Jewellery giant Pandora has remodelled its supply chain as part of work to double production capacity.
Pandora, which says it is the world’s largest jewellery maker by manufacturing volume, aims to increase production to 200m items by 2019.
At the same time the company wants to halve its manufacturing lead time to make it more agile and responsive to customer needs. In 2015 the lead time was eight weeks and it currently stands at six weeks, with the target being four weeks.
Pandora goes to market with new products 10 times each year and it is increasing the number of retail stores, of which there are currently more than 2,400. It recently added a Chinese online offering together with the Alibaba Group. In 2017 total revenues were around €3.1bn.
The work involves shifting production from multiple facilities in Thailand, where the company makes its jewellery, into two purpose-built centres where production will be organised along agile lines with improved flow. One of the centres is in Lamphun in northern Thailand, currently with more than 3,000 employees but with capacity for 5,000. It opened in 2017. The other, in Bangkok, opened in January 2018 with capacity for 5,000 workers. This process is due to be completed by 2019.
Thomas Touborg, senior vice president of group operations at Pandora, told SM previous production expansion had not been strategic. “Our capacity was just expanded floor by floor, building by building, without taking a step back and looking through a lens, ‘How should we arrange the structure?’” he said. “We needed more capacity. We felt the need to become more agile.”
Pandora has opted to use planning software from Quintiq to “optimise utilisation of production equipment as well as human resources by ensuring that the specialised craftsmen have the correct mix of skills to execute the planned production,” said the company.
“The solution will provide the agility needed to achieve high utilisation and on-time delivery while considering peaks in seasonal consumer demand.”
Touborg said the changes would put pressure on suppliers. “With reduced lead times the requirements on suppliers also change,” he said. “You need robust suppliers who can deal with shorter lead times.
“The network of suppliers we have is pretty strong and some of the best in the market. The relationship with them and willingness to work with Pandora is quite strong.”
Indirect procurement takes place at Pandora’s headquarters in Copenhagen, Denmark, while direct procurement is carried out in Thailand.
Touborg said the procurement team in Thailand was an “integrated part of manufacturing”, working closely with planning and development teams.
He said the changes would allow Pandora to increase its range of products while carrying the same percentage of inventory against revenue.
Across the globe the company employs more than 27,000 people, with around 13,000 working in Thailand.
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