guest lecture - scm implementation - apr 2013

7/30/2019 Guest Lecture - SCM Implementation - Apr 2013

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Copyright 2011 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

Supply Chain ManagementImplementation

Universitas Indonesia, April 2013

Copyright 2011 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.


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Copyright 2011 Accenture All Rights Reserved.2

Bio

Awin PuruhitaManagerAccenture Management Consulting

Education

ST, Electrical Engineering, Institut Teknologi Bandung

M.Sc, Management of Logistics and Production Systems,

Ecole des Mines de Nantes, France

Work Experience

Accenture

Deliver Plus UK

Airbus France

GE Consumer & Ind

ustrial

2


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Copyright 2011 Accenture All Rights Reserved.

Moving Assembly Line Video

Introduction

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http://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/boeing.FLV


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Have flown Boeing 787 Dreamliner?

Three years of delays

Breakeven point at the year 2021

The delays put the total cost closer to $32 billion for Boeing

Global Supply Chain

4


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Global Supply Chain

5


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Global supply chains are a source of competitive advantages: Low cost labour

Low cost raw material

Local expertise

Government incentives

and disadvantage:

Increase sup

ply chain risk

Global Supply Chain

6


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Supply Chain risks: Supply?

Demand?

Operational?

Security?

The Concept of Volatility

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Volatility isnt new but its velocity is

The Concept of Permanent Volatility

Government & Politics Economic Volatility Commodity Cycles

Globalization &

Regionalization

New/Demanding

Customers Supplier Variability

Government policies are

increasingly unpredictable.

Financial and Market

volatility impacts

Shortened Product lifecycles and

instant commoditization of

innovations

Global footprints increase

vulnerability.Failure to meet demand results in lost

customers, permanently

Continued volatility in

commodity prices.


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What percentage of companies are concerned about supplychain resiliency?

Discussion Question:Managing Risk


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Over 80% of companies are concerned about supply chain resiliency

Only 10% are actively managing risk

Research has shown that while only 10% of manufacturers have mature

systems and processes to address these risks, those that do are 75% moreprofitable than their competitors

Managing and Monitoring Risk


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Industries are responding to risk in a variety of ways, although

typically falling short

Source: Global Operations Survey, Accenture

Insource (return back to home

country for manufacturing)

Forward buying/hedging strategies

Formal supply chain riskmanagement program

Establishing an intentionally

geographically distributed supply base

Increased inventories

and safety stock

Sourcing of contingent suppliersand/or logistics provide

Manufacturing locally

and globally

38%

42%

49%

50%

53%

61%

62%

Responding to Volatility and Risk

Events


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SCM PROJECT APPROACH &

CASE STUDIES


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Business Case Problem Statement

Kaizen ScheduleKaizen Team

Goal StatementProject Scope

Project Charter

Project Approach


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Voice of Process/Customer/Business

Voice of

Customer

Voice of

Process

Voice of

Business

Project Approach


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Kaizen Projects

Best for low complexity projects where knownsolution(s) can be applied

High bias for action and implementation

Lean Six Sigma Projects

Best for complex projects where root cause ofproblem is not understood

Thorough measurement and analysis prior to

implementation

Effort

EconomicValue

HighLow Med

High

Lo

w

Med

ProjectSelection Process

Strategic Issues

Network-wide, systemic business issues resultingfrom too many/few products/offerings

Process complexity driven by historical performanceissues

Slow, costly product development processes

The Project Selection Process Filters and Prioritizes Opportunities

Project Approach


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SIPOC Analysis

(Image removed due to confidentiality)

Project Approach


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Six Sigma comb ines strong analys is sk i l ls to reduce

var iation w ith a robu st problem-solv ing method ology

Customer-centricview of Process

Improvement projects

Data driven (statistically

based) process

improvement

Controls and leading

indicators ensuresustained results

Reductions in defects,

and re-work

Stage-gating ensures

initial assumptions are

maintained throughout

project duration

Reduction of variation

and root cause

resolution

Requires measurement ofProcess Capability

Creation of a

common language

for all process

improvement

Tollgate Reviews maintainvigilance on critical

deliverables

Implementation plans

for replication

across enterprise

Define

Measure

Analyse

Improve

Control

Define the opportunity

from both business and

customer perspectives

Understand the process

and its performance

Search for the key factors

(critical xs) that have the

biggest impact on process

performance and determine

the root causes

Develop improvement

solutions for thecritical xs

Implement the

solution and

control plan


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Supply Chain Components

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Manufacturers

SuppliersManufacturer Distributors Retailers Consumers

ProductInformation

Financial Resources

Product

Information

Financial Resources

Integrated Supply Chain:

the integration of key business processes from end user through original suppliers

that provides products, services, and information that add value for customers and

other stakeholders.

