The Power of Advanced Planning Tools

Transcription

1 The Power of Advanced Planning Tools EyeOn Belgium Industry Network Event Antwerp April 19, 2017

2 Agenda APS : Getting started and tool selection The APS Compass : User requirements, design & implementation Team capabilities & organizational changes 2

3 APS Characteristics There are some generally accepted APS characteristics: Constraint-based Optimization Scenario simulation Coverage of multiple stages in the supply chain (if fully deployed) ERP tells you what is going on, APS what should be going on 3

4 APS Prerequisites APS can be part of your solution in dealing with planning complexity if a number of prerequisites are fulfilled: Synchronized processes Knowledgeable people Organizational discipline Solid master data management APS can be a part of your problem in dealing with planning complexity when the prerequisites are not met 4

5 APS Functionality 1. Some of the typical APS offerings Constrained planning Scenario simulation E2E visibility ( when fully deployed) 2. Optimisation through heuristics & solvers are useful, but very dependent on correct inputs and configuration 3. Revenue & margin management is not always a typical APS offering 5

6 APS is a key enabler for decision making Set clear planning objectives Pay attention to the decision making process 6

7 APS elements to consider FEASIBLE PLAN PLAN ADHERENCE PLAN INTEGRATION 7

8 Typical approach Objectives & scope Objectives connected to goals Target operating Model ( TOM), Stadtler (scope), SCOR (process), data flow model (integration) Analysis Assess current state Gap analysis Tool Selection Business case Functional requirements Selection process (RFI/ RFQ/ Demo/ ) Design Starting from decisions what do you need to receive, do and provide to make that decision Integration ( handovers ) with other functions Implement Cutover to new process Planning solution and master data updates/ changes Training & change management Decision driven Take decisions at place (horizon, scope, aggregation) where quality is best 8

9 Scoping : Stadtler as a tool to define scope Long term Purchasing Production Distribution Sales Strategic Network Design Bucket Detail Frequency Mid term Sales & Operations Planning (S&OP) Supply Network Planning Short term Material Requirements Planning (MRP) Rough Cut Capacity Planning (RCCP) Scheduling Distribution Resource Planning (DRP) Transport planning Demand Planning ATP & Demand fulfillment Integration between the different planning layers / processes 9 Clear distinction of decisions per planning layer

10 Positioning Stadtler within other approaches like SCOR Source: supply chain council Source: Stadtler & Kilger, 2005 Linear, process level Functions in relation to each other 10

11 There is more than Business and Functional Requirements! Requirement Type Business Requirements Stakeholder Requirements Solution Requirements Functional Non-functional Transition Requirements Requirement Scope Higher level statements of the goals, objectives, or needs of the enterprise 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 Characteristics of a solution that meet business requirements and stakeholder requirements Behaviour and information that the solution will manage Describe environmental conditions under which the solution must remain effective or qualities that the systems must have 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) 11

12 Target Operating Model : the first step Purpose of the Target Operating Model Level Level 1 Generic Level 2 Configuration Level 3 Process blocks Level 4 Workflow of tasks Level 5 Work instruction Description Planning principles Differentiate complexity Differentiate the businesses & supply chain models (MTO/ MTS/ ) Main process blocks Swimming lanes Metrics related to tasks Workflow of tasks: Sequence of steps Input / Output Work instructions System transactions The planning principles do not include process descriptions, but describe principles, improvements in current WOW, process implementation risks with regard to elements enabling a successful implementation 12 Last changed: 30/05/2016 (BLA)

13 Implementation phasing - example Start per function, highest impact improvements first Demand Planning is in general a good starting point Combined NRP& RCCP next logical step Base level and standardized plant / warehouse alignment Inventory control Supply Planning MPS & Detailed Scheduling Optimize in the plants Drive supply KPI Inventory optimization Full close loop planning to execution Inventory Planning & DRP as the last step 13

14 Tooling Selection Abundance of Choice - SC Magazine IT Subway 14

15 To0l selection Some overlooked shortlisting reasons Integration technology Technical and functional breadth of solution Some overemphasized reasons Gartner One vendor ERP vs APS mantra 15

16 10 step selection process for planning tools 1. Check (high level) process design & requirements 2. Define functional requirements Create business case (benefits) Milestone: main activities of to-be process Create business case (costs) Milestone: required functionality must have and nice to have 3. Create short list/ Send out Request for Information (RfI) 4. Send out Request for Proposal (RfP) 5. RfP discussion meeting 6. Review suppliers Milestone: short list of potential suppliers Milestone: send out RfP Milestone: get to know supplier and review critical requirements Milestone: decide on suppliers to consider in next phase 7. Prepare scripts for demo sessions 8. Demo sessions with suppliers 9. Final selection 10. Negotiation Milestone: define demo script to make final selection Milestone: determine differentiators in req. between suppliers Milestone: 1 st preferred supplier 2 nd best supplier Milestone: agree on contract with supplier

