process 1© the delos partnership 2005 integrated enterprise leadership process steps
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Process 1 © The Delos Partnership 2005
Integrated Enterprise LeadershipIntegrated Enterprise Leadership
Process Steps
Process 2 © The Delos Partnership 2005
Framework for Process Framework for Process ReviewReview
ProcessInputs Outputs
People
Behaviours/Culture
Measures/Performance Indicators
Process 3 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process NameProcess Name
InputsInputs Purpose/AgendaPurpose/Agenda OutputsOutputs
PeoplePeople Desired CultureDesired Culture MeasuresMeasures
Systems to support this stepSystems to support this step
Link to otherLink to other
ProcessesProcesses
Process 4 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process Name : InnovationProcess Name : Innovation
InputsInputs• Product development strategy• Updated Project Plans• Prioritisation process• Financial forecasts and cost/benefit analysis• Issues around projects• New project proposals
Purpose/AgendaPurpose/Agenda• To review all projects• Understand project resource clashes• Determine impact of delays• Agree inclusion of projects in Financial plan• Agree issues to go forward to SMR
OutputsOutputs• Decisions on how to handle cross-project resource issues• Communication on project delays/advances• Agreed financial plan for innovation projects• Issues to go forward to SMR
PeoplePeople•Innovation Process Owner• Marketing Manager• Development Manager• Operations Manager• HR Manager• Finance/IT Manager
Desired CultureDesired Culture•Realistic business plans for new products – no overstatement of requirements• Commitment to timelines• Communication between project leaders• Honest assessment of success/failure
MeasuresMeasures•On time delivery of projects•On time delivery of milestones•% Forecast accuracy [original plan versus 1st year sales]• % of revenue generated through new products
Systems to support this stepSystems to support this step•Primavera 4.3
Link to other ProcessesLink to other Processes•New product development meeting•Site development meeting [to be replaced]
Process 5 © The Delos Partnership 2005
Integrated Enterprise LeadershipIntegrated Enterprise Leadership
AACCTTIIOONN
AACCTTIIOONN
Week 1 Week 2 Week 3 Week 4
InnovationInnovationReviewReview
InnovationInnovationReviewReview
CustomerDemandReview
CustomerDemandReview
SupplyPlan
Review
SupplyPlan
Review
PriorityReview
PriorityReview
Stage 1Stage 1
Stage 2Stage 2
SeniorTeam
Review
SeniorTeam
Review
Stage 5Stage 5
Stage 7Stage 7
Stage 3Stage 3
SupportReview
SupportReview
Stage 6Stage 6
Stage 4Stage 4
Process 6 © The Delos Partnership 2005
InnovationInnovation
What counts as innovation ?
– New product– Change to existing product - line extension– New manufacturing process– Change to manufacturing process– Regulatory change– Capital expansion– ERP Project
Process 7 © The Delos Partnership 2005
Integrated Business Plan
Integration of InnovationIntegration of Innovation
Innovation
Supply Chain
DemandPlan
SupportActivities
0
5,000
10,000
15,000
20,000
25,000
30,000
Euros
Sales Contrib
Sales/Profit
Financial Analysis
Budget
Previous
Current
Process 8 © The Delos Partnership 2005
Innovation ProjectsInnovation Projects
All share the following issues:– Need Project Plan– Need business justification– Need co-ordination– Difficult to forecast outcome - uncertain
Also– Need cross project resource management– Need integration into all other processes– Prioritisation across projects
Process 9 © The Delos Partnership 2005
Management of InnovationManagement of Innovation
Stage/Gate Process
Formal Process for Managing Projects
Gate0
Gate0
Gate1
Gate1
Gate2
Gate2
Gate3
Gate3
Gate4
Gate4
Stage 0Stage 0 Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3 Stage 4Stage 4
Review
InvestigateInvestigate FinancialCase
FinancialCase
DevelopDevelop TestTest LaunchLaunch
Process 10 © The Delos Partnership 2005
Management of InnovationManagement of Innovation
Integrated Project Management – Programme Management
0
20
40
60
80
100
120
1st Qtr 2nd Qtr 3rd Qtr 4th QtrQtr
Capacity - Design Resource
Dem Cap
Req Cap
Process 11 © The Delos Partnership 2005
Prioritisation of ideasPrioritisation of ideasProject Name Value [£ m
NPV]Strategic Fit Risk Rank
New Product A 20 5 5 500
Factory relayout 50 2 5 500
Omega 45 5 2 450
Alpha 20 5 4 400
New Material 33 4 3 396
Planned Shutdown
2 5 5 200
Inspection 5 5 5 125
IT Systems 100 1 1 100
Office Move 40 2 1 80
Process 12 © The Delos Partnership 2005
Integration with Supply ChainIntegration with Supply Chain
Design
Purchase
Intermediate Manufacture
Sub-assemble
Finish
Distribute
Cumulative Lead TimeCumulative Lead Time
Insert NewProducts Here
Insert NewProducts Here
Process 13 © The Delos Partnership 2005
New Product Development New Product Development PerformancePerformance
Definition
Purpose
Horizon
Source of information
Number of new products developed on time
Improve NPD process
New product development time
Activity schedule in planning system or project plans
Process 14 © The Delos Partnership 2005
NPD Performance ReportNPD Performance ReportProject reference
Planned Date
Actual Date
Hit/ Miss
Comment
A1001 23/2/99 02/3/99 Miss
A1096 23/2/99 15/3/99 Miss
B2304 24/2/99 17/2/99 Hit
B2403 25/2/99 18/2/99 Hit
D1237 26/2/99 27/2/99 Miss
D1453 26/2/99 20/2/99 Hit
NPD Performance = 3/6 = 50 %
Process 15 © The Delos Partnership 2005
Innovations ManagerInnovations Manager
Strategy
Innovation Manager
DevelopmentIdeas
ProjectPlans
DevelopmentPlans
Supply Plans
ProjectSystem
Prioritised PlansPrioritised Plans
Process 16 © The Delos Partnership 2005
Innovations Review MeetingInnovations Review Meeting
Update on projects
Review and approval of major new projects
Performance Measures
Projects prioritised
Agreement onmajor new projects
Issues for furtherreview
Process 17 © The Delos Partnership 2005
WorkshopWorkshop
Define the inputs, outputs and agenda for the Innovation step in the process.
