www.tocpractice.

com

16th International Conference of the

TOC Practitioners Alliance - TOCPA
www.tocpractice.com

April 23, 2015 Johannesburg, South Africa

TOC Driven Procurement Sharing the

implementation and results at two SA
implementations

Albert Van der Wat, Cargo Solutions, South Africa

23rd April, 2015

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Albert Van der Wat

Albert was born and raised in Johannesburg,
and completed his Industrial and Systems
Engineering Degree at the University of
Pretoria in 2008. Albert is currently working
for CargoSolutions, as TOC consultant and
Symphony Implementer.
Albert has a vast
knowledge of how Symphony can improve a
companys operations using TOC based
planning, execution and management tools.
In addition, Albert also uses the Symphony
Simulator as marketing tool to illustrate how
TOC and Dynamic Buffer Management can
Albert Van der Wat
improve Inventory carrying costs
E-mail: albert@cargosolutions.co.za
Tel: 0114858700
Cell: 0834636232

16th International Conference of the TOC Practitioners Alliance - TOCPA

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TOC Driven Procurement Sharing the

implementation and results

Your logo

Scope of Presentation
Share insights in TOC Procurement with DBM
Specifically in long lead time SKUs and Spare Parts
How to improve on KPIs in Procurement, namely:
Reduce Stock Outs
Reduce Overstocking

Inventory Quantities

Inventory Value

Increase Inventory Turns

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Distribution Solution
Basic Distribution Solution
Store
/ DC

Factory

Customers

FG
WH
Customers

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Procurement Solution
Renewed Procurement Solution
Suppliers

Consignm
ent Stock

RM
WH

Factory

Suppliers

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What do we want to Achieve?

Remove complexity of MRP
Constant reviewing of Min-Max levels
Reviewing MOQs and EBQs
Revising BOMs
Human constraints

Remove Evils of MRP

Having too much inventory
Having too little inventory

Help against the Bull Whip effect

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What is the Bull Whip Effect?

The bullwhip effect is an observed
phenomenon in forecast-driven distribution
channels. It refers to a trend of larger and larger
swings in inventory in response to changes in
customer demand (or forecast), as one looks at
firms further back in the supply Chain for a
product. Jay Forrester Industrial Dynamics
(1961)

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Bull Whip Effect

Image from: http://sinaslogisticsblog.blogspot.de/2010/04/bullwhip-effect.html

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Bi-modal Distribution
Carol Ptak - DDMRP

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Dynamic Buffer Management

Inventory is Too
Much in the
Green zone -

Buffer target is
decreased to
reduce
unnecessary
inventory cost

Replenishment
requirement

Replenishment
execution

Consumption rate
temporarily
increases

Inventory resides Too Much in the Red

Zone Availability is at risk

DBM
A Reminder

Consumption rate is back to

normal rate again

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Our Procurement Clients

Printing company
High value SKUs
MTO driven
Forecast dependent

Aviation company
Very demanding clients
Long lead times
High variability in usage
16th International Conference of the TOC Practitioners Alliance - TOCPA

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16th International Conference of the

TOC Practitioners Alliance - TOCPA
www.tocpractice.com

April 23, 2015 Johannesburg, South Africa

South African Bank Note

Company
The TOC story at the
South African Bank Note
Company
Kobus Snyman, SABN, South Africa
23rd April, 2015

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Name of the presenter

1990 - 1992
B com (Cum Laude) ( Major in Business Economics , HR)

1993 - 1997
SABN HR Department , HR Administrator

1998
Internal audit Diploma , Certificate in internal control

1997 - 2000
SABN Finance Department Assets and Insurance

2000 2007
SABN Finance department Assistant Cost Accountant

2008 Current ( Established

SABN Logistics Department )

SABN HOD Logistics Warehousing , Export , Imports , Securitized

Product Storage , Demand Control , Waste Management

K Snyman
Logistics Manager
Tel 012 521 1499
Cell 084 600 1074

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SABN Supply Chain

Current Status

Customers places annual orders based on forecasting

Delivery planning is done for the financial year
Inks and Paper comprise a very high % of product
cost focus area
Inks and paper is now being replenished by vendors
All SKUs are being ordered based on Symphony
recommendations

Future

Vendor Managed Inventory (VMI)

