Demand Driven MRP Case Studies from the Demand Driven Ins7tute

Transcription

1 Demand Driven MRP ase Studies from the Demand Driven Ins7tute All material and content copyright 2014 Demand Driven Ins;tute. All rights reserved. er;fied Demand Driven Planner (DDP) is a trademark of the ISEA 1

2 Oregon Freeze Dry ase Study Mountain House Division: Sales increased 20% ustomer Fill Rate improved from 79% to 99.6% 60% reduc7on in inventory Industrial Ingredient Division: 60% reduc;on in make to order lead ;me 100% On- Time- Delivery 20% reduc;on in inventory Raw Material No out of stock Reduced inventory $2.5M+ All material and content copyright 2012 Demand Driven Ins;tute. All rights reserved. er;fied Demand Driven Planner (DDP) is a trademark of the ISEA 2

3 LeTourneau ase Study DDMRP MRP All material and content copyright 2012 Demand Driven Ins;tute. All rights reserved. er;fied Demand Driven Planner (DDP) is a trademark of the ISEA 3

4 Synchroniza;on and Flow hallenge Lead Time before DDMRP Distortions & amplification in demand requirements reverberate backward Suppliers Forestry Products Demand / Information Variability Mining Products Steel Products Supply Variability = ustomer omponent Supply (H/ L) Drilling Systems End Item Assembly inherits the amplifying upstream variability. = Remote Location Offshore Products 4

5 DDMRP Design = Strategic Replenishment Buffers = Time Buffer FP Suppliers MP SP S DS = ustomer = Remote Location OP 5

6 DDMRP (Longview) vs. MRP (Houston) 600 Low Inventories 600 Stock- outs reduced by over 66%! $Millions High Service Fewer Expedites $Millions High Inventories Shortages Massive Expedites Dec '01 Dec '02 Dec '03 Dec '04 Dec '05 Dec '06 Dec '07 Dec '08 Sep '09A 0 Dec '01 Dec '02 Dec '03 Dec '04 Dec '05 Dec '06 Dec '07 Dec '08 Sep Longview Inv Longview TR Houston Inv Houston TR 6

7 Before Demand Driven FMG Example (soap powder) 7

8 Before Demand Driven FMG Example (soap) Purchase Orders Planned Orders (MRP) Manufacturing Orders D Pack 1 Expedites/ Schedule Break-ins D Raw Pack Mix Room Pack 2 D Pack Days D 8

9 DDMRP Design FMG Example (soap) D Manufacturing Orders Stock Transfer Orders Purchase Orders Pack 1 D Raw Pack Mix Room Pack 2 HUB D Pack 3 9 Days 3-8 Days D All material and content copyright 2013 Demand Driven Ins;tute. All rights reserved. er;fied Demand Driven Planner (DDP) is a trademark of the ISEA 9

10 Immediate Results for Materials FMG (soap) 300 Materials are buffered without increase in RPW inventory. This is accomplished with 18% less total RPW. Dampened the bull whip, now opera7ng more effec7vely, with less working capital Before Replenishment lead time has been reduced 82% to 9 days from 50 days, becoming Responsive After Finished Goods dropped 45+% with consistent services level at or above 99.7% 10

11 A few cases from Orchestr8

12 O8 Boots ontract Manufacturing ase Study Move from MRP based Planning to a Pull based philosophy Inbound Doubled inventory turns Improved schedule stability from 60% to 95% In-house Bottle Blowing Reduced lead time from 6 weeks to 1 week 33% stock reduction Finished Goods 30% reduction in stock in 6 months In November 2007 BM switched off MRP added remaining factory cells 20% total FG stock reduction Lead time reduced from 12 weeks to 4 weeks Internal Service level improvement to 98.9% Obsolescence reduced by 50% Now planning all items Internal and External using O8 processes Enabled BM to win additional third party manufacturing business: P&G Manufacturing partner of the Year 2008 Re-designed the Planning structure to match new way of working 40% head count reduction Inbound Stock FG Stock Order Stability Obsolescence Service Headcount FG Lead Time

