The Oliver Wight Class A Checklist for Business Excellence, sixth edition Operations Management Magazine, July, 2007

Manufacturing guru Oliver Wight has, in his relatively short life (he died, aged 53,

in 1983), left a huge legacy in the field of business management, which has not

been matched by many educators. He is probably best known as the ‘inventor’

of MRPII and the Master Production Schedule. One of the key management tools

introduced by him and developed, over the years, by his disciples, is the Class A

Checklist, which is the subject of this book. I seem to recall that this started many

years ago as the MRPII Class A Checklist, which was used by many of us MRPII

implementers to gauge if the MRPII implementations we had been responsible for

delivered the business benefits we had promised. In practice very few companies

achieved Class A status, many claimed to have achieved it and many admitted

that they hadn’t – but A Class status was the holy grail for most of them.

®

in this issue:

book review from operations management: oliver wight class a checklist for business excellence

push versus pull - perception versus reality oliver wight publications:inventory record accuracy, second editionmaster scheduling, third edition

enterprise sales & operations planning tool v6.0

public courses around the world

T H E W I G H T L I N EYEAR 2007, ISSUE 2

the oliver wight proven path

The concept of the Class A checklists has come a long way since then. The Sixth Edi-tion, which I have just reviewed, is the latest version and covers the wider business areas beyond manufacturing resource planning of the early checklists. It still focuses on opera-tions and supply chain management but now also deals with strategic planning, manag-ing and leading people, driving business processes and integrated business management. In other words, it is a tool to assess the overall operational performance of the business.

There are, of course, a number of performance assessment tools available from different sources these days but the key advantages of the Oliver Wight one are for me:- Comprehensiveness (within a 200 page book!)- Based on long-standing experience- Affordability (you can just buy the book)

Of, course, you don’t get anything for nothing in this world. The book states quite clearly (and I would totally support it) that you need a trained, experienced facilitator to get the most out of the assessment process. Why is that so? The book essentially consists of lots and lots of statements and the assessor has to decide (on a scale from 0 to 5) if the statement is true for the business under review. The assessment questions are sufficiently broad and non-quantified that only someone with good industry experience can really judge where the business sits within the scale. Let me take an example Class A state-ment, which I have picked at random from the ‘Driving Business Improvement’ section:

“The business has developed an approach to process innovation that is complementary to continuous improvement activities. Process innovations have generated step-change improvement. Innovation in the process is driven by improvement reviews.”

It is probably not easy for a management team to give a general yes/no answer, even if they understand the statement, but to grade the answer on a scale of 0 to 5 requires a very good knowledge of what process innovation really means in a competitive context.

In practice the assessment is the first step of a business improvement process and key steps are defined as:

- Identify and agree the scope of the Checklist that applies to your business (indicat-ing that there has to be an element of judgement in the interpretation).

- Set a clear and independent benchmark that is consistent throughout the business.- Set up a manageable programme of excellence activity (based on benchmarking and

prioritisation).

The book does not linger on the activities required to achieve Class A performance; after all, this is an assessment tool, not a business improvement textbook: it is strong on the ‘what’ (…a business should look like) and has no real answers to the ‘how’ (…to get there). The ‘how’ is a matter of much more research and education - activities which Oliver Wight International, quite rightly, tries to encourage and supports through its extensive portfolio of education courses.

““The ‘Journey’

remains a crucial

theme as few

businesses will find

it possible to address

all aspects of this

checklist as a single

initiative.

Oliver Wight have

identified a series of

templates compris-

ing logical selections

from the checklist

to drive the priority

needs of the

business.”

Operations Management July, 2007

So, is this book a sales tool for Oliver Wight International education and consultancy? Yes, probably. Is it just a sales tool without intrinsic value? Certainly not! The checklist cov-ers the whole spectrum of business activities and offers an excellent guide to Class A business performance. Class A is achieved with an overall rating of at least 4.5 we are told; in other words, a company should be able to say “yes” to just about every question in the book. That would imply that a manager should understand pretty well all of the statements in the checklist and get his business to the level indicated by each statement. I appreciate that, to do this properly, is a complex process requiring analysis, prioritisation and project implementations. But, as a first test of understanding of what Class A really means the book is outstanding.

