Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - June 6, 2012 -  

Industrial Giant 3M on Mission to Remove Its Supply Chain “Hairballs”

 

Solution Involves Large Manufacturing Hubs, Reduced Outsourcing

 
     
     
  by SCDigest Editorial Staff  
     
 

 

SCDigest Says:
3M's Littmann stethoscopes used to be made in steps involving 14 outside contractors and three 3M plants. Now all processes are being brought into a plant in Columbia, Mo. As a result, the cycle time will fall to 50 days from 165

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A simple story sums up the issue. 3M makes a line of a simple picture hooks under the Command brand name. Until recently, the production process in a sense started in an 3M adhesive plant in Missouri, from which the sticky stuff was shipped 550 miles to another 3M plant in Indiana, where the adhesive was applied to polyethylene foam.

From that factory, the work-in-process was shipped 600 more miles to Minneapolis, where a contractor applied the 3M logo and the WIP was sliced into the right sizes. From there, another 200 mile trip to a contractor that added the hooks and did the final packaging. 1300 miles of supply chain travel in total for a product that just sells for a few bucks.

The term "hairballs" for such supply chain complexity was apparently coined earlier by George Buckley, who recently retired after years as 3M's CEO and who launched a program to reduce some of that complexity.

John Woodworth, 3M's senior vice president of supply chain operations, told the Wall Street Journal that "We had long supply chains. It was and continues to be an issue."

Some complexity is inherent in a company that has some 65,000 SKUs across its many divisions, and operates 241 plants in 41 countries. Two-thirds of its sales now come from outside the US.

From our view, the complexity is perhaps at times compounded at 3M because a number of its businesses and plants are suppliers to other areas of the business, as locations and processes needed to support external customers can add complexity, time and distance for internal manufacturing flows.

The point person responsible for leading the war against hairballs is Jim Welsh, a vice president responsible for manufacturing and working with suppliers. He leads a team of 3M supply chain executives that is currently focused on 18 "high-impact" opportunities to improve efficiency in in manufacturing and supply chain.

The general goal is to reduce manufacturing cycle times by 25%.

"3M's long-term plan is to have fewer, larger, more efficient plants, and spread them out around the world," the Wall Street Journal article says. "More production will be done in what 3M calls "super hubs," plants capable of making scores of products for a region of the world. 3M now has 10 hubs, including six in the U.S. and one each in Singapore, Japan, Germany and Poland. It plans at least six more, all outside the U.S."

The hub strategy has already played out in the production of the Command picture hooks. In 2010, consolidated all the steps needed to make the hooks at a plant in Minnesota, where a number of products, such as Scotch tape, Nexcare bandages, furnace filters the hooks and other products are produced.

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That plant now creates finished Command products for the Americas while sending giant rolls of unfinished sticky foam to Singapore and Poland, where they are tailored for Asian and European markets. With this strategy, the cycle time for making Command hooks has dropped to 35 days from 100 seen when using the old supply chain flows.

Another example: 3M's Littmann stethoscopes used to be made in steps involving 14 outside contractors and three 3M plants. Now all processes are being brought into a plant in Columbia, Mo. As a result, the cycle time will fall to 50 days from 165, 3M’s Welch says.

It isn’t stated in the article, but to us it seems that the hub strategy appears to mean that more processes will be brought in house, versus use of outsourcers to perform various steps in a multi-phase manufacturing process.

The hairballs (a term, by the way, 3M doesn't much like using today after Buckley’s retirement) not only added operational costs and created long cycle times, they of course also increased 3M’s inventory levels, as buffer inventories were held at multiple locations along the chain. The hub strategy should reduce those inventory levels.

The question of course is how did things get this way before the recent effort to eradicate such complexity. From our view, sometimes such complexity, especially in very large companies, simply grows over time almost of its own nature until some executive leads the charge to reverse course.

Interestingly, 3M itself says that a conservative, risk-adverse culture also played a key role.

Because it was reluctant to make many investments in a product line until it proved itself in the market, 3M would avoid buying new equipment or build new plants. So 3M product engineers "would look around for available machines and expertise even if it was hundreds of miles away. That meant 3M could keep machinery running round the clock more often, gaining efficiency. But it also meant more costs for shipping and longer production cycles."

Welsh says 3M's new strategy is to ramp up production much faster when it has a hit product and avoid "disjointed supply chains" - a nicer sounding term than hairball.

What's your reaction to the 3M story? Do lots of companies have such hairballs? Is outsourcing actually a contributing factor? Let us know your thoughts at the Feedback section below.


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We've heard the term “hairball” used in many contexts, but to the best of our knowledge not in the Supply Chain.

Until now, that is, as industrial giant 3M tells the Wall Street Journal that it has been working hard to remove a series of hairballs from its supply chain network.

The basic problem: overly complex movement of goods and too many product touches across 3M's vast network.

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