You have ten minutes.
Define the inputs, outputs and agenda for the Innovation step in the process.
You have ten minutes.
Process 18 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process NameProcess Name
InputsInputs Purpose/AgendaPurpose/Agenda OutputsOutputs
PeoplePeople Desired CultureDesired Culture MeasuresMeasures
Systems to support this stepSystems to support this step
Link to otherLink to other
ProcessesProcesses
Process 19 © The Delos Partnership 2005
Integrated Enterprise LeadershipIntegrated Enterprise Leadership
AACCTTIIOONN
AACCTTIIOONN
Week 1 Week 2 Week 3 Week 4
InnovationInnovationReviewReview
InnovationInnovationReviewReview
CustomerCustomerDemandDemandReviewReview
CustomerCustomerDemandDemandReviewReview
SupplyPlan
Review
SupplyPlan
Review
PriorityReview
PriorityReview
Stage 1Stage 1
Stage 2Stage 2
SeniorTeam
Review
SeniorTeam
Review
Stage 5Stage 5
Stage 7Stage 7
Stage 3Stage 3
SupportReview
SupportReview
Stage 6Stage 6
Stage 4Stage 4
Process 20 © The Delos Partnership 2005
Demand Planning and Demand Planning and ManagementManagement
Horizon
PLANMANAGEEXECUTE
Cumulative Lead Time
Add or subtractTo capacity
Strong Link to
Integrated Enterprise Leadership process
Capacity andMaterials“firm”
Take Orders
Today
Process 22 © The Delos Partnership 2005
Why is a Forecast needed ?Why is a Forecast needed ?
Design
Purchase
Intermediate Manufacture
Sub-assemble
Finish
Distribute
Cumulative Lead Time
Customer PlacesOrder here
Forecast needed to cover this
Process 23 © The Delos Partnership 2005
Why is a Forecast needed ?Why is a Forecast needed ?
Design
Purchase
Intermediate Manufacture
Sub-assemble
Finish
Distribute
Cumulative Lead Time
Customer PlacesOrder here
Forecast needed to cover this
Process 24 © The Delos Partnership 2005
Common Reasons for Not Common Reasons for Not ForecastingForecasting
I can never make it100% accurate
My business has toomany unforeseen
peaksMy business isdifferent - you can’t forecast it
I don’t know who’s responsible
for it anywayIt’s not in my
objectives
I’m measured on getting high sales
- so who cares about the forecast
The factory nevermake what I forecast
anyway
Nobody thanks me for it – so why
bother ?
Process 25 © The Delos Partnership 2005
The Delos ModelThe Delos ModelFor Business Integration For Business Integration
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
Responsibility
Process 26 © The Delos Partnership 2005
Forecasting - is there a definition?Forecasting - is there a definition?
Process 27 © The Delos Partnership 2005
Forecasting – DefinedForecasting – Defined
A forecast is a formal request to the Supply Management function
from Sales and Marketing
to have the product, materials and capacity available according to the quantity and at the
time that they anticipate the demand will occur from the customer to ship the product
to their premises
A forecast is a formal request to the Supply Management function
from Sales and Marketing
to have the product, materials and capacity available according to the quantity and at the
time that they anticipate the demand will occur from the customer to ship the product
to their premises
Process 28 © The Delos Partnership 2005
Impact of Biassed ForecastImpact of Biassed Forecast
Increase resources to meet higher demand
OVERFORECASTING IS AS BAD AS UNDERFORECASTING
More StocksMore Labour
More MaterialsMore Plant
No SalesCost of Goods
increases
OVERFORECASTING
GROSSMARGIN
GROSSMARGIN
Stocks LowLabour UnavailableShort of CapacityShort of Materials
Lost SalesCost of Goods
increases
GROSSMARGIN
GROSSMARGIN
UNDERFORECASTING
Resources insufficient tomeet demand
Process 29 © The Delos Partnership 2005
The Ten Rules of ForecastingThe Ten Rules of Forecasting1. A forecast is necessary for planning supply and supporting financial
and business plans
2. A forecast is never going to be right
3. A forecast is wrong because the assumptions were wrong
4. Accountability for the forecast rests with Sales and Marketing
5. Forecasting needs an application of intelligence
6. More accurate forecasting comes from your customers’ customer
7. Forecasts at an aggregate level are more accurate than the detail
8. Effective management of demand is key to managing forecast inaccuracy
9. A written policy for managing flexibility is essential
10. Measuring forecast accuracy will improve the process
Process 30 © The Delos Partnership 2005
Forecasting Needs a Simple Forecasting Needs a Simple ProcessProcess
Filter Filter DemandDemand
ComputeComputeforecastforecast
CaptureCaptureActualActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Hold Demand ReviewHold Demand Review
Agree commercialAgree commercial plansplans
AgreeAgreeExceptional demandExceptional demand
AssumptionAssumptions written s written down and down and
agreedagreed