I find it interesting that the Oliver Wight organisation has changed its approach a bit. In the past there used to be grades from D (I seem to recall) up to A and the path from D to A was the journey. Now it is claimed that there is only one class, i.e. Class A and commercial survival demands that a company needs to achieve Class A performance. There is no ‘we are quite good; we have reached Class B’ anymore; there is only ‘Class A’ or ‘Not Class A’. That is in line with modern thinking of competitive world-class performance. You need to be as good as the best in your industry to sur-vive. Second best will no longer do.

I actually got a bit confused at that stage since there are Class A Milestone Awards, Class A Business Unit Accredita-tion and Class A Business Excellence. That’s probably relevant if you work with Oliver Wight International but not some-thing the general reader needs to worry about too much, I think. I am told by the authors, and I would agree that“The ‘Journey’ remains a crucial theme as few businesses will find it possible to address all aspects of this checklist as a single initiative. So what should they attack first? Such decisions are further complicated in larger organisations with multiple markets, multiple plants, and matrix organisations. Businesses are encouraged to tailor their use of the checklist (following an initial business diagnostic of process capability) to align with their strategic priorities. To assist this process Oliver Wight have identified a series of templates compris-ing logical selections from the checklist to drive the priority needs of the business. Attainment of this selection from the Checklist will represent capability in a specific process area,

and/or accountability area, with recognition through Class A Milestone Awards.”

Also, a bit of new terminology has crept into the process descriptions. For example, the Master Production Schedule is now called the Master Supply Plan by Oliver Wight Inter-national (in recognition that many companies today have outsourced manufacturing so that supply chain management capabilities are increasingly the need, and supply planning has replaced production planning as the generic term.)

The introduction to the book describes the excellent ‘Oli-ver Wight Business Maturity Map’ which explains the four phases a business need to go through to achieve excellence. There is an emphasis on process consistency and the elimina-tion of unplanned events. (This is not new, of course, and I recall working for a US multinational company back in the 70’s where the President rigorously pursued a management philosophy of “no surprises”.) Much of the process assess-ment is based on effective Sales & Operations Planning (S&OP) – something I can only support having seen over many years how important good S&OP processes are in any manufacturing and supply business.

The only area, which I felt could have been a bit better was the area of “Managing External Sourcing”. It covers much of the procurement activity but seems a bit thin on vendor col-laboration, vendor managed inventory and vendor continu-ous improvement – areas which are high on the agenda of many companies.

Having said that, this is a minor criticism of a generally very comprehensive piece of work. Just think about it: 200 pages, each one filled with statements of what makes a Class A busi-ness, together with a range of relevant performance mea-sures for all of your key business processes! This is not a book which one reads as such – it is more a reference book of best industry practice. I would commend it to any manager, consultant and student (from practitioner education to MBA level). I think everyone who works towards the effective management of a business should have a well-thumbed copy on his or her bookshelf – it is really that useful!

Dr. Günther Kruse, Scope Management Limited

®

two new publications by oliver wight authors

Inventory Record Accuracy, Second Edition Up-to-date and thorough, Inventory Record Accuracy, Second Edition, describes and discusses the latest tools and techniques in Cycle Counting. One new topic introduced by co-authors Roger B. Brooks and Larry W. Wilson is Inventory Tactics versus Inventory Control, which clarifies the tactical and control issues surrounding inventory. They also describe how to establish and maintain inventory record accuracy in a Lean environment and cover new topics such as supplier/vendor-managed inventory.

The Second Edition features an extensive discussion on sleuth-ing for root cause of errors, typically a problem area for prac-titioners of cycle counting. Brooks and Wilson review several

different situations and recommend a number of likely sleuthing activities to discover and correct the error(s). Additionally, they have significantly expanded their explanation of inventory record tolerances and added a number of graphical displays and visuals to enhance the understanding of establishing tolerances.

Co-authors are Roger B. Brooks, a long-term principal of Oliver Wight Americas, Inc., who consults with companies on planning and control, strategic planning and continuous im-provement; and Larry W. Wilson, a long-term principal of Oliver Wight Americas, Inc., who consults to businesses on customer service, inventory reduction, and inventory management.

Master Scheduling, Third Edition This book is the most comprehensive book available on the topic of master scheduling. In this third edition, author John Proud goes into great detail on the topics of master schedul-ing mechanics, functions of master scheduling within different environments, bills, schedules, rough-cut capacity planning, and the link with Sales & Operations Planning. The book ends with an extensive chapter containing critical information on effective implementation. This should be the handbook for anyone directly involved in day-to-day master scheduling as well as all departments integral to the scheduling process.

