Supply chain mangagement (SCM) implementation methodology & best

Supply Chain Mangagement (SCM) - Implementation Methodology & Best presented by Rachel Hsieh

Jul 14, 2006

Presented by Rachel Hsieh

Rachel_hsieh2000@yahoo.com.tw

Supply Chain Management (SCM)

Implementation Methodology & Best

• The Introduction of SCM Systems

• The Practice of Multi-sites Production Planning

• SCM Planning Cycle

• SCM Planning Policies

• The Points for Attention When SCM Projects Are Implemented

The Introduction of SCM Systems

SCM Workflow

Order &

Production Planning

Allocation Planning

Forecasting Netting Master

Planning

Demand Forecasting &

Collaboration

Order Entry

Order Promising

Demand Fulfillment

New Orders,

Forecast Supply Allocation

Central Planning

Supply Plan

Frozen Plan

Supply Plan/

Allocations Latest Available to Promise

Schedule Ship Date

Netted Forecast

Local Planning Order Quoting

Introduction to Planning

Systems

• Manufacturing environments vary greatly.

• A planning methodology that works in one environment may fail in another.

• Inadequate analysis often results in

inefficient planning.

• We will discuss various approaches to

planning.

Characteristics of Some

Approaches

• Material Requirements Planning

• Manufacturing Resource Planning

– (MRP II) / Order Launch Schemes

• Constraint Based Management

– Theory of Constraints

– Synchronous Flow Management

Purchase Req.

Open Order

2006 Trainers` Training

Manufacturing Resource Planning

(MRP II) Order Launch

• Builds on data of “little MRP”

• Adds business strategy

integration

• Adds rough cut capacity check

• Adds resource capacity check

• Adds shop floor feedback

• Iterative process

Master Planning

Rough Cut Capacity

MRP

Capacity Requirements Planning

Shop Floor Control

Business Planning

Production Planning

Manufacturing Resource Planning (MRP II) Order Launch Limitations

• Batch processing

• Uses planned lead times

• Sequentially decomposes solution with long

planning cycles

– Capacity constraints are accommodated iteratively with material planning as a separate step.

– Requirements such as setups are improperly treated.

• Work is pushed through the shop, not pulled

• Local optimization

2006 Trainers` Training

MRP II Limitations for Planning

Master Planning

Rough Cut Capacity

MRP

Capacity Requirements Planning

Shop Floor Control

Business Planning

Production Planning

for material and capacity

constraints

• Plan doesn’t incorporate

material shortages

• Schedule doesn’t account for

material and capacity

Procurement Plan Execution

Work Order Execution

Shipping MDS Relief

CRP RCCP

Theory Of Constraints

• Postulated by Dr Eliyahu Goldratt in

1970’s

• Described in the novel “The Goal”

• TOC is an different approach to the

continuous improvement process

• TOC has application to all industries

where there is a flow of information and/or materials.

TOC Fundamental Concepts

• Optimization of sub-system components does not equal optimization of the total system

• Standard accounting practices diverts attention away from the real problems

• A new set of operational performance

measurements is required

• The goal of any company is to make money

• A constraint is anything that limits you from

achieving the goal or desired result

TOC Improvement Process

• Step 1 IDENTIFY the system’s constraints

• Step 2 EXPLOIT the system constraint (I.e

squeeze the most possible from the limits of the current process)

• Step 3 SUBORDINATE everything else to Step

2 (I.e try to synchronize flow, or do anything

else

• Step 4 ELEVATE the system constraint

• Step 5 If the constraint is BROKEN, go back to

step 1

Advanced Planning Systems (APS)

Why Is MRP Not Enough?

• Demand Cannot Be Sorted by Our Prefer Sequence The Demands Can Only Be Planned by Their

Requirement Time

• Some MRP Systems Don’t Consider about Order Status

• Lacking Simulation Functions

• Not Considering about Capacity and Transfer Batch for Every Workstation

The Advantagea of APS

̇ Account for material and capacity

̇ Reduce planning cycle time

̇ Get more SCM information

̇ Strength SCM process

̇ Reduce inventory

Adexa’s Unified Environment

ERP Users

U D S

Unified Data Server

Local Unified Data Server

ERP Users

ERP Users

Demand Planning ( DP DP) Global Strategic Planning Planning ( (GSP GSP )

Strategic Planner

Factory Planning Engine

Supply Chain Planner

Decision Analysis User

GRAServer

Web Access

ATP Users

Marketing Planner

Web Access

SC Agents (purchasing, etc.)

