Integrated Enterprise
Leadership
Process Steps
© The Delos Partnership 2007
page 1
IELStage
Process
Steps
1
Stage 7
Innovation
Review
Stage 2
Customer
Demand
Review
Stage 3
Supply
Plan
Review
Stage 5
Stage 6
Priority
Review
Senior
Team
Review
Stage 4
Support
Review
Week 1
Week
2 Partnership 2007
© The Delos
page 2
Week 3
Week 4
A
C
T
I
O
N
Integration of Innovation
Integrated Business Plan
Financial Analysis
30,000
25,000
20,000
Budget
Euros 15,000
Previous
10,000
Current
5,000
0
Sales
Contrib
Sales/Profit
Innovation
Demand
Plan
Supply
Chain
Support
Activities
© The Delos Partnership 2007
page 3
Innovation step - Purpose
1. To manage all “new things” against strategic
intent, and prioritise where needed
2. To review changes to plans and implications
on other parts of the business
3. To review overall performance and managing
projects
It is not about managing projects, but must link to
those other projects.
© The Delos Partnership 2007
page 4
Innovation
What counts as innovation ?







New product
Change to existing product - line extension
New manufacturing process
Change to manufacturing process
Regulatory change
Capital expansion
ERP Project
© The Delos Partnership 2007
page 5
Integration of Innovation
• Innovation is carried out by many
functions
• All innovation has impact on different
areas
• Resources are finite
• Priorities need to be set for innovation
projects
© The Delos Partnership 2007
page 6
Innovation Projects
All share the following issues






Need Project Plan
Need business justification
Need co-ordination
Need cross project resource management
Difficult to forecast
Need integration into all other processes
© The Delos Partnership 2007
page 7
Management of Innovation needs a
process
Stage/Gate Process
Stage 0
Stage 1
Gate
1
Ideation
Is it a
good
idea?
Stage 2
Gate
2
Initial
Investigation
Does it fit
our
criteria ?
Stage 3
Gate
3
Research
And Develop
Full business
Case
Stage 4
Gate
4
Gate
5
Develop
Product in line
With customer
Requirements.
Test
market
products
and
service .
Develop
market
Meets
customer,
supply and
financial
criteria.
Meets
customers’
and
operations
needs..
Business
Case and
prioritisation
.© The Delos Partnership 2007
page 8
Stage 5
Review
Full production
marketing and
Sales of product
Project Choices – the Five Questions for
initial investigation
Strategic
Fit
Change
Orientation
Market
Attractiveness
Projec
t
Technology
Fit
© The Delos Partnership 2007
page 9
Business Impact
First Cut Priority Check
Project
Strategic
Market
Technology
Business
Impact
Change
orientation
Overall
Average
1
10
10
10
10
10
10.0
2
10
8
7
10
5
8.0
3
9
8
5
8
8
7.6
4
7
6
7
7
9
7.2
5
4
7
8
9
5
6.6
6
3
8
9
6
5
6.2
7
7
4
4
5
8
5.6
8
6
5
5
5
4
5.0
9
2
3
2
3
7
3.4
© The Delos Partnership 2007
page 10
Financial justification for ideas
Year 1
Volume
Year 2
Year 3
Year 4
Year 5
100
115
120
140
150
10
12
13
15
17
2
2.5
2.75
2.5
2
Inc
Overheads
0.5
0.5
0.5
0.5
0.5
Cash Flow
1.5
2.0
2.25
2
1.5
Wkg Capital
1
0.5
0.2
0.2
0.2
Cap
Expenditure
4
1.5
2.05
1.8
1.3
Sales
Contribution
Net Cash
Flow
-3.5
Net Present Value @ 15 % =
© The Delos Partnership 2007
page 11
Prioritisation of ideas
Project Name
Value [£ m NPV]
Strategic Fit
Risk
Rank
ABC
20
5
5
500
PQR
50
2
5
500
VWY
45
5
2
450
XYZ
20
5
4
400
DEF
33
4
3
396
RST
2
5
5
200
LMN
5
5
5
125
OPQ
100
1
1
100
FRG
40
2
1
80
© The Delos Partnership 2007
page 12
Financial Case
Integrate into
Business Plan
Issues
 How much
 When
© The Delos Partnership 2007
page 13
Integration into Business Plan
Year 1
Volume
Sales
Contribution
Year 2
Year 3
Year 4
Year 5
100
115
120
140
150
10
12
13
15
17
2
2.5
2.75
2.5
2
Inc Overheads
0.5
0.5
0.5
0.5
0.5
Cash Flow
1.5
2.0
2.25
2
1.5
Wkg Capital
1
0.5
0.2
0.2
0.2
Cap
Expenditure
4
1.5
2.05
1.8
1.3
Net Cash Flow
-3.5
Make – To- Stock
-3
-2
-1
Demand Plan
12
0
12
0
12
0
Last Demand Plan
Actual Demand
11
9
12
5
13
2
New Demand Plan
Difference
-1
5
12
Difference
4
16
Cum Diff
Months
Cum Diff
-3
-2
-1
Supply Plan
12
5
12
5
12
5
Last Supply Plan
Actual Supply
11
9
11
8
12
1
New Supply Plan
Difference
-6
-7
-4
Difference
13
17
Cum Diff
-3
-2
-1
71
76
81
Last Stock Plan
66
59
48
New Stock Plan
-5
17
33
Difference
Cum Diff
Stock Plan
Actual Stock
Difference
1
2
3
4
5
6
7
8
9
Q4
Q1
12
0
12
0
12
0
12
0
12
0
12
0
12
0
12
0
12
0
36
0
36
0
1
2
3
4
5
6
7
8
9
Q4
Q1
12
5
12
5
12
0
12
0
12
0
12
0
12
0
12
0
12
0
36
0
36
0
1
2
3
4
5
6
7
8
9
Q4
Q1
86
91
91
91
91
91
91
91
91
Months
66
© The Delos Partnership 2007
page 14
Management of Innovation
Integrated Project Management – Programme Management
Capacity - Design Resource
120
100
80
60
Dem Cap
Req Cap
40
20
0
1st Qtr
2nd Qtr
Qtr
© The Delos Partnership 2007
page 15
3rd Qtr
4th Qtr
Integrated Enterprise Leadership
Family ABC
Months
-3
-2
Months
-1
1
Demand Plan
70
70
70
Last Demand Plan
Actual Demand
71
75
80
New Demand Plan
1
5
10
Difference
6
16
Cum Diff
Difference
Cum Diff
-3
-2
-1
75
75
75
Last Supply Plan
Actual Supply
70
69
71
New Supply Plan
Difference
-5
-6
-4
Difference
-11
-15
Cum Diff
-3
Order Book Plan
Actual Orders
Difference
66
-2
70
1
Supply Plan
New Forecasts
2
3
4
5
6
7
8
9
Q4
Q1
70
70
70
70
70
70
70
70
210
210
2
3
4
5
6
7
8
9
Q4
Q1
70
70
70
70
70
70
70
210
210
3
4
5
6
7
8
9
Q4
Q1
41
41
41
41
41
41
41
41
41
75
75
Impact on Supply
Cum Diff
-1
1
61
56
51
Last Plan
67
73
82
New Plan
6
17
31
Difference
2
46
41
© The Delos Partnership 2007
page 16
Integration with Supply Chain
Distribute
Finish
Insert New
Products Here
Sub-assemble
Intermediate Manufacture
Purchase
Design
Cumulative Lead Time
© The Delos Partnership 2007
page 17
Integrated Innovations Planning
IDEAS
IEL AT FAMILY
LEVEL –
VOLUME
AND VALUE
MPS AT
PRODUCT
LEVEL –
VOLUME
AND VALUE
MPS/MRP AT
PRODUCT AND
COMPONENT
LEVEL –
VOLUME
COMMERCIAL
SUCCESS
TIME
© The Delos Partnership 2007
page 18
New Product Development
Performance

