education

education (Photo credit: Sean MacEntee)

 

A co-worker and I, both supply chain veterans for over 20 years, are delivering supply chain training to a mix of new hires and more experienced employees. The course we are delivering is the APICS (Association for Operations Management) Basics of Supply Chain management which, for those familiar with the CPIM certification process, is the first of 5 supply chain courses on the road to CPIM certification.

 

The process of delivering this training has got me thinking about the need for supply chain education and what happens when manufacturing companies employ planners and schedulers that don't have that education. As a supply chain software company, our role during sales cycles and deployments is to ensure that we understand the existing processes, be it done with multi-million dollar supply chain planning suites or in Excel or Access. This gives us some interesting views into the very strange processes that some large companies are using in their supply chain.

 

As you think about how some of these processes evolved, you realize that they very likely originated when the company was very small and grew over time becoming more and more complex as the company grew and evolved. However, the process may have been started by the company founder as a spreadsheet to track sales or an access database by the guy who designed the chip to order parts for the next release.

 

There are two sides to this coin. On the one hand, not being encumbered by traditional supply chain knowledge means that these very bright people are able to think outside of the box and potentially come up with very unique and powerful ways to accomplish a needed task. These new approaches could potentially be much better than any traditional approach and be a significant differentiator for that company. On the other hand (and this is what we've seen many times...) the organically evolved process is slow, cumbersome, expensive and almost impossible for any sane person to figure out on their own.

 

Quality, trained, supply chain people are actually pretty difficult to find in most regions. In my experience, many planners started their careers elsewhere in the company; factory workers, clerks, inventory control and somehow managed to find their way into supply chain planning. These people likely have had no formal education in supply chain. That being said, they are intelligent, capable people with strong experience in how the company ACTUALLY works. They are a very strong base for which to build an amazing supply chain organization. The only missing factor is education. Fortunately, we do have organizations like APICS that can provide a standard, recognized body of knowledge to turn these ready and able individuals into an awesome supply chain team.

 

So how do you get your supply chain team educated in supply chain fundamentals? Check out the apics.org website as a starting point. They can help you find out where to get training for your planning staff. Many regions offer training in house which may work better for your planners. If not, they will often hold courses at the local community college. More and more colleges and universities are running supply chain programs and have been for several years. This may be a good place to recruit new supply chain analysts that can enrich your current planning team. Either way, having a team that understands supply chain fundamentals means that you can avoid many of the supply chain mistakes that many growing companies continue to make.

 

How do you handle supply chain training in your organization? Do you have a strange process that developed organically over the years that is still in use? Comment back and let us know.



Originally posted by jwesterveld at http://blog.kinaxis.com/2012/02/supply-chain-education-no-planner-left-behind/

It has been awhile since I had posted a blog and in today's Twitter-centric world, my topic of the day is already old news for most as it happenedtwo weeks ago. Nevertheless, I thought I should send a delayed"shout out" to Lora Cecere for starting up her newresearch firm, Supply Chain Insights.

 

Now, normally if someone came up to me and asked if the world needed another analyst firm, my response would likely be lukewarm at best, but I think what Lora is embarking on is very important, and downright necessary, for three key reasons.

 

First, so much industry coverage is based on driving efficiencies of existing processes. Clearly, the efficiency game is essential and never ending, however I think Lora sets herself apart by always looking for new ways to do things, coming up with new processes to tackle new challenges. I have always been a much bigger believer in focusing on effectiveness over efficiency and I expect Supply Chain Insights to spend a lot of time of this type of research.

 

Second, the small and innovative software vendor needs a voice today more than ever. They need press that they cannot afford to "buy". This is not a self-serving plug either as I think Kinaxis has clearly crossed the chasm to the pragmatic buyer (this does not mean that I ever think we will stop being "cool"). All I am saying is that so much of the innovation in any capitalistic society comes from the entrepreneur ... which brings me to my last reason.

 

The world cannot have enough entrepreneurs. Setting a BHAG and throwing your own funds, blood, sweat and tears behind something you really believe in is the cornerstone of business advancement. I expect that this initiative will keep other analysts, customers and well, even software vendors on their toes.

 

Now, as for achieving her very BHAG, only time will tell, but one thing I have never understood is taking strike three looking, instead of swinging for the fences.



