Best Practice Manufacturing • Presented by Phil Heenan President APICS Victoria Chapter
Best Practice Manufacturing • Presented by Phil Heenan • President APICS Victoria Chapter • www.heenan.com.au Best Practice Manufacturing • • • • • • • • • • Tools Teamwork Integration Sales & Operations Planning Sales, Production & Inventories interplay Operations driving financials Behaviour Change Follow a proven methodology Initial Performance Measures Case Study The Many Tools for Improving Effectiveness* Increase Reliability Total Quality, Six Sigma, Poka-Yoke, ISO + others X Reduce Waste & Time Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others X X Enhance Coordination Sales & Operations Planning, MRPII, ERP, Kanban, VMI, + others * Chris Gray – S&OP Best Practices book Development Sales Marketing Manufacturing Finance CEO Silo Silo Silo Silo Silo "It’s easy to get the players. Getting ‘em to play together, that’s the hard part." S&OP and Associated Processes Financials Data Base Strategic Planning General Ledger Bills of Material Business Planning Accounts Receivable Accounts Payable Fixed Assets Routings Forecasting, Demand Management and New Product Development Budgeting Purchasing Sales and Operations Planning Resource Requirements Planning Inventory Balances Master Scheduling Rough Cut Capacity Planning Open Orders Detailed Material Planning Detailed Capacity Planning Costings Suppliers Warehousing Activity Based Costing History Detailed Planning & Execution Processes Customers Execution Performance Measurement, Quality & Continuous Improvement through Lean Thinking The Monthly S&OP Process Five Steps The Monthly S&OP Process Step #5 Executive S&OP Meeting •Decisions •Authorized Game Plan Step #4 Partnership Meeting Step #3 Supply Planning • Capacity constraints • 2nd-pass time phased plan (with new production plan) Step #2 Demand Planning • Management Forecast • 1st-pass time phased plan (with new forecast) Step #1 Data Gathering End of Month • Recommendations & Agenda for Exec Meeting • 3rd-pass time phased plan (consensus, alternatives, what-ifs) •Statistical Forecasts •Sales & Marketing Inputs Make-to-Stock S&OP Display Make-to-Order S&OP Display S&OP’s Role in Financial Planning • Monthly review of financial plans • Development of annual plans and budgets • A basis for some capital investment decisions • To help manage cash flow • S&OP need NOT always equal financial plans (realistic estimates vs. optimistic targets) S&OP Integrated with Financial Planning Family: Description: All Families All Widgets Average Selling Price: Standard Product Cost: $ 1.960 $ 1.140 ALL FIGURES IN US DOLLARS x 1000 History AUG 46,256 46,648 392 15,092 36,652 36,848 196 15,288 55,076 56,056 980 16,268 44,688 45,472 784 17,052 610,148 627,200 17,052 17,052 Sales (Sales Dollars) Last Sales Plan Current Sales Plan Difference Cum Difference $ $ $ $ 383,740 386,904 3,164 3,164 54,880 55,272 392 3,556 47,040 46,648 (392) 3,164 37,240 36,848 (392) 2,772 54,300 56,056 1,756 4,528 43,200 45,472 2,272 6,800 620,400 627,200 6,800 6,800 Supply (Cost Dollars) Budgeted Production Current Production Plan Difference Cum Difference $ $ $ $ 205,884 211,356 5,472 5,472 31,350 31,920 570 6,042 26,904 29,868 2,964 9,006 21,318 21,432 114 9,120 32,034 31,920 (114) 9,006 25,992 26,904 912 9,918 343,482 353,400 30,096 $ 29,868 $ 29,868 29,868 (228) 30,096 $ 29,868 $ 29,868 29,868 (228) 30,096 29,184 29,184 30,096 29,640 29,640 30,096 29,640 29,640 $ $ OCT (912) $ $ DEC Current Year Expected Results 53,900 55,272 1,372 14,700 Finished Goods Inventory (Cost Dollars) Budget $ 30,096 $ 30,096 Plan $ 27,360 $ 27,132 27,132 Plan (Current) Actual $ 27,360 27,132 Difference $ (2,736) (2,964) SEP Current NOV JAN - JUL TOTAL Business Plan (Budgeted Sales Dollars) Budgeted Sales Plan $ 373,576 Current Sales Plan $ 386,904 Difference $ 13,328 Cum Difference $ 13,328 (456) 9,918 (456) “The definition of insanity is doing things the same way and expecting different results.” Albert Einstein The Proven Path First Cut Education Vision Statement Cost / Benefit Ongoing Education Initial Education Project Organization Sales, Logistics and Manufacturing Processes Audit Assessment I Performance Goals Planning and Control Pilot and Cutover Data Management Performance Measurements Process Improvement Audit / Assessment II Software 0 Initial Outside Education Inside Education Business Meetings Brainstorm Strategy Time (Weeks or Months) Ongoing Education Develop Policies and Procedures Refine and Simplify Policies and Procedures One Family New Products Extension to All Families Start Financial Links Design Software Special Projects Reconcile With Business Plan Developing Aggregating Techniques to Relate Totals of MPS to Aggregate Plans Vital Signs (Metrics or KPI’s) Type Level Time Period Customer Service Item Week Sales Plan Family Month Detailed Sales Plan (Forecast) Item Month Items Within Tolerance Total Items Quantity X% Production Plan Family Month Actual Production Production Plan for Each Family Quantity 98 - 102% DRP Replenishment Performance Item Week Days 95% Master Schedule Performance Item Day / Week Master Schedule Stability Item Week Manufacturing Performance Item Week Productivity Work Area Week / Month MPS Std Hrs Output Total Work Hours Supplier Performance Item Week Actual Receipts Scheduled Receipts Quantity and / or Days 95% Inventory Accuracy Item / Location Week Accurate Records Records Counted 0 - 5% 95% Bill of Material Accuracy Item / Level Week Accurate Bills Bills Audited Quantity 98% Routing (Process) Item / Level Week Accurate Processes Processes Audited Formula Complete Shipments on Time Requested / Promised Shipments Tolerance Quantity And / Or Days Item Completions Items Scheduled Quantity and / or Days 95% X and / or Y% # of Schedule Changes # of Items Scheduled - By Time Zone Item Completions Items Scheduled X% / 98-99% X% Actual Sales Sales Plan for Each Family On-Time Whse Receipts Scheduled Items Minimum Required Quantity and / or Days Exclude Set-up Time From Output Only 95% X% 98%
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