intersite pull / golden rules draft october 5, 2007 be-tl2-013-draft-intersite golden rules business...

Intersite Pull / Intersite Pull / Golden RulesGolden Rules

DRAFT

October 5, 2007

BE-TL2-013-DRAFT-Intersite Golden Rules

Business ExcellenceBusiness Excellence

2BE-TL2-013-DRAFT-Intersite Golden Rules

Overview & Scope 3Objective – Intersite Pull 4Key Attributes of Intersite Pull 5Background - Intersite Pull 6Benefit of Intersite Pull 7House of FLE - Intersite Pull – Key Areas of Focus 8Intersite Pull Data Requirements 9Intersite Pull - Golden Rules 10Intersite Pull - Macro View – End to End Process 11Intersite Pull - Overall Process 12Intersite Pull Bin Sizing Guidelines for Puller & Pullee 13Intersite Pull – ROP Table 14Intersite Pull - Kanban Replenishment Time (KRT) 15 – 16Intersite Pull – How Does it Work? 17Intersite Pull – Cisco (Example) 18Intersite Pull Supplier Site – FG Supermarket Table 19Intersite Pull Implementation @ SAO – Example 20 – 23Exercise & Formats 24 - 28

ContentsSlide(s)

Table of Contents - Intersite Pull


OverviewOverviewThe Global Planning solution for the Supply Chain network that improves decision making and optimizes end product and component flows between the different sites of Our Organization and supports decision-making processes like Master Plan and Standard Operations Plan (SOP). These simulation tools provide a proactive view of stocks or requirements allocation alternatives, both in product groups and on end products.

ScopeScopeConsumption from Customer Sites Supermarket generates Pull signal to Supplier Site when the ROP (Reorder Point) is reached.1. Automated signal goes to Supplier Site’s FG Supermarket owner

• Preferably signal also generates release on Blanket PO*• Site can start with Email as a signal with long term solution to be EDI

2. System generated Advanced Shipment Notice (ASN) sent to Customer Site

Overview & Scope


The communication option offered in this solution orchestrates between several Sites. This partial replication of can be fully modeled and allows different Sites to be consolidated, while information can also be shared between several Sites on the Intersite Pull.

• Improvement of Customer Satisfaction: less obsolescence, in time deliveries, due-date compliance and etc.

• Increase your Profitability: by reducing costs (production costs, distribution costs, inventory costs, etc.)

• Increase Efficiency: improve your visibility, improve internal and external collaboration, anticipation of production and sourcing needs

Objective – Intersite Pull


Withdraws needed Parts from preceding Process between Customers & Suppliers Sites

Preceding Process 'owns’ Supermarket ‘Purchasing’ Intervals derived from TAKT time ‘Purchased’ Quantities in Standardized Quantities Improve Overall Customer Satisfaction Reduce stocks and Costs to Improve Turnover plus Profit Margins Improve Procurements Optimize Production Resources Control the Complexity of Our Supply Chain Optimize Internal and External Collaboration

Key Attributes of Intersite Pull


Next Evolution of FLE Optimal and Predictable Inventories at sites Connecting the dots – Line Encompasses Collaborative Effort with support from various functions Global Point of Contact by Function, not by region (mixed signals, multiple points

of contact). Consolidated Communication Channel, not Duplicative Calls. Accept more Responsibility and value add Functions Need to Collectively Simply Processes Create a more Efficient Information Flow-simplify and Rationalize tools. Assume the necessary Value-add Functions of a Supply Node Eliminate MUDA.

Background - Intersite Pull


The Benefits of the Intersite Pull based on Short & Long Term are as follows: Short Term

