Wartsila: Supply Chain Planning

With more than 12,000 employees in 130 offices across more than 60 countries, Wartsila is a major player in the global economy. The company, founded in 1834, has a market capitalization of approximately €3 billion (US$3.87 billion).

As the leader in its chosen markets, Wartsila is the object of great expectations.

Underpinning those expectations is the need to continue to develop the resources that enable Wartsila to grow and out-execute the competition.

Wartsila is well aware of the challenge growth can pose. In 2005, the company was heartened by promising business conditions in the shipbuilding and power plant industries. At the same time, executives were concerned that supply chain shortcomings in its Trieste, Italy, plant threatened to torpedo Wartsila's ability to capitalize on growth opportunities in these sectors.

Determining that it needed outside help to sort through its challenges, Wartsila hired Accenture. With its deep supply chain experience, Accenture was seen by Wartsila executives to be an ideal partner to identify ways in which Wartsila could build the manufacturing and sourcing capabilities critical to achieving high performance in the demanding shipbuilding and energy-generation industries.

Accenture began its work with a comprehensive assessment of three key areas of the Trieste plant's operations: production planning, purchasing/raw materials supply and organization design. The most significant shortcomings were in the supply chain planning arena. To address these challenges, Accenture reviewed all processes related to production to make them more efficient and trained and coached all personnel on the new processes and their resulting new job duties.

More specifically, Accenture institute a number of innovations that had an immediate impact on the Trieste plant's operations:

• To help Wartsila improve the purchasing forecast given to vendors, the Accenture team created a new master data classification scheme.
  
  
• To enable stronger collaboration among teams, more predictable materials delivery, and better production planning and scheduling, Accenture created several new technology tools.
  
  
• To improve information sharing and accountability among departments, Accenture defined and deployed a cross-functional team representing every important area of the business.
  
  
• To improve timing of a chronically late product, Accenture set up a new purchase program.
  
  
• To help ensure that critical and long leadtime parts are available when needed, Accenture created a more focused bill of materials for a year-long volume forecast to suppliers.

The supply chain project has produced considerable benefits for Wartsila. For instance, better coordination among departments has resulted in an overall improvement of internal effectiveness and ability to resolve issues quickly. Despite increased demand and problems securing supply, on-time delivery of finished products remained stable. Once new hardware and processes are implemented, the company expects to reduce engine production lead time—thus freeing up capital and internal resources. And improvement in on-time and on-quality deliveries will reduce penalties and service costs and, it is anticipated, will lead to increases in market share for Wartsila.

Working with Accenture, Wartsila has taken major strides toward mastering key supply chain capabilities. In fact, Wartsila reports that the supply chain project has helped the company to satisfy continually increasing demands—which is critical because Wartsila expects requests for engines in 2008 to be double the number in 2005. This renewed ability to keep pace with the market's needs is a strong indication that the company, with Accenture's help, is on the fast track to high performance.