Vendor holding buffers to shorten supply lead time
Reduce forecasting periods
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SABN Supply Chain

Raw Mat

Kanban

Printing

Finishing

Buffer

Kanban

Customers

Kanban

Spares

Spares

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SABN Raw Materials

SKUs Inks, paper, spares etc currently
managing approximately 6000 SKUs
All SKUs are now managed using Symphony
with DBM
Long lead time items are challenging , but
become less challenging once supplier buy in
and view buffers daily

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SABN Raw Materials

Old Mode of Operation
Ordering was done on out of stock / replace &
forecast

Un desirable events (UDEs) / Challenges

Overstocking,
Stock outs,
MRP challenges,
Forecast Challenges,
Reorder methodology on MRP , complicated
formula and not working
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SABN and TOC

Introduced TOC by Supply Chain Executive
Reasons for change out of stock , stop start ,
over stocking..
To go live , massive clean up , determine
buffers , check integrity of stock , categories
(Critical / lead time) , motivated staff

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SABN SKU Chart

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TOC and Procurement

Stock
SKU Description
Location

CWH

CONSUMABLE

CWH

PPE

CWH

CHEMICAL

CWH

CONSUMABLE

CWH

SPARE

CWH

BOX

CWH

CONSUMABLE

CWH

SPARE

Inventory at
Transit

0.00

BP Transit

100%

Inventory at
Site

0.00

975.00

2%

1.00

0.00

67%

25.00

192.00

1%

0.00

34%

5,996.00
0.00
0.00

BP Site

Black / Red Reason

100% Project consumption

UOM

Replenishment Time

GL Code

Requisition Quantity

PO Quantity

Buffer Size

21 INCO

0.00

0.00

2.00

99% Spike in consumption

EA

23 INPC

750.00

225.00

1,000.00

67% Annual cleaning of factory

LT

18 INCL

0.00

0.00

75.00

105.00

65%

EA

21 INCO

192.00

0.00

300.00

132.00

34%

EA

90 INCO

0.00

0.00

200.00

-366%

1,000.00

33%

EA

20 INPA

0.00

5,996.00

1,500.00

-1%

2,010.00

-1%

MM

21 INCO

0.00

0.00

2,000.00

-5%

42.00

-5%

EA

21 INCO

0.00

0.00

40.00

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CWH Stocked Out SKUs

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CWH Colour Stats

Previous stock management
DBM implemented

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All INK in CWH

Overstocked

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GWH Spares

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The Future at SABN

Process of giving suppliers access to symphony
High volume suppliers move to VMI

Supplier has Symphony access and long term pricing

Supplier creates requisition based in Symphony
SABN converts requisition to order
Supplier dispatch

SABN manages buffers (DBM) based on

SABN production planning (SKU phase in and out)

16th International Conference of the TOC Practitioners Alliance - TOCPA

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16th International Conference of the

TOC Practitioners Alliance - TOCPA
www.tocpractice.com

April 23, 2015 Johannesburg, South Africa

Aerosud Aviation
The TOC story at Aerosud

Brian Ingram, Aerosud, South Africa

23rd April, 2015

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Brian Ingram
I am the Supply Chain Director at Aerosud Aviation
based in Centurion Pretoria.
I have been with the company for 16 years.
I have a mechanical engineering background and
have spent the majority of my working life in the
aviation/Aerospace field

BRIAN INGRAM
SUPPLY CHAIN DIRECTOR
b.ingram@aerosud.co.za
T: +27 (0)12 662 5041
C: +27 (0)82 901 9658
F: +27 (0)12 662 5169
www.aerosud.co.za

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Group Introduction
Current Group Organisation

Board of Directors

Since 1990

Design and Development of aviation Products

Industrialization & Make to Print
Manufacture of Composites, Thermoplastics, CFRTP, Deep drawn
Pressings, Welding, Treatments, Sheet metal parts, Machined
components and medium sized assemblies

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Aerosud Aviation Business Model

Summary of Customers and Products
Vacuum Formed and
Lay-up parts and
Assemblies
600 part number
4 500 p/m