• Consumption Based Replenishment

• Better “Model Mix” Management

• Predictable Inventory

• Improved availability, Reduced Expediting

Long Term • Reduced churn in Order Management

• Reduced Liability due to Consumption based Pull

• Reduced Critical work for Supplier & Buyer

Simple to understand & easy to implement system

Benefits of Intersite Pull


Goal of SPSTM : Add Value & Eliminate Waste…Relentlessly for Our Customers

Heijunka

Six Six SigmaSigma

Value Stream Map ® 5S ® Supermarkets ® SMED

JIT Jidoka

Stop @ Abnormality

Takt Time Production

Single Piece Flow

Pull Production

Autonomation

SequencingLevel Loading

House of FLE

Three Key Areas of Focus to support Intersite Pull

Intersite Pull – Key Areas of Focus


Supplier Site Customer Site

• Manufacturing Lead Time

• Assembly Yield

• Standard Pack Size

• Minimum Production Qty

• Delivery Frequency

• Mfg Planning cycle time

• Customer Demand

• Customer Forecast

• Customer Service Levels

• Assembly Yield at Incoming

• Transit Time

• A, B , C Classification of Items

Intersite Pull Data Requirements


Supplier Site (Pullee) Customer Site (Puller) Supplier Site not authorized to ship without pull signal [Supplier Site shall

automatically ship the Current Week Reservation Qty in the following week, if the Customer Site fail to Pull)

Ship within 24 hrs of Receiving Pull Trigger (Based on the Agreed Max Qty by Models. Note: Pull Quantities above the Max shall follow to Component Leadtimes)

Must Deliver 100% of Pull Qty and ensure that there is NO LINE DOWN Situation @ Customer’s Site (100% adherence shall only be applicable within the Agreed Max Qty by Models. Note: Pull Quantities above the Max shall be Replenished based on the Component Leadtimes)

Forecast is only Used for Material and Capacity Planning. ROP will be Re-Calculated in case of huge Demand change / Yield issue @ FGI

Supermarket Min/Max level to be reviewed and adjusted at Pre-defined Frequency

Response to forecast from Supplier Site within 24 - 48hrsFGI Supermarket planned for sustaining products only – NPI, EOL, Low Volume

BTO & One Time Order..... ExcludedSupplier Site will - Communicate FG Supermarket levels on weekly basis (e.g.

RTF, FG tracking log) Mfg Sequence at Supplier site is decided by FG Super Market trigger (if No Pull or

Reservation from Customer Site, then Supplier Site shall stop Production) System generated Advanced Shipment Notice (ASN) sent to Customer site

Consumption from Customer Site’s Supermarket generates Pull signal to Supplier Site when the ROP is reached

Forecast Leveling (Smoothing Algorithm) done at Customer SiteCustomer Site will communicate on a Weekly basis - Level Loaded 4

weeks rolling Reservation Qty with Purchase Order.Ownership of Liability of FGI (ECO, EOL, E&O…) Belongs to CustomerAutomated Signal goes to Supplier Site’s - FG SupermarketCustomer Site will - Communicate Supermarket levels and the Min /

Max Qty on a Weekly basisCustomer Site shall be responsible to organize Meeting or Conference

Call with Supplier Site for all Upsides above the Agreed Max FG Supermarket Quantity to review the Next appropriate cause of actions

Customer Site will continue to track & provide Performances of Actual Pull Vs. END CUSTOMERS Forecast

Onus of END CUSTOMERS T & C for all Claims lies with Customer Site

Intersite Pull - Golden Rules


RM Supermarket

Receiving Dock

Kitting SMT,ICT, Functional

Test

Kitting Pack/ShipSupplierShipping

BTO

CustomerPull

BTO/CTOOrder Mgt

Order Mgt

HeijunkaHeijunka

WMS


Automated Signal

ROP Caluculator

ForecastGolden RulesNo Pull Signal – No Ship

Golden RulesSend Pull Signal @ ROP

Intersite Pull – Macro View – End to End


Cus

tom

er

Supp

lier

Raw SM

Raw SMFG SMMfg

Orders

Forecast

Shipments

Orders

ROP

Final Assembly Transit


KIT

FG

Ship Ship

Forecast

Pull TriggerPull Trigger

Pull Trigger

ROP Pull Trigger

• Governed by Golden Rules

• Collaborative Approach : Lean, AM & Customer (if needed)

• Weekly Operating Mechanism

• FG SuperMarket “Dictates” Mfg Sequence at Supplier Site

Connecting Flextronics Sites with “Pull”

Intersite Pull – Overall Process


Optimal Bin Size agreed to between Sites (Puller & Pullee)a. One Bin equals the Standard Package Quantity (SPQ)b. Bin can be, Plastic Bin, Container, Box, Pallet etc.c. Total Number of bins in loop depends on – ROP, Delivery

Frequency, MOQ, & Safety StockStart Condition – All Bins Full at Customer (Puller) and Supplier (Pullee)

