Stepping up to success - Jewson case study

Jewson supply constructors and construction projects. Stalled in their rise to the top table, they sought WCI help in developing a vision based on benchmarked best practice wherever it could be found.

Their big idea was to clarify who they wanted to be in the future, then work back to see how to get there.Success was being held back by a vast catalogue and a supply chain confused by rapid growth. WCI advised simplification – dividing the supply chain into product category streams.Jewson wanted minimum costs, with maximum agility, service and efficiency. They knew it could be done: unwavering focus on the supply chain made Tesco world number one.

Could it work in Construction?

Key challenges
Inventory was too high, the mix poor. Fearing sudden changes in demand, they over stocked in low volume lines, under stocked in high. There was no formal replenishment system and no way to estimate local demand. They needed clear, specific policies on measuring and responding to demand efficiently.Suppliers should deliver the right material to the right place at the right time. With sketchy data, supplier management was poor. Orders needed to be clear from the start.
But would suppliers cope with tighter demands?The quality of the last interaction – delivery for example – affects customer views more than routine positive experience (eg always finding what you need).

But in distribution, Jewson were at the ragged edge of the possible. Trip decisions were taken ad hoc, with no logistic framework. Expensive and inefficient. And to no customer benefit.Solution: a vision of values

Jewson began by raising their game in meeting customer demands – incurring cost, short term. No point in a great operation with no customers! Meanwhile, they planned their lean transformation. They would create a vision of the future, define the gap between the vision and the present, and work out how to close it.

The first question was ‘What do our customers really want?’. The answer? The lowest cost – BUT with better service. That’s what Jewson would provide.The team saw branches as their big potential asset. Making the supply chain “values based” would maximise the value of the branches to customers and company alike.

They wanted their offer to be:
Efficient – getting it right at the lowest price.
Trustworthy – a supply chain that delivers what it promises.
Personalised – adapting to shifting customer and local needs.
Knowledgable – aware throughout the organisation of everything affecting construction.

The business had to be, and be seen to be, truly values driven in order to achieve its financial value potential.WCI helped them mapped current systems, benchmarking and importing current best practice and defining the gap they had to close. Here's how they planned to meet the three key challenges.On inventory, WCI's insight was to categorise products into three broad groups by sales and supply characteristics. All lines in a group would have the same control and decision making régime.

The first 1000 lines (under 20%) accounting for 80% of sales volume, would be tightly controlled. Better performance, much less effort!

The next 4000 (around 15%) would be 100% available at top branches, 95% elsewhere.This enormous simplification allowed tight control for far less effort and cost. The beauty is, all customers get everything they want nearly all the time (even if you like barbecue gnomes, you don't buy one every visit!)

Where Suppliers couldn’t cope with the new, clear requirements Jewson would either find a new supplier or, if the on cost of change was the barrier, act on core ‘good guy’ values, and share some of the risk (hold more stock, provide up front finance or equipment).For distribution and delivery, the key change was to see delivery as crucial to value. A good reputation takes time to build, but is lost in a moment! They introduced an organised mix of delivery processes – hub and radiation, plus direct to customer, supporting it with clear SLAs.

Some branches with the facilities became their own hubs.

Benefits

• The supply chain is lean, controllable, flexible and responsive nationally, regionally and locally.
• Profitability is rising.
• Service levels are their highest ever: physical deliveries work, availability is above 98%.A question of viewpointJewson are moving up.

Their new offer, supported by clear, standardised, decision making, combines better service with lower cost. WCI helped them understand that distribution is a value rather than a cost adding process: they are striving to satisfy customers in an FMCG setting. The actual change they handled for themselves. What made it possible was the shift in perspective.