Originally posted by kmunroe at http://blog.kinaxis.com/2012/02/a-nod-to-supply-chain-insights/

The third in our SupplyChainBrain video interview series is Jabil. These videos are jam packed with great content and I suggest you check them out (free registration to view, but well worth it!)

 

The cost of managing risk can’t be allowed to outweigh the value of the supply chain, says Joe McBeth, vice president, supply chain, at Jabil. But there are unknowns that have to be planned for.

 

As one of the largest manufacturing service providers in the world, Jabil is involved in everything from full product design, logistics, assembly and supply chain services for some of the biggest businesses around. That guarantees complexity to contend with.

 

"The challenges are consistent with some of the things we’ve seen in past, but they are more dramatic than they were" says McBeth. "The complexity of globalization, the number of nodes, the number of suppliers, the number of customers in the industries we serve, they all add a large amount of complexity to the equation."

 

Added to that are the unknowns like the tsunami and earthquake combo that disrupted so many supply chains last year in Japan.

 

With a title like vice president of supply chain, McBeth is understandably a bit biased in assessing the importance of supply chain management. It’s simply the "the most important competitive advantage" that Jabil has in its space, in his view. He acknowledges that that arena is filled with good players. Everyone is working from small margins, and it’s difficult to stand out or to be unique. McBeth feels that Jabil is just that because quite aside from its product offering, its supply chain excellence "does create some separation" from the competition.

 

To have that kind of world-class supply chain, it’s imperative to have a data system and tool set that allow one to manage the complexity that happens daily. "The guy with the best information is always going to win," McBeth says.

 

That’s no mere academic concern for Jabil. The manufacturer has 12,000 active suppliers and more than 250 major accounts. One needs a dependable data tool to plan and understand risk in order to keep ahead of the curve in that complex environment, he says. Sometimes you develop your own supply chain, sometimes you inherit one. Nevertheless, in all cases one needs to comprehend the risks around the master schedule and how to commit to customers’ demand signals. That necessity drove Jabil to invest in the RapidResponse solution from Kinaxis, McBeth says.

 

"We needed a tool set that was fast, that was easy to use and could do multiple scenarios so that we come out with better answers."

 

As the company expands around the world, the supply chain needs to be continually reconfigured to support the additional manufacturing sites. "Having a control tower that feeds the best information, that does the modeling — that will allow us to be ahead of the game, to lower our risk, lower our costs and produce greater value for the end customer," McBeth says.

 

It’s important to have tool that indicates course corrections that must be made. But McBeth says he envisions a tool one day that won’t just respond to changes but will anticipate them and take proactive measures.

 

To view video in its entirety, click here



Originally posted by lsmith at http://blog.kinaxis.com/2012/02/turning-supply-chain-risk-into-opportunity-at-jabil/

Like many people,the other weekI tuned into the Grammy Awards. I was partly driven to see how Whitney Houston was memorialized there, as undoubtedly others were. The show had its highest ratings since 1984—and its second-largest ever—attracting 39.9 million viewers.

 

What ended up resonating the most with me that night, however, wasn't a performance, or an award speech. It was a commercial.

Willie Nelson became one of the most popular c...

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The Chipotle ad that aired during the Grammys features Willie Nelson singing Coldplay's "The Scientist," as a stop-motion video depicts the story of a man whose family farm evolves into an industrial animal factory. As the business grows, the farmer sees the error of his ways and, as the lyrics say, he goes "back to the start." The factory is dismantled, and the animals are removed from cages and once again roam free. The final scene shows the farmer placing a crate into the back of a Chipotle truck.

 

This commercial, which was commissioned by Chipotle to emphasize the importance of developing a sustainable food system, definitely tap dances on all of the heartstrings that it's supposed to. To the idealist, it is a great vision of the way things could (and can) be. And is there any better voice than that of Farm Aid co-founder Willie Nelson to represent the U.S. family farmer? But to the cynic, it will undoubtedly appear as a flagrant oversimplification (hey, what are the financial and logistical implications of all this de-industrialization, anyway?). For me, it triggers both optimism and pessimism.

 

The song lyrics also sparked another supply-chain-related response from me. If someone were to ever write a song about the challenges of supply chain planning, I think it might sound something like these select lines from "The Scientist" that play over the commercial:

 

I was just guessing

 

At numbers and figures

 

Pulling the puzzles apart

 

Questions of science

 

Science and progress

 

Do not speak as loud as my heart...