Definition

Number of new products developed
on time

Purpose

Improve NPD process

Horizon

New product development time

Activity schedule in planning system
or project plans

Source of information
© The Delos Partnership 2007
page 19
NPD Performance Report
Project
Planned
reference Date
A1001
23/2/99
Actual
Date
02/3/99
Hit/
Miss
Miss
A1096
23/2/99
15/3/99
Miss
B2304
24/2/99
17/2/99
Hit
B2403
25/2/99
18/2/99
Hit
D1237
26/2/99
27/2/99
Miss
D1453
26/2/99
20/2/99
Hit
Comment
NPD Performance = 3/6 = 50 %
© The Delos Partnership 2007
page 20
Earned Value Measure
Definition
Proportion of work completed in
value compared with work
scheduled to be completed
Purpose
To review cost versus budget
status of project
Horizon
Length of Project
Source of Info
Project Plan reports
© The Delos Partnership 2007
page 21
Earned Value Report
Activities/Time
Value
A
B
C
D
E
F
Total
Planned
100
150
100
250
200
200
1000
Earned
100
150
100
100
200
0
650
% comp.
100
100
100
40
100
0
Variance
0
0
0
-150
0
-200
90
220
80
300
220
910
Variance
to EV
+10
-70
+20
-200
-20
-260
Variance
Spend
+10
-70
+20
-50
-20
Actual
Cost
© The Delos Partnership 2007
page 22
+200
-350
-90
Culture/behaviour
• Over optimism on likely success of new
product
• Failure to manage scope of project
effectively
• Abilene syndrome – management of
agreement
• Functional development – lack of focus
on customer.
© The Delos Partnership 2007
page 23
Traditional functional management
Stage/Gate Process
Stage 0
Stage 1
Gate
1
Research
Department
Research
Department
Stage 2
Gate
2
Stage 3
Gate
3
Development
Department
Stage 4
Gate
4
Development
Department
© The Delos Partnership 2007
page 24
Stage 5
Gate
5
Operations
Department
Review
Commercial
Department
Process or program management
Stage/Gate Process
Stage 0
Stage 1
Gate
1
Stage 2
Gate
2
Stage 3
Gate
3
Research
Department
Development
Department
Financial/Support
Department
Operations
Department
Commercial
Department
© The Delos Partnership 2007
page 25
Stage 4
Gate
4
Stage 5
Gate
5
Review
Innovations Manager
Development
Plans
Strategy
Project
Plans
Innovation
Manager
Development
Ideas
Project
System
Supply Plans
Prioritised Plans
© The Delos Partnership 2007
page 26
Innovations Review Meeting
Outputs
Inputs
• Strategy
• Priorities
• Update on projects
• Impact analysis
• Financial plans –
forecasts, prices and
costs
• Review against
strategic
criteria
•Performance Measures
Agenda
1.
2.
3.
4.
5.
Status on existing projects
Changes to milestone dates
Impact analysis
Recommendations on
impacts
Performance Measures
© The Delos Partnership 2007
page 27
•Projects prioritised
•Agreement on
major new projects
•Decisions on
impact
On Financial plan
•Issues for further
Review
•Improvements in
process
Framework for Process Review
Process Name :
Process owner :
Inputs:
Purpose:
Outputs:
People:
Culture/Behaviour:
Measures:
System/module:
Requirements:
Expected Actions:
Link to other processes :
© The Delos Partnership 2007
page 28
“Global Innovation Planning – R&T” Process
Inputs
R&T:
 New materials
 New technologies
 New surface treatments
Environmental Requirements
Feedback from previous cycle
Measures
Close out of actions - are
dates
being met as at original
project
start date
Projects started in right lead
time?
Information provided in right
format?
Scope/Purpose
Projects which impact critical
resource:
Operations
Supply Chain
Outputs
Revised resource plan
Revised list of requirements
Revised financial plan
Provide appropriate information
to
Supply/Customer Demand
Review changes to existing
projects
(by exception)
Links to Other Processes
Global Planning Team
People
Process Owner:
 Patrick Monclar (ISO P2)
R&T Project Managers
GPT Representative
S&OP Co-ordinator?
© The Delos Partnership 2007
page 29
IELStage
Process
Steps
1
Stage 7
Innovation
Review
Stage 2
Customer
Demand
Review
Stage 3
Supply
Plan
Review
Stage 5
Stage 6
Priority
Review
Senior
Team
Review
Stage 4
Support
Review
Week 1
Week
2 Partnership 2007
© The Delos
page 30
Week 3
Week 4
A
C
T
I
O
N
Demand Planning and Management
PLAN
EXECUTE MANAGE
Take
Orders
Capacity and
Materials
“firm”
Add or subtract
To capacity
Strong Link to
Integrated Enterprise
Leadership process
Horizon
Today
Cumulative Lead Time
© The Delos Partnership 2007
page 31
The Ten Rules of Forecasting
1. A forecast is necessary for planning supply and supporting
financial and business plans
2. A forecast is never going to be right
3. A forecast is wrong because the assumptions were wrong