AssumptionAssumptions written s written down and down and
agreedagreed
ReviewReviewAccuracyAccuracy
Process 31 © The Delos Partnership 2005
Execute Statistical ForecastExecute Statistical Forecast
• Use demand history to produce trends and identify patterns
• Key influences to be derived :• Base• Trend• Seasonality
Process 32 © The Delos Partnership 2005
““Tell me how you will measure Tell me how you will measure me and I will tell you howme and I will tell you how
I will behave”I will behave”
““Measure me irrationally andMeasure me irrationally andI will behave irrationally”I will behave irrationally”
Behaviour issueBehaviour issue
Process 33 © The Delos Partnership 2005
Forecast AccuracyForecast Accuracy
Definition
Purpose
Horizon
Source of Information
Percent of items within a tolerance
Assess the degree of flexibility required by the supply side and to improve the process
Cumulative lead time (= purchasing plus manufacturing)
Forecasting module Sales module
Process 34 © The Delos Partnership 2005
Forecast Accuracy Report – by Forecast Accuracy Report – by ErrorError
Group Product Forecast Actual Error % Error
Product Group A
Product 123 100 120 +20 20
Product 456 200 150 -50 25
Product 789 300 330 +30 10
Total 600 600 0 17 %
Product Group B
Product 345 200 300 +100 50
Product 567 500 300 -200 40
Product 890 600 700 +100 17
Product 678 200 400 +200 100
Total 1500 1700 200 40 %
Process 35 © The Delos Partnership 2005
Forecast Quality and BiasForecast Quality and Bias
0
5
10
15
20
25
30
35
40
% of Items
Normal
Graph forecasts to display bias
Bias
Process 36 © The Delos Partnership 2005
Sales Forecasting: InputsSales Forecasting: Inputs
• New Customers• New Products• Pricing Initiatives• Advertising And Promotions• Cannibalisation• Customers Own Forecast• Competitors Activity• External Factors
Process 37 © The Delos Partnership 2005
Review Exceptional DemandReview Exceptional Demand
• Review large potential business– Tenders– New contracts– Large one time demand
• Decide whether to include in forecast or not– Avoid probabilities– Decide on hedging strategy– Agree on acceptance of risk
Process 38 © The Delos Partnership 2005
Demand CreationDemand CreationDemand Facts
– Population– Numbers between age 13-16– Children less than 11
Demand Drivers– Events (Xmas)– Desires– Technology
Demand Controllers– Pricing– Promotion– Distribution– Advertising– Packaging
ASSUMPTIONS
RESULTS
• Market Share• Market Reach• Frequency of purchase
Process 39 © The Delos Partnership 2005
Sales and Marketing FocusSales and Marketing Focus
Month 1 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Month 2 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Month 3 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Month 4 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Month 5 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Month 6 Region A Region B
Cust
A
Cust
B
Cust
C
Cust
A
Cust
D
Cust
E
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group XYZ
Prod 4
Prod 5
Prod 6
Sales/Account
Managers
Sales/Account
Managers
MarketingMarketing
One
Set of
Numbers
One
Set of
Numbers
Process 40 © The Delos Partnership 2005
Collaborative Planning - Collaborative Planning - ProgressProgress
Data Exchange
Vendor Managed Inventory
Co-ManagedInventory
Trading Partnership
Integrated Planning and Replenishment
• Ability to view Customer data•No management process•Possibly available on Internet
•Agreed process for managing inventory (VMI) – Supplier’s problem!
•Supplier schedules provided
•Agreed process for managing inventory•Mutual availability of data and plans in joint systems•Supplier schedules provided, and forecasts provided.
•Mutual sharing of long term plans•Full briefing on long term strategy•Joint improvement activities
•Joint forecast review•Joint agreement on Business plans and inventory strategy•Joint improvement activities
Time
Process 41 © The Delos Partnership 2005
COLLABORATIVE COLLABORATIVE FORECASTINGFORECASTINGCPR• Collaborate• Plan• Replenish
SEAMLESS
CUSTOMER
OUR COMPANY
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisationDemandDemand
SupportSupport
SupplySupply
One set o
f num
bers !
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisationDemandDemand
SupportSupport
SupplySupply
One set o
f num
bers !
Process 42 © The Delos Partnership 2005
Sales Forecasting - Sales Forecasting - Review Exceptional DemandReview Exceptional Demand
• Review large potential business– Tenders– New contracts– Large one time demand
• Decide whether to include in forecast or not– Avoid probabilities– Decide on hedging strategy– Agree on acceptance of risk
Process 43 © The Delos Partnership 2005
The Delos ModelThe Delos ModelFor Business Integration For Business Integration
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
One set o
f num
bers !
