SFS

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Published: 09th January 2012
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The Stanley Fulfillment System (SFS) is a Transformational Lean™ proprietary methodology used by Stanley Black & Decker to reduce waste, minimize inventory, and improve quality through manufacturing and transactional projects and activities, which maximizes business performance by streamlining supply-chain, manufacturing, and back-office processes and achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital while increasing efficiency and adding value without creating waste.

SFS was derived directly from the concept of Operational Lean, which is defined as the systematic application of Lean principles in progressive steps throughout the enterprise to optimize flow toward a pre-defined end state by eliminating waste, increasing efficiency and driving value. With Operational Lean, SBD uses a Path of Work to improve any process. The Path of work is: Identify – Stabilize – Flow – Pull – Level & Continuous Improvement.

Moreover, most of the philosophies and tenets as well as methods, techniques, and tools of Lean as well as Six Sigma are all found within SFS. Further, the terms Operational Lean and SFS are effectively synonymous. There are tools available in each stage of the Path of Work, and we do not differentiate between a Lean tool and a Six Sigma tool. We choose the appropriate tool for the situation. Also, SFS was principally architectured similar to other prominent, successful and historical systems such as the well known Toyota Production System (TPS), which was technically the birthplace of Lean.

SFS was created by merging aspects of “Lean” and “Six Sigma”, which are two important and successful quality management initiatives in their own right: making work better (using Six Sigma) and making work faster (using Lean principles). Moreover, these two underlining methodologies that comprise SFS each evolved independently in turn from a series of prior initiatives in different industries and companies throughout the world and recorded history.

SBD has successfully leveraged the numerous potential features and benefits that are intrinsic in both methodologies into a combined system, which has resulted in breakthrough improvements and stellar performance throughout the last couple of years. Nevertheless, let’s take a brief look at the definition, features, benefits and overall objectives of SFS as they apply to each individual employee and the SBD company as a whole.

SFS is the foundational business system that prepares SBD operations to achieve a transformational redefinition and deployment of a business model that drives continuous improvement and delivers breakthrough shareholder and customer value. Moreover, SFS drives company-wide transformation in order to strengthen and streamline SBD’s operations to accelerate company growth. Simply states, SFS means Waste Elimination to Fuel Profitable Growth!

Additionally, there are five key pillars of SFS, which are:
• Hate waste: Waste is everywhere, and we do what needs to be done to eliminate it;
• Simplify: Complexity is tolerated only when it adds value to our customer and end user;
• Communicate: We succeed together, when we are all moving toward the same goal, and open communication is the only way to ensure we are doing that;
• Standardize: Our strength comes from building the BEST process, and making that process SIMPLE and REPEATABLE, in every area of our operations; and
• Act: Make fast decisions based on the best data, and move aggressively to pursue growth.

Conversely, at SBD, SFS continues to be a driving force behind the consistent and superior earning growth throughout the years. Lean decreases waste, improves process speed, and reduces invested capital, while Six Sigma provides a formal process for aligning the business with the customer’s Critical-To-Quality (CTQ) requirements. Moreover, SFS allows SBD the ability to quickly identify and resolve business problems and ultimately drive towards higher growth and greater market share.

SFS centers on fulfilling the customers’ needs 100% of the time, and exceeding their expectations by improving every day. The SFS consists of core principles, values, and practices that the SBD employees and associates live by and carry out in their day-to-day activities. SBD leverages world-class “Centers of Excellence” that maintain the organization ahead of the curve, a goal deployment process that allows SBD to hit targets and continue growing, and a showcase plant initiative to ensure that all plants, Export Processing Centers, Foreign-Trade Zones and Distribution Centers (DC) remain on track towards achieving the respective SFS-related goals. With SFS, SBD reduces cost, leverages new technologies, generates more cash by improving working capital performance, and achieves maximum efficiency. SFS is at the heart of everything that SBD does!

Employees and people often wonder why SFS is so important to SBD. The four main reasons behind SBD’s commitment to SFS include:
• SFS makes us faster: It focuses on eliminating obstacles and waste while accelerating our operations;
• SFS makes us smarter: It focuses on standardizing our processes and centralizing our information, which enables us to make better decisions quicker;
• SFS drives customer value: A faster, smarter organization is more agile and responsive to the demands of our customers and market; and
• SFS fuels our growth: Working capital efficiency generates cash, which we reinvest into the business.

From a financial perspective, SFS drives Working Capital Efficiency in the range of about $1 billion in cash. Additionally, Working Capital is the amount of cash we have locked up operating the SBD company on day-to-day basis. Therefore, if SBD decreases inventory (e.g., DCs), accelerates cash collection [Account Receivable], extends payment terms [Account Payable], then working capital decreases and cash-on-hand increases!

Further, Working Capital Turns are a measure of how quickly and efficiently SBD converts its working capital into sales. Moreover, great companies focus on growing sales and reducing working capital.

