process 1© the delos partnership 2005 integrated enterprise leadership process steps

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Process 1 © The Delos Partnership 2005 Integrated Enterprise Integrated Enterprise Leadership 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 21 © The Delos Partnership 2005

Why is a Forecast needed ?Why is a Forecast needed ?

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