In the previous article, we covered the Future of Digital Supply Chains, Agile, connected and sustainable and the QAD DynaSys senior product management team’s vision of Digital Supply Chain Planning.
In this last article of our series dedicated to Digital Supply Chain Planning, you will find out how Essilor moved to an agile and resilient supply chain and guided its digital transformation, through an interview with David Bourgoin, Essilor’s S&OP referential supervisor.
David, could you tell us a bit more about yourself, your role as a Global S&OP Supervisor, and Essilor as a company?
[David Bourgoin] I am in charge of the monthly S&OP process for Essilor for 10 years now. ESSILOR is the World Leader of Ophthalmic Lenses. And since end of 2018, ESSILOR merged with LUXOTTICA, the World Leader of Luxury and Sports Eyewear. We now are the group EssilorLuxottica.
Essilor strategy is guided by our mission of Improving Lives by Improving Sight.
Innovation and Partnerships are the cornerstones of our growth. From a S&OP perspective this means to be able to quickly simulate product phase in and phase out, innovation gives us a bit more than 250 New Products per year, and we invest every year more than $200 billion for Research and Innovation. As well, we need to be agile, lean and digital enough to integrate the new partnerships in our S&OP process and tools. Since the last 5 years we have integrated around 130 new partnerships around the world.
Could you tell us a bit more about Essilor’s supply chain organization?
[David Bourgoin] Essilor has a complexe distribution network with more than 700 stock locations. I will try to make it simple using the concept of Route to Market. This concept helps us to manage our end to end S&OP process. We have more than 3000 possible Route To Market within our organization. Each route starts with one of our 32 manufacturing plants where we produce either finished or semi-finished lenses. The Finished lenses are shipped to Distribution Centers (DC), we have 14 major DCs worldwide. The semi finished lenses are shipped to one of our 490 Rx Labs (prescription labs) where they are finalized based on our consumer’s prescription and needs. The other end of the route to market, is the market, composed of Consumers, Opticians, Retailers and e-Shop for e-commerce. We count more than 350.000 end customers located in more than 100 countries.
What were your supply chain main challenges during the pandemic and what was the impact on your supply chain?
[David Bourgoin] Well, during the pandemic, our biggest challenge was the business continuity plan. We had to adapt our supply chain to still deliver customers and minimize the impacts.
To ensure the continuity of service, as soon as we have assessed the consequences of the measures taken in China such as lockdown, Chinese New Year shutdown continuation in early 2020, we started to explore what could be the possible back-ups in terms of production. In our case we moved some Chinese products to Laos and to some European plants.
But the pandemic started to extend from China to Europe and later to the Americas. So what we transferred o Europe, we had to move it elsewhere. So we immediately looked at all potential backups, at what could be launched as quickly as possible in terms of alternatives production.
Later China finally reopened the production but major markets, US and Europe, were running slow due to the different lockdowns. We had to slow down the production pace.
Actually, during the first months of the Covid Crisis, we consistently had to give very precise instructions on production priorities and on shipping priorities. The goal with production restart was not to produce too much of the wrong inventory. This supply chain team was playing a key interface role between Essilor Customers, base plants and partners. We have consistently played with the Route To Market to adapt the distribution.
Seeing as you had to adapt your production plans very quickly, what processes did you review or put in place during this crisis to have a more Agile and Resilient supply chain?
[David Bourgoin] In a normal situation we currently use QAD DynaSys solutions at a tactical level. But in such a case, with the different lockdowns worldwide, either for market, for factories and for some customs, we had to move to more fast and agile simulation tools. We decided to put in place shared indicators via Google Sheets. Our extended Supply Chain has been reduced to the ends of our routes.
On one hand we have markets. Zone’s demand management team entered the volumes with different “what if” scenarios in several SpreadSheets “ what if we lost 30%, or 40% or even 50%… of the sales versus 2019 ”.
On the other hand we have the plants. We asked Plants managers to enter every Monday what production lines will be locked and which one can be reopened. They enter numbers of days per week, possible lenses launched per day, number of operators available …
You’ve moved from a tactical level to a more operational level throughout all of these supply chain disruptions. So, your S&OP processes need to adapt during the pandemic?
[David Bourgoin] Our biggest challenge was the business continuity plan. Thus, to secure the service we had to be very very reactive. So we were managing the risks and the what if scenario in real time, in an operational way of planning. Our monthly S&OP turned into a weekly S&OP. This lasted the 3 months during which the western countries were entering in lockdown one after another whereas the eastern one’s were coming back .
Like a lot of manufacturers, the standard S&OP process needs to adapt to the pandemic. How are things today, and what has changed?
[David Bourgoin] Well, I would say that when we came back to more stability, we moved back to our tactical planning and S&OP with QAD DynaSys solutions.
Today we are still facing some challenges, for example on raw materials. This is something never encountered before at worldwide level. The worldwide market acceleration in early 2021 stressed all suppliers and some couldn’t accelerate as fast as needed, or were on lockdown due to Covid. These difficult events allowed us to extend our S&OP with the materials procurement department, which is now a strength.
Does it mean you have included the sourcing and procurement departments in your global S&OP meetings?
[David Bourgoin] Yes, definitely. This close collaboration, with the sourcing and procurement department during the pandemic, gives us ideas to build stronger relationships to secure our supply chain. And soon we think about synergies with sourcing & procurement and R&D to optimize our ecological impacts by recycling wastes.
A couple of manufacturers have decided or are thinking of relocating part of their production post pandemic. What about Essilor? Any plans to relocate production?
[David Bourgoin] There are definitely plans in progress. Today we are working on the mid term plan for budget preparation for the 2022 to 2025 period. We are investing to increase capacities with several targets: follow Market growth, develop more agile production networks and relocate as much as possible.