Sheet metal Electrical

Rack assemblies

C-class wing parts and

welded track can
assemblies

600 part numbers

25 000 p/m

4 500 B737

C-class parts
1 000 part numbers
4 000 p/m

500 part numbers

40 000 p/m

850 B777

Cockpit linings, Cargo

lining Wing Tip and Galley

Track Cans and CFRTP

Frame Clips

3 000 part numbers

10 000 p/m

800 part numbers

10 000 p/m

Aerosud Aviation parts delivered to:

3 500 A320
30 A400M

25 A350

A320
B737
A400
A350

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

34 >> 36 >> 46
31 >> 34 >> 42
>> 1 >> 2.5
>> 2 >> 3

2012

2013

2014

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Aerosud Aviation Business Model

Annual Turnover: 65mUSD (2014)

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Supply Chain
International Procurement
Annual International spend 25 mUSD
Raw Materials
75%

3500 SKUs
580 Suppliers
Detail Parts
14%

US = 65%
Europe = 25%
UK = 10%
Lead Times up to 12 months with an average lead time of
90 days

Others
2% Services
8%

Manufacturing
& Tools
1%

High amount of Life Limited SKUs

High cost of individual materials

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Addressing Industry Challenges an Aerosud View

Key Strategic Elements

Maintain technology investment and Engineering capability

99% on-time delivery and a preferred supplier

Implementation of ToC methodology
Increase level/complexity/size of assembly work
Increase order book based on current range of process approvals with moderate expansion
Expand local content and supplier base (make-buy decisions)
Expand Local and International Partnerships

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Business Systems
Integrating Business requirements

WIKIWINGS

Business Process Management

Financial
Management

Inventory

ERP Purchasing
Solution

SYMPHONY

Production
Management
Operational Processes and Procedures (OPPS)
(EN/AS 9100 Compliant)

Detail parts
tracking

Shop Floor Data

Collection

SFDC
Part Quality
Reporting

OMEGA

PDM
WIP
Management

Priority
Management

Manufacturing
Engineering Tool

Workflow

Subcon
Management

PLM
Solution

Configuration

EBOM/MBOM

TOC
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Production Management the TOC

way.

How reliable are we now?

How do we become more reliable?
How do we remain reliable?

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Production System

16th International Conference of the TOC Practitioners Alliance - TOCPA

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How reliable are we now?

Buffer Penetration (<5% Black; <10% RED)

MTA

MTA (qty SKUs BRYG) & MTO (qty PPSs BRYG)

Per job Class (M, S, V, L, A, etc)
Per project
Turned Black & Launched Black

MTO

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How reliable are we now?

Buffer Penetration (MTA only)

SOH+WIP

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How do we become more

reliable?

Flow Rate performance

Value Stream view Project or flow group view (per job Class i.e. S, M, V, L, other)
Cell view (CCR, Monitor, other)

Value Stream

Cell View : CCR & Monitor

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How do we remain reliable?

Planning reliability

Buffer size management

Buffer Trace
Settings management

Execution reliability

Protective Capacity history per cell

PC Profile in value stream
Reason codes for not achieving flow
NRFT

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Production System
make-to-availability VS make-to-order

To Customer

LAUNCH

Data Set-up & Management

100%

MTO Lead time

SOH

Buffer

MAKE TO ORDER

33%

WIP

EBQ

66%

MAKE TO AVAILABILITY

BUFFER
PENETRATION

SOs
qty

20
20

20
BUFFER PENETRATION

20

To Customer

LAUNCH

SOs that are post-due

SOs falling outside

the launch
window

Time

t = NOW

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Production System
Physical Deployment
System Implementation
- Cell Organisation
- Expediting Function
- Visual ToC Priority System - BRYG
- Daily priority Hitlist - BRYG

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Aerosud Raw Materials

Complex supply chain together with volatility
in customer demand, presents many
challenges to any inventory management
system.
TOC purchasing methodology, driven via
Symphony software, has shown many
advantages not the least of which is visibility
that allows for improved inventory
management.
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PTS Colour Stats

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Consolidated PTS Raw

Warehouses

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Consolidated Stocked Out

SKUs

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Consolidated Inventory Value

Reduction

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What does the future hold

1)Improved throughput
2)Improved visibility at all levels
3)Reduced Inventory
4)Reduced stock outs

16th International Conference of the TOC Practitioners Alliance - TOCPA

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Questions

Any Questions for Kobus or Brian?

16th International Conference of the TOC Practitioners Alliance - TOCPA