A Case Study of steam engineering and control instrumentation solutions Provider - Advanced Supply Chain Planning (ASCP)

‘Methodology related to planning performance measures’

Abstract This whitepaper is based on a case study of how the Client, a high volume global manufacturer of steam engineering and control instrumentation solutions, encountered some ASCP usage and Plan performance issues. In this case study presentation, we’ll share how the Client successfully optimized the entire ASCP Planning Chain performance. The objective of the white paper is to share with the users specific strategies to improve performance by creating scripts and reports.

Company and Background

KTCS – Company Profile Kudale Talwelkar Consulting and Software Services Pvt. Ltd. (KTCS) has been

formed with an intention of providing high skilled services in the area of Oracle Value Chain Planning (VCP) suite and E Business Suite of applications.

KTCS aims at enabling clients to plan and manage supply chain IT in the most cost effective manner.

Since its inception in Nov.2008, KTCS has successfully served 8 clients from different industries.

KTCS consultants are highly experienced in Oracle APS & EBS implementation and consulting with clients across the globe.

KTCS is based in Pune, Maharashtra.

Pre-ASCP usage improvement (pre scenario)CLIENT started implementing and Advanced Supply Chain Planning (ASCP) in 2012. The management was thinking to get benefits from the ASCP implementation then an Assessment was taken place with the help of KTCS to see where they are lacking in getting optimum use of ASCP, then KTCS came up with the following ASCP Planning Performance Measures, Measures were included:

ASCP Performance Improvement Objectives Client engaged the KTCS development and support team to quickly resolve performance issues and help with stabilizing and managing the Planning Chain, based on KTCS’ past proven success in implementing and supporting high volume ASCP, GOP and Inventory Optimization client environments. The KTCS team objectives with regards to ASCP Planning Chain were:

Supply Function Responsiveness

Collaboration with suppliers

Internal collaboration

Performance tracking and

improvement

Enabling actions

The KTCS team analyzed the issues and adopted a step by step approach to improve the Performance of ASCP:

1. The KTCS Support team to work on identifying the root cause and to develop a long term solution to eliminate issues of the Planning performance measures.

5. Develop various reports to detect cancelled orders, reschedule out orders which could be called from running requests.

Based on the prior success of KTCS’ approach of performance Improvement of ASCP, the solution was developed and tested. The KTCS team analyzed the following key parameters before coming up with the solution:

Scripts were developed to run the program which were designed to give output in excel sheets.

The Methodology adopted by KTCS:FMPL Business objectives

At FMPL any system would be considered useful only if it contributed in fulfilling the above business objectives. So it was necessary that the approach / methodology adopted by us to improve business utility of the system had components that were “enablers” of these objectives. We adopted following approach to improve both business utility of the system and its actual usage by the business.

1. Identify enablers for above business objectives.2. Derive assessment criteria to assess division’s performance on the enablers.

Monthly Dispatch Value

On time Delivery Inventory Control

3. Have weekly meetings with planning team and supply manager of every division.4. Guide teams / supply managers on actions to be taken by them.5. Identify and resolve issues raised by planning teams.6. Assess every division on the assessment measures on monthly basis.7. Discuss assessment results with supply managers in presence of supply director.

At the beginning of the assignment we observed that ensuring achievement of monthly dispatch value committed to top management remained the topmost priority of all supply managers (supply manager is a head of a particular business division) in FMPL. Everyone in the division was fully aware of these targets and the current status of dispatches. The value dispatched by a division has a major role to play in the calculation of its VAPP (value added per person). All monetary incentives to employees in a division are linked to the extent of achievement of division’s VAPP target. Hence this high level of awareness about monthly dispatch value.

On time delivery and inventory levels were measured and considered important. However proactive actions to perform well on these dimensions were not as visible as the efforts to achieve monthly dispatch value.

It was this difference in the relative importance of business objectives which prompted us to use assessment measures in a time-phased manner. Various assessment measures used and their sequence of implementation are mentioned later in this paper.

Enablers – Monthly dispatch value

1. Availability of information for taking sales order preponement / postponement decisions

2. Quick and complete alignment of make / buy supply orders with sales order preponement / postponement

3. Sales order shipment schedule stability ( 4 weeks rolling)4. Planner level collaboration for internal supply chain actions5. Consistency in ATP rules for FGs and component stocking policies.6. Clarity on receipt priorities for buyers7. Supplier communication ( supply priorities)8. Customer communication ( getting orders cleared for dispatch)9. Availability of information to “reschedule” order backlog in future periods

10.

