Supply Chain In Maintenance

Old Model 1

Supporting

Process

LPG Plant

Operations

Services
 Old Model 2

Finance

Transport

Maintenance

Purchasing

Warehouse
 Supply Chain Model

LPG Plant

Process Control LPGProduct Storage

Product
Natural Gas
Production Loading

Human
Finance
Resource
Purchasing & Warehouse & Maintenance Asset
Transportation Transportation
Plant
Activity Reliability
Sustainability
 Supply
Chain
Production
Accounting
Quality

LPG
Production

Human
Finance
Resource

Plant
Sustainability

Maintenance
Administration
Quality
Supply Chain Processes
 Supply Chain
• SCM is concerned with the management and control of the flows of
– material,
– information, and
– finances.

• The task of SCM is to:

– design,
– plan, and
– Execute
the activities at the different stages.
 SCM in a Supply Network

Suppliers Activity Services

Information

Cash Demand
SCOR Model Functions
SCOR Hierarchy
SC Planning
SC Planning
 Planning & Information Sharing
Stakeholders Technical Support Maintenance Logistics Supplier

Work Planning & Execution Delivery Material

Request Scheduling
 Integration in SC

Purchasing
Maintenance Asset
&
Activity Reliability
Logistics

Low Quality Poor Utilization

(Financial, Transport) of Resource Capacity No Metrics Tracking

Unreliable Delivery Accumulation of Work

Orders Improvement Resisted

Increasing Backlog Additional Complexity

Plant Sustainability
Segmentation
Segmentation Charts
 Definitions
•Response Time

–Does Requester send on short notice and expect quick service or is a longer
lead time acceptable?

–Customers buying custom machinery would plan the purchase in advance and
expect some lead time before the product could be delivered.

•Service Level

–Do requesters expect all products to be available for immediate delivery or will
they accept partial deliveries of products and longer lead times?

–Customers who order a custom-built new machine tool expect to wait a while
before delivery.
 Warehouse
• A system that runs day-to-day operations of a DC.

• Controls item putaway, picking, packing, and delivery.

• Features:

– Transportation management,

– Order management,

– Yard management,

– Distribution,

– Labor management, and

– Warehouse optimization
Warehouse Management Systems
 Logistics & Distribution
• Logistics: getting the right material to the right place at the right time in
the right quantity.

– Traffic Management:

• The selection, scheduling & control of carriers (for both internal

& external materials.

– Distribution Management:

• The packaging, storing & handling of products in transit to the

end-user.
Distribution System
 Inventory
• Inventory is spread throughout the supply chain and includes everything
from:

– raw material to

– work in process

that are held by any party in a supply chain.

 Inventory Types
• Cycle Inventory
– The amount of inventory needed to satisfy demand for the product
in the period between purchases of the product.

• Safety Stock
– Inventory that is held as a buffer against uncertainty.

• Seasonal Inventory
– This is inventory built up in anticipation of predictable increases in
demand that occur at certain times of the year.
 Min-Max Inventory Control
1. Forced-ordering system
• The trigger for ordering is the end of the review period.

2. Fixed order quantity

• The trigger for ordering is when the facility reaches the minimum
level.

3. Fixed order cycle

• The trigger for ordering is the end of the review period for the
commodities that are at the minimum level.
 Fixed Order Quantity

MAXIMUM RATE OF USAGE

WITHOUT STOCK-OUT
**REORDER
QUANTITY (Q)

.. .
... *REORDER LEVEL
STOCK . ... POINT (A)
. ..
LEVEL . ...
. ..
Q . .. Q
..
. .. EXPECTED RATE
. ..
.. OF USAGE (R)
. .
..
.

. BUFFER STOCK
.
. LEVEL
LEAD TIME .
(L)

TIME
 Fixed Order Cycle

*ORDER UP TO LEVEL

**REORDER
QUANTITY
**REORDER Q3
QUANTITY

STOCK Q2 Q3
LEVEL .
.
Q2 .
.
Q1 .
.
Cover period
.
. .
. .
. . BUFFER STOCK
. . LEVEL
. .
. LEAD TIME (L) . LEAD TIME (L)
. .
.
REVIEW REVIEW
PERIOD (T) PERIOD (T)
TIME
 Common Causes of Stock Outs
Quantity

Q Demand Uncertainty
R
SS
Time
L

Quantity
Lead Time Variability
Q (LT = Cycle Time + Transit Time)
R
SS
Time
L

Quantity Supply Uncertainty

Q
R
SS
Time
Enabling SCM
Levels of Planning
SC Strategies
 MTO Strategy
•It allows engineers to purchase supplies to their requirements.

•It only start activity once the work order is released.

•This creates additional wait time for the requester to receive the product,

•But allows for more flexible customization compared to purchasing from

retailers' shelves.
Business Strategies
 Business Plan

Implementing a state-of-the-art
industry standard

SC Strategy
•MTO
Business Plan

•Industry Standard:
 Asset Management
 Supply Chain Management

•State-of-the-Art:
Oracle eAM
Business Strategy
 Excel ???
•Low Cost
•Differentiated
•Horizontal Focus
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan
Master Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Resource
Planning
Master Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Resource
Forecasting
Planning
Master Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
 Principles of Forecasting
• Forecasts are usually wrong.
• Every forecast should include an estimate of error.
• Forecasts are more accurate for families or groups.
• Forecasts are more accurate for nearer periods.

Deterministic Probabilistic
 Forecasting Influence
• Forecasting errors can increase the total cost of ownership for a product

- inventory carrying costs,

- obsolete inventory,

- lack of sufficient inventory, and

- quality due to accepting marginal products to prevent stock out.

