One of the most crucial but often unseen aspects of a company is its supply chain. The supply chain department oversees how a business obtains supplies for its products, plans how many of each product to make, transports them between various stages of production and ultimately delivers them to customers.
During the past several years, Lexington-based printer company Lexmark International has completed a strategic shift in its supply chain operations. It has consolidated both printer and ink and toner manufacturing together with traditional supply chain work.
Linda Hollembaek, Lexmark's vice president of global supply chain operations, who has been with the company for nearly 12 years, recently spoke with the Herald-Leader to discuss the changes and more about how supply chain operations work.
Here are highlights of the conversation:
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On Lexmark's decision to incorporate manufacturing into the supply chain and how it is different than most companies: "We pulled it all together because we feel end-to-end, it's more important to bring it back to the customer, make the right product, get it to the right place and get it to them on time.
"In the past, we were a volume provider, but as we continue to execute our strategic shift in our inkjet business towards business customers, our capabilities needed to shift with that. In doing so, the supply chain needs to be about customizing for business.
"So in every major geography, we have a customization center. We ship products in there and based on customers' orders, we might add solutions and services applications or do lots of settings for the customer.
"There are literally thousands of settings we can put on those machines to make them work well in networked environments."
On finding solutions to what Lexmark has described in recent quarters as increased costs related to delivering its products from factories to customers: "It was a big piece of work. It's an ongoing thing. ... Our team was pretty active in determining key focus areas and the required improvements.
"Since there's a number of functions even within supply chain, we put together cross-functional teams made up of supply chain, finance and sometimes our providers to drive to the improvement targets we set.
"We set objectives ... to improve on a full-year basis and have largely made that progress. ...
"This team really executed well and decisively because you can't take a lot of time bureaucratically with decision making. ... I think the thing we did best of all was project management because we made sure what we put in place didn't create another problem."
On determining the availability of supplies in the wake of the Japanese earthquake and tsunami earlier this year: "That earthquake happened on a Friday. On Friday afternoon, we were trying to assess where we were. By Saturday morning, our team had put together a very detailed analysis of every technical component we had, every supplier, and we had in place risk- mitigation plans, that we are always working on and were executing on immediately.
"That way, we were able to make it a very manageable situation for Lexmark. ... Within six weeks, we were back to business as usual."
On lessons learned from that experience: "We have a better understanding of our second- and third-tier suppliers and what they have in their just-in-time and buffer stock inventory. ...
"We've put together a set of requirements ... because we want to make sure that the level they're carrying is the right level."
On how the company makes sure the right amount of products are produced: "We've started converting certain product lines to being pull systems. That means every day that we ship products out of our distribution center, it places a demand signal on the factory to know to produce that.
"We didn't use to do that. We used to forecast monthly. ... We started the change about 15 months ago, and we're in the process of converting.
"We expect the pull process to be done soon at up to 75 percent to 80 percent of our manufacturing lines that feed the U.S.
"We've reduced inventory and improved our ability to meet customer demands, and we can respond very quickly. It gives us more flexibility in the line. Employees think it's so cool because it's like a puzzle."
On how they forecast the amount of a certain product needed when it launches: "There's a science to it. We have a clear statistical model and very detailed processes. We look at things like how the predecessor product did ... but there's also an art to it. The art is what's different, like whether we think certain large accounts might be interested in it because it might solve a need they have."
On getting into supply chain operations at a company: "My recommendation to someone is when they get into a company to work in multiple functions. Work a little more laterally early in your career by getting sales experience, sales support and analytical skills in finance.
"The other thing I usually tell people is, a lot of supply chain people will take on any project. The dirtier the project feels, the more you will learn. It can feel like a really tough one, but you learn more from those tough jobs.
"And take an analytical approach and learn how to put data together. Putting data together tells a story, and that is a lot about what a supply chain job is."