www.highmixlean.com best of the best sales and operations planning conference using s&op in...
TRANSCRIPT
www.Highmixlean.com
Best of the BestSales and Operations Planning
Conference
Using S&OP in Companies with Using S&OP in Companies with Lean ManufacturingLean Manufacturing
Bill Kerber, CFPIM
www.Highmixlean.com
Agenda Agenda
A few thoughts about Executive S A few thoughts about Executive S & OP and Takt Time& OP and Takt TimeExecutive S & OP StrategiesExecutive S & OP Strategies::
1.1.LevelLevel
2.2.ChaseChase
3.3.HybridHybrid
Material Procurement practicesMaterial Procurement practicesPush versus PullPush versus Pull
Negotiations and planningNegotiations and planning
Questions and AnswersQuestions and Answers
www.Highmixlean.com
Lean & Executive S&OP Do Different ThingsLean & Executive S&OP Do Different ThingsLean & Executive S&OP Do Different ThingsLean & Executive S&OP Do Different Things
Lean ManufacturingLean Manufacturing Lean emphasizes/focuses on flow.Lean emphasizes/focuses on flow. It also has a focus on eliminating waste from processesIt also has a focus on eliminating waste from processes Strong on executionStrong on execution Drives improvements to the operating environmentDrives improvements to the operating environment Flow works best with stable and linear demandFlow works best with stable and linear demand
Executive S&OPExecutive S&OP Tools for forward decision-makingTools for forward decision-making Strong on planningStrong on planning Long future horizonLong future horizon Balances demand and supply across the supply chainBalances demand and supply across the supply chain Can be used in many different environmentsCan be used in many different environments
They work best when they work together!They work best when they work together!
www.Highmixlean.com
Takt timeTakt time
Demand rate?Demand rate?
oror
Production Rate?Production Rate?
www.Highmixlean.com
Takt time and Executive S & OPTakt time and Executive S & OP
Current Lean definition has Takt time Current Lean definition has Takt time as effective working time divided by as effective working time divided by demand ratedemand rate
In most circumstances, we would be In most circumstances, we would be better off making it effective working better off making it effective working time divided by Production rate (from time divided by Production rate (from S&OP plan)S&OP plan)
www.Highmixlean.com
What does Takt Time Do?What does Takt Time Do? Sets the “Beat” in the form of pitch for Sets the “Beat” in the form of pitch for
production. production. Determines how many people work in Determines how many people work in
assembly jobs.assembly jobs. Provides “the bar” for operator balance Provides “the bar” for operator balance
charts for line balancing.charts for line balancing.
For all of these, takt would be better For all of these, takt would be better represented by the production rate from represented by the production rate from S&OP.S&OP.
www.Highmixlean.com
Traditional Executive S&OP Traditional Executive S&OP StrategiesStrategies
Make to StockMake to Stock
Make to OrderMake to Order
Finish to OrderFinish to Order
www.Highmixlean.com
We have also have three We have also have three production strategiesproduction strategies
Level- Most often associated with Make to Level- Most often associated with Make to Stock. To achieve a level production, a buffer Stock. To achieve a level production, a buffer against variable demand must be used.against variable demand must be used.
Chase –Most often Make to order. Also could be Chase –Most often Make to order. Also could be called variable capacity.called variable capacity.
Hybrid-used in both environmentsHybrid-used in both environments Learning to See has couched this as making to Learning to See has couched this as making to
shipment or making to supermarket.shipment or making to supermarket.
www.Highmixlean.com
Level Level
Buffer with finished goods Buffer with finished goods inventory inventory
(al a TPS) (al a TPS) Make to StockMake to Stock
www.Highmixlean.com
In this strategy there is no correct level of inventoryStock AmountStock Amount
www.Highmixlean.com
BOM Shape helps dictate strategyBOM Shape helps dictate strategy
In this ‘shape’ a few end items are made from many parts, materials, and components.
An example would be an equipment manufacturer such as automobiles, lawn mowers, capital equipment, etc. This shape lends itself to making to stock.
Levels # of Parts
www.Highmixlean.com
How Lean fits in: Make to StockHow Lean fits in: Make to Stock
Supermarket Here
Replenish Finished Goods on pull signal
Or create mix leveled Heijunka schedule and push to finished goods
Pull or Push to finished goods
www.Highmixlean.com
Mix and Volume variability Mix and Volume variability definitionsdefinitions
Mix variability is a measure of how often Mix variability is a measure of how often the models and their variants actually the models and their variants actually are sold.are sold.
Volume variability is measured by Volume variability is measured by simply determining whether the total simply determining whether the total amount of work required in the factory amount of work required in the factory by the customer orders varies by the customer orders varies significantly from period to period. significantly from period to period.
www.Highmixlean.com
Leveling Production mix versus Leveling Production mix versus sales mixsales mix
Forecast = 100 A, 50 B and 50 C this Forecast = 100 A, 50 B and 50 C this monthmonth
At 20 days in month, this is 10 per dayAt 20 days in month, this is 10 per day Production sequence = A B A C A B A C A Production sequence = A B A C A B A C A
B A C etcB A C etc The actual sales may not equal the The actual sales may not equal the
forecast.forecast. A finished goods inventory handles this.A finished goods inventory handles this.
www.Highmixlean.com
Leveling MixLeveling Mix
Pull systems work better when mix is Pull systems work better when mix is leveledleveled
Shared resources can be synchronized Shared resources can be synchronized based on the production pattern.based on the production pattern.
