©2010 ram management group, inc. sales & operations planning principals & practices rich...

©2010 RAM Management Group, Inc.

Sales & Operations Planning Principals & Practices

Rich Mihelich, C.P.M., CFPIM, CIRMRich Mihelich, C.P.M., CFPIM, CIRM


Objective

• Balance Supply and Demand

Bridge the Gap between Sales & Operations!


Benefits

• Improve Manufacturing Effectiveness

• Improve Sales Performance

• Improve Forecast Accuracy

• Improve Resource Utilization

• Improve Communication

• Develop Common Goals

Respond to Changing Environments!


• Make to Stock

• Make to Order

• Engineer to Order

• Assemble to Order

Supply Chain Strategies


BUSINESS PLANNING

SALES PLANNING

PRODUCTION PLANNING

MASTER PLANNING

MATERIALS PLANNING

CAPACITY PLANNING

PROD. ACTIVITY CONTROL

PURCHASING

PERFORMANCE MEASURES

TopManagementPlanning

OperationManagementPlanning

OperationsManagementExecution

Bills ofMaterial

Inventory

Routings

ResourcesOK?

PlanningOK?

no

yes

no

yes

Objectives

Demands

Resources

Hours

Parts

Accountability


BUSINESS PLANNING

SALES PLANNING

PRODUCTION PLANNING

DEMAND PLANNING

FORECAST MANAGEMENT

SALES ORDER MANAGEMENT

SALES ORDER PROMISING

FORECAST CONSUMPTION

PERFORMANCE MEASURES

TopManagementPlanning

OrderManagementSystem

CustomerServiceExecution

Markets

Customers

Products

CRMOK?

OMSOK?

no

yes

no

yes

Objectives

Demands

Resources

Backlog

Back Order

Accountability


BusinessPlanning

Evaluate political, economic, demographic,technological and competitive factors that will affect the demand for products.

LONG-RANGE PLANNING


Sales Planning

Review the product lines offered and the markets served to develop long-range Sales projections*.

*Measured in terms of Dollars per financial period.

LONG-RANGE PLANNING


Sales Plan

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

Jan-99

Mar-99

May-99

Jul-99

Sep-99

Nov-99


ProductionPlanning

Production planning takes a production rate calculation* across the Sales Plan to produce a Resource Requirements Plan.

*This calculation is typically a fixed hours/dollar.

LONG-RANGE PLANNING


Production Plan

0

10000

20000

30000

40000

50000

60000

Hours

Jan-99

Mar-99

May-99

Jul-99

Sep-99

Nov-99


ResourceRequirements

Planning

Resource Requirements Planning is the process of matching the Sales Planwith resources such as labor requirements and production equipment.

LONG-RANGE PLANNING


Resource Plan

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Jan-99

Mar-99

May-99

Jul-99

Sep-99

Nov-99


Sales & Operations Plan

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

Jan-99

Mar-99

May-99

Jul-99

Sep-99

Nov-99


Results• Improved Measurement

• Increase Manufacturing Performance

• Increased SFC Efficiency

• Reduce Inventory

• Increase Customer Service

• Standardized Education Plan


Case Study 1

• Werner – Ladder Assembly Plant – Louisville, KY

S&OPWeekly UpdateMarch 2, 2010

(Week #9)

Prepared by: Rich Mihelich


February Sales 92% of Forecast

Production Forecast v. Actual

$616,689

$588,932

$572,858

$396,756

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0

10,000

20,000

30,000

40,000

50,000

Un

its

Plan

Actual

Plan Units

Actual Units

Budget


$323,000

$975,000

$375,000

$758,309

$609,244

$213,999

$721,952

$703,328

$225,672

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

2010 Plan January February

Inventory

Finished Goods

WIP

Raw Material

4.3% Increase 1.3% under plan

1,673,000$ 1,581,552$ 1,650,952$


• Total Backlog at 2 days. • Total PD $494.24– 4 line items of 6 pieces.

