Planning & Control
We focus on Demand Driven planning techniques (summarised in the graphic below and in partnership with the Demand Driven Institute). However we can assist in any type of planning system development. We are careful not to represent any software companies.
S&OP and Forecasting
We leave the design of S&OP management processes and sophisticated forecasting systems to other best-of-breed consultants.
We focus on ensuring that operations can lead the development of demand driven pull systems via the S&OP process. We help our clients to identify SKU’s which can stay with demand forecasts and which items would be better served by a pull system driven by actual demand. This is done in parallel to developing a comprehensive buffer strategy (shown below).
The creative design and positioning of buffers and control points is vital to an effective supply chain strategy. Statistical tricks such as variability pooling can be used to minimise the chances of problems caused by the well known bullwhip effect.
The following factors need to be taken into account when deciding where to position buffers;
Inventory Buffer Positioning Factors
|Customer Tolerance Time||The amount of time customers are willing to wait for the delivery of a product.|
|Market Potential Lead Time||The lead time that will allow an increase of price or the capture of additional business.|
|Demand Variability||The swings and spikes in demand.|
|Supply Variability||The potential for the severity of disruptions in sources of supply and/or specific suppliers|
|Inventory Leverage & Flexibility||Places in a BOM or the distribution network that leave the company with the best lead time compression to meet the business needs.|
Time and Capacity Buffer Positioning Factors
|Customer Tolerance Time||The amount of time potential customers are willing to wait for the delivery of a product. In the case of time and capacity buffers this is the backorder time.|
|Cycle Frequency||The current performance characterics of the supplier for a product and therefore its minmum order size and remake time.|
|Latent Capacity||Most cost effective combination of efficiency, labour, equipment utilisation and WIP that delivers the capacity required for supply chain responsivness|
|Critical Operation Protection||Best way to protect the critical operation (the Drum) in the supply chain from stoppages.|
Inventory Buffer Sizing
Inventory buffers are used to manage Make-To-Stock products and materials. Time buffers and capacity buffers are used to manage Make-To-Order products and materials.
Inventory buffers are used to absorb demand and supply variation for those finished goods, raw materials and parts that have a high average demand relative to the optimum replenishment quantity.
The intention of an inventory buffer is to decouple the downstream customer or process from upstream leadtimes and variability. We can size inventory buffers using;
Capacity & Time Buffer Sizing
Make signals to the factory may arrive as a replenishment signal from a strategic inventory buffer (Make-To-Stock) or as a pure order from a customer (Make-To-Order) depending on the supply chain strategy.
Time and capacity buffers are used to manage Make To Order (or Deliver To Order) materials and absorb demand and supply variation for finished goods, raw materials and parts that have much slower average demand relative to the optimum replenishment quantity. They may also be used for high cost materials where the risk, and costs, of obsolescence are high.
Time and capacity buffers are also used in factories to control factory performance (see this article for more information).