Process 44 © The Delos Partnership 2005
Demand ManagementDemand Management
Strategy
Demand Manager
Sales and Marketing
SystemForecast
Plan
ManufacturingAnd Purchasing
ERPSystem
Consensus ForecastConsensus Forecast
Process 45 © The Delos Partnership 2005
Demand Review MeetingDemand Review Meeting
Update on Assumptions
Review major changes To Forecasts
Performance Measures
UnconstrainedDemand
Uncertainties
FinancialProjection
Process 46 © The Delos Partnership 2005
Customer ServiceCustomer Service
Definition
Purpose
Horizon
Source of Information
Number of orders delivered to required date to customers’ premises
Flexibility required to meet customer needs
Make To Stock - none
Make To Order - product lead time
Sales order entry
Process 47 © The Delos Partnership 2005
Order Required Date
Actual Date
Required Quantity
Actual Quantity
Hit/ Miss
1435 22/2/99 23/2/99 1050 1050 Miss
1560 23/2/99 23/2/99 2000 2000 Hit
1573 24/2/99 23/2/99 300 300 Miss
1745 25/2/99 25/2/99 450 500 Miss
1800 26/2/99 26/2/99 700 650 Miss
1820 26/2/99 26/2/99 1000 1000 Hit
Customer Service Report – Customer Service Report – Against Request DateAgainst Request Date
Customer Service = 2/6 = 33 %
Process 48 © The Delos Partnership 2005
WorkshopWorkshop
Review current Demand Planning process and recommend changes/refinements
You have thirty minutes.
Review current Demand Planning process and recommend changes/refinements
You have thirty minutes.
Process 49 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process NameProcess Name
InputsInputs Purpose/AgendaPurpose/Agenda OutputsOutputs
PeoplePeople Desired CultureDesired Culture MeasuresMeasures
Systems to support this stepSystems to support this step
Link to otherLink to other
ProcessesProcesses
Process 50 © The Delos Partnership 2005
Integrated Enterprise LeadershipIntegrated Enterprise Leadership
AACCTTIIOONN
AACCTTIIOONN
Week 1 Week 2 Week 3 Week 4
InnovationInnovationReviewReview
InnovationInnovationReviewReview
CustomerCustomerDemandDemandReviewReview
CustomerCustomerDemandDemandReviewReview
SupplySupplyPlanPlan
ReviewReview
SupplySupplyPlanPlan
ReviewReview
PriorityReview
PriorityReview
Stage 1Stage 1
Stage 2Stage 2
SeniorTeam
Review
SeniorTeam
Review
Stage 5Stage 5
Stage 7Stage 7
Stage 3Stage 3
SupportReview
SupportReview
Stage 6Stage 6
Stage 4Stage 4
Process 51 © The Delos Partnership 2005
Supply Chain ManagementSupply Chain Management
Horizon
PLANMANAGEEXECUTE
Cumulative Lead Time
Add or subtractTo capacity
Strong Link to
Integrated Enterprise Leadership Process
Capacity andMaterials“firm”
Release Orders
Process 52 © The Delos Partnership 2005
Basic FormulaBasic Formula
Item DataBOM’s
And Routes
StockAnd
Capacity
Master Schedule
Forecasts Orders
Suppliers Factories
What do theyactually want ?
What havewe got ?
Whatdoes it need ?
What do we need to do ?
What do we thinktheywant ?
Process 53 © The Delos Partnership 2005
Objectives of Master ScheduleObjectives of Master Schedule
• State forward production plan by Stock Keeping Unit (SKU)
• Summarise what the business can do
• Provide Available to Promise information for Sales/Customer Service
• Provide stability to the supply organisation– Firm Planned Orders
Process 54 © The Delos Partnership 2005
Rough Cut Capacity PlanningRough Cut Capacity Planning
Objective– Translate Family Volumes into capacity
requirements– Test validity of plan against demonstrated capacity
How– Use planning profiles– Use critical resources– Use demonstrated capacity
Result– Possible problem areas
Process 55 © The Delos Partnership 2005
Rough Cut Capacity PlanningRough Cut Capacity Planning
RequiredCapacity
DemonstratedCapacity
Family Volumes x
Rate per hour
Family Volumes x
Rate per hour
Actual ProductionPer month
Actual ProductionPer month
CriticalResources
Process 56 © The Delos Partnership 2005
Rough Cut ProfileRough Cut Profile
Key Resources Units Families
A B C D E F
Supplier A Lts 2.1 3.4 4.2 1.3
Warehouse Pallets 12 14 20 5 10
Quality Assurance Hrs 3 5 3 10 7 2
Line ABC Hrs 2 5 1 5.6
Labeller Hrs 4 7 2 5
Filling m/c Hrs 3 7 9 2 5
Hours per 000 units
Process 57 © The Delos Partnership 2005
Rough Cut ResultRough Cut ResultMonth 5Month 5
Key Resources Required Production Volumes Capacity
A
220
B
200
C
35
D
40
E
150
F
15
Req Dem Max
Supplier A
Warehouse
Quality Assurance
Line ABC
Labeller
Filling m/c
Process 58 © The Delos Partnership 2005
Rough Cut Result – Month 5Rough Cut Result – Month 5
220 200 35 40 150 15
Key ResourcesUnits FamiliesA B C D E F