Sites

Intersite Pull Bin Sizing Guidelines for Puller & Pullee


Parameter Basic ROP Advanced ROP STD PO

Lead Time Guidance Replenishment (Mfg LT + Intransit LT) < 1 wk

Replenishment (Mfg LT + Intransit LT) > 1 wk All

Variability Guidance (STD/AWU) Low Variability (less than 1.25) Medium Variability (between 1.25 and 3) High Variability (greater than

3)

ABC Stratification (Rule) C Class, or common parts A & B Class All

Data for Avg Demand Last 2 Qtr "Actual" Customer Demand

Last 2 Qtr "Actual" Customer Demand & Next two Qtr Forecast used with different weightings depending on historical forecast accuracy.

N/A

Lead Time Replenishment Time (Days) Replenishment Time (Days) Any

Standard Deviation Last 2 Qtr "Actual" Customer Demand Last 2 Qtr "Actual" Customer Demand N/A

Z (NormsInv of Service Level) C-99.995% (Suggested) B- 95%, C-99.995% (Suggested) 0

# of Pulls within Qtr (Frequency) Rulw > 5 > 5 ≤5

ROP Execution

1. Trigger when OH + OO is < ROP 2. Trigger Qty = Avg Demand Over Repl. Time (Bin Size calculated) 3. Supplier Site delivers from FG SM w/in 24hrs 4. No W.O. release to Mfg at Supplier site till trigger from FG SM is rec'd

1. Trigger when OH + OO is < ROP 2. Trigger Qty = Avg Demand Over Repl. Time (Bin Size Calculated) 3. Supplier Site delivers from FG SM w/in 24hrs 4. No W.O. release to Mfg at Supplier site till trigger from FG SM is rec'd

1. Trigger "PO" when Projected OH < 0 (or SS value) at or inside LT plus Order Policy 2. Trigger Qty = Delta of OH and GR at or inside LT and ABC order policy rules. 3. Supplier site holds no FG, builds to order

Inte

rsite

Intersite Pull – ROP (Re-order Point) Table


ProcessPlanning

ManufacturingCycle Time

Transit toCustomer Site

OrderProcessing

TransitSupplier

Site

MaterialReceiving

Inter Site - Kanban Replenishment Time (KRT)

Customer Site

HugeVariation

Needs to be “Predictable”

Intersite Pull - Kanban Replenishment Time (KRT)


FGSuperMarket

Transit toCustomer Site

OrderProcessing

TransitSupplier

Site

MaterialReceiving

Inter Site - Kanban Replenishment Time (KRT)

Customer Site

24 Hrs

Mfg Lead Time

Intersite Pull - Kanban Replenishment Time (KRT)


SOLECTRON

SOLECTRON

• Pull Confirmation

• Shipments as per Pull

• Shipment Documents

• FG Supermarket

• Blanket PO

• Pull Trigger

TAKT TIME

NEW

NEW

NEW

SOLECTRON

SOLECTRON

SupplierSite

Customer Site

Intersite Pull – How Does it Work?


Penang DFPenang PCBA

Austin DF

Austin PCBA

MarketForecast

MarketForecast

1. Receive & enter market Forecast2. Create a Production Plan3. Maintain safety-stock4. Net on-hand5. Maintain M/B codes.6. Maintain supplier % splits.7. Maintain supplier lead-times8. Transmit net demand to suppliers.9. Receive supplier confirmations?

3rd party suppliers

3rd party suppliers

DF Sites

Potentialfor SLRCFAAnalysis

1. Receive & enter DF net demand2. Create a Production Plan3. Maintain safety-stock4. Net on-hand5. Maintain M/B codes.6. Maintain supplier % splits.7. Maintain supplier lead-times8. Transmit net demand to suppliers.9. Receive supplier confirmations?