Enablers – Inventory control

1. Availability of information on all supply (make / buy) actions relevant to all pending sales orders

2. Quick and complete alignment of make / buy supply orders with changes in sales order schedule.

3. Sales order shipment schedule stability ( 4 weeks rolling)4. Planner level collaboration for internal supply chain actions5. Clarity on receipt priorities for buyers6. Supplier communication ( supply priorities)7. Lead time corrections based on average actual lead times 8. Implementing planner / buyer role overlap9. Eliminate safety stock / rationalize safety stock values10. Controlled release of “make” orders to shop floor. ( release only those planned

orders which are fully pegged to on hand)11. Availability of information on

a. on hand inventory pegged to demandb. on hand inventory pegged to safety stockc. on hand inventory pegged to excessd. inbound supply pegged to demande. inbound supply pegged to safety stockf. inbound supply not required ( to be cancelled)g. inbound supply to be postponed

Enablers – On time delivery

1. Complete clarity on “scope of supply” on sales order booking2. Sales order shipment schedule stability ( 4 weeks rolling)3. Free up buyers to focus on on-time receipts through

a. Automated internal order creationb. Automated creation of outside processing (OSP) purchase ordersc. Automated creation of purchase orders for high consumption items

4. Minimize manual communication of priorities amonga. Planning – buying functionsb. Planning – manufacturing function

5. Planner level collaboration for internal supply chain actions6. Customer communication ( getting orders cleared for dispatch)7. Traceability of adherence to schedule by each supply function8. Mechanism to track time elapsed from customer PO to Invoice.9. Improve team work to address

a. purchasing challengesb. capacity challengesc. scope change (BOM change) impact

Enablers – Foundational

These are the enablers which if not present reduce effectiveness of the enablers mentioned above.

1. Top management's orientation on "ASCP Driven" management of operations.2. Strengthening planning function.3. Highly empowered central planner.4. Active involvement of "head of operations".5. Mechanism to ensure timeliness of transactions.

(In this paper I will remain focused on actions taken on first three set of enablers. During our discussion I can explain what was done regarding foundational enablers….it requires some elaboration on FMPL org structure and how two business groups CIG and SEG are managed)

As mentioned earlier a time phased assessment criteria was derived from these enablers. The first assessment criteria used from Aug 12 to Nov 12 is as given below.

1 – No action / Just Initiated 2- Below average 3-Average 4- Good 5 - Excellent

In my weekly meetings with planning team and supply managers of each division (total of 12 divisions ….9 from control instrumentation group and 3 from steam engineering group are covered) the teams were oriented on importance and relevance of what was being assessed and what specific steps they need to take to improve their assessment score…which in turn indicated presence of enablers of three primary business objectives. After 4 months of assessment in this manner the assessment criteria was changed to the following. Though the assessment criteria got changed, supply managers were supposed to keep a close track of progress on previously used assessment parameters.

Continuous interaction with divisional teams, monthly assessment and its formal discussion with supply directors helped in two important things apart from divisions taking right actions on various enablers.

1. It created a broad based buy-in of ASCP way of planning and running operations2. It helped identify genuine system configuration changes / report requirements / add

on customizations based on difficulties encountered by some divisions in adhering to recommended processes.

Arrow indicates desired direction of the measureAll figures are % figures

From Jan 13 onwards we also started sharing following information along with detailed item / order level supporting data with supply managers so as to help them have better operational control on inventory build-up.

Due to availability of this information…. in most of the divisions both sales and supply functions are working together to explore possibility of using up excess inventory in new / open orders. Sales function has actively got discouraged from forcing buyers to initiate “advanced procurement” actions without sufficient confidence on sales order realization. Supply managers are now supposed to be fully aware of the reasons behind unimplemented “cancellation” and “reschedule-out” recommendations.

Solution Benefits The performance Improvement solutions described above greatly benefited Client’s Supply Chain Planning. Some of the benefits are as below: High Degree of Accuracy in ASCP Results Due to a very high rate of success of the complete data collection of various orders with the help of custom reports, the ASCP plans maintained a high degree of accuracy. This helped the Supply Chain Planning team regain confidence in the ASCP and IT department’s capabilities. High Order On-Time Delivery Rate A high degree of accuracy of the planning data helped Client to maintain very high on-time delivery rates. Increase Utilization of Machine and Resources Timely loading of the planned orders in the MES resulted in increased utilization of machinery and resources. ASCP tuning made the plan available early enough and this allowed for higher rate of utilization.

Conclusion Client on-time delivery of consistently high quality product has been the key to staying ahead of the competition in the commodity product market in which Client operates. With the company’s growth, the Supply Chain Planning model at Client’s place will continue to evolve bringing new challenges for business, IT teams and systems. The company will need to continue building on already achieved results and be ready for greater efficiency and performance.