+ Subcontractors + Logistics Providers


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Supply Chain Activities

There are seven activities most commons in supply chain which are:

All seven of these processes can be mapped to and associated with the majority of the

five components of the supply chain (suppliers, manufacturers, distributors, retailers, and

consumers). However, for most, there are a few components that are more closely tied

with that particular activity.

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SupplyChains

Activities

PurchasingOrder

processingDemandplanning

Inventorymanagement

Warehousing TransportationCustomer

service

Manufacturers

SuppliersManufacturer Distributors R etailers Consumers


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Purchasing

In the past, purchasing was very much a clerical activity. Today, purchasing is a very strategic part ofthe supply chain process, consist of well-established and defined procedures, such as creating

purchase orders and communication with suppliers to get pricing information or to obtain status on

late products. (Procure-to-Pay process)

Considerable emphasis is being placed on the following initiatives within purchasing:

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Focusing ontotal net landed

cost

Exploiting thecapabilities ofinformationtechnology

Supplierrelationships

Consolidation ofsuppliers


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Marketing &

Sales

Product

Delivery

Billing &

Collection

Management

Inventory

Planning and

Control

Production

Supply Chain

Management

Procurement

and Materials

Management

Cost

Management

Finance&

Accounting

Project Scope - High Level End to End Process

CASE STUDYSupplier Management Automotive Manufacturer


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Level 2 - End to End ProcessProcurement & Materials Management

Procurement

RequisitionPurchasing Receiving

Finance & Accounting

Production

Inventory Planning &

Control

Cost Management

Material Stores

Supplier

Management

Key changes



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Best PracticeSupplier Selection


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Level 3 - Process ModelSupplier Selection

PR.06

Supplier

Management

PR.06.02

Supplier Selection

PR.06.02.01

Determine Tender

or Non Tender

Purchasing

PR.06.02.02

Determine

Approach

PR.06.02.03

Conduct

Supplier

Selection

PR.06.02.04

Negotiate

Agreement and

Select Supplier



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Level 3 - Process ModelSupplier Performance Management

PR.06

Supplier

Management

PR.06.04

Supplier

Performance

Management

PR.06.04.01

Conduct

Supplier

Segmentation

PR.06.01.03

Define and

Deploy

Measurable

Evaluation

Criteria

PR.06.01.04

Monitor

Supplier

Performance

PR.06.01.05

Evaluate and

Improve

Supplier

Performance

PR.06.01.02

Define

Interaction

Model for Each

Segment



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Best PracticeSupplier Performance Management Supplier Segmentation


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Best PracticeSupplier Performance Management QCDDM Criteria


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Demand planning includes both forecasting and production planning. It is

associated with the manufacturers, retailers, and consumers components of the

supply chain

Production planning itself is closely related to demand planning. The main concerns of production

managers while determining their production planning are as follows:

Number of units of a specified product to be produced

Time intervals over which production will occur

Availability of materials and machines to produce the number of units required within the specified

time frame

Demand Planning

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Manufacturer Retailers Consumers

Manufacturer execute the

forecasting and production

planning

For Forecasting purpose, retailers

provide manufacturer with Point

of Sale (POS) data

The taste and demand of customer

are the main driver of Demand

Planning


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Inventorymanagement is the process of trading off the amount of inventory needed to

achieve high levels ofcustomer service with the cost of holding this inventory.

The carrying cost of inventory has been estimated at 25 - 40% of the value of the inventory

itself, on an annual basis.

Currently there are two growing initiatives/philosophies within inventory management

which are:

Just in time (JIT)

Vendor managed inventory

Inventory Management

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Inventory

Carrying Cost

Service Level


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If Sales gave me

an accurate forecast,

we would provide

excellent service

I dont know what

my customers will

want in 3 months

If manufacturing

were more flexible, wecould meet customer

requirements

We can only beso flexible at

reasonable cost

Manufacturing

& distribution

Sales &

Marketing

Biases and inaccurate forecast create Business Conflicts

Who Is Right?