Supplier A Lts 462 680 - 168 195 - 1,505 1,500 2,500
Warehouse Pallets 2,640 - 490 800 750 150 4,830 4,000 4,000
QA Hrs 660 1,000 105 400 1,050 30 3,245 3,500 4,200
Line ABC Hrs - 400 175 40 840 - 1,455 1,500 2,500
Labeller Hrs 880 1,400 70 200 - - 2,550 1,500 2,500
Filling m/c Hrs 660 1,400 315 80 750 - 3,205 3,000 4,500
REQ CAP
DEM CAP
MAX CAP
ROUGH CUT CAPACITY PLANNINGResult for Month 5
Production Volumes
Process 59 © The Delos Partnership 2005
Rough Cut Result Rough Cut Result – Graph by Resource– Graph by Resource
Month 5 - RCCP
0
1000
2000
3000
4000
5000
6000
Supplier A Warehouse QA Line ABC Labeller Filling m/c
Resources
Un
its REQ CAP
DEM CAP
MAX CAP
Process 60 © The Delos Partnership 2005
Rough Cut ResultRough Cut ResultCapacity RequirementCapacity Requirement
Filling Machine : Cap Req
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1 2 3 4 5 6 7 8 9 10 11 12
Months
Hou
rs
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Process 61 © The Delos Partnership 2005
FamiliesFamilies
A family is the highest level of aggregation that can reasonably give a capacity picture
There may be a need to have marketing families and manufacturing families
A family is the highest level of aggregation that can reasonably give a capacity picture
There may be a need to have marketing families and manufacturing families
Process 62 © The Delos Partnership 2005
Master Schedule Link to IELMaster Schedule Link to IEL
Product B3Product B2
MPSProduct B1
IEL Family B
16
6Cum Diff
10
51Difference
80
75
71
Actual Demand
70
70
70
Demand Plan
-1
-2
-3
Months
70
4
70
5
70
6
70
7
70
8
70
3
Cum Diff
Difference
New Demand Plan
70
70
70
Last Demand Plan
921
Months
210
210
Q1
Q4
-15
-11
Cum Diff
-4
-6
-5
Difference
71
69
70
Actual Supply
75
75
75
Supply Plan
-1
-2
-3
70
4
70
5
70
6
70
7
70
8
70
3
Cum Diff
Difference
New Supply Plan
70
75
75
Last Supply Plan
921
210
210
Q1
Q4
31
17
6Difference
82
73
67
Actual Orders 66
51
56
61
Order Book Plan
-1
-2
-3
41
4
41
5
41
6
41
7
41
8
41
3
Difference
New Plan
41
41
46
Last Plan
921
41
41
Q1
Q4
Make – To- Order
Process 63 © The Delos Partnership 2005
MRP “Logic”MRP “Logic”
Have we enough Stock ?
Have we enough Stock ?
DemandsDemands
Yes/NoYes/NoYes
No ActionNo Action
Have we any on order ?
Have we any on order ?
Yes/NoYes/NoNo Create
Planned Order
Create Planned Order
YesDue Date=
Need Date ?
Due Date=
Need Date ?
Yes/NoYes/No
No ActionNo Action
Yes
Action
Message
Action
Message No
Process 64 © The Delos Partnership 2005
Planned OrdersPlanned Orders
PlannedOrders
CapacityRequirements
Plan
ComponentPlan
Red Item
14356
Sub-Item
43768
1 per
•Automatic re-plan•Plans matched sets of parts•Plans hours for CRP
Process 65 © The Delos Partnership 2005
Detailed Capacity PlanningDetailed Capacity Planning
1 2 3 4 5 6 7 8
ProjectedGross Requirements
10 10 10 10 20 20 20 20
Scheduled Receipts 20
Projected Available Balance
30
Planned Order Release
Opn No Work Centre
Operation Set Run
10 45 Inspect 0.5 0.10
20 55 Mix 1.0 0.5
30 65 Pack 1.0 0.2
Routing
Work Centre Information
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8
Reqd
Demo
Process 66 © The Delos Partnership 2005
Creation of Vendor ScheduleCreation of Vendor Schedule
1 2 3 4 5 6 7 8
Projected
Gross Requirements
10 10 10 10 20 20 20 20
Scheduled Receipts 20
Projected Available Balance
30
Planned Order Release
Supplier Schedule
Part Number : 14356 D escription : Red Pen
Line Part Number Description Qty ScrapPer
Factor10 43768 Pen Barrel 1 0.020 76452 Finished Nib 1 0.030 89563 Cap 1 0.0
Bills of MaterialPlanning Data• Lead Times• Order Quantities• Safety Stock
Process 67 © The Delos Partnership 2005
Vendor ScheduleVendor Schedule
Part
No.
1/7 8/7 15/7 22/7 29/7 5/8 12/8 19/8 26/8 Sept Oct 12 m
Total
23467 20 20 20 20 20 80 80 960
24566 10 10 30 60 60 1040
35467 35 70 70 35 35 140 140 1680
14376 20 20 40 40 160 180 1920
25436 10 10 10 40 80 620
Supplier : ACME Grinding Equipment Limited
Orders Pay for materials Visibility
Orders : Part Qty Due
145326 23467 20 1/7
Process 68 © The Delos Partnership 2005
Vendor SchedulerVendor Scheduler• Manages Exception messages
• Reviews and manages performance
• Operates MRP for their items
• Releases vendor schedule
• Point of contact for suppliers
Process 69 © The Delos Partnership 2005
Time Fence PolicyTime Fence Policy
Horizon
PLANMANAGEEXECUTE
Cumulative Lead Time
Add or subtractTo capacity
Strong Link toIntegrated Enterprise Leadership Process
Capacity andMaterials“firm”
Release Orders
Open SesameFirmNO !
