Robust Supply Planning

Module 8: supply planning tools and reporting

Croy
October 11th, 2018
Robust Supply Planning - DAY 2

9.00 Recap Day 1

9.15 Understanding your supply chain
10.30 Break
10.45 Supply planning process design
12.00 Lunch
12.45 Interactive game
14.00 Supply planning tools & reporting
14.30 Break
14.45 Supply planning organization
15.15 Improve tomorrow
15.45 Wrap up and closing

2
APS definition

“Advanced Planning & Scheduling (APS) involves the analysis and

planning of manufacturing and logistics in the short, mid,
and long terms”

“APS describes any program that uses advanced mathematical

algorithms or logic to perform optimization or simulation on finite
capacity scheduling, sourcing, capital planning, resource planning,
forecasting, demand management, and others”

Source: www.apics.org
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Planning tools

Source: Magic Quadrant for Supply Chain Planning System of Record (2018)
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ERP is not a planning system

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ERP system vs. APS system

ERP APS
Planning approach Material requirements and Material requirements and capacity
capacity planned in sequence planned simultaneously
Planning goal Materials planning with basic Feasible, optimized plan
capacity check
Scope Company Supply chain
Functional focus Wide: Narrow:
Purchasing, Manufacturing, HR, Planning processes
Distribution, Finance, Marketing
Supported Operational planning and Strategic, tactical and operational
processes operational execution planning
Optimization No Yes
What-if simulation Limited High
Planning speed Low High

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Leading Systems

fix lead

1 2 3 4 5

fix lead LRP

1 2 3 4 5 6 7 8 9 10 11 12 13 14 24
SCP
fix lead follow
OP Advanced planning
1 2 3 4 5 6 7 8 9 10 11 12
lead follow Local ERP
MRP/ERP
1 2 3 4 5 6 7 8 9 10 11 12

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Data flows

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Specific Requirements: need instead of want

Business Requirements Objectives and goals

Stakeholder Requirements Stakeholder expectations

Solution Requirements Characteristics to meet business & stakeholder requirements

Functional Behaviour & information of the solution

Non-functional Qualities the system (performance, usability,…)

Transition Requirements Capabilities required to move from as-is to to-be

Business Analysis Body of Knowledge® (BABOK® Guide)

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Specific Requirements: need instead of want

Requirement Type Requirement Scope

Business Requirements Higher level statements of the goals, objectives, or needs of the enterprise

Stakeholder Requirements Statements of the needs of a particular stakeholder or class of

stakeholders. They describe the needs that a given stakeholder has and
how that stakeholder will interact with a solution
Solution Requirements Characteristics of a solution that meet business requirements and
stakeholder requirements
Functional Behaviour and information that the solution will manage

Non-functional Describe environmental conditions under which the solution must remain
effective or qualities that the systems must have
Transition Requirements Describe capabilities that the solution must have in order to facilitate
transition from the current state of the enterprise to a desired future state

Business Analysis Body of Knowledge® (BABOK® Guide)

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Everyone talks their own language

Define
Terms that seem common
Planned order
Inventory

Watch out for

Specific Terms
Cubic hours
Yield curve

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Challenge yourself to make Specific Requirements

“when I create a plan it needs to take into account maximum capacity”

• Take into account
• Create a plan
• Maximum capacity

“the system needs to extrapolate the forecast by product groups”

• Extrapolate: how, when
• Product groups
• Disaggregate?

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10 Step Selection Process for Planning Tools

1. Make (high level) process 2. Define functional

design requirements

Milestone: main Milestone: required

activities of to-be functionality must have
process and nice to have
Create business Create business
case (benefits) case (costs)

3. Create short list/ Send

4. Send out Request for
out Request for 5. RFP discussion meeting 6. Review suppliers
Proposal (RFP)
Information (RFI)
Milestone: short list of Milestone: send out Milestone: get to know Milestone: decide on
potential suppliers RFP supplier and review suppliers to consider in
critical requirements next phase

7. Prepare scripts for demo 8. Demo sessions with

9. Final selection 10. Negotiation
sessions suppliers

Milestone: define demo Milestone: determine Milestone: Milestone: agree on

script to make final differentiators in req. 1st preferred supplier contract with supplier
selection between suppliers 2nd best supplier
Structured Approach & Considerations (APS)

Issue RFP Invite vendors Negotiation

RFP Prep
Initial response Demo Close deal

• URS traceability • Second line of review • APS specific • Vendor team and
matrix of response scenarios for demo resourcing
• Vendor quote • Second line review of • Pricing structures
assessment scoring (cloud versus
• Different attendees • Different attendees premise)
focus on different focus on different
aspects aspects
Short listing

– Some overlooked shortlisting reasons

• Integration technology
• Technical and functional breadth of solution

– Some overemphasized reasons

• Gartner
• “One vendor” ERP vs APS mantra

Source: Magic Quadrant for Supply Chain Planning System of Record (2018)
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APS ≠ ERP

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Managing design tracks: best practices

Master Data Design

Functional Design
Core Integration
Principles
Integration Design Overall Design

– Planned order, process / production order, sales, purchasing cycles

– Master data integration
– Cross systems integration

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Integration – starts with cycle thinking

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Optimization? If Excel is the starting point….