Also connection to existing order entry front end

PP

Factory Planning Engine

Factory Planners

Factory Planning Engine

UDS = Adexa Unified Data Server

Active Data Warehouse

(Using Common Data Model)

DP

Customers, Products, Forecasts, Orders, Shipment, Backlog Info

FNE

Customers, Products, Confirmed Orders

Forecast

MP

Supply Chain Data WIP, fixed wafer start plan, Order Backlog

Netted Forecast

DF

ATP/CTP

Customer Allocation, Order Status

FP FP

FP FP

Work Orders Exceptional Work Orders

Sales Order

Info

DB

Order Inquiry

Order Promise

The Practice of Multi-Sites

Production Planning

SCM Planning Cycle

tion Pla

n

MO Sch edu le

MO Sch edu

le

E-Procurement

Planning Server Procure Req.

2006 Trainers` Training

Rhythm Planning Cycle

Modify Plan

Spec Files

Rhythm Memory- Resident Data

Generate Plan

Modify Plan

4

5

6 7

DOWNLOAD DATA

Download data from

execution system to ASCII

files on periodic basis

1

SERVER STARTUP

Pull data from ASCII files to memory-resident using spec file mapping Generate material-constrained, infinite capacity plan(ICP)

2

3

RUN CLIENT

Generate client/user-specific screen using ad files

5

2006 Trainers` Training

Summary—Typical Rhythm

Planning Cycle

Save Plan

Detailed Scheduling

Auto Capacity

Capacity Planning

Material Planning

Data Cleanup

Approval Process 1

9 Save Plan to Simulation Database

Management Approval Save Plan to Production Close Loop

10 11 12 13

2 FP Plan

- Infinite Capacity, Finite Material Plan

- Finite Capacity Balance

-Confirm Schedule Ship date

-Confirm Promise Date

1 Data Download

3 Data Feedback

DECISION POIN TS

Planning Cycle

4 MC

- Check material issues

SCM Planning Policies

The Method to Plan a Master Schedule

• Determine profile buckets according to Master Planning buckets

• Determine how forecast is distributed into profile buckets considering

– demand profile within forecast bucket or

– Preferences in Master Planning due to

material/capacity availability or other constraints

• Determine from which distribution bucket’s

forecast to net promised order quantity

• Sort all demands by demand priority

• Estimate capacity

Forecast Policy 1 - Single Request

Profiling

1000

On the First Day of the Bucket

Forecast Policy 2 - WEEKLY

DP

MP

250 F.Req

250 F.Req

250 F.Req

250 F.Req

Profiling

1000 Forecast

10/2005

120 F.Req 10/01/05

120 F.Req 10/11/05

40 F.Req 10/28/05

Profiling

1000 Forecast

10/2005

1000 Forecast

10/2005

Oct 2005

1000 Forecast

Sep 2005

166 233 233 233 231 225 225 225 229

Forecast Netting Policy

1-PROPORTIONAL

9/10 Order for 800

• Total forecast 1000 in Sep Forecast Bucket

• Netted Forecast in Weekly buckets

• 1000 – 800 = 4 * 50

Forecast Netting Policy 2 - NEAREST

9/10 Order for 800

• Total forecast 1000 in Sep Forecast Bucket

• Netted Forecast in Weekly buckets

• Nets 250 in week 2 only

Forecast Netting Policy

3-BACKWARD_AND_FORWARD

9/10 Order for 800

• Total forecast 1000 in Sep Forecast Bucket

• Netted Forecast in Weekly buckets

• Nets 800 in the following sequence

• 250 from week2, 250 from week1, 250 from week3, 50 from week4

Inventory Assignment

Prioritize Demand Orders

Sort prioritized Demand Orders

Sort parts from end-item

to raw materials

Calculate demands

Allocate supplies

Sort Demands by Demand Priority (1)

Demand Order Due Date Quantity Priority

ORDER_1 09/14 250 100

ORDER_2 09/14 50 100

ORDER_3 09/13 150 100

Forecast_1 09/14 100 0

Sort Demands by Demand Priority (2)

Demand Order Due Date Quantity Priority

ORDER_3 09/13 150 100

ORDER_2 09/14 50 100

ORDER_1 09/14 250 100

Forecast_1 09/14 100 0

Inventory Preprocessing

• Sort routings for each part by date-effectivity

• Calculate demand_sort_priority for each

demand order based on due date, quantity, and priority

• Sort demand orders using the

demand_sort_priority.