17 Thoughts on tool selection Short list based on existing tool knowledge, not only analyst lists Requirement based, organize second line of review Dig deeper on delivery technology (cloud, on premise, SaaS,..) Set service requirements for the APS vendor 17

18 Agenda APS : Getting started and tool selection The APS Compass : User requirements, design & implementation Team capabilities & organizational changes 18

19 Design 19

20 Designs trade offs : Make it work Central vs local Aggregated vs level of detail Analytical vs transactional Fast scenarios vs single outcome Heuristics / solver vs manual Graphical representation vs numeric 20

21 Managing design tracks: best practices Master Data Design Core Integration Principles Functional Design Integration Design Overall Design Planned order, process / production order, sales, purchasing cycles Master data integration Cross systems integration 21

22 Key messages for design 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 22

23 Understand your supply chain

24 Approach 1 Map Supply Chain 2 Map decisions per planning layer 3 Define horizon and aggregation level per planning layer 4 Define the process 24

25 Approach Mapping Supply Chain Map decisions Define horizons Describe processes Clear Handover processes Define constraints (e.g. combined pipelines) Determine bottlenecks in the supply chain process: Utilization rates (iron and/or human) Days of storage Critically review all bottlenecks. Prevent planning all bottlenecks, find alternatives. Review decisions that have to be taken within planning Determine per decision the planning layer Agree what resource to plan in DP, S&OP, MPS and scheduling Here the concept of user stories can support well to fetch al decisions and make the design practical for a user Based on the decisions per horizon, define horizon per planning layer Determine aggregation level to take decisions. Map magnitude of divergence: Base RM SKU Define planning processes Focus on hand-over rules (timing, responsibilities) 25

26 Clear Hand-over processes 26

27 Outcome S&OP Process Planned anticipation stock Stock Targets Constraint Demand Plan Harmonized snap shot 6:22 Current Stock Level Netting of Demand based on new forecast Planning rules Review Alerts Determine Requirement s MA Plan supply MA Updated planned orders Determine Req bottleneck production lines Plan supply at bottleneck resources Push supply to low utilized production lines Sales Order Book Netting of Demand based on new forecast Demand Control Process Current Stock Level Review Alerts Planning rules & component availability Solve alert by adjusting GMN planning Updated planned orders Run MRP Current Stock Level SAP Order long lead-time components PO Discuss with MPS planner to align planning in case insufficient supply RM/ Packaging ordered Current Stock Level Sales Order Book Check starting stock position Planning rules & component availability Review Alerts 1 2 SAP Current Stock Level Current Stock Level Run MRP Possible to solve w/o interfering fixed horizon? No Run alerts based on orders (no forecast) Yes Storage Capacity tanks Order bulk raw materialsing PO Order raw materials/ packaging PO 1 Evaluate impact on bulk raw materials Evaluate impact on bulk raw materials 1 Projected Stock level Projected Stock level Discuss with scheduler to align planning in case insufficient supply Discuss with scheduler to align planning in case insufficient supply Alert solved? No Consult product mng for prioritization Bulk RM ordered RM/Packaging ordered Yes Updated process orders Confirm new schedule Planning rules: min, target stock level, max stock level (storage capacity), sequencing rules Component availability: availability of raw materials and packaging material 2 Weekly Production Meeting Planned Production Required # of people... Updated process orders Process outcome of meeting Agreed Schedule Process orders (REL) Handover Schedule D+1 Think cycles and set clear responsibilities Monthly Receive S&OP plan Weekly Day 15 Create MPS 6:00 Daily Close open orders Interface stock/ sales orders Monday Tuesday Evaluate stock position Receive forecast update Determine new MPS plan Month Week Day 17 MPS Process S&OP Planner MPS Planner 5th Determine capacity constraints Define swim lane Monthly Weekly Daily 8:00 27 Run MRP Evaluate schedule Day Sales Raw Material planner Scheduler

28 80% of process inefficiencies are caused by poor hand-over process Buckets Detail Demand Planning & S&OP Months Aggregated Supply Network Planning (SNP) Rough Cut Capacity Planning (RCCP) Weeks SKU How to translate from aggregated level tosku level? Planning objects are: - Demand Plan - Inventory Plan - Sourcing Plan Scheduling

29 Integrate and don t overcomplicate

30 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 USP Daily Schedule Packing Schedule Not Connected First and second stage plan NPI Planning 30 30

31 Optimization? Let s start with visualization VISUALIZE ALERTING Use the available alerting functionality: 1. Planned vs target inventory 2. Capacity utilization 3. Component availability 4. Demand Changes Understand degree of freedom by combine with type of demand: Does my alert still exists when I only considered confirmed demand? 31

32 Don t plan every resource, but apply upstream restriction in planning rules > Apply Single Point of Planning, the rest will follow! Production processes can consist of multiple upstream steps Most likely these processes will have separately different constraints To avoid multiple review of the planning per process step, include the upstream constraint in the planning rules of the last step 32

33 Manage volatility

34 Stop Forecast... Manage Volatile Demand Why forecasting? Capacity Management Sourcing of raw materials Replenishment of stock? Make financial forecast Ordering of critical components 34