4. Accountability for the forecast rests with Sales and Marketing
5. Forecasting needs an application of intelligence
6. More accurate forecasting comes from your customers’ customer
7. Forecasts at an aggregate level are more accurate than the detail
8. Effective management of demand is key to managing forecast
inaccuracy
9. A written policy for managing flexibility is essential
10. Measuring forecast accuracy will improve the process
© The Delos Partnership 2007
page 32
Common Reasons for Not Forecasting
I can never make it
100% accurate
The factory never
make what I forecast
anyway
My business is
different - you
can’t forecast it
It’s not in my
objectives
My business has too
many unforeseen
peaks
I don’t know
who’s responsible
for it anyway
I’m measured
on getting high sales
- so who cares
about the forecast
Nobody thanks
me for it – so why
bother ?
© The Delos Partnership 2007
page 33
Forecasting - is there a definition?
© The Delos Partnership 2007
page 34
Forecasting – Defined
A forecast is a formal request to the Supply
Management function from Sales and Marketing
to have the product, materials and capacity
available according to the quantity and at the
time that they anticipate the demand will occur
from the customer to ship the product to their
premises
© The Delos Partnership 2007
page 35
Forecasting Needs a Simple Process
Capture
Actual
Filter
Demand
Compute
forecast
Review
Accuracy
Agree commercial
plans
Agree
Exceptional demand
Hold Demand Review
CONSENSUS
© The Delos Partnership 2007
FORECAST
page 36
Assumptions
written down
and agreed
Impact of Biassed Forecast
OVERFORECASTING IS AS BAD
AS UNDERFORECASTING
OVERFORECASTING
UNDERFORECASTING
Increase resources to
meet higher demand
Resources insufficient to
meet demand
More Stocks
More Labour
More Materials
More Plant
Stocks Low
Labour Unavailable
Short of Capacity
Short of Materials
No Sales
Cost of Goods
increases
Lost Sales
Cost of Goods
increases
GROSS
MARGIN
GROSS
MARGIN
© The Delos Partnership 2007
page 37
Execute Statistical Forecast
• Use demand history to produce trends
and identify patterns
• Key influences to be derived :
 Base
 Trend
 Seasonality
© The Delos Partnership 2007
page 38
Sales Forecasting: Inputs
•
•
•
•
•
•
•
•
New Customers
New Products
Pricing Initiatives
Advertising And Promotions
Cannibalisation
Customers Own Forecast
Competitors Activity
External Factors
© The Delos Partnership 2007
page 39
Effect of New Products on Old
Products
Cannibalisation
Definition: The impact (usually negative) of sales
on old product from new product
 Assess the impact Timing
 Volume
 Finance
 Review impact on run-out of old product – Product
Life cycle effect
© The Delos Partnership 2007
page 40
Demand Creation
Demand Facts
 Population
 Numbers between age 13-16
 Children less than 11
Demand Drivers
 Events (Xmas)
 Desires
 Technology
Demand Controllers
 Pricing
 Promotion
 Distribution
 Advertising
 Packaging
© The Delos Partnership 2007
page 41
A
S
S
U
M
P
T
I
O
N
S
R
E
S
U
L
T
S
• Market Share
• Market Reach
• Frequency of
purchase
Sales Planning Process
EXAMPLE
 Sales vision and strategic framework
 Carry out channel analysis and identify opportunities
 Establish sales development priorities
and draft channel strategies
 Review draft brand plans
 Issue long term plans
 Develop detailed implementation plans
 Monitor implementation
© The Delos Partnership 2007
page 42
P D
A C
Collaborative Planning - Progress
Integrated Planning
and Replenishment
•Mutual sharing of long term plans
•Full briefing on long term strategy
•Joint improvement activities
Trading Partnership
Co-Managed
Inventory
Vendor
Managed
Inventory
Data
Exchange
•Joint forecast review
•Joint agreement on Business
plans and inventory strategy
•Joint improvement activities
•Agreed process for managing inventory
•Mutual availability of data and plans in joint systems
•Supplier schedules provided, and forecasts provided.
•Agreed process for managing inventory (VMI)
– Supplier’s problem!
•Supplier schedules provided
• Ability to view Customer data
•No management process
•Possibly available on Internet
Time
© The Delos Partnership 2007
page 43
Review “Exceptional” Demand
Review large potential business
 Tenders
 New contracts
 Large one time demand
Decide whether to include in forecast or
not
 Avoid probabilities
 Decide on hedging strategy
 Agree on acceptance of risk
© The Delos Partnership 2007
page 44
Forecast Accuracy

