Driving Supply Chain Inventory Reduction via Strategic Analysis & Robust Management Process. Boon Kit, Straits SNO Leader
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1 Driving Supply Chain Inventory Reduction via Strategic Analysis & Robust Management Process Boon Kit, Straits SNO Leader
2 Boon Kit Foong Joined Procter & Gamble in 1998 Currently Supply Network Operations Leader for P&G M sia/s pore: Market Operations Planning Customer/Distributor Logistic Physical Distribution & Operations Started in Malaysia (2 years), then relocated to Singapore (9 years), Thailand (3 years) and currently back to Malaysia in Multiple Supply Network Operations assignments across country, regional/global category businesses, services & manufacturing plant: Business Integration External Value Creation MRP II/Operational Planning Supply System Design & Delivery SAP/APO SNP Product Design, Development & Implementation
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5 P&G Malaysia P&G officially entered the Malaysia market via the acquisition of Richardson Vicks in With 160 employees today, we are serving different customer channels, touching the lives millions everyday with our brands.
6 Driving Supply Chain Inventory Reduction via Strategic Analysis & Robust Management Process Supply Chain and Inventory Strategic Inventory Analysis Robust UPI Management Process
7 Supply Chain and Inventory
8 The Balancing Act Inventory should be maintained to provide the best balance between cost and service Demand Supply Network Capability Performing Inventory Planning
9 Uncertainty - Supply & Demand must be balanced with Inventory and Supply Response Capability Incremental Capability Incremental Inventory Demand Supply Network Capability Performing Inventory Planning
10 How do we reduce Inventory?
11 How to reduce Inventory? Search for opportunities to improve planning and speed-up the flows REDUCED INVENTORY Demand Supply Network Capability Inventory Planning IMPROVED PLANNING
12 How to reduce Inventory? Increase total system capability INCREASED CAPABILITY Demand Supply Network Capability FURTHER REDUCED INVENTORY Inventory Planning
13 The right inventory dependencies Capacity Predictability Missed Cases To make one balloon smaller, the excess air must go into one of the other balloons! Inventory Inventory is a consequence. Supply Chain Structure Equipment choices Cost structure Operating Strategy Uncertainties Demand patterns Unique answer for each supply chain
14 Strategic Inventory Analysis
15 Inventory in Supply Chain Finished Goods Intermediates (Work in Process or WIP) Components Materials Raw Materials Pack Materials
16 Total SC Stock Inventory Components in a Product Life Cycle 4 3a 3b Anticipation Stock Frozen Stock: QC Stock Frozen Stock: Transit Stock to DC 1 2 3c Safety Stock Cycle Stock NPI 3a 3b 3a 3b 3a 3b c
17 Key Drivers by Component Driver Uncertainty Response Time Inventory Component Safety Stock Economies of of Scale Location Sourcing Transportation modes Capacity Uncertainty Cycle Stock Frozen Stock Anticipation Stock Not as as planned Unnecessary/NPI
18 Inventory by Function Performing Inventory Unproductive Inventory (UPI)
19 Key Performing Inventory: Safety Stock to cover Uncertainty (Demand & Supply uncertainty) Key Variables: Material lead-time Response time Potential delays System reliability Forecast accuracy/bias Demand variability Target Service level Supply drivers Demand drivers Risk Tolerance
20 Unproductive Inventory Component UPI = NPI + Excess + Deadstock 1. Non Performing Inventory (NPI) Red (blocked, non-sellable, expired) Orange (Remnants, discontinued and no-movers) 2. Excess (non productive) Inventory higher than Safety (including Cycle Stock) Also known as Yellow Stock 3. Dead Stock (non productive/performing) Lowest inventory point can be up to three months in the past A thermometer of inventory health
21 What UPI Tells Us? UPI Component Opportunities Non Performing Inventory (Idle) Off quality Initiatives/conversions Operating strategy choices Expired Trade Returns Excess Inventory Operating strategy adherence Inventory target setting Shipment bias MOQ/SKU complexity/proliferation Pre-building too much Inventory for an Event or Initiative Dead Stock Overstated Safety Stock Safety Stock non-compliance Lack of Inventory or Demand visibility Batch size Preferred sequencing to avoid setups
22 Robust UPI Management Process
23 UPI Management Process 1. Report Generation 2.UPI Analysis/Review 3. Action Plan
24 UPI ASEAN Market
25 2. UPI ASEAN Analysis/Review
26 2. UPI ASEAN Analysis/Review
27 UPI Application Success Stories Across Brand, Supply Chain, Materials Type 1. Dec 12 to June 13: P&G Malaysia & Singapore reduce 9% of its total inventory. 2. June 11 to June 12: Bangkok Skincare & Color Plant module reduced 16% and 33% of its plant inventory respectively 3. June 08 to June 09: Global SK-II reduced 17% of its supply chain inventory
28 Critical Elements 1. Cash as Priority cost & service liability 2. Leadership Engagement & Support 3. Reward Technical Mastery 4. System/Process Owner(s) 5. Robust Management Process 6. Efficient Data Extraction & Effective Data Analysis 7. 30% Analysis/Review & 70% Action Implementation 8. End to End Supply Chain Mindset (operating strategy)
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30 Thank You
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