 Forecasting Benefits
• Essential for smooth operations of business organizations,

• Estimates of the occurrence, timing, or magnitude of uncertain future

events,

• Costs of forecasting:

– excess labor;

– excess materials;

– expediting costs;

– lost revenues.
 Forecasting Estimates
• Predicting future events,
• Usually demand behavior over a time frame,
• Qualitative methods
– Based on subjective methods.
• Quantitative methods
– Based on mathematical formulas or statistical methos.

Demand Behavior
 Demand Behavior

Demand
Demand

Random
movement

Time Time
(a) Trend (b) Cycle

Demand
Demand

Time Time
(c) Seasonal pattern (d) Trend with seasonal pattern
 Moving Average Method
150 –

125 – 5-month

100 –
Orders

75 –

50 – 3-month

Actual
25 –

0– | | | | | | | | | | |
Jan Feb Mar Apr May June July Aug Sept Oct Nov
Month
• Average several periods of data.
• Dampen, smooth out changes.
• Use when demand is stable with no trend or seasonal pattern.
 Exponential Smoothing Method
70 –

60 – Actual  = 0.50

50 –

40 –
Orders

 = 0.30
30 –

20 –

10 –

0– | | | | | | | | | | | |
1 2 3 4 5 6 7 8 9 10 11 12
Month
• Averaging method
• Weights most recent data more strongly
• Reacts more to recent changes
• Widely used, accurate method
 Forecast Control
• Reasons for out-of-control forecasts
– Change in trend
– Appearance of cycle
– Weather changes
– Projects
– Outsourcing
– Politics
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Operations Resource
Forecasting
Planning Planning
Master Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
 Participants
•Plant Manager,

•Supply Chain Manager,

•Maintenance Managers,

•Master Scheduler,

•Accounting Manager,

•Logistics Manager, and

•Materials Manager.
Make to Stock

Make to Order
 Meeting
•The purpose is to update the plan (demand, operations, finances) as a
result of changes in the external and internal environments.

–Even though the logic of OP is simple, implementing is not.

–Implementing it requires people

to make changes and

to do some aspects of their jobs differently.

–It will take an investment of time to fully digest and become

comfortable with the new methods because this is not an extension of
past experience.
 The First Meeting
•It is intended to be primarily a learning experience.

•It won’t be perfect and may not even be highly polished

–we may not have all the data we need,

–We are working to get all the data, but

–we do not want to delay the implementation by waiting for data.

•The frequency and timing should be aligned with financial processes.

 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Operations Resource
Forecasting
Planning Planning
Master Planning

Rough-cut
Demand Master
Capacity
Management Schedule
Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
Production Chasing Strategy
Production Leveling Strategy
RCCP
Demand Management
Master Schedule
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Operations Resource
Forecasting
Planning Planning
Master Planning

Rough-cut
Demand Master
Capacity
Management Schedule
Planning

Material Capacity
Requirements Requirements
Planning Planning
Execution

• SCM
• Planner
• Mgr
• SE
• JE
• Logistics
CRP
Calculation Work Load
MRP
 Manufacturing Planning & Control (MPC)
Business
Demand Material Resource
Plan

Operations Resource
Forecasting
Planning Planning
Master Planning

Rough-cut
Demand Master
Capacity
Management Schedule
Planning

Distribution Material Capacity

Requirements Requirements Requirements
Planning Planning Planning
Execution

• SCM
Production
Activity Final Capacity • Planner
Control Assembly Control • Mgr
Schedule
• SE
• JE
• Logistics
 DRP
•It organizes inventory requirements on central supplies

Distribution
Requirements
Planning

Warehouse Purchase Finance Transport

Weekly List Weekly List Weekly List Weekly List
 PAC & FAS
•It is responsible for executing the master schedule and the material
requirements plan.

•It takes the form of I/O control and WO sequencing on a daily basis.

•It creates and monitors the FAS on a daily basis.

 Capacity Control
•It measures WO completion and compares it with the capacity plan.

•It determines if the variance exceeds pre-established limits.

•It takes corrective action to get back on plan if limits exceeded.

•It is carried out on a daily basis.

 Boundaries and Definitions
• Define all system components and boundaries.

– WO Boundary,

– Inventory delivery nature,

– Metrics,

– Responsibility assignment,

– Planning phases frequencies, and

– etc.
A Framework For Managing The Supply Chain

6
Develop
measurement system
for supply chain
performance

5
4
Organize for
Pilot new supply
supply chain
chain solutions
performance

3
1 2
Develop effective
Develop a supply Gather supply
partnerships and
chain strategy chain information
alliances
 A Framework For Managing The Supply Chain
• Develop a supply chain strategy

– Service level requirements,

– Plant and distribution network design,

– Inventory management,

– Business processes,

– Organizational design and training requirements,

– Performance metrics and goals.

 A Framework For Managing The Supply Chain
• Pilot new supply chain solutions

– Successful supply chain improvement including

• Involvement of key stakeholders, suppliers, requesters and

employees,

• Selection of scope and environment, focusing on avoiding risk,

• Identification of the key questions that the pilot must answer.

 A Framework For Managing The Supply Chain
• Develop measurement systems for supply chain performance

– On time in full,

– Internal defect rates,

– Cost reduction,

– Stock turns,

– Order to delivery lead time,

– Flexibility.
 Implementation Timeline

May Jul
Jun
 Implementation Timeline

May Jun Jul Aug Sep Oct Nov Dec Jan Feb

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