 

Running in circles

 

Chasing our tails

 

Coming back as we are

 

Nobody said it was easy

 

Oh it’s such a shame for us to part

 

Nobody said it was easy

 

No one ever said it would be so hard

 

I’m going back to the start

 

What do you think? Did these lyrics elicit a similar response in the supply chain portion of your brain? And what do you think of the commercial itself? Does it present an overtly idealized vision for farming in the U.S.? Can we really go "back to the start"?



Originally posted by lbossers at http://blog.kinaxis.com/2012/02/willie-nelson-and-the-supply-chain-lets-go-back-to-the-start/

I have been in supply chain management longer than I care to remember, but there are others who have been in the field even longer, and their experience and wisdom is often on display. I follow the writings and opinions of George Palmatier because he is one of those that gives regular insightful comment. George has a thought-of-the-day email blast that I nearly always think about first thing in the morning, if I am not on the road and have time to digest.

 

Last week onecame through, and it was a beauty.

 

 

George's statement that

 

I find many companies do planning, but then fail to monitor, manage and control the business once the planning is "done".

 

I couldn't agree more with George, to the extent that we have been using the terminology Plan-Monitor-Respond for over 2 years now. These are 3 different competencies, and all too often we focus only on the Plan portion in Operations. Actually this is true in general businesstoo, but let's keep it to Operations for now.

 

There are reams written on how to create the perfect plan with many Masters and Phds awarded for research on generating an optimized plan, but very little is written about what happens once the plan is created, optimized or not. This is all good stuff and I was one of those graduate students pursuing the perfect plan many years ago. Much of this research and attempts to realize the result in the field have led to enormous strides in our understanding of Supply Chain.

 

But I have moved on.

 

George makes the statement that companies need to

 

"control the business as it responds to change — changes in market, customers, external influencers, and the competition, etc."

 

This is a great statement, but it doesn't go far enough, and here is why. George's statement is based upon the assumption that the plan was correct, or, even worse, optimal, in the first place. It wasn't. It was, and it should be, the best we could come up with at the time based upon what we knew about the market, but we had to make many assumptions about pricing, demand, supply, capacity and a whole host of other factors including exchange rates, fuel prices, etc. And guess what, a whole lot of those assumptions did not pan out. The point I am trying to make is that it isn't changes in market, customers, external influencers, and the competition, etc. that is causing us to respond. What is causing the mismatch between what we thought would happen — the plan — and reality is that the plan was wrong in the first place.

 

Nothing exemplifies this better than the fact that a recent study by Terra Technology shows that a forecast is typically no more than 52% accurate. 52%! And that represents a 6% improvement over an 8 year period. The average forecast accuracy for new products is 35%. One of the primary uses of the demand plan is to drive the supply plan. Well, if the demand plan is typically only 52% accurate, how accurate will be the supply plan? Can the supply plan ever be optimal given the forecast error? Of course the forecast error is not the only factor that will impact the quality of the supply plan since many assumptions have to be made about capacity and supply availability. Terra Technology and other vendors focused on demand have helped companies make tremendous strides in improving forecast accuracy, but the result is that the forecast error is still around 30%. This is a big improvement from 48%, but it is still 30%.

 

 

Of course this does not mean that planning is not important. Planning is very important, but planning, monitoring and responding must be equal and integrated competencies. In fact, responding to the mismatches between the plan and reality requires the creation of a new plan, but this needs to be done very quickly. So the key capability that is missing is monitoring — knowing that something is different and, more importantly, what impact this change has up and down the supply chain. But there is one more piece missing, namely know who is impacted — name, rank, and serial number — because only then can anyone take action to address the mismatch. But this brings up another issue with the current centralized planning systems, namely that planning is a team sport requiring collaboration, consensus, and compromise across several functions, often with competing objectives and performance measures. Reaching consensus can only be achieved through compromise based upon the evaluation and comparison of several scenarios simultaneously. In order to evaluate several scenarios you need a tool that will return results in seconds or minutes, not in 8 hours.

