IBP Case Study Weir Minerals

Transcription

1 IBP Jan 2017 IBP Case Study Weir Minerals Jan 6th 2017 Lars Sondergaard Managing Partner Head of Global Business Unit Planning at Westernacher Introduction

2 The Weir Group overview Leading global provider of engineering solutions to mining and minerals, oil and gas, power and industrial markets Established in 1871 with a footprint in over 70 countries employing more than 14,000 people across three divisions FTSE 100 company Minerals - End-to-end solutions provider with original equipment and aftermarket products, including high quality pumps, valves, wear resistant linings, cyclones, crushing & screening equipment, dewatering systems, hose and controls 1

3 Weir Minerals - company structure 20 production sites 55 service centers Sales & Distribution Centers worldwide (not pictured) Over 6,300 employees Numerous sales offices Major customers 2

4 Weir Minerals Manufactured Products Slurry Pumps Cone Crushers Rubber Hoses Positive Displacement Pumps Vertical turbine pumps Rubber sheet and linings Screens Hydrocyclones Valves 3

5 Why does Weir need a S&OP process? Minerals needs to improve its S&OP response to customer and market changes to optimize profitable outcomes, in close to real-time: S&OP approach was fragmented and not harmonized S&OP process was a slow, elaborate and manual process Little consistency in how demand is consolidated an translated into supply requirement and there is little system visibility of Regional or Global demand and capacity situation Long lead times even though capacity would be available elsewhere in the network 4

6 Objective The journey to S&OP Excellence Gartner S&OP Maturity Model Orchestrating Demand sensing Reacting RCCP Asset Utiln Inventory Levels Anticipating Plan manuf capacities Forecast error Inventory turns Functional costs Collaborating NPI Profitability Marketing plans Service Levels Working capital Demand tradeoffs Service strategies Profit Market share Weir objective is to move from ~1 to >3 within 6 months of go-live date, with all entities at 3 by 2017, and improving up to and beyond 4 5

7 Sales & Operations Planning S&OP Sales & Operations Planning (S&OP) is a set of decision-making processes, to balance demand and supply, to integrate financial planning and operational planning, to deploy strategy. In narrow terms : S&OP is about CHANGE. It provides a window into the future, so that companies can 1) see potential problems ahead of time 2) take corrective action and 3) prevent potential problems from becoming a real ones. 6

8 Expected benefits Based of our past experience, the following benefits can be realized. Soft Benefits such as: Enhanced Teamwork Better Communications (in- and external) Better Decisions in shorter time frames Strategy Linkage Improved Accountability & Control Improved Foresight / Window to future Working Capital improvement: Quote to cash time is shortened due to better planning capabilities. Plant Productivity Improvement Cross-plant recognition of over- and under-utilization giving options of optimization across the network or potential for contract manufacturing Intra-plant recognition of over-and underutilization enabling plant utilization optimization measures (e.g. labor planning) Early recognition of production bottlenecks, allows for resolution measures to be taken well in advance New Product Launch Risk Reduction Reducing risk of new product launches by balancing capacity between the existing and new product(lines). Creating visibility to all parties involved. Benefits 7 Customer Service Improvement Through planning and leveling of constrained resources the avg. Sales order cycle time is reduced Uncover capacity restrictions within the network and shift production accordingly to solve bottlenecks before they occur; improve the First Time Fill & deliver on confirmed delivery date Inventory Reduction Higher forecast accuracy due to better demand visibility supported by sophisticated prognosis models facilitates network wide reduction of inventories and safety stocks. Balance inventory throughout network shift over-inventories to short-handed locations Surplus & Obsolescence Reduction Prevent obsolete material by monitoring the days of supply across the entire network, alerting the planners early to potential issues using threshold values Recognize surplus material and balance it throughout the network Supply Chain Cost Reduction By using an integrated planning solution with scenario capabilities, balancing of ordering, inventory, transportation and production costs can be achieved across the entire enterprise

9 Expected benefits What problems will S&OP solve and HOW will it help solve them? The primary objectives of S&OP are: Improved Customer Service (On Time Delivery, Lead Time, Service Levels) Improved Operational Efficiency (cost management, asset utilization, inventory, plant & equipment deployment) S&OP can help improve performance through: Better forecast accuracy and dialogue Faster planning and execution response times Better visibility of demand and supply mismatches 8

10 Expected benefits in numbers Service level: 5-10% SKU Rationalization: % Order Fulfillment Lead Time: 10% Inventory Cost Reduction: 5% 9

11 Sales & Operational Planning Supply Executive Review Demand Balance Input from Sales, Marketing, Finance and Operations, including quantity, price, revenue, and margin Consensus Demand Planning and New Products Based on updated demand plan, understand capacity and material impacts, including contract manufacturing Understand long-term gaps in supply and demand Review and resolve outstanding supply issues Compare constrained plan with finance plan Define and compare scenarios Escalate resolution plans with scenarios, if applicable Review key changes since last meeting 10