Process 70 © The Delos Partnership 2005
Time Fence PolicyTime Fence Policy
• Should relate to Cumulative Lead Time (CLT)– Requires review of CLT by product– Could be different by product group
• Should state who can change and when
• Should be clear about “Emergency Changes”
Process 71 © The Delos Partnership 2005
Integrated Enterprise Integrated Enterprise LeadershipLeadership
-3 -2 -1
Demand Plan 120 120 120
Actual Demand 119 125 132
Difference -1 5 12
Cum Diff 4 16
Months 1 2 3 4 5 6 7 8 9
Last Demand Plan 120 120 120 120 120 120 120 120 120
New Demand Plan
Difference
Cum Diff
Months Q4 Q1
360 360
-3 -2 -1
Supply Plan 125 125 125
Actual Supply 119 118 121
Difference -6 -7 -4
Cum Diff -13 -17
1 2 3 4 5 6 7 8 9
Last Supply Plan 125 125 120 120 120 120 120 120 120
New Supply Plan
Difference
Cum Diff
Q4 Q1
360 360
-3 -2 -1
Stock Plan 71 76 81
Actual Stock 66 66 59 48
Difference -5 -17 -33
1 2 3 4 5 6 7 8 9
Last Stock Plan 86 91 91 91 91 91 91 91 91
New Stock Plan
Difference
Q4 Q1
Make – To- Stock Senior Team FocusMPS Focus
Process 72 © The Delos Partnership 2005
Master Schedule Master Schedule
• Definition
• Purpose
• Horizon
• Source of Information
• Valid Material and Capacity plans and stability of those plans
• Improve planning process, and provide desired stability to supply chain
• Product’s Cumulative Lead Time• Master Scheduling module
Process 73 © The Delos Partnership 2005
Master Schedule AchievementMaster Schedule AchievementFirm Plan Order
Plan Start Date
Actual Start Date
Planned Quantity
Actual Quantity
Hit/ Miss
10034 22/2/99 23/2/99 1050 1050 Miss
10067 23/2/99 23/2/99 2000 2000 Hit
10165 24/2/99 24/2/99 300 300 Hit
10230 25/2/99 25/2/99 500 500 Hit
10376 26/2/99 26/2/99 700 700 Hit
12782 26/2/99 26/2/99 1000 1000 Hit
Schedule Achievement = 5/6 = 84 %
Process 74 © The Delos Partnership 2005
Right First Time ReportRight First Time Report
Commentary
•Right First Time suffered from new component supplier
•Product specs not updated
Right First Time
0
20
40
60
80
100
120
Rig
ht F
irst
Tim
e
Actual
Target
Process 75 © The Delos Partnership 2005
Schedule AchievementSchedule Achievement
• Schedule = Agreed sequence of activity• Across business/value chain• Others are dependent on schedule completion
• Measurement = # Activities completed on time x 100%• # Activities scheduled for
period
• Not just production Schedules• Purchasing• Product Launch• Maintenance• Cash Collection
Process 76 © The Delos Partnership 2005
Schedule Achievement - Schedule Achievement - ProductionProduction
Definition
Purpose
Horizon
Source of Information
Number of works orders completed to required date into stock or next operation
Improve manufacturing process
Product Lead Time
Shop Floor control module
Process 77 © The Delos Partnership 2005
Source of DataSource of Data
At point of order release record – Operation Due Dates– Works Order Due Date
Store away first due date
Process 78 © The Delos Partnership 2005
Source of DataSource of Data
At point of completion of operation and works orders record actual date
Process 79 © The Delos Partnership 2005
Schedule Achievement ReportSchedule Achievement Report
Works Order
Required Date
Actual Date
Required Quantity
Actual Quantity
Hit/ Miss
1470 22/2/99 23/2/99 1050 1050 Miss
1590 23/2/99 23/2/99 2000 2000 Hit
1580 24/2/99 23/2/99 300 300 Miss
1803 25/2/99 25/2/99 450 500 Miss
1908 26/2/99 26/2/99 700 700 Hit
1854 26/2/99 26/2/99 1000 1000 Hit
Schedule Achievement = 3/6 = 50 %
Process 80 © The Delos Partnership 2005
Schedule Achievement ReportSchedule Achievement Report
CommentarySchedule achievement suffered from unplanned absenteeism
The Zanara machine needs repairing
Schedule Achievemnt
0
20
40
60
80
100
120
% o
n t
ime
Actual
Target
Process 81 © The Delos Partnership 2005
Daily Pace
Daily Actual
Week Target
Week Actual
Daily Pace
Daily Actual
Week Target
Week Actual
Daily Pace
Daily Actual
Week Target
Week Actual
Previous 4 Weeks:w/e 8/28 56 61 29,000 26,300 3,750 525 w/e 9/4 23 25 26,000 23,450 4,500 5,348 w/e 9/11 40 41 25,000 26,125 4,600 4,451 w/e 9/18 56 44 29,000 30,230 5,355 5,020
total 175 171 109,000 106,105 18,205 15,344
Last Week:9/19/05 9 7 9 7 5,000 4,297 5,000 4,297 765 529 765 529 9/20/05 14 7 23 14 5,000 3,972 10,000 8,269 765 695 1,530 1,224 9/21/05 14 9 37 23 5,000 4,647 15,000 12,916 765 200 2,295 1,424 9/22/05 12 9 49 32 5,000 5,196 20,000 18,112 765 850 3,060 2,274 9/23/05 10 8 59 40 5,000 5,166 25,000 23,278 765 700 3,825 2,974 9/24/05 9 7 68 47 2,000 3,179 27,000 26,457 765 800 4,590 3,774 9/25/05 - 5 68 52 2,000 1,319 29,000 27,776 765 725 5,355 4,499
Daily Pace
Daily Actual
Week Target
Week Actual
Daily Pace
Daily Actual
Week Target
Week Actual Bus. Plan
Plan /
Actual Delta
Previous 4 Weeks: End of August (111) w/e 8/28 4,383 3,378 605 608 w/e 9/4 16 25 (102) w/e 9/4 4,368 3,700 552 503 w/e 9/11 21 41 (82) w/e 9/11 3,898 3,669 526 427 w/e 9/18 81 44 (119) w/e 9/18 3,316 3,584 630 654 w/e 9/25 74 52 (141)
total 15,965 14,331 2,313 2,192
Total 192 162
Last Week:
9/19/05 484 502 484 502 91 94 91 94 Bus. Plan
Plan /
Actual Delta
Rev Prod
Plan
Plan /
Actual Delta
9/20/05 673 511 1,157 1,013 91 86 182 180 April 151 151 - April 151 151 - 9/21/05 630 604 1,787 1,617 90 93 272 273 May 253 167 (86) May 165 167 2 9/22/05 720 607 2,507 2,224 90 87 362 360 June 179 203 (62) June 229 203 (24) 9/23/05 650 682 3,157 2,906 90 96 452 456 July 245 194 (113) July 166 194 4 9/24/05 600 606 3,757 3,512 90 76 542 532 August 261 263 (111) August 274 263 (7) 9/25/05 384 702 4,141 4,214 90 51 632 583 Sept. 192 162 (141) Sept. 232 162 (77)
F/A Releases - Actual vs. Rev FCF/A Releases - Actual vs. Obj.