Let’s come back to digitalization. David, can you tell me more about the digital transformation of Essilor?
In my role, I am more focused on the upstream part of the supply chain, the manufacturing part. Today we focus ourselves on the digitalization of the S&OP execution. We want to have a leaner, integrated and CO2 friendly network. This suppose common tools, processes and web accessible indicators.
We have a project for having Plants, RxLabs and any partnership integrated in the same database, to extend the supply chain execution.
A second project is to control the distribution ecological footprint of our Route To Market. We want to measure the environmental impact in terms of CO2 when choosing a Route To Market.
Another digitalisation concerns our planning processes for training and support.
With the pandemic we are traveling less and less, a lot of people work from home,… Before I was used to moving 5 to 6 weeks a year in Asia, or in the US. So we decided to accelerate the digitalisation of our training documentation and to launch a “classroom training” platform.
As you said, a lot of people were and are still working from home today. What about e-commerce platforms? Does Essilor have developed a web platform? Can you tell me more about that?
Well, after speaking about supply chain, let me say a few words on “Marketing and R&D” where digitalisation is the most creative. Essilor is working on different Digitalization programs.
The first one is e-commerce. Thus, since 2014, we develop our e-commerce platforms such as EyeBuyDirect by helping customers in their online choice. We develop capacities and competencies, we create “brand.com” online shops such as Rayban.com.
In fact E-commerce is one of the key competitives advantages to widen our leadership.
Another project is for eye care professionals and consumers. We are developing a digital application “Essilor Companion” that facilitates and simplifies the sales and lens consultation process.
Last but not least, Luxottica is closely working with Google to develop connected Eyewears, the “Smart Glasses”. I invite you to search about this new technology on the web.
Essilor has been a QAD DynaSys customer for almost 32 years now. What are the key benefits you get from a Digital Supply Chain Planning solution today?
[David Bourgoin] Like I said before, we are building an end to end supply chain planning and execution. Also to stimulate the synergies with other departments such as Marketing, Sourcing and Procurement, we need centralized, web-accessible databases and tools. Thanks to our collaborative platform, all worldwide supply chain entities can connect, simulate and “talk” to each other worldwide to build efficient master plans.
Since the past 10 years working on the new QAD DynaSys DSCP platform, we have a more robust and reactive global S&OP. We moved from 10 factories in constrained capacity planning, with 2 to 3 months to make decisions, to 16 factories in a 3 weeks planning process. We increased the scope and saved up to 2 months in the “decision making” phase.
As well in terms of inventory control, QAD DynaSys solutions allowed us to save 0.2 month of coverage every year since the last 10 years, while improving our Customer Services. This represents millions in stock and cash flow saved.
Last but not least, we have accelerated the phase in / phase out process. We can simulate new product introductions up to 6 months in advance. Additionally, we can simulate manufacturing investments, plant closure or flow change to validate the best possible scenarios.
Essilor moved to the QAD DynaSys Cloud in 2018; What are the benefits of a cloud based solution?
[David Bourgoin] With the QAD DynaSys Cloud solution we have a more fluid, and quick centralized support. This avoids stress for Asian or US S&OP administrators, they don’t have to wait for the French admin to wake up !
As well, it improves the calculations and data treatments, it is faster than with our previous on-premise solutions.
You mentioned earlier that Essilor is working on relocation, CO2 friendly network and ecological impacts. What about sustainability? Is it a strong initiative within your company? What have you put in place or you are planning to put in place ?
[David Bourgoin] Sustainability is definitely an important part of the company strategy. Actually our position as a global leader encourages us to lead the way for sustainable development. We have seen that our customers’ expectations about our performance on sustainability matters are higher than before, giving us a competitive advantage.
At the Operations level, for a few years now Essilor has committed to reduce its environment impact through 3 main pillars: energy, water, and waste.
As you know WATER is becoming scarce in many places around the globe. We put emphasis on water reduction. Since 2015 we have succeeded in reducing the water consumption in our manufacturing process by 25%.
We are now stepping into the effort of reduction of our WASTE and ENERGY consumption. Regarding ENERGY, we have many programs to reduce consumption in our processes. And in the WASTE front, swarf and materials consumption are one of our main challenges. We put effort on reducing the material consumption from the semi finished to the end product. Also, we work with partners on how to reuse the swarf, and we closely work with the R&D teams on breakthrough technologies for the long term.
At S&OP process level, to meet with our road map towards carbon neutrality we will adapt to take into account the CO2 impact. Like I said previously, we will challenge our Route To Market, our sourcing processes, from a Sustainability perspective.
Those are some great initiatives for our planet! A few words to conclude and about your vision of the future of Digital Supply Chain Planning for Essilor?
Working towards our Mission of improving lives by improving sight encourages us to lead the way for a more Digital, Agile and Sustainable Supply Chain.
- Digital:he merged with Luxottica, our extension with partnerships, the synergies with other departments force us to have on-line tools and databases, accessible from any place worldwide. We have to meet with our supply chain increasing scope, while keeping reactivity. As well, with the Covid crisis, we understood how important it is to strengthen our supply chain collaboration internally but as well externally.
- Agile: With the last events the world faced, I remember the Ever Given Boat stuck in the Suez Canal, the more numerous fires or storms the earth had in the past years, Pandemics… We need to be able to quickly run on a worldwide basis “What if simulation” processes to anticipate or respond to those disruptive events.
- Sustainability: After decades producing, consuming, traveling without looking forward to the planet’s resources and environments, we are liable for the new generations of reversing this trend. Global Warming and Planet’s Resources Management should now be at the heart of our companies decisions. We now need tools, processes, “What if Scenarios” to limit our ecological impacts and move towards carbon neutrality.
This COVID Crisis will certainly be a marker in our history to more responsible choices for the new generations.