Definition

Percent of items within a tolerance

Purpose

Assess the degree of flexibility
required by the supply side and to
improve the process

Horizon


Source of Information
Cumulative lead time
(= purchasing plus manufacturing)
Forecasting module
Sales module


© The Delos Partnership 2007
page 45
Forecast Accuracy Report – by Error
Group
Product Group A
Product
Forecast
Actual
Error
% Error
Product 123
100
120
+20
20
Product 456
200
150
-50
25
Product 789
300
330
+30
10
600
600
0
17 %
Product 345
200
300
+100
50
Product 567
500
300
-200
40
Product 890
600
700
+100
17
Product 678
200
400
+200
100
1500
1700
200
40 %
Total
Product Group B
Total
© The Delos Partnership 2007
page 46
Forecast Quality and Bias
40
35
30
Bias
25
20
15
10
5
%
70
%
60
%
50
%
40
%
30
%
20
%
10
0%
-1
0%
-2
0%
-3
0%
-4
0%
-5
0%
-6
-7
0%
0
Graph forecasts to display bias
© The Delos Partnership 2007
page 47
% of Items
Normal
Customer Service

Definition

Number of orders delivered to
required date to customers’
premises

Purpose

Flexibility required to meet customer
needs

Horizon

Make To Stock - none

Make To Order - product lead time

Sales order entry

Source of Information
© The Delos Partnership 2007
page 48
Customer Service Report –
Against Request Date
Order
Required
Date
Actual
Date
Required
Quantity
Actual
Quantity
Hit/
Miss
1435
22/2/99
23/2/99
1050
1050
Miss
1560
23/2/99
23/2/99
2000
2000
Hit
1573
24/2/99
23/2/99
300
300
Miss
1745
25/2/99
25/2/99
450
500
Miss
1800
26/2/99
26/2/99
700
650
1820
26/2/99
26/2/99
1000
1000
Customer Service = 2/6 = 33 %
© The Delos Partnership 2007
page 49
Miss
Hit
Sales and Marketing Focus
Region A
Month 1
Prod
Group
ABC
Prod 1
Prod 2
Prod 3
Prod
Group
XYZ
Prod 4
Prod 5
Prod 6
Region B
Region
A
Region B
Month
Cust 2
Cust
Cust
Cust
Cust
Cust
Cust
Cust
Cust
A
B Cust C Cust ACust
D
E
Region A
Region B
Month 3 A
B
C
A
D
E
Cust
Cust
Cust
Cust
Cust
Cust
Prod
Region A
Region B
Prod
Month 4 A
B
C
A
D
E
Group
1
Cust
Cust
Cust
Cust
Cust
Cust
ABC
Prod
Region A
Region B
Prod
Month 5 A
Prod
B
C
A
D
E
Group
1
2
Cust
Cust
Cust
Cust
Cust
Cust
ABC
Prod
Region A
Region B
Prod
Month 6 A
Prod
B
C
A
D
E
Prod
Group
1
2
Cust
Cust
Cust
Cust
Cust
3
ABC
Prod
Prod
Prod
A
B
C
A
D
Prod
Group
1
Prod
Prod
2
3
ABC
Prod
Prod
Group
4
Prod
1
Prod
XYZ
Group
Prod
Prod
2
Prod
3
ABC
Group
4
Prod
5
Prod
XYZ
2
Prod
Prod
Prod
3
Prod
Group
4
Prod
5
XYZ
6
Prod
3
Prod
Prod
Prod
Group
4
5
Prod
Prod
XYZ
6
4
Group
Prod
Prod
XYZ
5
Prod
6
5
Prod
6
Prod
Marketing
6
© The Delos Partnership 2007
page 50
Cust
E
Sales/
Account
Managers
One
Set of
Numbers
Cultural issues
1.
2.
3.
4.
Over optimism or pessimism
Reforecasting to the budget
Not spending the time on forecasting
Forecasting what you want production
to make and not what the customer
wants
5. Not understanding forecast accuracy is
a tool to improve the process.
© The Delos Partnership 2007
page 51
Demand Management
Plan
Strategy
System
Forecast
Demand Manager
Sales and
Marketing
ERP
System
Manufacturing
And Purchasing
Consensus Forecast
© The Delos Partnership 2007
page 52
Demand Review Meeting
Outputs
Inputs
• Strategy
• Update on Assumptions
• New Product
developments
• Major changes to
Forecasts
• Competitive
threats/opportunities
•Performance Measures
Agenda
1.
2.
3.
4.
5.
Revised Forecasts
New Products
Competitor analysis
Gaps to strategic plan and
proposals
Performance Measures
© The Delos Partnership 2007
page 53
•Unconstrained
Demand
• Agreement on
Risks and mitigation
• Actions to close
gaps
•Financial
Projections
• Actions for
improving process
Framework for Process Review
Process Name :
Process owner :
Inputs:
Purpose:
Outputs:
People:
Culture/Behaviour:
Measures:
System/module:
Requirements:
Expected Actions:
Link to other processes :
© The Delos Partnership 2007
page 54
Framework for Process Review – Customer
Demand
Process Name
Inputs
Business strategy
Order book sales
Assumptions
Major forecast changes
Innovation
Purpose/Agenda
1. Review new product forecasts
People
Sales Director (lead), KAM, Bid