F/A Releases vs. Business PlanPellet Trays Zirc Grids
Columbia Production Status - Key Areas - Through week ending: September 25, 2005
Conversion kgUFinal Assembly Releases IFBA Rods
What is the measure ?What is the measure ?
0/7 = 0 % ?0/7 = 0 % ?
0/7 = 0 % ?0/7 = 0 % ?
Process 82 © The Delos Partnership 2005
AccountabilityAccountability
Sales
Logistics
Distribution
Manufacturing
Process 83 © The Delos Partnership 2005
Root Cause AnalysisRoot Cause Analysis
Works OrdersNot on time
Works OrdersNot on time
PeopleProcesses
Lack of Skill
Lack ofTraining
Equipment Material
Order Closing
Order Release
Slow running
AvailabilityNon availability
Not to spec
Advice of Delay Absenteeism
BreakdownFailed in use
Process 84 © The Delos Partnership 2005
Schedule AchievementSchedule Achievement
• Schedule = Agreed sequence of activity• Across business/value chain• Others are dependent on schedule completion
• Measurement = # Activities completed on time x 100%• # Activities scheduled for
period
• Not just production Schedules• Purchasing• Product Launch• Maintenance• Cash Collection
Process 85 © The Delos Partnership 2005
Supplier PerformanceSupplier Performance
Definition
Purpose
Horizon
Source of Information
Number of deliveries received into stock on or before due date/time
Improve supplier delivery process
Purchasing Lead Time or Time Fence
Vendor Schedule or Purchase Order`
Process 86 © The Delos Partnership 2005
Supplier Achievement ReportSupplier Achievement Report
Commentary
•Supplier achievement suffered from alternative supplier having quality problems
•The new product caused untold problems
Supplier Achievemnt
0
20
40
60
80
100
120
% o
n t
ime
Actual
Target
Process 87 © The Delos Partnership 2005
Root Cause AnalysisRoot Cause Analysis
Purchase Orders not on time
Purchase Orders not on time
PeopleProcesses
Unreliable promises
Lack ofTraining
Equipment Material
Order Placement
Vendor Schedule
AvailabilityNon availability
Not to spec
Time Fence
BreakdownFailed in use
Lack ofTraining
Process 88 © The Delos Partnership 2005
Master SchedulerMaster Scheduler
Strategy
Sales Forecasts
CustomerOrders
ManufacturingPlan
PurchasingPlan
MRPSystem
Balanced PlanBalanced Plan
Master Scheduler
Process 89 © The Delos Partnership 2005
Supply Review MeetingSupply Review Meeting
Update on Projects
New Forecast
Rough Cut and Demonstrated Capacity
Performance Measures
Supply Plan
Alternatives
Issues for furtherreview
Process 90 © The Delos Partnership 2005
WorkshopWorkshop
Define improvements to the inputs, outputs and agenda for the Supply step in the process.
You have thirty minutes.
Define improvements to the inputs, outputs and agenda for the Supply step in the process.
You have thirty minutes.
Process 91 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process NameProcess Name
InputsInputs Purpose/AgendaPurpose/Agenda OutputsOutputs
PeoplePeople Desired CultureDesired Culture MeasuresMeasures
Systems to support this stepSystems to support this step
Link to otherLink to other
ProcessesProcesses
Process 92 © The Delos Partnership 2005
Integrated Enterprise LeadershipIntegrated Enterprise Leadership
AACCTTIIOONN
AACCTTIIOONN
Week 1 Week 2 Week 3 Week 4
InnovationInnovationReviewReview
InnovationInnovationReviewReview
CustomerDemandReview
CustomerDemandReview
SupplyPlan
Review
SupplyPlan
Review
PriorityReview
PriorityReview
Stage 1Stage 1
Stage 2Stage 2
SeniorTeam
Review
SeniorTeam
Review
Stage 5Stage 5
Stage 7Stage 7
Stage 3Stage 3
SupportReview
SupportReview
Stage 6Stage 6
Stage 4Stage 4
Process 93 © The Delos Partnership 2005
SupportSupport
What are the support activities?