13 The BM Management report shows wide ranging value to the business People Processes System Financial Benefits Time Saving Workload Reduction Redistribution of Tasks Establish Pull Planning Methodology Remove effect of MRP Noise Volume Variability Analysis ategorise Replenishment Techniques Lead Time Reduction Finished Goods omponents ash Flow Impact Supports New Structure Headcount Reduction Provide more intuitive tools Interaction with External ustomers Web Portal Functionality VMI Opportunities Enables Innovation Discussions Daily Processes Stabilise Demand Swifter Reaction to change Ability to hallenge Support development of S&OP Process Daily / Weekly Activities One Set of Numbers Monthly Analysis apacity Planning Target Stock alculation Setting & Reviewing orrect Levels Simulation / Budget Preparation Reporting KPI Dashboard Schedule Adherence OTIF Inventory Reduction Finished Goods - VMI omponents ash Flow Impact Historical Picture of Supply & Demand Supplier & ustomer Order Points / Liability Forecast omparison Interaction with Internal ustomers VMI Interaction with Suppliers VMI of omponents Supply Discussions Greater Stability Phase Out Process Discontinue Dates ontrol Obsolesence

14 3M Finished Goods Planning Supplier VMI Hub Product Factory 5 Hubs 20 Warehouses Market Suppliers Replenishment call-offs to demand Stocking locations in hubs and warehouses across Europe Planning done centrally Stock targets set in each location based on volume and order patterns at that point Local warehouse stock set by market demand, lead time to ship from Hub & batch size to ship Hub stocks set by call off demand pattern, lead time & batch size to make in the factory Supplier stocks set against factory demand and lead time to resupply

15 3M Occupational Health Inbound & Distributed finished goods Stock held in 5 EDs and 20 local warehouses and inbound to the 3M factory 30% reduction in on-hand inbound inventory 60% reduction in FG Inventory across all sites Service performance better than the 97% target Elimination of process gaps in factory between Lean / Pull methods and planning approach Process delivers better productivity, reduction in Nonvalue added activity and better communication & relationships across the supply chain Service Inbound Inventory FG Inventory Planning effort Productivity Working with O8 has put us back in control of the supply chain S Alexander, 3M Supply hain Manager, OH & ES, Europe

16 O8 Implemented in Thailand to support UK Warehouse Requirement to run a VMI style process from Thailand O8 system installed in Thailand in the summer of 2010 The planning parameters changed to VMI in November 2010 O8 system influenced stock levels in the UK from January /05/ /05/ /06/ /06/ /07/ /07/2010 ases 000s 31/07/ /08/ /08/ /09/ /09/ /10/2010 Pallets 23/10/ /11/ /11/ /12/ /12/ /01/2011 Value % Jan , % 5.6 May ,797 65% /01/ /01/ /02/ /02/ /03/2011 Weeks Stock Var ,168-35% Stock reduced to target using standard internal safety stock optimisation led to decreased service levels 2. Stock levels returned to original level to solve service issues 3. O8 implemented: Service remains high whilst stock levels drop 26/03/ /04/ /04/ /05/ /05/ % 80.0% 60.0% 40.0% 20.0% 0.0%

17 GDS planning model with O8 Business Benefits Spare parts Stock reduction by approx. 500K EUR (c.15%) High availability maintained over 98% Scalability one person handle all parts with no major challenges No additional team required when implemented in new regions Low levels of noise when changing the parameters each month approx. 1,500 changes compared with 2,500 Use of O8 AB analysis to adjust lot sizes/rounding values with optimum balance between number of inbound order lines and stock level lean up components and introduce more Kits - Easy to customize various aspect of it (rules, filters etc.) - Strong tool to make various simulations on a what if bases and find the optimum set of parameters - Extra potential available

18 GDS planning model with O8 Process benefits achieved with O8 Monthly target process down to 2 days for 70K skus (spare parts) using standard rules System provides full simulation capability to trial alternate rule settings and support new implementations ontrol provided through the Phase In / Out controls Removal of mistakes through elimination of spread sheets loud system allows installation across multiple SAP instances Now live in Singapore urrent roll out in Australia and India