Support Manager, Demand
Manager, Commercial
Desired Culture
Cohesive and agreed sales plan
2. Review changes to previous
forecasts
3. Agree and sign off assumptions
4. Agree actions to close gaps
Outputs
Sales Forecast/Demand Plan
Unconstrained demand
Uncertainties
Financial projection
5. Review performance
measures
Systems to support this step
ACT!, TABS, Excel, Corporate Planning model
Link to other Processes
Supply, Prioritisation and Senior Team
Review
© The Delos Partnership 2007
page 55
Measures
Business plan
Forecast accuracy
Order book value
Customer service –on time in full
to customer promise date
IELStage
Process
Steps
1
Stage 7
Innovation
Review
Stage 2
Customer
Demand
Review
Stage 3
Supply
Plan
Review
Stage 5
Stage 6
Priority
Review
Senior
Team
Review
Stage 4
Support
Review
Week 1
Week
2 Partnership 2007
© The Delos
page 56
Week 3
Week 4
A
C
T
I
O
N
Supply Chain Management
PLAN
EXECUTE MANAGE
Release
Orders
Capacity and
Materials
“firm”
Add or subtract
To capacity
Strong Link to
Integrated Enterprise
Leadership Process
Horizon
Cumulative Lead Time
© The Delos Partnership 2007
page 57
Supply Planning should happen at two
levels..
Rough
Family
Cut
-3
-2
-1
Supply Plan
125
125
125
Last Supply Plan
Actual Supply
119
118
121
New Supply Plan
-6
-7
-4
-13
-17
Difference
Cum Diff
1
2
3
4
5
6
7
8
9
Q4
Q1
125
125
120
120
120
120
120
120
120
360
360
Difference
Cum Diff
Filling Machine : Cap Req
Master \Schedule
5,000
4,000
4,500
3,500
4,000
3,500
3,000
Hours
Detail
4,500
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
-
1
2
3
4
5
6
7
Months
MRP/CRP
Capacity
Requirements
Plan © The Delos Partnership 2007
page 58
Component
Plan
8
9
10
11
12
Rough Cut Capacity Planning
Objective
 Translate Family Volumes into capacity requirements
 Test validity of plan against demonstrated capacity
How
 Use planning profiles
 Use critical resources
 Use demonstrated capacity
Result
 Possible problem areas
© The Delos Partnership 2007
page 59
Rough Cut Capacity Planning
Actual
Production
Per month
Family Volumes
x
Rate per hour
Required
Capacity
Demonstrated
Capacity
Critical
Resources
© The Delos Partnership 2007
page 60
Rough Cut Profile
Hours per 000 units
Units
Key
Resources
A
Families
B
Supplier A
Lts
2.1
Warehouse
Pallet
s
12
Quality Assurance
Hrs
Line ABC
Hrs
Labeller
Hrs
Filling m/c
Hrs
C
D
3.4
E
F
4.2
1.3
14
20
5
10
5
3
10
7
2
2
5
1
5.6
4
7
2
5
3
7
9
2
3
© The Delos Partnership 2007
page 61
5
Rough Cut Result
Month 5
Key Resources
Required Production Volumes
A
220
B
200
C
35
D
40
Supplier A
Warehouse
Quality
Assurance
Line ABC
Labeller
Filling m/c
© The Delos Partnership 2007
page 62
E
150
F
15
Capacity
Req
Dem
Max
Rough Cut Result
– Month 5
ROUGH CUT CAPACITY PLANNING
Result for Month 5
Production Volumes 220
Key Resources
Units
Supplier A
Warehouse
QA
Line ABC
Labeller
Filling m/c
Lts
Pallets
Hrs
Hrs
Hrs
Hrs
200
Families
A
B
462
2,640
660
880
660
680
1,000
400
1,400
1,400
35
C
40
D
490
105
175
70
315
150
E
168
800
400
40
200
80
© The Delos Partnership 2007
page 63
195
750
1,050
840
750
15
F
150
30
-
REQ
CAP
DEM
CAP
MAX
CAP
1,505
4,830
3,245
1,455
2,550
3,205
1,500
4,000
3,500
1,500
1,500
3,000
2,500
4,000
4,200
2,500
2,500
4,500
Rough Cut Result
– Graph by Resource
Month 5 - RCCP
6000
5000
Units
4000
REQ CAP
3000
DEM CAP
MAX CAP
2000
1000
0
Supplier A Warehouse
QA
Line ABC
Resources
© The Delos Partnership 2007
page 64
Labeller
Filling m/c
Rough Cut Result
Capacity Requirement
Filling Machine : Cap Req
4,500
5,000
4,000
4,500
3,500
4,000
3,500
Hours
3,000
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
-
1
2
3
4
5
6
7
Months
© The Delos Partnership 2007
page 65
8
9
10
11
12
Objectives of Master Schedule
• State forward production plan by Stock
Keeping Unit (SKU)
• Summarise what the business can do
• Provide Available to Promise information
for Sales/Customer Service
• Provide stability to the supply
organisation
 Firm Planned Orders
© The Delos Partnership 2007
page 66
Master Schedule Link to IEL
Make – To- Order
3
2
1
Demand Plan
7
0
7
0
7
0