They will depend on your particular organisation – one person’s critical activity is another’s support role!Examples:– Finance– IT– Quality– Engineering– Human Resources
Process 94 © The Delos Partnership 2005
Support stepSupport step
• Establish the resource needs and priorities for all support activities – e.g.– Finance– Human Resources– Information Technology– Engineering
• Provide financial base for decisions• Highlight resource issues in these areas, which are
relevant• To ensure that all plans – innovation, demand and
supply – are underpinned by the appropriate support resources.
Process 95 © The Delos Partnership 2005
Financial planFinancial plan
Pull together all the volume plans into one financial picture
• Volume x price = revenue• Volume x cost = variable cost• Margin = revenue – variable cost• Overheads are fixed• Profit is the result• Assumptions on assets• Cash Flow calculation
Process 96 © The Delos Partnership 2005
Financial Planning Financial Planning SpreadsheetSpreadsheet
Sales Plan -3 -2 -1
Demand Plan 120 120 120
Actual Demand 119 125 132
Difference -1 5 12
Cum Diff 4 16
1 2 3 4 5 6 7 8 9
Last Demand Plan 120 120 120 120 120 120 120 120 120
New Demand Plan
Difference
Cum Diff
Months Q4 Q1
360 360
Supply Plan -3 -2 -1
Supply Plan 125 125 125
Actual Supply 119 118 121
Difference -6 -7 -4
Cum Diff -13 -17
1 2 3 4 5 6 7 8 9
Last Supply Plan 125 125 120 120 120 120 120 120 120
New Supply Plan
Difference
Cum Diff
Q4 Q1
360 360
Inventory Plan -3 -2 -1
Stock Plan 71 76 81
Actual Stock 66 66 59 48
Difference -5 -17 -33
1 2 3 4 5 6 7 8 9
Last Stock Plan 86 91 91 91 91 91 91 91 91
New Stock Plan
Difference
Q4 Q1
Financials -3 -2 -1
Actual Sales 1190 1230 1310
Product Cost 476 492 524
Contribution 714 738 786
Admin Overheads 102 110 114
Manufacturing Overheads 104 104 105
Profit 508 544 607
Change in Stocks 0 +28 +44
CASH FLOW 508 572 651
1 2 3 4 5 6 7 8 9
Projected Sales 1200 1200 1200 1200 1200 1200 1200 1200 1200
Product Cost 480 480 480 480 480 480 480 480 480
Contribution 720 720 720 720 720 720 720 720 720
Admin Overheads 100 100 100 100 100 100 100 100 100
Manufacturing Overheads 100 100 100 100 100 100 100 100 100
Profit 520 520 520 520 520 520 520 520 520
Change in Stocks -152 -25
CASH FLOW 368 495 520 520 520 520 520 520 520
Q4 Q1
3600 3600
1440 1440
2160 2160
300 300
300 300
1560 1560
1560 1560
Process 97 © The Delos Partnership 2005
Revised Financial PlanRevised Financial Plan
0
5,000
10,000
15,000
20,000
25,000
30,000
Euros
Sales Contrib
Sales/Profit
Financial Analysis
Budget
Previous
Current
Process 98 © The Delos Partnership 2005
Reviewing the GapReviewing the GapFinancial Strategic Forecast
0
5
10
15
20
25
1 2 3 4 5
Year
£m.
All New
New
Extend
Current
Aspiration
Process 99 © The Delos Partnership 2005
Preparation of the budgetPreparation of the budget
Financial projection enables– Visibility of current year outturn – early– Visibility of subsequent year(s) to enable budget to
be one set of numbers – early
Requires culture change– No six month process– No sandbagging of the numbers– Simple cut-off period– “Roughly right” rather than “precisely wrong”
Process 100 © The Delos Partnership 2005
Information ResourcesInformation Resources
I have been trying to get that report on Customer Service written for six
months. You can never get anything out of that
department !
I have been trying to get that report on Customer Service written for six
months. You can never get anything out of that
department !
How am I expected to
get something out of nothing
Process 101 © The Delos Partnership 2005
IT Resources SchedulerIT Resources Scheduler
Strategy
Project Plans
Help DeskEnquiries
Infrastructure plan
ResourceRequirements
MaintenancePlan
Balanced PlanBalanced Plan
IT ResourcesScheduler
Process 102 © The Delos Partnership 2005
Information ResourcesInformation Resources
Integrated Project Management
0
20
40
60
80
100
120
1st Qtr 2nd Qtr 3rd Qtr 4th QtrQtr
Capacity - Programming Resource
Dem Cap
Req Cap
Process 103 © The Delos Partnership 2005
Human ResourcesHuman Resources
1. Plan for Direct and Indirect labour requirements
2. Organisational development
3. Training plans by individual as a result of Training Needs analysis• What financial benefits being delivered ?• What resource issues exist ?
4. Management of• Pay negotiations• Move to Annualised hours
5. Downsizing, Rightsizing, upsizing, outsourcing
Process 104 © The Delos Partnership 2005
WorkshopWorkshop
Identify any improvements to this step of the process
You have thirty minutes.
Identify any improvements to this step of the process
You have thirty minutes.
Process 105 © The Delos Partnership 2005
Framework for Process ReviewFramework for Process Review
Process NameProcess Name
InputsInputs Purpose/AgendaPurpose/Agenda OutputsOutputs
PeoplePeople Desired CultureDesired Culture MeasuresMeasures
Systems to support this stepSystems to support this step
Link to otherLink to other
ProcessesProcesses
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