Planning & Control
Here we focus on converting the aggregate plan into a Planning and Control System at the operational tactics level (shown below) which includes;
S&OP and Forecasting
Sales and Operations Planning (S&OP) methodologies and forecasting techniques used in our clients businesses have usually evolved over a long time. We can influence these areas in the following ways;
We leave the design of S&OP management processes to other consultants like The Oliver Wight Company. However we can ensure that any of our design and optimisation techniques are appropriately integrated into your existing S&OP process.
We advocate minimising wasted effort caused by multiple and disconnected forecasts within a business. To this end we continue to research the latest thinking in demand driven operations management, particularly Flowcasting and Demand Driven MRP & DRP.
In any case we can work within, and help optimise, any aggregate planning and forecasting process through all nodes of a supply chain, from raw material suppliers through to the retail shop.
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.
What follows is an actual scenario that illustrates the way Capacity (people and assets) and Time Buffers can be designed and manipulated to service a Make-To-Order product;
A business is asked to supply a high margin product in small volumes. It is a product that changes frequently so the business is keen to minimise its exposure to dated and damaged stock. Consequently it decides not to use a strategic inventory for this product and asks the customer for its maximum delivery time and the customer requests a 3 week delivery time.
The business decides to run the product every week which will give them a 2 week time buffer should there be any supply issues.
In order to run the product every week the business must increase their crewed time (additional labour resources working on weekends) to ensure that the new product is run every week (due to the extra production time and changeover time required). The business has essentially provided a Capacity Buffer by asking people to work weekends when required. This is an expensive use of resources and so they decide to look for other ways of providing the required Capacity Buffer.
After completing a Bullant Demand Filter, it is identified that the production line is running at less that 50% efficiency. This is because there are a lot of interconnected pieces of high-tech machinery.
A lot of this machinery has a very high capacity and is being restricted by a single piece of machinery with about half the capacity of the rest. Engineers confirm that a flexible buffer of WIP can be placed before the restrictive piece of equipment; so shielding it from upstream downtime and increasing the total efficiency of the line to over 65%.
It is anticipated that the resulting, additional Capacity Buffer will replace the need for additional labour.
Supply Chain Scheduling
We can help to develop supply chain scheduling strategies for your most complex supply chains;
Finished Goods - Strategic Inventory (Make-To-Stock) Management
We can deal with your existing ERP/MRP system to set up more traditional safety stock system.
We can also set up a more contemporary multi-echelon materials and inventory planning and execution solution using demand driven de-coupling points throughout your network.
Finished Goods - Lead Time (Make-To-Order) Synchronisation
We can design a leadtime synchronisation system that works in parallel with your strategic inventory scheduling system.
Inbound Materials - (Deliver-To-Stock & Deliver-To-Order) Scheduling
We can use Strategic Inventory and Lead Time synchronisation techniques (described above) to control your inbound materials. We do this by creating a Plan For Every Part (PFEP), taking into account the unique commercial needs of each material such as consignment stocks, supplier risk, suppler distance and supply seasonality.