12 Differentiating Planning Processes by timescales Years Strategic Business Planning Budget & Finance Planning Sales & Operations Planning Product Design & Development Months Demand Planning Master Planning Weeks Procurement Planning Production Planning Days Customer Demand Management Replenishment Planning and Execution Production Planning 11

13 Sales and Operations Planning Demand Review Supply Review Balancing Executive Review Tasks Collect unconstrained demand, from multiple sources: - Firm, anticipated orders - Product families - Assumptions Align to revenue and margin targets Collect supply data, from multiple sources - Inventory balance, targets - Production plan - Procurement plan - Production costs - Lead times - Shift levels - Materials review Bring together Consensus Demand and Supply plans Review with stakeholders to identify gaps Develop alternative scenarios to address gaps Review proposed sales and operations plan Review unresolved gaps Agree final plan that meets KPIs Outputs Approved Consensus Demand plan (Forecast Demand) Propagated to Demand/ Supply Alignment Approved Consensus Supply plan (Available Capacity) Propagated to Demand/ Supply Alignment Identify scenario that best meets customer, operational and financial goals Unresolved gaps escalated to Executive Review Approved upside scenarios Published final plan for all stakeholders Balanced plan for execution Input to financial forecasts 12

14 S&OP Document flow ECC IBP - S&OP C4C Demand Finance Plan CO/PA Sales Orders Sales Orders Statistical Forecast Finance Plan Opportunities Sales Forecast Opportunities Sales Forecast Consensus Demand Constrained Demand Constrained Demand Supply Supply Proposal Inventory Supply Plan Inventory Inventory Target 13

15 Working with Dashboards and Planning Views Dashboards Demand Planning Local Demand/ Supply Balancing Regional Demand / Supply Balancing Executive Review Planning Views T1_OE_Overview DP_Input_Opps T1_OE_Detail T1_Spares_Overv iew T2_OE_Detail T2_Spares_Overv iew Consensus Demand Capacity Overview Capacity Details Inventory Performance Supply Plan Overview Supply Plan Details Uncovered Revenue + Margin Constrained vs. Finance Plan T1_Spares_Detail s T2_Spares_Detail s Reports Forecast vs. Demand History Forecast vs. Financial Budget Bill of Material Forecast Accuracy Deviations between current and future Forecast Changes in the Forecast since previous month Where Used List 14

16 Working with scenarios Copy Compare & Decide Copy What If Constrained Scenario 1 A B C Baseline Scenario Constrained Scenarios dealing with the Alerts New Baseline Scenario Unconstrained Scenario with Alerts been triggered Constrained Scenario 2 X What If Y Z Baseline Scenario without unaddressed Alerts 15

17 Working with meetings Executive Meeting Balancing Meeting Demand meeting Forecasting & Demand history analysis Supply meeting Load conversion and analysis 16

18 Resolving imbalances: Increase Capacity Work overtime Increase shifts Demand exceeds capacity Decrease Demand Challenge demand (reductions possible?) Postpone orders Build stock ahead Re-allocate production to other plants Outsource CAPEX, Tooling, Business Acquisition Reduce promotion Order freeze Cut back inventory Decrease Capacity Reduce shifts Schedule absence Reschedule maintenance Capacity exceeds Demand Increase Demand Expedite orders Schedule promotions Introduce new products Insource 17

19 Data model IBP is not a reporting tool it has a complete data model to depicture: Master Data * Transactional Data Planning Functionality Simulations CURRENCY CURRID Currency CURRENCYTO CURRTOID EVENT EVENTID UOMTO UOMTOID EXCHANGERATE CURRID, CURRTOID Pricing SOURCECUSTOMER CUSTID; LOCID; PRDID Customer CUSTOMER CUSTID CUSTOMERPRODUCT CUSTID; PRDID UOMCONVERSION PRDID; UOMTOID Vendor LOCATIONFR LOCFR LOCATION LOCID LOCATIONPRODUCT LOCID; PRDID Material Master PRODUCT PRDID SPRODUCT SPRDID COMPONENT PRDFR Routing PRODUCTIONRESOURCE RESID; SOURCEID Info Record SOURCELOCATION LOCFR; LOCID; PRDID PRODUCTIONSOURCEITM PRDID; SOURCEID BOM SOURCEPRODUCTION LOCID; PRDID; SOURCEID RESOURCELOCATION LOCID; RESID Workcenter RESOURCELOCATIONPRO DUCT LOCID; PRDID; RESID RESOURCE RESID *picture not complete 18

20 Dashboards and Charts 19

21 Dashboards and Charts 20

22 Planning Views 21

23 Collaboration using SAP JAM 22

24 Challenges so far Do not underestimate the following factors: New Software > IBP S&OP is completely flexible > Software and Implementation knowledge is key Integration of system through HANA Cloud Integration Process and Data > Product hierarchy development > Connection to C4C Organizational Change Management - Harmonization Effort > Across Regions and Companies > Across Departments (Sales, Production, Finance) > Aligning Planning Level -> Rules for disaggregation 23