 

Dick Ling and Andy Coldrick, while at StrataBridge, wrote a white paper titled "The Evolution of S&OP" in which they promoted the idea that the "One Number Plan" concept is flawed because of the inherent uncertainty in the plan. Instead a range of scenarios should be explored to test several assumptions in an integrated manner. In other words, scenario planning or what-if analysis should be performed from the very start because we do not have a crystal ball, that our plans are based upon many assumptions, some of which will be wrong.

 


 

The title of the graph captures the concept very well:

 

Recognizing inherent uncertainty and reflecting this in your decision making process.

 

In closing, it isn't that planning is a waste of time, but rather that planning alone is not enough. To steal a term from Optimization Theory, planning is necessary, but not sufficient. You must be able to Plan-Monitor-Respond. These must be equal and integrated capabilities.



Originally posted by tmiles at http://blog.kinaxis.com/2012/02/optimized-planning-is-good-not-god/

As mentioned last week, SupplyChainBrain recently completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are jam packed with great content and I suggest you check them out (free registration to view, but well worth it!)

 

 

Each Friday for the coming weeks, we will be highlighting some of these clips. Next up, Lockheed .

 

As important as ERP and MRP systems may be to a company, it is critical to have visibility into one’s supply chain, both in real time and through what-if scenarios, says Mike Keltz, IT integrator at Lockheed Martin Aeronautics.

 

Visibility, of course, is not an issue solely for manufacturers of airplanes. But it is a major challenge for companies with worldwide reach, and that certainly describes Lockheed Martin Aeronautics, which is among the premier manufacturers of tactical and cargo aircraft for the military.

 

The pain can be felt when fluctuations occur in the supply chain, so it’s crucial to have as complete a view into the operations of suppliers (and their suppliers as well) as one can, Keltz says. Otherwise, overall operations are jeopardized, not least of whose are the customers.

 

Greater visibility would also enable forecasters and planners to work more efficiently. That, coupled with top-notch supply chain management becomes the differentiating factor among competitors, Keltz says.

 

A world-class supply chain needs enterprise resource planning and manufacturing resource planning systems "to actually keep the business going," Keltz says. But they don’t give you the view into fluctuations and challenges, nor do they allow yo to do what-if analysis. The latter is key; one must run such simulations before making any changes, such as altering scheduling agreements or adjusting lead times. Keltz says the what-if analysis enabled by the RapidResponse solution from Kinaxis has been invaluable to Lockheed Martin Aeronautics. "You can actually see what the effect will be of making changes before you invest some very expensive dollars."

 

To view video in its entirety, click here



Originally posted by lsmith at http://blog.kinaxis.com/2012/02/keeping-up-with-supply-chain-innovation-at-lockheed-martin-aeronautics/
Kinaxis Inc.

The three C’s of S&OP

Posted by Kinaxis Inc. Feb 16, 2012

http://www.kinaxis.com/campaign/on-demand-continuous-sop/

 

Last month, Aamer Rehman, vice president, manufacturing solutions here at Kinaxis, presented at the Sales & Operations Planning Innovation Summit in Las Vegas. Thatsession, "Continuous Sales & Operations Planning for the Manufacturing Sector," is now available for viewing on-demand.

 

S&OP, by its very nature and purpose is a cross-functional activity. Yet the multiplefunctionsin supportof S&OP have long been segmented into different isolated activities that reflect organizational structures and functional goals. Thisleads to long, ineffective, and inefficient planning cycles that driveless thanmaximized value for the organization as a whole.

 

 

In his presentation, Aamer talks about the technology and process requirements to achieve a continuous, connected and truly collaborative S&OP capability.

 

The presentation gives a good overview of the Kinaxisperspective and position on what S&OP can and should be.

 

http://www.kinaxis.com/campaign/on-demand-continuous-sop/



Originally posted by lsmith at http://blog.kinaxis.com/2012/02/the-three-cs-of-sop/

What do you say when the CEO is asking whether the company will hit its revenue targets for the current reporting period? Can you tell the CEO instantly which customers may be facing late delivery, and which orders may not ship? Can you tell the CEO what is causing the late deliveries and how the company could get back on track?

 

Even if your company has an effective, integrated ERP system, chances are you won't have a good answer. Because, even the 'best of breed' ERP systems don't give the business stakeholders sufficient visibility into what's actually happening to ensure performance improvements. Are employees able to determine for themselves the future risk to the company? Are they able to test alternative decisions and evaluate the financial and operational impact quickly and effectively? They should, because that is where the business value lies.

