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
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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%