John Proud, a long-term principal of Oliver Wight Americas, Inc., has compiled years of hands-on experience from working in his early years in the day-to-day operations of the master scheduling process in manufacturing companies and combining it with his knowledge of the detailed level functioning of the process; how master scheduling is fed into by other processes, and the feedback of information for operations through his experience with hundreds of consulting clients.

Throughout this book, John illustrates key concepts using worksheets and walking the reader through each phase step by step. In this newest edition, all graphs, flow charts, policies listings, and procedure listings have been updated to reflect the latest best practices. Following the Implementation chapter, this book contains Class A Master Scheduling Process and Performance Checklists, a Sample Implementation Task List, a Sample Process Flow Diagram, and an extensive 38-page glossary defining the most cur-rent terminology ensuring a thorough understanding of all the requirements of Class A master scheduling performance.

The Oliver Wight

Library contains

business books

written by Oliver

Wight consultants

for the business

professional.

push vs. pull - perception versus reality by Daniel Araujo and James Correll

Introduction “Push” and “Pull” are terms that have become synonymous with specific supply chain designs. In re-cent years, these words also have come to characterize the “quality” of said supply chains. The preconceived impression is that “Push” is inappropriate, while “Pull” is the preferable or acceptable methodology. In addi-tion, Push and Pull have been relegated to certain inappropriately pre-assigned techniques. As an illustration, Push is typically aligned with Material Requirements Planning (MRP), while Pull is placed alongside Kanban. This, by extension, transfers these techniques (practices) to the corresponding level of appropriateness. In the market, we see many professionals and organizations making decisions on which techniques to use and how to structure the management of their supply chains influenced only by those preconceived judgments. Few, however, actually base their decisions on a sound analysis of their business practices and requirements. This paper explains why Push and Pull cannot be automatically associated to one or another technique and describes other factors that have a critical influence on how to configure the supply chain.

Push: The Concept and the Practice Push is typically defined as the model in which the delivery of materials, the production of goods and/or the shipment of goods to customers, is done according to a predefined schedule. In fact, Push means to procure or produce some material or product without an immediate demand to use it. As the material or product shows in inventory, there will be efforts to “push” it to the next stage of the supply chain and ulti-mately to the consumers. Poorly-managed schedules tend to create many conditions to push materials and products without a true demand for them. For example:• Schedules tend to accommodate “waste” (safety stock, safety lead time, lot sizing, queues, set-ups, etc.), which makes schedules exceed the expected demands;• Supply chain is often slow to react to the true demands;• Demand management and supply chain management are not coordinated, leading to inefficiency and the failure of meeting demands, resulting in higher inventories. This further decouples the supply chain from the true demands;• Personnel are not sufficiently trained and, combined with inaccurate data, produce inappropriate schedules. The mismatch between the formal schedules and the real execution erodes the credibility of the whole model. As a result, where these distortions happen, the schedule-driven model presents low efficiency, slow response, high inventories and low customer service levels. However, we can attest that, for almost 40 years, Oliver Wight clients have demonstrated that the schedule model can be operated in the Pull mode supporting high customer service levels, low inventories, fast response to changes, and the ability to synchronize actions throughout the supply chain.

Pull: The Concept and the Practice Pull is the determination to produce exactly what the customers need, in the quantity and time closest to when they need it. The concept, admittedly, has been one of the most important factors of competitiveness in industry. Toyota is considered the most successful applicant of the Pull concept. It uses Pull principles to condition its corporate culture, strategy, value chain configuration, and its day-to-day operations. This consis-tency from culture and strategy to day-to-day operations makes Toyota a perfect representation of Pull. To emulate the Toyota model, a company needs to either redefine its business and culture to conform to their ‘Pull’ operational model or to rethink the elements in the model according to their chosen business definition. However, many companies have tried to replicate the Toyota success without understanding and reconciling culture, strategy, value chain configuration and day-to-day operations. The result has been frustra-tion and failure instead of expected success. The frequent distortions of the schedule-driven model and the widely-advertised success of Pull at Toyota have led to the mistaken and harmful association of Pull to some techniques and Push to others. In fact, it is our contention that most supply chain management techniques can be applied in a Pull or in a Push mode, depending on the culture and competence with which they are applied.