 

Not too long ago companies suffered from having too little data with which to manage the company's operations. The ERP age has brought in a different problem of too much data, but too little information. This is not unusual because transaction systems, such as ERP, are designed to capture data and make a record of a transaction, principally for accounting purposes. They were not designed to provide insight gained from analyzing many similar transactions.

 

It is a well-known fact that financial services and telecommunication companies have pioneered the use of business intelligence (BI) solutions to enable them to analyze massive amounts of data they have accumulated over the years. As a result, considerable insight was gained from data mining and data analysis and thus, the need for BI capabilities grew in the '80s and '90s in other industries as well. In the past 5+ years, the interest, and indeed the need, for real-time access to operational data has increased dramatically. The promise of real-time operational BI that goes beyond the capturing of static data snapshots and enables users to identify and analyze business trends and patterns, is of major interest to supply chain management (SCM) managers because they know that better information leads to better decisions and outcomes.

 

But despite being a hot topic, and one that has been written about extensively in the last 10 years by industry analyst firms under its many guises of business intelligence (BI), operational BI, and business performance management — there has been only mediocre results. Why?

 

BI tools suffer from two major drawbacks that prevent them from providing greater value and therefore obtaining greater adoption: They cannot identify causality and, as a consequence, they cannot provide a prediction of future performance and risk.

 

In SCM, without the deep supply chain analytics required to identify causality, BI tools cannot identify future risk based upon the current state of the supply chain. For example, while the information that a receipt of a shipment indicates that 20% of the shipment is damaged is important; the real value comes from being able to identify the orders that are impacted and therefore, being able to evaluate the potential financial consequence. In other words, BI tools do not provide actionable information and therefore fail to address a critical aspect of the day-to-day lives of operational people: knowing what levers to pull to affect change.

 

What has been missing is the predictive analytics to connect changes to consequences, both operational and financial. There is little value in knowing about a problem after it has occurred (or just before it occurs when you do not have time to react.) And knowing that something has changed is also of little value. But knowing the operational and financial consequences or root causes of these changes, and therefore what to work on, has immediate value. And knowing what to do to overcome the risks that these changes present is of greatest value.

 

For example, there may be several orders that will be delayed because of a shortage of one component. This component could be a fairly small part of a company's overall purchase costs so the shortage may be overlooked using traditional BI tools. But its impact on future finished goods availability may be quite large. Predictive analytics identifies future risks associated with current changes. And once you know what future risks are faced by your company, the natural next step is to find ways of testing the effect or impact of choosing one course of action over another to mitigate these risks.

 

At the heart of evolving business intelligence into business value is having the right tools at your disposal to make intelligent decisions that affect the future performance of your company. This requires:

  • knowing sooner of risks to the business,
  • understanding the operational and financial impact of the risk,
  • assessing the action alternatives (through "what-if" analysis), and
  • taking correction action to avoid or minimize the impact.

 

The 'rear-view mirror' approach to BI has not produced the performance improvements desired and urgently required by today's businesses. Predictive analytics that can clearly demonstrate cause-and-effect have been the critical missing piece in the BI value proposition to-date. To maintain and grow its place as a strategic enterprise tool, BI must be redefined to encompass and address the issue of real-time performance management.



Originally posted by tmiles at http://blog.kinaxis.com/2012/02/connecting-changes-to-consequences-the-missing-piece-for-getting-business-value-from-business-intelligence/
https://blog.kinaxis.com/wp-content/uploads/2012/02/Celestica1.png

Run Time (Min.): 12:22

 

Back in October at our annual Kinexions user conference, SupplyChainBrain completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are jam packed with great content and I suggest you check them out (free registration to view, but well worth it!)

 

Each Friday for the coming weeks, we will be highlighting some of these clips. First up, Celestica.

 

Celestica’s Supply Chain Collaboration Center

 

Celestica’s collaborative initiative comprises three elements — inventory visibility, much closer relations with suppliers, and optimized inventory management, says Erwin Hermans, vice president of supply chain solutions at the contract manufacturer.



Originally posted by lsmith at http://blog.kinaxis.com/2012/02/fridays-supplychainbrain-video-clip/

We are in the final days for offeringcomplimentary access to the Kinaxis life sciences newsletter, whichincludesa Gartner Case Study: How Amgen Reinvigorated Its Supply Planning Process (Barry Blake, Hussain Mooraj: May 18, 2011).