Scheduling Level of Detail Master Planning Level of Detail

DSP Daily Schedule DSP Batch Schedule by Hour Network Requirements File Allocation File

Not
Connected
USP Daily Schedule Packing Schedule First and second stage plan NPI Planning

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19
Optimization? Let’s start with visualization

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Representing Capacities in Master Planning and Scheduling

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Representing Capacities in Master Planning and Scheduling….and consequences for
integration

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Mapping of critical resources

Scheduling relevant resource

MPS relevant resource
S&OP relevant (group of) resource(s)

• Carefully map your production processes and determine critical resource to plan in scheduling, MPS and S&OP
• Capacity planning on storage tanks is difficult! Options:
> • Model occupation time in a storage time, however often this cannot be modelled easily
• Agree on a maximum amount of different grades to plan in a certain time bucket
• Extend scheduling horizon

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Design takeaways

Translate requirements to tangible concepts like cycles, actions, interfaces

Integrally consider functional, master data, integration and performance aspects

Master data design and location standardization can be sacrificed, if specific business
process requirements are key and integration does not suffer

If supply aspects are in scope: expect (re-)consideration of master data design

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Go Live

25
Cheat sheets

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Go Live

Business Process

Organize for Quick Analytics Key User

• Forecast results, # orders interfaced, total inventories
• Try and find side effects (orders missing, status changing, etc)
Key Engineer

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Supply planning reporting
S&OP Balanced Scorecard

INVENTORY DEMAND
KPI Inventory in days of stock KPI Forecast Accuracy

F Inventory value KPI Forecast Bias

PI Slow Moving Inventory Value

PI Out-of-Spec Inventory value

PLAN

SOURCE PRODUCE DELIVER

SOURCE PRODUCE DELIVER

PI Reliability supplier KPI Prod Plan Adherence KPI OTIF
PI Capability supplier PI Production Schedule adherence PI Delivery Reliability
PI Utilization rate PI Delivery Capability
PI % First Time Right F Transport costs

(KPI) = Key Performance Indicator

(PI) = Performance Indicator
(F) = Financial Indicator
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Manufacturing Review

KPI Formula What Reference Value

σin=1 Planned Qty − Produced Qty Measures the production which is achieved • Scheduled Production (Process Orders)
*100%
Schedule Adherence σ Planned Qty on time in the right quality in the right mix • Actual Production (Process Orders
n= product/intermediate type of products Confirmed)

• Scheduled Production (Process Orders)

Production Plan (Planned Qty−Produced Qty) Measures the production which is achieved
* 100% • Actual Production (Process Orders
Adherence Planned Qty on time in right quality at total level
Confirmed)

Current Stock Value • Current Stock Value

Inventory plan Measures whether the stock targets set in
∗ 100% • Planned Stock Value in latest SI&OP plan
Adherence (Planned Stock Value) the SI&OP plan are achieved

Inventory in days of Net Value Stock Inventory in days of stock based on • Net Stock Value
*365
stock (forward) (Value Demand Plan next 3 months∗4) forecast • Demand plant (in value)
Inventory in days of Net Value Stock Inventory in days of stock based on • Net Stock Value
*365
stock (backward) (Value Historical Demand past 3 months∗4) historical demand • Historical demand (in value)

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Manufacturing Review

KPI Formula What Reference Value

• Available Capacity Gross Capacity

Actual of production hrs Measures how utilization rate is at it’s
Asset Utilization * 100% • Planned Down time
Available Gross Capacity hr – Planned down time hrs assets
• Production time

Percentage first- Line Items First Time Right Measures the line items which are • Line items produced
time-right * 100% produced without defects • Line items without defects
Line Items Produced

(Net Value off−spec Stock) Measures the line items which are • Net value off-spec
Defective stock *100%
Net Value Stock produced with defects • Net value stock

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Joost Rongen | Lead Sr. Consultant
Mobile +31 88 883 0008
joost.rongen@eyeon.nl

Stijn Rutjes | Sr. Consultant

Mobile +31 88 883 0036
stijn.rutjes@eyeon.nl

Eric Eggenhuizen | Sr. Consultant

Mobile +31 88 883 0020
eric.eggenhuizen@eyeon.nl

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