In terms of monetary savings and other benefits that SBD has derived from the program, the benefits equate to millions of dollars in waste elimination and quality improvement including but not limited to the following real-world examples:

• Reduced deployment planning cycle time 3 days;
• Greater than 50% reduction in warranty due to missing components;
• Technology solutions that streamline Stanley Works exchange of transaction-related information & to support daily operations using IntraLinks: 50% in time savings, 15% in total cost savings on each transaction, 45% reduction in travel costs.
• Supplier Development drove $1.6 million in savings in 6 months in Mexico;
• Created new Export Screening Process, $100K in Penalty Avoidance.
• Co-op process project for Regional Mass Merchants yields savings of 500 labor hours annually;
• $1-2M Saved in Process Efficiency via Lean/Six Sigma Principles at Stanley Works.
• Over 3,700 square feet of space regained at 5 Service Centers as a result of Kaizen events;
• 79% improvement to European print buying process;
• Reduced price errors in UK by 56%;
• Two times life in key application and + 30% power verses competition for next generation small angle grinder development;
• Expand FTZ operations to include Kwikset Overseas cargo, which provides a multitude of financial benefits—approx. $740k in Phase 1 / $910k in Phase 2 and other logistics benefits inherent in the FTZ program including flexibility, time-effectiveness, increased transit, receipt & shipping times.
• Streamlined, standardized, and automated the monthly financial reporting package used to review each manufacturing plant or region’s operating performance, yielding a 30% reduction in preparation time;
• Reduced fines from a major retailer by over 50% for quantities ordered Vs. quantities shipped;
• Increased shipper’s available productivity time by 2.5 hours/week through Kaizen event;
• Created new Process for Direct Export to the Middle East, which generating $50K in savings;
• Increased efficiency of our external recruitment process by eliminating non-value added steps associated with tracking applicants, reducing paper trails, and improving overall experience for the external applicant;
• Reduced material cost on 98% of zinc die cast parts by in-sourcing alloying process for Zamak 3, savings $561,000 annually;
• Improved overall material presentation & flow, reduced cell footprint [sq. ft.] by 24%, increased operator productivity by 17%, and reduced WIP 95% through a Team Kaizen Event saving $93,000 in annual standard costs;
• Standardized NAFTA Claims Process for Canada, which provides a multitude of financial benefits—approx. $200k in savings plus $5k interest;
• Created NAFTA Reconciliation Process for the U.S., which provide a multitude of financial benefits—approx. $1/2 million in savings plus approx $15,000 interest;
• Improved Data Center Operation processes resulting in 33% increase in productivity, 25% increase in quality, and 9% reduction in abandoned calls; and
• Implemented new processes for tracking and refreshing PC equipment allowing savings from lease Vs. buy decision to be realized; over $500K annual savings.

Quality is a critical concept in every industry and profession. As globalization continues to expand and the world becomes smaller, producing and delivering quality products equates to more customers (satisfied), increased jobs, and ultimately to company survival, growth and vibrancy. SFS, which is a cutting edge quality system, forms a natural union: Lean is about speed, flow, and the elimination of waste; and Six Sigma is about understanding and reducing variation and improving quality, accordingly. Further, SFS provides a platform for SBD to serve as a roadmap for continuous improvement, leveraging value, eliminating wastes, and enhancing the abilities of both the employees and the company in regard to manufacturing and logistics activities in order to provide customers with great products and excellent customer service. Also, this model is the compass that can be used to develop strategic and operational vision for the company and help navigate the turbulent waters of both manufacturing and logistics, which ultimately leads to customer satisfaction and company success!

From a Lean perspective, SFS employs continuous improvement techniques to streamline operations and drive efficiency throughout the supply chain. SFS has four primary elements that work in concert:
• Sales and operations planning ("S&OP"): focuses on keeping supply in sync with demand for products, to minimize inventory while maximizing customer fill rates;
• Common system platforms: entails standardization of processes and IT platforms to provide scalability that facilitates efficiency and rapid acquisition integrations;
• Transformational Lean: combines traditional supply chain and manufacturing lean with back office functions to enable transformation of business models to drive competitive advantage; and
• Complexity reduction: focuses on standardizing processes & eradicating complexity in all operational aspects, except where customers gain value and are willing to pay for customized offerings.

At SBD, SFS has evolved beyond waste and defect elimination and cost reduction. Moreover, it is a philosophy and system of management that centers on the creation of value: customer-centric. Further, SFS is used in every functional area, division and group to improve and align processes with overall business objectives. Furthermore, SBD deploys SFS project leaders throughout world-wide facilities including in North America, South America, Europe, Middle East, Asia, Africa, New Zealand, and Australia.

In conclusion, the two major improvement methodologies “Lean” and “Six Sigma” have been around for a long time. Individually both initiatives are impressive and have been important to the success of many companies both currently and in the past. However, with the advent of SFS, SBD possess a powerful cash management and operational Lean tool used to reduce waste, minimize inventory, and improve quality through manufacturing and transactional projects and activities, which maximizes business performance by streamlining supply-chain, manufacturing, and back-office processes and achieving the fastest rate of improvement in customer satisfaction, cost, quality, process speed and invested capital while increasing efficiency and eliminating waste (non-value added activities).

Further, within the SBD, Hardware and Home Improvement Group, SFS is already heavily embedded in and truly exemplified by the four main core beliefs and culture, which are: 1) Inspire Great People (training); 2) Connect with our Customers (Internal/External); 3) Innovate and Expand (Product/Processes); and 4) Drive World-Class Operations (Continuous Improvement/DMAIC).

Furthermore, the SFS provides SBD with a structured way to improve and also to solve current problems. Moreover, SFS provides breakthrough process improvements, which ultimately translate into higher efficiency, quality, speed, and increased company profitability while reducing costs, waste and defects. Go team SBD and long live SFS!

Article written on 3/1/2011 by

Scott A. Neal, LCB
Stanley Black & Decker, Inc.

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