The Value Chain and its Alignment to the Business Each company in the market can choose to define its business in a variety of ways. Different compa-nies succeed and become market leaders with different operational models. Therefore, it would be arbitrary to define a single way as the best for all companies. As Treacy and Wiersema postulate (The Discipline of Market Leaders)*, the choice of a different value discipline is enough to drive the definition of the culture of the organization, its strategies, and operational model in different directions. Other decisions, like those related to the product portfolio, the market, and the physical location, also can lead to very different business models. As the Toyota application clearly demon-strates, the configuration of the value chain needs to be consistent with the cultural, strategic, and opera-tional choices of each company. Consistency between the culture, strategies, operational choices and the value chain configuration is critical to evolve into a Pull model and a prerequisite to the appropriate choice of the supply chain man-agement techniques. As an illustration, Pull, in a business of one-of-a-kind, engineer-to-order, will require a different culture, strategies, operational choices, value chain configuration and techniques as compared to a high-quantity producer of a standard product with few options. In the same market, one producer may choose standardization while another may choose customization. We cannot say that one is right, and the other is wrong. Each company must have the right to choose different value propositions. But we can say that applying the same culture, strategies, operational choices, value chain configuration, and techniques of the standard business to the customization business is wrong. In a business where, for an extended time overall demand will by far exceed overall capacity to sup-ply, management will probably choose a strategy of maximizing the use of supply resources in detriment to some demands. The best strategy for this business may not be a pure Pull, at least in the foreseeable future.

The Choice of Techniques Even if a chosen business model establishes some preference for one technique over another, at dif-ferent points in the value chain different techniques may be appropriate to plan and manage the demand, the production activities, the resources, and the supply of materials. Knowing when and where to apply each of the different techniques is critical to attain the maximum performance in converting materials, productive resources, and technology into the products demanded by the customers. Unfortunately, instead of under-standing the business environment and defining the appropriate suite of techniques, management often focuses on one or another methodology and tries to apply it across the board. This often leads to devastating results. The distortions in the application of the schedule-driven model and some misconceptions about Pull and Push have led to the unwise fixation on reactive techniques (like Kanban) to the detriment of ‘depen-dent-demand’ techniques (like MRP) in the belief that the former are necessarily Pull and the latter primarily Push. In fact, both can be either Push or Pull depending on their application. A lean MRP operation maintains the supply chain constantly synchronized to the variations of de-mand and benefits from the lean culture and techniques to pursue the lowest lead times, lot sizes, and inven-tories. The cases of the automotive industry which synchronize the delivery of suppliers directly to the point of use in the assembly lines are straight applications of the ‘dependent-demand’ (MRP) logic. And, while the final trigger to deliver the components to the production line will be determined by the imminent execution in the line, all the preceding actions to make it possible were supported by the production line schedule and a back-scheduling technique. Assuming the same lean environment, a dependent-demand technique permits organizations to operate with much lower inventories and to react much faster to variations of demand than a reactive/replenishment technique. On the other hand, a distorted application of MRP allows lot sizes to grow to cover for manufactur-ing inefficiencies, safety stocks to be abused to cope with long lead times, and changes to demand to be filtered from MRP because the supply chain has not been enabled to respond. This results in inadequate schedules and inventories being pushed forth or simply being wasted. A Kanban environment without the lean culture will present the same sins in which the supply chain ‘stabilization’ will be proffered as an absolute virtue, even when “true” demand may be far from stable. Dis-tortions in the use of Kanban will be less noticeable in an environment of standard products, stable demands, and high volumes. However, it will create major problems if those conditions are not present. For many individuals, ‘demand-driven’ and ‘schedule-driven’ are mutually exclusive concepts. This common misconception has contributed to many unwise choices. Part of the reason for the misconception is that inappropriate scheduling can lead to the supply chain losing sight of the true demands, as previously

* The Discipline of Market Leaders, Addison-Wesley Publishing Company, 1995.