25 Challenges so far Please do not underestimate the following factors TECHNICAL IBP S&OP is completely flexible Software and implementation knowledge is key PROCESS AND DATA Product hierarchy development Connection to C4C* HARMONIZATION EFFORT Across regions and companies Across departments (Sales, Production, Finance) Aligning planning level à Rules for disaggregation 24

26 Challenges so far 1 : Technical Standard SAP IBP in the Cloud Standard Process Process Design Debugging is possible Debugging is not possible 25

27 Challenges so far 2 : Finding the right Planning Level Company Business Unit Market Segment Product Family Brand / Model Stock-keeping Unit Product Sub Family Packaging Size Stock-keeping Unit by Customer Stock-keeping Unit by Customer by Location 26

28 Challenges so far 2 : Process and Data Consolidation of hierarchies between: Countries and regions Systems Sales, Production, Finance (Engineer to Order) è Level 1 OEM è Level 2 CYCLONES, VALVES, PUMPS, SCREENS, etc. è Level 3 SLURRY PUMPS, POSITIVE DISPLACEMENT PUMPS, DEWATERING, etc. Standard Product Hierarchy è Level 4 Type Genesis Hydrocyclone, Separator è Level 5 Size 300, 350, 400, 450 è Level 6 Material Metal, Rubber, FM120 è Level 7 Build Bareshaft Pump, Pumpset, Bareshaft Froth Pump Extended Product Hierarchy (Material Classification) 27

29 Regional Balancing 3 : Harmonization Effort Sales Integrated Plan Finance Operations 28

30 Regional Balancing 3 : Harmonization Effort APAC Region Default manufacturing facility Alternative manufacturing facility Customer location Global Balancing Europe Region APAC Region Default manufacturing facility Alternative manufacturing facility Customer location 29

31 Roll-out Strategy 1 st stage : Foundation S&OP (AS-IS) VOLUME BALANCING in-house production resource requirement / capacity requirement plan load levelling / tactical outsourcing-insourcing 2 nd stage: Capable S&OP (TO-BE Phase 1) SINGLE SET OF NUMBERS Integrated sales, supply, and financial plan 3 rd stage: Integrated Business Management (TO-BE Phase 2) STRATEGY DEPLOYMENT Integrated sales, supply and financial plan new markets, product launches, acquisitions, supply chain developments 30

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33 Additional Information Webinar describing the Weir Minerals IBP process: Sales and Operations Planning Maturity Model Sales and Operations Planning How-To Handbook Thomas F. Wallace and Robert A. Stahl, 3 rd Edition

34 2015 Westernacher AG.. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of Westernacher AG. The information contained herein may be changed without prior notice. Some software products marketed by Westernacher AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by Westernacher AG and its affiliated companies ( Westernacher Group ) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for Westernacher Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. Westernacher and other Westernacher services mentioned herein as well as their respective logos are trademarks or registered trademarks of Westernacher AG in Germany and other countries.

35 Why Westernacher Westernacher has a long history of optimizing Integrated Business Planning Processes solutions with Best Fit SAP Solutions SAP IBP Pioneer Westernacher s been building custom IBP-like solutions with the SAP toolset and add-ons since the late 90 s. Early deployment of SAP IBP SAP S&OP/IBP experience from the beginning, first hand experience and solution input as SAP partner One of first to implement a Full Cycle SAP S&OP in the Discrete Industry. Strategy, approach, design to ensuring successful global rollout Leading IBP Process and SAP implementer in Discrete manufacturing using best practice data models and our own system and methodology Multiple S&OP/IBP POCs to date 34

36 Westernacher brings over 10 years of experience in optimizing Planning Processes. We will bring this experience to a no obligation half / fully day on site workshop to discuss a potential engagement. Offer for a half / full day (free of charge) workshop at your premises Workshop objectives Identification of specific organizational challenges in your company Provide SAP IBP solution overviews Establish potential solution approach, based on selected live SAP IBP demo scenarios Proposed agenda Meet & Greet, short introduction of participants and companies Presentation and discussion of IBP-Processes Discussion of challenges in your organisation Overview of SAP IBP solution Potential solution approach, based on selected SAP IBP scenarios Summary and next steps Suggested participants from your side Managing Director / Board Member Head of Corporate IT Process owner Planning Finance Potential participants from Westernacher Lars Sondergaard, Managing Partner and Head of Global Planning Practice Dr. Steffen Blunck, Managing Partner Senior Consulting and Solution Architect Christian Schmaus, Managing Partner, Senior Management Consultant The content for this workshop is only a proposal and we will be happy to incorporate any individual requirements. We recommend a short teleconference before the workshop to finalize the agenda. 35