Last Demand Plan
Actual Demand
7
1
7
5
8
0
New Demand Plan
Difference
1
5
1
0
Difference
6
1
6
Cum Diff
Months
Cum Diff
IEL Family B
3
2
1
Supply Plan
7
5
7
5
7
5
Last Supply Plan
Actual Supply
7
0
6
9
7
1
New Supply Plan
Difference
5
6
4
Difference
1
1
1
5
Cum Diff
3
2
1
6
1
5
6
5
1
Last Plan
6
7
7
3
8
2
New Plan
6
1
7
3
1
Difference
Cum Diff
Order Book Plan
Actual Orders
Difference
1
2
3
4
5
6
7
8
9
Q
4
Q
1
7
0
7
0
7
0
7
0
7
0
7
0
7
0
7
0
7
0
2
1
0
2
1
0
1
2
3
4
5
6
7
8
9
Q
4
Q
1
7
5
7
5
7
0
7
0
7
0
7
0
7
0
7
0
7
0
2
1
0
2
1
0
1
2
3
4
5
6
7
8
9
Q
4
Q
1
4
6
4
1
4
1
4
1
4
1
4
1
4
1
4
1
4
1
4
1
4
1
Months
66
MPS
Product B1
Product B2
Product B3
© The Delos Partnership 2007
page 67
Basic Formula
What do
we think
they
Want ?
Forecasts
What do they
Actually Want ?
Orders
Master Schedule
Item Data
What
BOM’s
does
And
it need ?
Routes
Stock
What have
And
Capacity We got ?
Suppliers
Factories
What do we need to do ?
© The Delos Partnership 2007
page 68
Planned Orders
Planned
Orders
Red Item
•Automatic re-plan
•Plans Matched sets of Parts
•Plans hours for CRP
Capacity
Requirements
Plan
14356
2 per
Sub-Item
43781
Component
Plan
© The Delos Partnership 2007
page 69
Capacity Requirements Plan
Periods
1
Projected
Gross Requirements
Scheduled Receipts
2
3
4
5
20
6
7
8
9
20
20
25
Projected
0
Available
Balance
Planned Order Release
5
5
5
-15
10
5
25
10
10
10
-10
15
25
Routing
Opn
No
Work
Centr
e
Operatio
n
Set
Run
10
45
Inspect
0.5
0.10
20
55
Mix
1.0
0.5
30
65
Pack
1.0
0.2
Work Centre
Information
60
50
40
Reqd
Demo
30
20
10
0
1
2
3
4
5
6
7
© The Delos Partnership 2007
page 70
8
Capacity Plan resolution
Hours
Capacity Plan WC 45
132
125
140
123
112
110
107
120 105
85
100
75
80
60
40
20
0
1
2
3
4
5
6
Weeks
© The Delos Partnership 2007
page 71
7
8
9
Required
Demo
Time Fence Policy
NO !
Firm
Open Sesame
PLAN
EXECUTE MANAGE
Release
Orders
Capacity and
Materials
“firm”
Add or subtract
To capacity
Strong Link to
Integrated Enterprise
Leadership Process
Horizon
Cumulative Lead Time
© The Delos Partnership 2007
page 72
Time Fence Policy
• Should relate to Cumulative Lead Time
(CLT)
 Requires review of CLT by product
 Could be different by product group
• Should state who can change and when
• Should be clear about “Emergency
Changes”
• Must be adhered to !
© The Delos Partnership 2007
page 73
Integrated Enterprise Leadership
MPS Focus
Make – To- Stock
Senior Team Focus
Months
-3
-2
-1
Months
1
2
3
4
5
6
7
8
9
Q4
Q1
Demand Plan
120
120
120
Last Demand Plan
120
120
120
120
120
120
120
120
120
360
360
Actual Demand
119
125
132
New Demand Plan
-1
5
12
Difference
4
16
Cum Diff
1
2
3
4
5
6
7
8
9
Q4
Q1
125
125
120
120
120
120
120
120
120
360
360
1
2
3
4
5
6
7
8
9
Q4
Q1
Difference
Cum Diff
-3
-2
-1
Supply Plan
125
125
125
Last Supply Plan
Actual Supply
119
118
121
New Supply Plan
-6
-7
-4
-13
-17
-2
-1
Difference
Cum Diff
-3
Stock Plan
Actual Stock
Difference
66
Difference
Cum Diff
71
76
81
Last Stock Plan
66
59
48
New Stock Plan
-5
-17
-33
86
Difference
© The Delos Partnership 2007
page 74
91
91
91
91
91
91
91
91
Master Schedule
• Definition
• Valid Material and Capacity
plans and stability of those
plans
• Improve planning process,
and provide desired
stability to supply chain
• Product’s Cumulative Lead
Time
• Master Scheduling module
• Purpose
• Horizon
• Source of Information
© The Delos Partnership 2007
page 75
Master Schedule Achievement
Firm Plan
Order
10034
Plan Start
Date
22/2/99
Actual
Start Date
23/2/99
Planned
Quantity
1050
Actual
Quantity
1050
Hit/
Miss
Miss
10067
23/2/99
23/2/99
2000
2000
Hit
10165
24/2/99
24/2/99
300
300
Hit
10230
25/2/99
25/2/99
500
500
Hit
10376
26/2/99
26/2/99
700
700
Hit
12782
26/2/99
26/2/99
1000
1000
Hit
Schedule Achievement = 5/6 = 84 %
© The Delos Partnership 2007
page 76
Right First Time Report
Commentary
Right First Time
100
© The Delos Partnership 2007
page 77
Actual
60
Target
40
20
Fe
b
D
ec
O
ct
ug
0
A
•Product specs not
updated
80
Ju
n
Right First Time
•Right First Time
suffered from new
component supplier
120
Supplier Performance