explained. But the illusion created by Kanban in a high-volume, repetitive demand environment also contrib-utes to the misconception. Under these conditions, it looks like the supply actions are only executed when there is an actual demand to fulfill. In reality, the true demand depletes an inventory below its ‘reorder point’ which then triggers a supply action to replenish the inventory. The units replenished are not intended to meet the demand that actually happened but, rather, the demand that is expected to happen later. The supply action is, therefore, based on the assumption that the demand that just happened will happen again, in the same pattern, and in the immediate future. This is called the ‘naïve forecasting technique’. Since the forecasting technique encoded in Kanban is not apparent, most people believe that the utilization of Kanban can spare them from the risks of forecasting. In fact, because forecasting in Kanban is hidden, it makes it more difficult to measure the deviations of forecast, to perceive when the Kanban pa-rameters need to be adjusted to a changed pattern of demand, and to improve the forecasts. Again, where demands are very stable, these distortions and misconceptions produce less visible effects. Should a company redefine its business just to make Kanban an appropriate technique? This is a strategic decision that cannot be made lightly and based on the virtues of the technique alone. For differ-ent stages of the chain and for different materials, products, and market segments, different techniques will be appropriate based on the volume, regularity, and predictability of demand, response time required by the customers, set-up costs, capacity, and other factors.

The Real Choices in Supply Chain Management As explained, Pull will be achieved only if the strategic orientation of the business and the culture of people are Pull, making the choice and the operation of the techniques conditioned to that concept. As we manage the supply chain with the strategic direction selected and by using the most appropriate techniques at each point, we should understand that there are really only two ways to plan for products and materials: looking backward and looking forward. Replacing an item when one unit is taken is considered by many as ‘forward-looking’ under the assumption that the consumption that just happened will repeat itself in the near future. This assumption, as explained for Kanban, carries inside a hidden forecasting technique which is called “naïve,” as previously noted. There are two problems with this assumption. First, the forecasting model is hidden so it cannot be measured for accuracy and, therefore, cannot be improved. Second, the belief that future demand is repre-sented by what was taken in the past is dangerous. To predict the future, one must look into the future. Still, this model works well in the short term for highly repetitive, stable demand items for which the future tends to quickly repeat the past. Nevertheless, even when those conditions are present, the business needs a longer view which must be accomplished by an appropriate forward-looking forecasting process. Many companies, determined to extensively use ‘backward-looking’ as the primary method in their supply chains, work to adapt portions of their businesses to the prerequisites of stable, repetitive demand. A positive way to do this is to recognize that much of the variability of demand is artificially induced rather than inherent to the true market demand. By eliminating distortions in commercial conditions and in inventories throughout the chain, most of the artificial variability can be eliminated. Another way to linearize the de-mand seen by the supply chain is to buffer it from the true market demand with inventory. In companies fully committed to stable supply chains, decisions are always made to buffer variations of demand with inventories and/or with customer lead times. In a Class A environment, the S&OP (especially in its evolved form of Integrated Business Manage-ment) and MS processes decide the best balance between the costs of buffering and demand variations and the costs of adjusting the supply chain to the variations of demand. Forward-looking needs to be understood in two basic situations: independent and dependent demand. For products or items in the supply chain where demand is decided directly by the consumer, the only way to determine what the demand will be is by understanding the factors that affect the consumers’ demand: trends, seasonality, events, companion products, fashion, etc. As there are always multiple scenarios possible in the future, any determination of future independent demand must be accompanied by the spe-cific assumptions on which it is based. The risk of the assumptions used determines the potential error of the forecasted demands, and the potential error determines the parameters for the supply chain techniques to use. Should a safety stock or safety time be maintained, and how much? Can a 99-percent customer service level be targeted or is 95 percent already challenging for this market or product segment? It should be noted that this consideration equally applies to backward-looking techniques - the size of a Kanban system directly depends on the size of deviations of demand against the assumed average.

