial espionage in the cold production business is a frequent occurrence, given
everyone’s “special” technological recipes.
1 A bill of materials (BOM) is a document containing a precise description of all the parts making up a whole (a manufactured product, for example). The document
specifies the supplier, dimensions, technical characteristics, etc.
2 A good air-conditioning system can increase “human” productivity in offices or workshops by up to 20%; the downside is the high cost of the system, which is all
the more quickly amortized as the system meets the sometimes very diverse expectations of ever more demanding professional customers!
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The plant’s IT specialist, Jacky BEHEM, “an old hand at monitoring”, not really into recent new technologies
and even less into Supply Chain, nevertheless suggests that you pay particular attention to the quality of
information gathering, which is the starting point, according to him, of the entire flow; in fact, he thinks
there are two starting points:
• the order from the industrial distributor (and future mass-market customer) to start the plant
process
• consumption of supplies and components on the production line stations that will condition
production and deliveries from suppliers;
On this second point, Jacky, thinks that the packaging of supplies and the collection system must be fast
and in absolute zero defect; he thinks of plastic bins which could be reused and on which would be
installed a system of traceability or other… The idea is perhaps interesting, do you think…
A consultation with Gary SITAMOB, the very rigid scheduler-planner, rather on the imperative model of the
Soviet era, tells you that wanting to eliminate upstream stocks of supplies and components will lead you to
have to deliver the company 5 to 10 times a day, just for the sheet metal part, so that’s strictly impossible.
He adds, moreover, that it took a good dose of unconsciousness to have accepted such a mission, and that
management will soon revert to the good old methods that have given a great deal of satisfaction; which
isn’t wrong, but does leave you a little skeptical; Jean CIVE was clear: “We’ve got to get there, whatever the
cost! It’s a question of survival for our company”; this thought, however, is beginning to send a chill down
your spine, given the importance of your mission!
In fact, you think it’s possible, with the collaboration of suppliers, to activate an organization enabling fine-
tuning of the factory’s quasi-content requirements, reducing order-taking times to zero. At present, the
company takes three days from the time an order is taken to the time it is processed by suppliers.
The “customer side” of the project, in conjunction with the supplier side, should enable the plant to be
managed on a just-in-time basis. Over the last three years, production has already risen from 200 to 250
air-conditioning systems per day (on average); as a result, the time and space saved by reducing stocks will
enable
to “aerate” the production process once again, where the close proximity of tools is conducive to costly
non-quality in after-sales management. Especially as productivity is bound to increase again following the
reorganization you’re in charge of. But the planned innovations and customizations are likely to slow this
progress down!
Jean CIVE, would like operators to be able to indicate from their workstations, by typing a few keys on a
keyboard or by a faster process, what stage of production they are at; the information base thus fed in
almost real time could also be consulted at any time by customers via a browser (internet browsers such as
Chrome, Edge, Firefox or Safari…). Armed with this information, customers can organize themselves to pick
up their products without having to waste time on unnecessary waiting or, worse still, without having to
return empty-handed, as happens quite regularly, since the “approximate” delivery times promised are not
always met.
In fact, management, who have heard, seen and read a lot about the advantages of a Supply Chain
Management organization, are counting on you in particular to integrate the Internet and new
communication tools wherever they can facilitate internal organization, improve product quality or provide
a service to the customer, and thus develop value! Management may think that technology could be the
solution to information problems, but they’re not really convinced, and above all, they don’t know which
technologies to use! Your role is essential!
In terms of internal organization, KAILLE would like you, for example, to introduce a simple system on
assembly lines to more easily inform operators of assembly modifications, in order to develop greater
responsiveness to product customization.
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WORK :
a strong generator of cash value: special, customized models sell for up to 50% more! And here, the
competition will find it hard to keep up. “This kind of information is still distributed in paper form, and
sometimes, by the time it reaches operators, mistakes have been made. But there are no less than three or
four hundred assembly modifications that need to be taken into account and distributed to the production
lines every year.
The ultimate goal in Jean CIVE’s mind is that even the testing phase carried out at the end of the line for
each product should be followed in real time by customers (distributors). “The test results we see on the
screens in Dunkirk will appear at the same time on our partners’ screens,” anticipates the management.
Generally speaking, how can KAILLE reconcile the necessary improvement in costs with the no less
necessary development of non-price competitiveness and therefore of market share (for example, winning
the mass retail market and developing product ranges with all interested chains) through the
implementation of an optimized Supply Chain supported by a synergistic information system, with the
implementation of solutions for the development of collaborative work with its current and future
partners…, so that KAILLE can
– fit into the new competitive environment that is taking shape in 2024 and is likely to persist, an
environment strongly impacted by the delayed effects of COVID-19, climate disruption, geopolitical “war-
like” tensions, the rapid development of AI…
– and satisfy the 100% requirements of its customers (distributors and, in fact, end customers who buy and
use air conditioners).
Jean CIVE, who is not an expert in Supply Chain, is asking you to consider (without limits) all the aspects
that seem judicious to you, in relation to the necessary creation of value which must be omnipresent in the
progress and realization of the project, so that KAILLE can meet this challenge. In fact, your work should
provide Jean CIVE with a sort of guarantee of the effectiveness of the transition to the desired new Supply
Chain organization. In other words, KAILLE needs to be put in a position to face up to an uncertain future
through the implementation of a Supply Chain management project.
Your work will be characterized by a critical analysis and the identification of a number of problems,
followed by proposals for improvements likely to ensure the successful implementation of the new Supply
Chain organization at controlled costs.
What’s important to me is your intellectual path in relation to a vast organizational problem that needs
to create value through the organization of an information system.
You can manage your approach as you wish! You can use diagrams, tables and graphs if you feel it’s
necessary.
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Direc tion
Ac hats
Productio
n
managemen
t
Scheduling &
Planning
General
Management
Accounting
and Finance
Department
Direc tion
Commerc
iale
Line Manager 1
IT
Research, development and
design
Line Manager 2
Line Manager 3
Quality control
APPENDIX 1: KAILLE’s current simplified organization
APPENDIX 2: CURRENT KAILLE ORGANIZATION
CURRENT ORGANIZATION CHART
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Important note: don’t use artificial intelligence help! For one case, it makes no sense. In addition, I’m going
to run every assignment through the anti-plagiarism software and AI usage detection software the
university is now equipped with.