 

 

 

According to the Gartner Case study, long supply cycle times require life science manufacturers to balance supply commitments, capacity management and product expiry issues. One global biotech company, Amgen, centralized elements of its planning processes and deployed a rapid planning tool to more effectively balance these requirements.

 

 

 

Key findings of the report include:

 

  • Rapid demand and supply planning processes are foundational capabilities required for a multitier sales and operations planning (S&OP) process that can propel companies beyond simple supply and demand matching to conscious, value-driven business decisions.
  • Life science manufacturers don't often incorporate into their planning processes "what-if" analysis to optimize supply. Additionally, many companies have disconnected their short-term planning from long-term capacity and supply commitment processes.
  • By centralizing elements of its planning process and deploying the appropriate advanced planning tool, Amgen can now quickly model the impacts of various "what-if" scenarios and extend these analyses to multiple planning levels across the entire supply network.
  • The company is now able to rapidly develop more-accurate supply plans that optimize capacity, inventory and product shelf life, decreasing the total planning cycle from 21 to 12 days. These consolidated, synchronized views of demand and supply across the entire product supply network are generated by the tool in minutes.

 

 

 

Last chance to download the newsletter here: http://www.kinaxis.com/campaign/kinaxis-gartner-pharma-newsletter/

 

 

Originally posted by lsmith at http://blog.kinaxis.com/2012/02/kinaxis-life-sciences-newsletter-featuring-complimentary-analyst-case-study-report-on-amgen-2/

Test_only.jpg

Image via Wikipedia

 

There used to be a commercial (with Orson Welles for Paul Masson wines) on television back in the 1970's advertisingthat they would "sell no wine before its time." This implied that they wouldn't release any wine until it reached full maturity and perfection. I thought this would be a good analogy for the concept of time phased release of supply orders to the supply chain. Shouldn't we want to release orders only when they reach full maturity and perfection?

 

The temptation is usually there to release supply orders as far out into the planning horizon as possible so as to give suppliers more time to deliver. But what actually happens when we do that in an MRP planning environment?It artificially lengthens lead times, and consequently, we are releasing more supply orders into an already overloaded supply chain. It seems to me that we should build a recovery reschedule of the past due purchase orders and cut the lead times to the bone, only releasing new supply orders in the near term when the master production schedule is more mature and firm.

 

The APICS definition of Time Phasing is:

 

The technique of expressing future demand, supply and inventories by time period. Time phasing is one of the key elements of material requirements planning.

 

This definition to me appears to be overly simplistic and deserves further expansion into specific scenarios and benefits. The definition doesn't say anything about the benefits of time phased release of supply orders in small bites. It should also include the benefits of time phasing the release of supply orders, based on precisely defined lead times in the near term, resulting in greater 'maturity' and 'perfection' of quantities and due dates.

 

I think the old adage, "How do you eat an elephant? One bite at a time," applies here. The time phased releasing of supply orders at the latest possible release date that would satisfy the minimal lead time requirement would result in only releasing supply orders when the production schedule is firm. This enables better accuracy in release quantities and due dates, and less disruption in the master production schedule.

 

https://blog.kinaxis.com/wp-content/uploads/2012/02/time-phased-funnel.png

 

http://blog.kinaxis.com/wp-content/uploads/2012/02/time-phased-funnel.png http://blog.kinaxis.com/wp-content/uploads/2012/02/time-phased-funnel.png

 

http://blog.kinaxis.com/wp-content/uploads/2012/02/time-phased-funnel.png

 

We can look at our entire planning horizon pictured above as a time phased funnel depicting firmed or released supply orders at lead time (dark shading), unreleased or planned supply orders (light shading), and gross demand and forecasts input and the resulting shipments to the customer. This planning horizon is funnel shaped because forecasts are generally more optimisticfurther out into the future and then start to lean out when approaching lead time due to forecast consumption by actual demand, capacity limitations of the master production schedule, and actual customer shipments.

 

If we take a closer look at the dark shaded area (firmed or released orders), we can probably say that a large portion of our planning horizon for customer delivery has, in effect, been relinquished to the mercy of our suppliers. So shouldn't we want to limit that dark shaded area so that we can maintain as much control of our planning horizon as possible?