Conceptually, only the last step of a supply chain, that is, direct contact with the end consumers, needs to be treated as independent demand. All the previous steps can be treated as having the demand dependent upon that last one. This is a potential advantage because it restricts the large risks of forecasting at every step in every chain. All the previous steps can have the demand calculated using techniques far more reliable than forecasting. This is a major difference between the backward-looking and the forward-looking models. In back-ward-looking, at every step the demand is forecasted (though not in a visible way) based on the immediate past consumption, with all the risks of forecasting using a naïve technique. The compounded risk of all the Kanban forecasting points throughout the chain tends to be higher than the risk of specialized forecasting at the last step only. The compounded risk of forecasting in all Kanban points is paid with a high buffer inven-tory between the supply chain and the market, with more restrictive demand management practices on the market or with inventory costs distributed according to the size of the multiple Kanban points. A second difference between the two models is that in a backward-looking model, such as a chain of successive Kanbans, there is a physical delay in recognizing a change in demand and passing it backwards. Assume a very fast-responding supply chain where every step works in daily demand cycles. The market consumes, from the last step in the chain, its predicted demand of 100 units but, unknowing to the chain, tomorrow’s demand will be only 50. The previous step interprets today’s consumption of 100 as the order to replenish in that quantity, as if tomorrow’s demand will be 100. One cycle later, in the third-to-last step in the chain, the consumption of 100 in the second-to-last step is interpreted as an order to replenish in that quantity. With the delay inherent to the process time in each cycle, the replenishment order will be passed backward, step by step, eventually reaching the first supplier in the chain. By that time, several early steps may be producing to replenish a demand that occurred several days (or weeks) before, while actual demand in the market already may be quite different. In a forward-looking model, any change in demand input at the end of the chain can be immedi-ately transmitted backwards throughout the entire chain. It is very likely that several steps will not be able to change their schedules for today or even for some of the future days, but the whole system can benefit from knowing that the demand has already changed and begin to make corrections as soon as it is feasible to change the schedules. Wall-Mart is normally considered the top reference for this practice, with the ability to immediately transmit to its suppliers the actual demand observed in the check-outs of the stores. Backward-looking and forward-looking are critical choices to make in supply chain management design as it impacts differently the last steps of the chain, characterized by independent demands, and the earlier steps, which can be treated as dependent demands if forward-looking is chosen.

Where to Meet Your Customer This is another critical choice when selecting forward-looking as it presents three basic options:• The first is “make-to-order” which links the product build schedule (and subsequently the assembly sched-ule) to actual customer orders.• “Make-to-stock/assemble-to-order” is the second option. It anticipates what the customer wants in base units and options, orders them at lead time, but only assembles the final product when actual customer or-ders are received. The advantage is that a limited number of forecasted items can be configured into a huge number of end items.• The third option, “make-to-forecast”, anticipates the end items the customer wants and produces them in advance so they are available when the customer orders them. As forecasts always include some error, products are often made to cover for an upside demand or a demand that happens earlier than forecasted. This creates a safety stock effect. It is important to note, however, that products are essentially made to a forecasted demand, and the planned inventory should be a conscious decision based on the potential error of forecasts and the targeted customer service level for each product and market segment. Ideally all products would be “make-to-order” because of the reduced inventory carrying costs and the elimination of the risks of customers not buying the products. However, manufacturing lead time and customer unwillingness to wait often makes this option inadvisable. To determine the correct option, an understanding is required of the characteristics of demand at each stage of the supply chain and for each product and market segment (see Basic Characteristics of Product Families). Conclusion Understanding the differences in demand and supply characteristics is extremely important to deter-mine the appropriate model for managing products. Toyota has addressed this by limiting its product design and market strategy to only Type 1 products. For example, instead of adapting the techniques to the defined

FIGURE 1

Basic Characteristics of Product Families

Within a family of products, there are four basic characteristic types:

Type 1 - Regular/Predictable/High-Volume Demand. These fit very well in the “make-to-forecast” or “make-to-stock” option. Depending on the potential error of forecast and on the customer service policy, higher or lower inventory can be planned (down to zero).Type 2 - Occasional/Unpredictable/Low-Volume Demand. These tend to be too costly and risky to “make-to-stock”, so the “make-to-order” or the “make-to-stock/assemble-to-order” model is applied. Here the customer assumes the risks of forecasting his/her demands and placing the order with enough time for the manufacturer to make and/or assemble it. When used, the “make-to-stock/assemble-to-order” model should be applied upstream in the supply chain until it reaches a stage where demand starts to be predictable (by aggregation of several demand sources) or where the needed materials are generic and readily available in the market or there is a willingness to stock selected items.Type 3 - Occasional/Predictable/Low Volume. These should be made to forecast, with the intention of keeping inventory at zero. This model is a variation from Type 1 because, in that mode, the regularity of demand permits the maintenance of stock that soon will be consumed. An example of Type 3 items are those to be consumed in a planned maintenance event. They may be highly predictable as to quantity and timing, and the following demand may be quite far in the future, so maintaining a permanent level of inventory may be unnecessary and costly. Another example may be products to support other specific events, such as a conference with a known number of participants.Type 4 - Occasional/Low Predictability/Immediate Customer Need. If these items are strategically relevant to the business, the cus-tomer need will drive to the “make-to-stock” option, in spite of the risks and costs involved. An example of this is service or spare parts. While by most criteria these inventories would be considered of very low performance, the cost of the equipment down time waiting for supply justifies the option to maintain a representative quantity in stock. Another example is one-time-only products that companies like Avon include in a sales campaign. They are a relevant part of the business strategy, but there isn’t any past experience to predict market reaction. If they are not sold during the campaign, they cannot be sold later; if demand exceeds the forecast, there will be lost sales. Other examples include seasonal and perishable products, event dependent products (Super Bowl), time-stamped products (calendars), etc.In addition to the predictability, regularity and volume of demand, the decision of ‘Where to Meet Your Customer’ needs to consider the acceptance of the customer to wait for the product and what the competition is offering.