Definition

Number of deliveries received into
stock on or before due date/time

Improve supplier delivery process

Purpose

Horizon

Purchasing Lead Time or Time
Fence

Source of Information

Vendor Schedule or Purchase
Order`
© The Delos Partnership 2007
page 78
Supplier Achievement Report
Supplier Achievemnt
120
100
80
© The Delos Partnership 2007
page 79
Actual
60
Target
40
20
b
Fe
D
ec
ct
O
Au
g
0
Ju
n
% on time
Commentary
•Supplier achievement
suffered from
alternative supplier
having quality
problems
•The new product
caused untold
problems
Master Scheduler
Manufacturing
Plan
Strategy
Customer
Orders
Master Scheduler
Sales Forecasts
Balanced Plan
© The Delos Partnership 2007
page 80
MRP
System
Purchasing
Plan
Supply Review Meeting
Outputs
Inputs
• Update on new
Products/Projects
•Latest Forecast of
unconstrained demand
•Rough Cut and
Demonstrated Capacity
• Detailed capacity
issues
• Material constraints
• Performance Measures
Agenda
1.
2.
3.
4.
5.
Required production plan
Issues in meeting plan
Proposals for resolving
issues
Capex projects
Performance Measures
© The Delos Partnership 2007
page 81
• Recommendations
for resolving issues
• Actions to meet plan
•Agreed Supply Plan
• Proposals for
improving process
Framework for Process Review
Process Name :
Process owner :
Inputs:
Purpose:
Outputs:
People:
Culture/Behaviour:
Measures:
System/module:
Requirements:
Expected Actions:
Link to other processes :
© The Delos Partnership 2007
page 82
SUPPLY PLANNING
PROFORMA (1)
By Site
Site Load & Capacity
Profile
Other Workcentre
Load & Capacity Profiles
Critical Workcentre
Load & Capacity Profiles
• 5 year horizon
- Rolling first 24 months
- Fixed years 3 to 5 (re-establishment of year 5 @ Roll 1)
Demand plan
Supply plan
400
400
300
300
EFA
A320
A340
200
100
0
Variance to Demand plan
EFA
A320
A340
200
100
0
2003 2004 2005 2006 2007
2003 2004 2005 2006 2007
• OE by programme
• Spares by major parts (product/process)
© The Delos Partnership 2007
page 83
30
20
10
0
-10
-20
-30
EFA
A320
A340
2003 2004 2005 2006 2007
“Supply Planning” Process
Inputs
Supply Planning:
 Material Planning (MRP)
 Capacity Planning
 Maintenance Planning
 Make/Buy
 Operations Assumptions:
 Demonstrated capacities
 Arrears management
 Lead-times
 Supplier Partnerships
 Purchase schedules
 Performance measurements
 Quality
Feedback from previous cycle
Scope/Purpose
Outputs
Produce a realistic
Manufacturing
& Supply Plan
Balance required capacity vs.
planned capacity
Define mismatches on
capacity
Resolve Operating Plan only
issues
Improve:
Load/capacity issues
Statement of policy decisions
Supply plan
Requirements for cap-ex
Security stocks
Recording of actions taken
“What if?” scenarios & alternatives
for
resolving issues
Identification of risk on materials
 Process
 Quality
 Job satisfaction
to Other
 Links
Flow to increase
capacity
Processes
NOT to solve
all issues
Make/buy
Load/capacity reviews
MPS - where applied
GPT
Measures
Schedule adherence
MPS stability
Expedited parts
internal/external
Concessions
Actual/planned capacity
© The Delos Partnership 2007
page 84
See slides 29-30
People
Process Owner:
 L. Schneider-Maunoury (ISO P6)
Site Operations Managers
Maintenance
Quality
Master scheduler
Site procurement/Supply Chain
Mgr’s
Global procurement
GPT
S&OP Co-ordinator
Human resources
IELStage
Process
Steps
1
Stage 7
Innovation
Review
Stage 2
Customer
Demand
Review
Stage 3
Supply
Plan
Review
Stage 5
Stage 6
Priority
Review
Senior
Team
Review
Stage 4
Support
Review
Week 1
Week
2 Partnership 2007
© The Delos
page 85
Week 3
Week 4
A
C
T
I
O
N
Support
What are the support activities?
They will depend on your particular
organisation – one person’s critical
activity is another’s support role!
Examples:
Finance
IT
Quality
Engineering
Human Resources
© The Delos Partnership 2007
page 86
Support step
• Establish the resource needs and priorities for all
support activities – e.g.
 Finance
 Human Resources
 Information Technology
 Engineering
• Provide financial base for decisions
• Highlight resource issues in these areas, which
are relevant
• To ensure that all plans – innovation, demand and
supply – are underpinned by the appropriate
support resources.
© The Delos Partnership 2007
page 87
Financial plan
Pull together all the volume plans into one
financial picture
• Volume x price = revenue
• Volume x cost = variable cost
• Margin = revenue – variable cost
• Overheads are fixed
• Profit is the result
• Assumptions on assets
• Cash Flow calculation
© The Delos Partnership 2007
page 88
Revised Financial Plan
Financial Analysis
30,000
25,000
20,000
Budget
Euros 15,000
Previous
10,000
Current
5,000
0
Sales
Contrib
Sales/Profit
© The Delos Partnership 2007
page 89
EBITDA
Reviewing the Gap
Financial Strategic Forecast
25
Aspiration
20
15
All New
£m.
New
Extend
Current
10
5
0
1
2
3
Year
© The Delos Partnership 2007
page 90
4
5
Budget
© The Delos Partnership 2007
page 91
Preparation of the budget
Financial projection enables
 Visibility of current year outturn – early
 Visibility of subsequent year(s) to enable budget to
be one set of numbers – early
Requires culture change
 No six month process
 No sandbagging of the numbers
 Simple cut-off period
 “Roughly right” rather than “precisely wrong”
© The Delos Partnership 2007
page 92
Budgets – the issues