• Zero Work Orders PD

Past Due Line Items

0

20

40

60

80

100

120

140

160

180

1/4

/20

10

1/5

/20

10

1/6

/20

10

1/7

/20

10

1/8

/20

10

1/1

1/2

01

01

/12

/20

10

1/1

3/2

01

01

/14

/20

10

1/1

5/2

01

01

/18

/20

10

1/1

9/2

01

01

/20

/20

10

1/2

1/2

01

01

/22

/20

10

1/2

5/2

01

01

/26

/20

10

1/2

7/2

01

01

/28

/20

10

1/2

9/2

01

0

2/1

/20

10

2/2

/20

10

2/3

/20

10

2/4

/20

10

2/5

/20

10

2/8

/20

10

2/9

/20

10

2/1

0/2

01

02

/11

/20

10

2/1

2/2

01

02

/15

/20

10

2/1

6/2

01

0

2/1

7/2

01

02

/18

/20

10

2/1

9/2

01

02

/22

/20

10

2/2

3/2

01

02

/24

/20

10

2/2

5/2

01

02

/26

/20

10

2/2

7/2

01

1

Ord

er

Lin

es

WO

OH

SHP

Backlog Situation

0

100

200

300

400

500

600

700

800

1/4/

2010

1/5/

2010

1/6/

2010

1/7/

2010

1/8/

2010

1/11

/201

0

1/12

/201

0

1/13

/201

0

1/14

/201

0

1/15

/201

0

1/18

/201

0

1/19

/201

0

1/20

/201

0

1/21

/201

0

1/22

/201

0

1/25

/201

0

1/26

/201

0

1/27

/201

0

1/28

/201

0

1/29

/201

0

2/1/

2010

2/2/

2010

2/3/

2010

2/4/

2010

2/5/

2010

2/8/

2010

2/9/

2010

2/10

/201

0

2/11

/201

0

2/12

/201

0

2/15

/201

0

2/16

/201

0

2/17

/201

0

2/18

/201

0

2/19

/201

0

2/22

/201

0

2/23

/201

0

2/24

/201

0

2/25

/201

0

2/26

/201

0

2/27

/201

1

Ord

er

Lin

es

SHP

OH

WO

©2010 RAM Management Group, Inc. Plant Efficiency 73.41%

WEEKLY DIRECT LABOR PLANT EFFICENCY

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Actual 65.79 75.80 72.42 72.13 75.83 72.42 61.63 55.72 61.23 65.53 72.57 75.84 67.48 83.14 75.62 71.53 73.84 80.91 77.52 80.47 73.41

Goal 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00

5-Oct12-Oct

19-Oct

26-Oct

2-Nov 9-Nov16-Nov

23-Nov

30-Nov

7-Dec

14-Dec

21-Dec

28-Dec

4-Jan11-Jan

18-Jan

25-Jan

1-Feb 8-Feb15-Feb

22-Feb


3 Less People – Same Hours

Weekly Earned Hours

30 16 8 5 0.00 1

877

474

225168

0.000 9

73% 72% 72%

80%

0%

61%

0

100

200

300

400

500

600

700

800

900

1000

TOTAL STEPS EXTENSION STAGES PUMP JACK SCAFFOLD

Ho

urs

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Eff

icie

ncy Employees

Earned HRs

Efficiency


Louisville Headcount

0

10

20

30

40

50

60

Salary 9 9

Warehouse Hourly 5 5

Indirect Hourly 6 6

Direct Hourly 36 36

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

HC +7 persons over current plan.


Recommendations

• Continue 5 day work-week?

• Move staffing from Shipping, to Steps, Stage, Rail Drilling, & All Fiberglass.

• Headcount more than 7 people above Plan.


Summary

• Actual Sales 92% of Plan

• Total Backlog at ~2 days

• Past Due $474

(4 items)

• Plant Efficiency 73%

• Stage efficiency 80%

• Extension & Steps 72%

• Inventory under plan

• All-Fiberglass >75 hours

• Alflo PM Required

• HC over budget

• No equipment down

• No Purchasing issues

• 1 Recorded Injury


Case Study 2

Johnson & Johnson

• Cordis – Cypher Stent Mfg. Facility– San German, Puerto Rico– Miami Lakes, FL– Juarez, Mexico– Roden, Netherlands

Cypher OPS Update

July 7th, 2004

US- FGI Projections

Cypher BX

• 6,152 units pulled from forward weeks

• Week 30 releases affected by Sterilizer Shutdown

• 50% Replenishment loaded on 06/15

• Lots with Toluene issue available to be released after week 28

• Coating at full capacity on week 32. Releasing at full capacity on week 38

• Backorders estimated based on weeks of supply model.