FIGURE 2

business strategies, Toyota conditioned its business definition and strategies to the techniques chosen and has excellent disci-pline throughout its entire supply chain to execute them. Many companies try to apply the Toyota approach without first changing their product design and market strategy to conform to the Type 1 approach, resulting in poor customer service and high inven-tory. However, conforming product design and market strategy to Type 1 products in many companies is not a recommended business decision. An increasing number of customers today are asking for more and more choices. Not satisfying their needs can significantly impact sales in a negative manner. To compete in the future, the selection and application of the correct model to the various characteristics is critical for manufacturing companies. This will require more and more companies to better understand the models and the characteristics for their application. And that means going deeper than the usual “Push” vs. “Pull”, Kanban vs. MRP, debate and focusing on the business strategies, the customers’ real requirements, and the actual supply chain characteristics. Evolving from Push to Pull also requires the identification of every element which stands in the way of Pull. Doing it for each item or group of items permits prioritizing the work and planning the journey as illus-trated in Figure 1.

regional calendar of events feb mar apr may jun

oliver wight asia/pacific

oliver wight eame

business excellence course 15-16 09-10

integrated business management (S&OP) for executives course 18-19 03-04 14-15 22-23 11-12 20-21 11-12

product portfolio and lifecycle management course 02-03 21-22 13-14

business excellence - the 3-day course 11-13 13-15 16-18

sales and operations planning course 15-16 15-16 17-18 04-05

demand management course 17-18 17-18 19-20 06-07

integrated supply chain management course 16-18 04-06 06-08 09-11 04-06

master scheduling course 12-14 01-03 17-19 14-16

managing and leading the business for executives course 21-22 21-22 30-01 06-07

business excellence - the 3-day course 14-16 10-12 14-16 02-04 14-16 08-10 20-22 01-03

integrated business management (S&OP) in practice course 03-04 23-24 08-09 01-02

managing the extended supply chain course 23-24 18-19 13-14

integrated business management (S&OP) for executives course 28-29 23-24 01-02 17-18

driving business improvement (tools & techniques) course 18-20 09-11 01-03 10-12

managing demand course 13-14 14-15 17-18 24-25

supply planning in practice course 28-30 28-30 07-09 07-09

french business excellence - the overview course 19-22 10-13 16-19 02-05

people and teams course 04-06 14-16

french strategic purchasing management course 01-02 20-21

french integrated business management (S&OP) for executives course 20-21 14-15

french driving business improvement course 22-23 16-17

Italian managing demand course 06-07

french managing demand course 23-24

italian integrated business management (S&OP) for executives course 11-12

product portfolio and lifecycle management course 25-26 12-13 09-10 19-20

advanced supply planning course 04-05 16-17 03-04

italian business excellence - the overview course 07-09

oliver wight americas

jan

master data integrity course 04-05 16-17

spanish sales and operations planning course 14-15

spanish business excellence - the 3-day course 16-18

managing demand course 10-11 28-29 12-13 25-26 18-19

supply planning in practice course 28-29 / 18-19 10-11 04-05 06-07

portuguese sales and operations planning course 06-07

Oliver Wight Americas

52 Newport Road, New LondonNew Hampshire 03257, USA

+1 (603) 526 5800 email: info@oliverwight.com

Oliver Wight Asia/Pacific

Suite 1, 112A Martin Street Brighton, Victoria 3186, Australia

+61 (0)3 9596 5830 email: information@oliverwight-ap.com

Oliver Wight EAME

The Willows, The Steadings Business Centre

Maisemore, Gloucester GL2 8EY, UK+44 (0)1452 397200

email: email@oliverwight-eame.com

®

www.oliverwight.com

together we make a difference

jul aug

business excellence course 15-16 09-10

integrated business management (S&OP) for executives course 18-19 03-04 14-15 22-23 11-12 20-21 11-12

