Arxada's short-term delivery & long-term capability

In the modern world, science-led solutions that claim to protect the health and wellbeing of people and our planet are under increased scrutiny. Arxada is a global specialty chemicals company, with a clear track record of industry innovations which range from Microbial Control Solutions to Professional Hygiene. The 3,000-strong Arxada team is headquartered in Basel, Switzerland and aims to be the preservation go-to within the industry, by solving the world's toughest preservation challenges. 

“We are focused on delivering superior products and services to our customers by leveraging our strength in science and innovation, our manufacturing process development capabilities, and our regulatory sciences organisation,” says Randy Willis, Vice President of Supply Chain for Arxada. 

A keen chemical engineer, he studied the subject at Lamar University, before taking up process engineering role in a management development programme for DuPont. He then went on to work at Axalta, Materion, and AkzoNobel, before joining Arxada in September 2022. 

“I worked across different sites and then moved into various operations and supply chain leadership roles in several companies - DuPont, Axalta, and now Arxada.”

The biggest challenge in his role at the moment is managing his team’s time. 

“Just like every leader, the big challenge is balancing short-term delivery versus long-term capability and building a property and excelling team over time. It's the balance between now and the future.”

Willis is most proud of the team he has built.

“I've been in a few transformative roles over my career, but I think the one I'm most proud of is the last year, my first year at Arxada, where we have transformed the supply chain and generated huge business improvements while building a winning culture and a winning team.”

Arxada's Evolution: Transforming supply chains with the right people, process and tools

Willis is improving end-to-end synchronisation and collaboration capabilities from customers through to suppliers, despite limited planning tool capabilities.

“We have a weekly process, where we have a cross-functional team from the commercial, manufacturing, supply chain, and procurement,” Willis says. “We are all working off the same set of books and numbers and plans, to make sure they're all aligned.” 

One of Willis’ next steps is getting tools that will help the team do just that. 

Three companies were brought together to make Arxada and, as a result, they have three different ERP systems, manufacturing networks and most important, work-cultures. The team uses core ERP to complete its planning. 

“We need to evolve and start doing our planning using modern tools. But that is in the future, not today. We decided to start with people and processes and follow with tools. Our processes have improved dramatically. Our team’s capabilities have improved dramatically. Now we're going to start working on tools and digital enablement.”

Willis is improving forward visibility to enable upside and downside supply capability. Arxada is starting to look at order intake frequency trends in the short, medium and long term, as well as efficiently managing feedback from key customers. 

“We run our supply chain at varying sales to capacity ratios based upon how quickly we can respond up or down, based on an individual asset. So we're using all those processes to manage up and down and make sure that we keep a constant supply and manage cash and cost effectively,” adds Willis.

Arxada's journey to optimise short, medium and long-term planning

Arxada’s strategy throughout 2021 and 2022 saw its inventory and back orders continue to rise, while service levels deteriorated, but Willis saw this as no different than most in the industry. 

“Between all the supply chain disruptions, staffing shortages and unpredictable demand, it caught us a little bit flatfooted,” Willis says. 

So, in September 2022, the team took a reset and backed up to look at the whole system and completely redesign it.

“We made it much more fit for purpose,” notes Willis. “To make sure that we're prepared for the short, medium and long-term, to meet the needs of both the business and our customers, more efficiently."

Arxada has two time-phased work streams, Fix and Iterate. 

“In short, that was all about here and now, making sure our ERP system was set up properly, making sure our planning practices were state-of-the-art and that we were monitoring and complying with the short-term needs of the business.”

Using these two time-phased work streams ensures that Arxada’s short-term orders are filled, midterm orders are planned and back orders are being covered.

“This also makes sure that our inventories turn back the other way and start getting under control,” says Willis.

The team has built the basics for organisational execution capability.

“We found the processes we wanted to run as an organisation from end to end and then designed the organisation to effectively manage and control that process.” 

Willis and his team have completely retooled the planning organisation, realigned the way they do work and readjusted the way that they collaborate with other functions in the company.

“As a result, we're getting much better outcomes.”

Arxada defined the path to first quartile five chain capability by starting with a cross-functional strategy meeting in Basel, facilitated by Ernst and Young (EY).

“We decided what we wanted to be when we grew up and what ‘good’ looks like for our particular company. Then based on that, we looked at where we are, where we want to be and did a gap analysis at the detailed level.” 

This created 55 projects, to get from point A to point B. Arxada then put them in logical work streams. 

“We time phased them from urgent and important, to important but not as urgent. We built the path from here to there,” said Willis. 

In September 2022, Arxada leadership and EY formed a team to reverse the trends and build sustainable capability to improve things. 

“We use EY’s supply chain practice to enable and accelerate our transformation and deliver results in weeks, not months. EY works well with our internal team and provides industry best practice. Insight helped build our multi-year roadmap and EY became our trusted advisors. 

“We openly discussed options regarding short-term priorities, developed the results-oriented organisation and closely monitored the overall performance of the supply chain and developed a winning organisational mindset.”

The results are quite remarkable. 

Arxada has:

• Reduced back orders by 70%
• Reduced inventory by 14% 
• Reduced manufacturing cost by 5%

“That happened very quickly - in the first 90 days. In one year, backorder reduction has gone from 70% to 86%, a 39% reduction in order delivery failures and a 29% inventory reduction.” 

Arxada has built KPI driven processes and people capabilities to set the stage for the next journey and has been sharply focused on its externally benchmarked force quartile supply chain performance.

“We looked at supply chain performance in a variety of ways, both from the number of people required to do it, inventory turns, supply market service levels - the full suite of what you would expect the top quartile supply chain to do,” says Willis. 

“Then, we looked at it from a more subjective view of the characteristics of a top quartile supply chain, which are important for us and which are not.” 

Arxada made conscious decisions on what the first quartile should look like.

Over the next year, Arxada intends to implement a fit for purpose end-to-end supply chain planning tool, with asset optimisation and full financial scenario planning capability. 

“We plan to improve our end-to-end synchronisation and collaboration capabilities with suppliers and customers, as well as provide forward visibility to support upside and downside supply capability. This will ensure sustained excellence for service to our customers while improving cost, networking and capital productivity. 

“Last and most importantly, we intend to achieve an externally benchmarked first quartile supply chain performance, making our supply chain a competitive advantage for our company.”

Within the next year, Arxada is going to work on four things.

“We're implementing a fit-for-purpose end-to-end supply chain planning tool, that will enable us to continue the journey of improving networking, capital cost and market service level or customer service level going forward,” says Willis. 

The company is going to improve its end-to-end synchronisation, using tools to make sure that its suppliers and customers are all working on the same base plans. 

“We're going to work on forward visibility using leading indicators,” Willis adds. “There are a few of our products that tend to lead the drop and the recovery. We're using those as bellwethers to understand what the general economy is going to do.”

Arxada is going to be more proactive in staffing up, as well as down, to make sure they are meeting their objectives and maintaining good supply to the market. 

“Last but not least, we are going to achieve first quartile supply chain capability and performance and the corresponding KPIs associated with that.”