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S&OP takes sales & marketing ambitions, supply possibilities, customer needs and financial goals and balancesthem to create a single, achievable plan

S&OP is the way the business takes decisions

Improving S&OP is more about Leadership and Behaviour than it is about systems

Sales:we can sell 200

Marketing:

the promotionwill sell 400

Supplier:

can onlysupply 150

Finance:

we have

budget of 300

FinancialPlanning

DemandForecasting& Planning

Category

CustomerService &

Distribution

Sales

Marketing

Suppliermgmt

Debtor mgmt

oneconsensus

plan

Source figure: Red Pepper. Modified E&Y 1999

S&OP is a means of aligning targets, objectives and actions across functions

Sales & Operations Planning (S&OP)


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Voice of Process/Customer/Business

Main Dealer Fix

PO Submission is

not aligned with

S&OP process

Stock levels at

main dealersare not

optimally

balanced

Frequent

changes in the

demand plan

after 2nd S&OP

Meeting

Obsolete stock

after phase out of

a model

Unplanned air

freight and

overtime cost

End to end

cross-functional

mindset

Voice of

Business

Voice of

Customer /

Process

Forecast for

N+2, N+3, N+4

not shared

regularly

Forecast

accuracy can be

improved

CASE STUDYSales & Operations Planning Automotive Manufacturer


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Business Case

Aligning Sales & Marketing and Production around the end to

end mindset of the Supply Chain value chain

SALES GROWTH: Reduce loss of sales / Increasing

availability of the right models

COSTS: Reducing cost for producing and delivering

Problem Statement

Main Dealer Fix PO Submission is not aligned with S&OP

process

Frequent changes in the demand plan after 2nd S&OP

Meeting

Obsolete stock after phase out of a model

Stock levels at main dealers are not optimally balanced

Unplanned air freight and overtime cost

Kaizen Schedule

Analyse As Is Process

Prepare for Kaizen workshop

Pre-Kaizen workshop

Conduct Kaizen workshop

Post-Kaizen draft to-be

submission

BPD submission to BPO

Xx

Xx

Xx

Xx

Xx

Xx

Kaizen Team

Client BPO

Client Key Users

Accenture Process Team

Accenture Kaizen SME

Goal Statement

Reduce expedited shipping costs as % of total shipping

costs

Reduce unplanned overtime as % of total overtime

Achieve high adherence to S&OP process

(schedule/metrics/time fences)

Project Scope

SC.01.01 Demand Planning

SC.01.02 Supply Planning

SC.01.04.01 Conduct pre-S&OP Meeting

SC.01.04.02 Conduct S&OP Meeting

Project Charter - Sales & Operations Planning

CASE STUDYSales & Operations Planning Automotive Manufacturer(Cont.)


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Directors

Finance

Sales &

Marketing

DemandPlanning

SupplyPlanning

Production

Generate

DPForecast

Strategic

Direction

Update

Supply

Plan

UpdateDemand

Plan

Update

Financial

Forecast

Generate

ProductionPlan

Update

Production

Schedule

Pre

S&OPMeeting

Monthly

S&OP

Meeting

Supply

Planning

Meeting

Demand

Consensus

Meeting

Create Financial

Forecast

Scenarios**

GenerateSupply Plan

S&OP Monthly Cycle

Generate

Sales &

Marketing

Forecast

High Level Process. S&OP is a monthly collaborating planning process which takes sales& marketing ambitions, supply possibilities, customer needs and financial goals and

balances them to create a single, achievable operating plan.

CASE STUDYSales & Operations Planning Automotive Manufacturer(Cont.)


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CASE STUDYProduction Planning - Aircraft Manufacturer

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Background One of the largest aircraft manufacturer

Huge Work In Progress (WIP) and Finished Goods (FG) inventory levels

Needed to stop the assembly line for 2 months in previous year due to

excessive FG stock

Objective

Optimized production planning

Balanced capacity and workload between work stations to reduce lead time

Estimated benefit from implementing optimized production planning


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CASE STUDYProduction Planning - Aircraft Manufacturer (Cont.)

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CASE STUDYInventory Management Automotive Manufacturer

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Background The client is a subsidiary of one of the largest and most well known Indonesian

company, which draw the majority of their revenue from Automotive Industry

Accenture helps their manufacturing companies to achieve higher

performance in their production as well as warehouse areas

Current target inventory levels are set by senior management, which isX-Y

weeks of supply across all of imported materials

High cost of expedited shipping (Air Freight)

Objective

To build inventory stocking policies to satisfy service objectives at best cost toserve unit production

Review current target inventory level using optimization tools and

methodology

Review estimated benefit from implementing new target stock level


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The optimum target safety stock was calculated for each material using

Accentures advanced optimization tool with the following parameters:

Safety Stock = Service Level Factor x Combined Demand & Lead-Time Variability

222xxx

LTDDSDALTSDzSS

Demand Variability /

Forecast Error

Optimum Target

Safety Stock

Replenishment

Time VariabilityService Level

CASE STUDYInventory Management Automotive Manufacturer(Cont.)


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guest lecture - scm implementation - apr 2013

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