 

Another thing that can be said for this dark shaded area is that it is the labor intensive portion of your total planning horizon because of near term supply chain volatility. Suppliers that can't deliver, lack of capacity, acts of God such as the earthquake in Japan, all of these and more can contribute to near term fluctuations to your master production schedule,which result in overtime throughout the company in order to resolve the issues quickly. Buyer/planners in particular, perform lots of work expediting and rescheduling released purchase orders. Despite the temptation to artificially increase lead times and therefore release more supply orders earlier, this can ultimately result in the buyer/planners increasing their own maintenance workload... sometimes beyond their means. Most buyer/planners I know are responsible for three or four thousand parts.

 

In the light shaded area (unreleased or planned orders), your suppliers have no control over your master production schedule. You do. In this area of the funnel, volatility, resulting in additional laborious tasks is not a problem. The MRP software handles it automatically. All planned orders are automatically rescheduled during every MRP run. So shouldn't we want most of our time phased funnel to be light shaded? In this area, we can also favor and easily maintain the formal system over the informal system of order launch and expedite hotlists.

 

Think about this the next time an overloaded supplier asks you for more lead time to dig himself out of a backlogged hole. You just might be supplying him with a bigger shovel.



Originally posted by Ray Karaffa at http://blog.kinaxis.com/2012/02/fine-wine-for-your-supply-chain/

I came across an interesting post today at SearchManufacturingERP that talked about how to pick a tool to support your S&OP processes. They raised a number of good points that I thought were worth going a bit deeper on.

 

The first point they make is that for most companies, Excel is not a viable S&OP tool.

  • Anyone who has done extensive work in Excel knows that it is a very powerful tool that works best with smaller data sets. Companies managing a complex supply chain soon find that they are stretching Excel's boundaries to the breaking point.
  • Modern S&OP process have a significant "what-if" component to them. While it is easy to make high level changes to Excel, understanding what the real impact of these changes are, is simply not possible. Consider a typical S&OP decision...what-if we were to add a promotion for this product line? A simple question, but a complex answer. Sure, you can change the forecast quantities in Excel, and that can show change to revenue. But what-if the product line is constrained? What is the purchasing spend going to be to support this? A simple Excel model simply cannot support this level of granularity.
  • Excel doesn't support alerts or lend itself to managing by exception. Once your S&OP plan is set, you need to monitor performance against it. Sure, you can see how you've performed at the next S&OP meeting, but isn't that too late?

 

I've gone into some details about how Excel is not the right tool for S&OP (and other things) in other posts, if you are interested, you can find them here;

 

Is Excel the right tool for S&OP
How are spreadsheets like cockroaches
The endless debate: Is S&OP about technology
When spreadsheets go bad

 

So, if Excel is not the right tool for S&OP, what is? Rather than call out a specific tool, let's look at some criteria that you need to consider when looking for an S&OP application:

  • I mentioned that Excel is not a good tool for S&OP is because it doesn't support "what-if" analysis. This is obviously something you need to look for in any tool for long range planning.But simply allowing you to hive off a version of the plan and make a change is not enough. The "what-if" analysis must provide detailed analysis as to what the impact of a given change will be throughout the supply chain. A key supplier of low level components was just hit by a flood and won't be shipping parts for six months — what impact will this have on my production? What-if demand increases on one of my product lines? What impact does this have on a constrained resource?…on my contract manufacturers?…on my suppliers? Only a system with full supply chain analytics can address these questions.
  • A related requirement is integration. If you are going to provide answers to the "what-if" questions above, you will likely need to have detailed information from multiple manufacturing centers around the world. These centers in all likelihood are running a variety of disparate ERP systems, so your tool will need to integrate across all these systems and bring the data in to a single environment.
  • As mentioned earlier, the ability to monitor performance against the plan and report on exceptions is key. A S&OP plan is good. A S&OP plan that you monitor and react to when underperforming is truly powerful.

 

There are several other factors that can play into your selection of a system for S&OP, but I think these are key ones. What tools are you using for S&OP planning? Are you evaluating new tools? What factors are you considering? Comment back and let us know!



Originally posted by jwesterveld at http://blog.kinaxis.com/2012/02/what-is-the-right-sop-tool/

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