• Annual budgets irrelevant in a fast
changing world
• It is a game played by any number of
players
• Budget is used as a “control mechanism”
– but it does not work
© The Delos Partnership 2007
page 93
Information Resources
I have been trying to get
that report on Customer
Service written for six
months. You can never
get anything out of that
department !
© The Delos Partnership 2007
page 94
How am I
expected to get
something out
of nothing
IT Resources Scheduler
Infrastructure
plan
Strategy
Help Desk
Enquiries
IT Resources
Scheduler
Project Plans
Balanced Plan
© The Delos Partnership 2007
page 95
Maintenance
Plan
Resource
Requirements
Information Resources
Integrated Project Management
Capacity - Programming
Resource
120
100
80
60
Dem Cap
40
Req Cap
20
0
1st Qtr
2nd Qtr
3rd Qtr
Qtr
© The Delos Partnership 2007
page 96
4th Qtr
Customer Service Report –
Against Request Date
Order
Required
Date
Actual
Date
Required
Quantity
Actual
Quantity
Hit/
Miss
1435
22/2/99
23/2/99
1050
1050
Miss
1560
23/2/99
23/2/99
2000
2000
Hit
1573
24/2/99
23/2/99
300
300
Miss
1745
25/2/99
25/2/99
450
500
Miss
1800
26/2/99
26/2/99
700
650
1820
26/2/99
26/2/99
1000
1000
Customer Service = 2/6 = 33 %
© The Delos Partnership 2007
page 97
Miss
Hit
Customer Service Report – Against
Promise Date
Order
Promise
Date
Actual
Date
Promised Actual
Quantity Quantity
Hit/
Miss
1435
1560
1573
1745
1800
1820
23/2/99
23/2/99
24/2/99
25/2/99
26/2/99
26/2/99
23/2/99
23/2/99
23/2/99
25/2/99
26/2/99
26/2/99
1050
2000
300
450
650
1000
Hit
1050
2000
300
450
650
1000
Customer Service = 6/6 =100 %
© The Delos Partnership 2007
page 98
Hit
Hit
Hit
Hit
Hit
Human Resources
1. Plan for Direct and Indirect labour requirements
2. Organisational development
3. Training plans by individual as a result of Training
Needs analysis
• What financial benefits being delivered ?
• What resource issues exist ?
4. Management of
• Pay negotiations
• Move to Annualised hours
5. Downsizing, Rightsizing, upsizing, outsourcing
© The Delos Partnership 2007
page 99
Quality Assurance
Time 2005 2005 2006 2006 2006 2006
period Q3
Q4
Q1
Q2
Q3
Q4
>>>>
>>
2010
Q4
Numbers of units
Unit Of Measure
75
75
100
100
100
100
150
QA on manufacturing and
assembly
12
12
18
16
14
14
18
New product project A
(Strategic plan ref # 12)
1
2
3
2
1
0
0
New product project B
(Strategic plan ref # 06)
0
0
1
2
3
3
0
New Layout Project
(Strategic plan ref # 15)
1
1
1
2
4
1
0
14
15
23
22
22
18
18
Total # of people
© The Delos Partnership 2007
page 100
Support Review Meeting
Outputs
Inputs
• Update on new
Products/Projects
•Latest projection of
demand and supply and
inventory/shipments in
Financial terms
• Projection of
Overheads
• Assumptions on debtors
creditors/debtors
• Performance Measures
•Strategic financial plan
Agenda
1.
2.
3.
4.
Latest projections on Profit
and cash flow
Issues in meeting strategic
plan
Proposals for resolving
issues
Performance Measures
© The Delos Partnership 2007
page 101
• Recommendations
for resolving issues
• Actions to meet plan
• Agreed revised
financial plan
• Proposals for
improving process
Framework for Process Review
Process Name :
Process owner :
Inputs:
Purpose:
Outputs:
People:
Culture/Behaviour:
Measures:
System/module:
Requirements:
Expected Actions:
Link to other processes :
© The Delos Partnership 2007
page 102
Need for Multi-Level Integrated Planning
Financing
Competition
Research
Costs
GLOBAL
LEVEL 3
Manufacturing
Economics
REGIONAL/
Brand
LEVEL 2
SECTOR
Development
Customer’s
Tastes
LOCAL/COUNTRY
LEVEL 1
© The Delos Partnership 2007
page 103
Where do the main processes occur ?
Innovation
Customer
Relationships
LEVEL 1
Customer/Country/
Market
LEVEL 2
Region/Country
Grouping/Business
Sector
LEVEL 3
Region/Global
© The Delos Partnership 2007
page 104
Supply
Management
Financial
Priorities
Strategic
Review
Multi-Level Integrated Enterprise Planning
G
L
O
B
A
L
Financial
Priorities
Innovation
New
Innovation
Activity
Review
L
O
C
A
L
Supply
Supply
Review
Supply
Review
Supply
Review
Review
Financial
Consolidated
Priorities
Recocniliation
Corporate
Review
Senior
Team
Review
Week 2
Europe/
Global HQ
LEVEL 2
Region/
Business Unit
LEVEL 1
Customer
Demand
Demand
Planning
Demand
Planning
Demand
Planning
Demand
Planning
Planning
Week 1
LEVEL 3
Country/
Market
Week 3
© The Delos Partnership 2007
page 105
Week 4
Top Level GS&OP Process Diagram:
R&T
Intersite
Demand
BU/CS
Priority
Planning
Global
Planning
Senior
Team
Review
BU
Demand
CS
Demand
LEVEL 3
Global
LEVEL 2
Business
Unit
Priority
Planning
By Site
Innovation
@
Sites
Site
Demand
Week 1
LEVEL 1
Country
Supply
Planning
By Site
Week 2
Global
Customer
Innovation Demand
Supply
Planning
Week 3
Priority
Planning
© The Delos Partnership 2007
page 106
Senior
Team
Week 4
Revised Top Level GS&OP Cycle:
Calendar Month 1
M
T
W
T
1
Calendar Month 2
M
F
2
2
3
BU
Demand
R&T
5
6
BU
Demand
CS
Demand
Intersite
Demand
12
7
8
CS
Demand
9
Week 1
Innovation
@ Sites
13
Site Priority
Planning
14
15
16
Week 2
26
4
5
6
11
12
13
Site
Demand
10
21
22
By Site
16
17
Site Priority
Planning
23
23
18
24
25
STR
27
28
30
29
STR
Week 4
R&T
© The Delos Partnership 2007
page 107
30
19
20
26
27
BU/CS
Priority
Planning
Global
Planning
Week 3
BU/CS
Priority
Planning
Global
Planning
F
Supply
Planning
By Site
20
T
Innovation
@ Sites
Intersite
Demand
9
W
Site
Demand
Supply
Planning
19
T
31