product portfolio and lifecycle management course 02-03 21-22 13-14

sep oct nov dec

business excellence - the 3-day course 11-13 13-15 16-18

sales and operations planning course 15-16 15-16 17-18 04-05

demand management course 17-18 17-18 19-20 06-07

integrated supply chain management course 16-18 04-06 06-08 09-11 04-06

master scheduling course 12-14 01-03 17-19 14-16

managing and leading the business for executives course 21-22 21-22 30-01 06-07

business excellence - the 3-day course 14-16 10-12 14-16 02-04 14-16 08-10 20-22 01-03

integrated business management (S&OP) in practice course 03-04 23-24 08-09 01-02

managing the extended supply chain course 23-24 18-19 13-14

integrated business management (S&OP) for executives course 28-29 23-24 01-02 17-18

driving business improvement (tools & techniques) course 18-20 09-11 01-03 10-12

managing demand course 13-14 14-15 17-18 24-25

supply planning in practice course 28-30 28-30 07-09 07-09

french business excellence - the overview course 19-22 10-13 16-19 02-05

people and teams course 04-06 14-16

french strategic purchasing management course 01-02 20-21

french integrated business management (S&OP) for executives course 20-21 14-15

french driving business improvement course 22-23 16-17

Italian managing demand course 06-07

french managing demand course 23-24

italian integrated business management (S&OP) for executives course 11-12

product portfolio and lifecycle management course 25-26 12-13 09-10 19-20

advanced supply planning course 04-05 16-17 03-04

italian business excellence - the overview course 07-09

master data integrity course 04-05 16-17

spanish sales and operations planning course 14-15

spanish business excellence - the 3-day course 16-18

managing demand course 10-11 28-29 12-13 25-26 18-19

supply planning in practice course 28-29 / 18-19 10-11 04-05 06-07

portuguese sales and operations planning course 06-07

together we make a difference®

Asia/PacificSuite 1, 112A Martin Street, Brighton

Victoria 3186, Australia

Europe, Africa & Middle EastThe Willows, The Steadings Business Centre

Maisemore, Gloucester GL2 8EY, UK

Americas52 Newport Road, New London

New Hampshire 03257, USA

oliver wight launchs version 6.0 of the enterprise sales & operations planning tool What if you could manage your business the way a head coach manages a professional sports team? You’d have the benefit of films to review past team performance, from scouting reports on your upcoming contest, and a game plan with charts, graphs and stats that enable your team to execute flawlessly as you call theright play in any situation.

That’s the power of the Enterprise S&OP Tool, a unique decision support product that facilitates the transition to S&OP and optimizes the ongoing use of the S&OP process. Businesses that use it typically implement their S&OP process up to four times faster than those using traditional methods, with a corresponding reduction in cost, and a higher success rate. Now, with v6.0, Oliver Wight leverages the power of SQL Server to enhance functionality even further.

The primary change in the newly introduced ESOPT v6.0 is the conversion to the Microsoft SQL Server database that dramatically expands the ability to add features and functions, and improves network performance and stabil-ity. Two enhancements added in v6.0 are the Aggregation functionality and the ability to expand to a five-year planning horizon, which is offered as an option.

ESOPT structures the data in Strategic Business Units, Planning Families and Subfamilies. Version 6.0 enables users to add user-defined aggregation groups and attributes to the group, and the planning subfamily may be assigned up to twelve groups. Each of the groups can be aggregated and analyzed up to three levels at a time, providing virtually unlimited information views in Demand Review, Supply Review and Financial Analysis.

ESOPT was designed and built by Oliver Wight’s manufacturing process experts as an integral presentation tool, not by software developers as a bolt-on to an ERP or SCM product and has been refined over eight years through use in more than 100 customer implementations.