35 Use the right replenishment strategy! Most process industry companies prefer stability in their manufacturing processes. Batch size driven systems (EOQ) trigger replenishment based on stock levels. Timing of replenishment orders is uncertain, quantity is certain. Periodic replenishment systems (EPEC) trigger replenishment based on timing. Timing of replenishment is certain, quantity is uncertain Fixed rhythm Flexible slots Week 1 Week 2 Week Week 4 35

36 80-90% of companies use rule-of-thumb to set safety stocks In a world that is full of dynamics can we suffice with such an easy method? All customers are equal, but some are more equal than others: S&OP guidance on service offering Consider the relevant factors: demand uncertainty, target service level, shelf lifes, supply uncertainty and production capabilities. Mind the signal and the noise: it is not about the most advanced statistics, just rigor statistics 36

37 Feasible Planning Feasible plan 37

38 Average production times is only correct in 50% of the cases... RCCP Scheduling + Average batch times work fine within production planning Note: planning to maximum capacity of < 100% - Average batch times in scheduling will result in plan adherence issues Note: planning to all available machine hrs For scheduling use production batch times with e.g. a 90% upper bound percentile Pull forward demand when production is running well. 38

39 Closing the loop for advanced planning systems APS s have grown to support real-time, data driven insights. However: the data loop is not closed Estimated Data Advanced Planning Exactly Wrong Define top parameters Define true parameter value Integrate in APS Using simulation determine to which parameters the outcome is most sensitive Determine the true parameter value bottom up, using e.g. movement data Integrate real-time to APS and transactional systems as parameters Use variance as input to safety stock and scenario calculations

40 40 Optimal team

41 Thoughts on organizational set-up for demand planning Centralized Simple governance structure Alignment of supply chain, financial & overall business goals Process standardization Lower bias Career paths more attractive: better recruiting and retention Operations / Supply Chain management Independent Expertise with planning Sales & Marketing Clear accountability Decentralized Proximity to market: sense demand Flexibility to shape demand (NPI, promoted products) Autonomy to match (local) supply to demand in best way 41

42 Thoughts on organizational setup for supply planning Supply Network Planning RCCP Scheduling Centralized Normal / long lead times Common production resources Production rules are clear and well described Limited interdependencies between lines All levels integrated in one function Isolated product groups Necessity to perform Production Planning at low level of detail (e.g. in case of campaign planning) Unreliable production resources Benefit: reduces amount of handover moments, hence inefficiencies Multiple functions Multi-sourcing production base Complex supply chain network multiple warehouses high level of intedepencies Benefit: prevents that planner is driven by short term issues and midterm planning gets no attention Decentralized Short lead times Special / local / production resources High degree of tacit knowledge Intederpendencies amongst production lines within the site

43 Closing Closing, tips and tricks 43

44 What to do tomorrow? Think cycles and be 100% clear about hand-over process Visualize first, optimize later Don t try to forecast it all, plan for flexibility to manage uncertainty in demand & supply Start scheduling as late as possible 44 Stimulate right behavior If you can avoid a hand-over, avoid the hand-over!

45 Working for the purpose of documenting..or the other way around? Testing Testing: cover requirements But: prevent too narrow and functional focus Formal Documentation as a necessity SOP, work instructions Master data management Functional and technical design Reference Documentation as enabler 45 Quick reference cards Process vision Championed behaviours Vision Booklet

46 Go Live Business Process Organize for Quick Analytics Forecast results, # orders interfaced, total inventories Try and find side effects (orders missing, status changing, etc) Key User Key Engineer 46

47 Agenda APS : Getting started and tool selection The APS Compass : User requirements, design & implementation Team capabilities & organizational changes 47

48 Move people with H3-ladder 7 lead 6 ownership 5 execute 4 commit 3 believe 2 understand 1 aware unaware Hands Heart Head H3- change ladder 7. lead: lead others in the change 6. ownership: show commitment and ownership of the change 5. execute: experiment 4. commit: want to do it, willing to accept consequences. 3. believe: convinced I can do it and believe the change will be of benefit 2. understand: see what does it mean for me 1. aware: aware of the change through communication of the stakeholder driving the change unaware: unaware of the change 48

49 Ingredients for a successful APS implementation Commitment of organizational members to system application usage and new processes But also Organizations are supposed to improve the system as well as the organization process - Clear objective of APS system automation vs different way of working Training develop documentation both on new system and new business processes - Sufficient resources, but also expert resources (e.g. key user approach) Include data & change management as part of the program Step-by-step implementation of modules and network - Scope of the project, starting points, what s next and how (e.g. different locations) 49

50 Critical Success Factors The most important critical success factors: Top management support Project team work and composition Project management Change management culture and programme Factors also regularly mentioned are Communication Project champion Business process reengineering Taking into account at least those seven critical success factors mentioned above should result in less uncertainty, better understanding among employees, and more commitment, and as a result of that lower resistance to change and higher project success rates. 50

51 Mentimeter session 51

52 eyeon.nl