Intersite Pull – Cisco (Example)


Revenue

Frequency

Mfg LT

Make to Forecast Decide Make to Order

80 % List 70 % List <70 % List

> 8 Wk/Qtr

> 1 Week

4-8 Wk/Qtr

0.5-1 Wk

< 4 Wk/Qtr

< 0.5 Week

Intersite Pull Supplier SiteFG Supermarket Table (Example)


Before After

Part Yield: 100% ImprovementPart Yield: 100% Improvement Yield: 100%Yield: 92.6%

Inventory : 58% ImprovementInventory : 58% Improvement Total DOS: 10 daysDOS: 24 Days

Replenishment CT: 94% ImprovementReplenishment CT: 94% Improvement Time: 10 hours Time: 170 hours

Shi

nei:

Mac

hini

ng O

pera

tions

Asy

st -O

ps:

3PL

War

ehou

seA

syst

-Ops

:In

tern

al W

HA

syst

-Ops

:P

rod

Floo

r

Machining operations manufactures the parts and ship to Asyst Ops based on Forecast and PO loaded.High raw material inventory

Shipped parts stored in external WH which will be picked upon WO trigger

WO picked parts will be staged at internal WH for shipment to prod floor

Parts de-kitted and staged on the prod floor

Shi

nei:

Mac

hini

ng O

pera

tions

Shi

nei:

M/C

sup

erm

arke

tA

syst

-Ops

:In

tern

al W

HA

syst

-Ops

:P

rod

Floo

r

-- 2 bin Kanban, with empty bin as trigger

-- 5 days WIP

Pull

Pull

-- Daily Milk Run from machining operations for replenishing empty bins

-- 2 days WIP

Pull-- Material pull from Asyst-Ops WH

will trigger machining ops to start producing parts

-- 2 days WIP

-- Parts production trigger from Machining Ops WH

-- 1 days WIP

Start to End

Star

t to

End

Intersite Pull Implementation @ SAO – Example # 1


Before Kaizen After Kaizen

Operations Problem Action Taken ResultsHigh RM Inventory

Long material delivery lead time

Set up KANBAN System from supermarketto supplier to facilitate a pull system.

Establish a Min-Max System to replenishMaterial

To proliferate the “kanban pull” for 9 other local suppliers by end Feb

Trial run on 21 parts from supplierZephyr; inventory reduced by20% for the 21 selected parts

Supplier delivery lead time reduced from 3 days to 1 day

Warehouse

Transferring Kanban Card to Kanban post when material is at Min level

Buyer acknowledge pull signal and awaiting supplier to pick up kanban card daily



FG DOS : 85% ImprovementFG DOS : 85% Improvement

WIP DOS : 66% Improvement WIP DOS : 66% Improvement

2 Days14 Days

9 Days 3 Days

Customer: Asyst

Establish FG Supermarket Precision Machining Section Before After

FG Super Market

• No Visual Management

• No FG Supermarket

• High WIP & FG Inventory

2-Bin System with Visual Management



Before Kaizen After Kaizen

Setting Up of Floor Stock Supermarket Before Kaizen

After Kaizen

• Enable Pull system, Kanban, Min-Max, implementation, and in turn reduce excess inventories• 5S and Kit inventory accuracy of 99%• reduced picking & kitting cycle time from 35.7 mins to 55 Second Per Kit• Reduction of space by 20% from 5787 to 4648 sq ft

2 Bin System

Kanban System

Kit Case Kanban



Let us Visit Our Operations&

Find Parts Supplied by Our Sister Sites to Develop Intersite Pull Opportunities

Remember!!!Don’t Solve it…….Just Do It!

Exercise


Microsoft Excel Worksheet

Overall Inter-site Pull Tracker


Intersite Pull Performance Chart (Inventory & OTD %)

0

0

0

1

1

1

1

Tota

l Inv

ento

ry (U

S$M

)

00000111111

Inte

rsite

Pul

l Per

form

ance

Total Inventory (M$)RequestMet 100%% OTD for Pull Signals 0% 0% 0% 0% 0% 0% 0% 0%

Sep '06 Oct '06 Nov-06 Feb-07 May-07 Jun-07 Jul-07 Aug-07

Intersite Pull Performance Chart (Inventory & OTD %)


Number of Parts on InterSite Pull

Frequency of Pull per Week Status

to

Pull Signal Actual Pull

% #DIV/0!

Actual Qty Shipped in accordance = Pull Signal

Intersite Pull Performance Summary

Inter Site Pull Location

Actual Qty Shipped to less than Pull SignalActual Qty Shipped to less than Pull Signal with No Risk

Intersite Pull Performance Summary


Microsoft Excel Worksheet

Intersite Pull Daily Performance Tracker