• Sort parts from downstream to upstream for a part sequence

• Sort the Parts to obtain a part sequence:

– If part B follows part A in the part sequence,

then in no BOM can part B be downstream to part A

Inventory Preprocessing

• Iterate through demand orders and post

demands on part buffers

• Iterate through supplies (PO’s, Unassigned

inventory, etc.) and post supplies at part buffers

2006 Trainers` Training

Inventory Preprocessing

Part Buffer A

Demand 1

Demand 2

Demand 3

Part Buffer B

Mfg 1

Mfg 2

Part Buffer C

Part Buffer D

First: Determine demands on highest level part

Second: Manufacturing orders for A appear as demand for B

Third: Demands for Bcreate demand for C and D

Fourth: Demands for C and D require PO’s to satisfy

Depth-first Problem Fixing

• Sort the demand orders using the demand sort priority

• Starting from the highest priority demand order, fix problems

– using alternate parts

– alternate routings for short orders

– changing decisions to make, procure, use

surplus etc

CAO - Concept

Step -1 Run Infinite Capacity Plan

a Will identify Material and Capacity

problems

b Fix Material problems

Step - 2 Run Finite Capacity Plan - CAO

a Will attempt to fix Capacity problems

CAO - Resource Criticality

CAO - Resource Criticality

Step - 2 (Contd.) Once resource identified it will

start with the earliest overloaded bucket

1 Which tasks among in the bucket to

consider for moving ?

Time

CAO - Resource Criticality

CAO Priority: All tasks in a bucket are assigned

CAO - Resource Criticality

CAO Priority=LPST - start_time

LPST

1

start_time

CAO - Resource Criticality

Pull-Offload-Push - First Pass

1 2

CAO - Resource Criticality

Pull-Offload-Push

2 3

3 The resource overload in bucket 4 solved

So go to next overloaded bucket ie., 5

1

CAO - Resource Criticality

Pull-Offload-Push - First Pass

2 3 1

CAO - Resource Criticality

Pull-Offload-Push - First Pass

2 3 1

4 End of bucket reached Repeat procedure from start of the bucket

CAO - Resource Criticality

Pull-Offload-Push - Second Pass

2 3 1

CAO - Resource Criticality

Pull-Offload-Push - Second Pass

2

3 1

CAO - Resource Criticality

Pull-Offload-Push - Third Pass

̶ Cannot pull any tasks due to MATERIAL

CONSTRAINT

̶ OFFLOAD if alternate exists

̶ Push - Higher CAO Priority pushed first

2

3 1

• SCM System plan the starting time according

to order delivery date, the current

capacity and material

• The work orders can be consolidated

• All planning result can be input into ERP System

Procurement Policy (1)

• It’s allowed to consolidate the

procurement orders of the same

material in a period.

• The failure rate and shrinkage rate should be considered about

Procurement Policy (2)

procurements is today, the planned orders can

be input into ERP System

reports

ERP System, we need to use alerts to notice the key persons.

What Information can Suppliers get from

– Shipping date, shipping location, the total output quantity of the PO

– The information about material receiving

– The information about material returning

– The information about late orders

– The time to create an invoice and invoice number

– Payment Time, Amount of Money , Account, Payment Term

The Points for Attention When SCM

Projects Are Implemented

Acceptance Test

25%

Deploy, Monitor &

Transition

10%

Develop Solution

35%

Business Release Activities

Measure Value Delivered

Assess Delivered Value

Project QA Review

End User Acceptance

Technical Model Review

Sign Contract

Solution QA Review

Project Kick-off

Average 6 months

SCM Project Management

Risk Management Scope Control Management of client expectation

Quality Management Management of Project Team

Proposal Presentation

Project Startup

Project Execution

Project Completion

Identify Project Risk

Average risk projects

Low risk projects

Technology Risk

Implementation Risk

Economic Risk

Organization Risk

Expected IS benefits difficult to achieve

Expected IS benefits likely to achieve

Expected IS benefits almost certain

to achieve

Major realignment

of organizationa

l resources

Minor realignment

of organizationa

l resources

Compatible with existing organizationa

l structure

Regulatory Risk

Expected Major government policy change

Expected Minor government policy change

Compatible with existing

government policy

Key Success Factors

• Business Focused Implementation Strategy

– Establish current baseline and target business value to be derived

– Establish a clear relationship between requirements and business value

• Client Commitment

– Strong feeling of project ownership (Its OUR project )

– Executive Management support

• Supply project with required resources

• Enable changes in business policies, procedures, and measurements

• Remove road blocks and broker rapid resolutions of issues

– User driven with strong support from IT Function

– Continuity / Stability of project team

• Delivering Early and Often

– Maintain a Sense of urgency -make decisions, take actions, and move on – Project momentum accelerates with production use

– Rapid realization of a ROI speaks loudly and clearly to the project’s success

Thank You!