• 70% attainment in Final Release considering ReComS audit and lab Investigations.

Back orders as of Monday

US- FGI Projections

Cypher BX

•50% Replenishment loaded on 06/15

• 2,022 additional units released last week pulled from forward weeks

• Week 30 releases affected by scheduled San Angelo shutdown

•Lots with Toluene issue available to be released after week 28

• Coating at full capacity on week 32. Releasing at full capacity on week 38


US Back Orders

130

6,235

1,899

96 1,755

3,259

9,904

345

222

2,578

6,566

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Apr

-04

May

-04

Jun-

04

WE

Jul

3

July

O

utlo

ok

Aug

Out

look

Sep

O

utlo

ok

Non Focus Customers Focus Customers

US Production/Sales/Customer Service

Replenishment Rate changed to 50% on 6/15

Replenishment Rate changed to 50% on 6/15

Q3

Revenue Plan: 110,400

Act. QTD: 4,475Avg/wk: 4,475Avg/wk to go: 8,827

Line Item Fill Rate

90.0%

75.0%

60.0%

91.2%95.4%

81.3%

37.2%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Apr

-04

May

-04

Jun-

04

WE

Jul

3

July

O

utlo

ok

Aug

Out

look

Sep

Out

look

Net Revenue vs Non-Revenue

4,475

33,600

44,000

35,48825,820

25,339

32,800

18,602

28,01832,120

9,859

0

20,000

40,000

60,000

80,000

100,000

Apr-

04

May-0

4

Jun-0

4

WE

Jul 3

July

Outlo

ok

August

Outlo

ok

Sep O

utlo

ok

Revenue Non-Revenue

US Release into FGI

80,561

66,754

42,712

15,789

85,342

47,79951,696

-

15,000

30,000

45,000

60,000

75,000

90,000

105,000

120,000

135,000

150,000

Apr

-04

May

-04

Jun-

04

WE

Jul

3

July

O

utlo

ok

Aug

Out

look

Sep

Out

look


Supermarket Status as of 07/06/04

Mix

Catheters Supermarket Mix% Attainment

88%

61% 65% 66% 63%68% 69% 69% 69%

74% 75%

87% 85%85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

04/0

5/0

4

04/1

2/0

4

04/1

9/0

4

04/2

6/0

4

05/0

3/0

4

05/1

0/0

4

05/1

7/0

4

05/2

4/0

4

06/0

1/0

4

06/0

8/0

4

06/1

4/0

4

06/2

1/0

4

06/2

9/0

4

07/0

5/0

4

Parylene Supermarket Mix% Attainment

83%100% 100% 100% 98% 93% 90% 97% 90% 94%

80%

97% 88%

76%

96%

0%20%40%60%80%

100%120%

03/2

9/04

04/0

5/04

04/1

2/04

04/1

9/04

04/2

6/04

05/0

3/04

05/1

0/04

05/1

7/04

05/2

4/04

06/0

1/04

06/0

8/04

06/1

5/04

06/2

2/04

06/2

9/04

07/0

6/04

Coated Stents Supermarket % Attainment

37%

55%

16%

51%

63%68%

57%47%

9% 7%3%

66%69%

6%

43%

0%10%20%30%40%50%60%70%80%

03/2

9/04

04/0

5/04

04/1

2/04

04/1

9/04

04/2

6/04

05/0

3/04

05/1

0/04

05/1

7/04

05/2

4/04

06/0

1/04

06/0

8/04

06/1

5/04

06/2

2/04

06/2

9/04

07/0

6/04


SnOP

LinkedIn/Groups/Sales & Operations

The SnOP Group on LinkedIn is a global strategic networking organization developed to lead the evolving profession of Sales & Operations Planning by creating and disseminating S&OP knowledge and research in the virtual environment.


SummarySales and Operations Planning is the activity

of developing the long-ranged Manufacturing Plan as defined by the Resources available. This process includes Sales Planning, Production Planning, Resource Planning, Master Production Scheduling, MRP and Capacity Planning.


Visit us Online@

www.ramscm.com

©2010 ram management group, inc. sales & operations planning principals & practices rich...

Documents

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