Capacity requirements for the value Capacity requirements for the value stream will fit the average requirements stream will fit the average requirements during each interval.during each interval.
FIFO lanes are kept to a minimum with FIFO lanes are kept to a minimum with regards to the need to balance regards to the need to balance operations for mix.operations for mix.
www.Highmixlean.com
Leveling mix in a high mix Leveling mix in a high mix environmentenvironment
High inventory investmentHigh inventory investment Potentially high obsolete inventoryPotentially high obsolete inventory Potential poor customer service Potential poor customer service
(reliant on forecast accuracy) (The (reliant on forecast accuracy) (The forecast will most likely be forecast will most likely be inaccurate, due to the high mix inaccurate, due to the high mix variability)variability)
www.Highmixlean.com
Leveling only volumeLeveling only volume
The buffer for the value stream may The buffer for the value stream may (or needs to, or should) contain only (or needs to, or should) contain only high volume items high volume items
We need to have separate strategies We need to have separate strategies for high volume and low volume for high volume and low volume items when creating the schedule.items when creating the schedule.
Interval should be based on a time Interval should be based on a time slice of volume and the number of slice of volume and the number of items sold during the time slice. items sold during the time slice.
www.Highmixlean.com
Leveling only volume, Cont.Leveling only volume, Cont.
More elaborate capacity planning is More elaborate capacity planning is necessary due to work content necessary due to work content variations caused by varying mixes variations caused by varying mixes of products being sold. of products being sold.
Cross training of operators is Cross training of operators is needed to handle required flexibility needed to handle required flexibility from various mixes as well as for from various mixes as well as for absentees absentees
www.Highmixlean.com
Level Level
Buffer variability with lead-timeBuffer variability with lead-time
Make to OrderMake to Order
www.Highmixlean.com
BacklogBacklog
J F M A M J J A S O N D
Time
Dem
and Demand
Production
Backlog
www.Highmixlean.com
BOM ShapeBOM Shape
In this ‘shape’ many end items are made from a few raw materials.
An example would be an injection molding company
This shape suggests a make to order strategy.
www.Highmixlean.com
How Lean fits inHow Lean fits in
Make to Make to
OrderOrderMake to Make to
OrderOrder
Supermarket here
You must make the lead time fit market requirements!
www.Highmixlean.com
Managing BacklogManaging Backlog
Market Lead Time
Variable Backlog
Production Lead Time
www.Highmixlean.com
Managing BacklogManaging Backlog
Promised dates must be managed Promised dates must be managed one of two waysone of two ways• Fixed lead time, vary capacity if backlog Fixed lead time, vary capacity if backlog
exceeds allotted timeexceeds allotted time• Variable lead time, governed by an Variable lead time, governed by an
aggregate view of sold versus capacityaggregate view of sold versus capacity
www.Highmixlean.com
ChaseChase
Buffer variability with:Buffer variability with:• more flexible and agile more flexible and agile manufacturing resourcesmanufacturing resources
www.Highmixlean.com
Chase StrategyChase Strategy
Production
Demand
Inventory (Backlog)
www.Highmixlean.com
Takt time and ChaseTakt time and Chase
Takt time has a different connotation Takt time has a different connotation in this strategyin this strategy
Think in terms of units of capacity, Think in terms of units of capacity, such as with adding production in such as with adding production in chunks of lines, or adding time at the chunks of lines, or adding time at the same ratesame rate
www.Highmixlean.com
Chase requires:Chase requires: Cross trainingCross training A way to know when to switch jobs A way to know when to switch jobs
during the workday (controlling flow)during the workday (controlling flow) Adding or subtracting labor by using Adding or subtracting labor by using
• Temporary employeesTemporary employees• OvertimeOvertime• SubcontractorsSubcontractors
OrOr Staff for peak periods and work on Staff for peak periods and work on
improvements when slowimprovements when slow
www.Highmixlean.com
HybridHybrid
Buffer variability with:Buffer variability with:• common component inventory (produce common component inventory (produce to stock)to stock)•finish-to-order with flexible finishing finish-to-order with flexible finishing capacity capacity
(Postponement)(Postponement)
www.Highmixlean.com
BOM ShapeBOM Shape
In this ‘shape’ many end items are made out of a few sub assemblies or intermediates that are made out of many unique raw materials and parts.
An example of this would be a pharmaceutical manufacturer with many package types from standard product (aspirin), personal computers, packaged chemicals
This shape lends itself to a postponement strategy.
www.Highmixlean.com
How Lean fits in : PostponementHow Lean fits in : Postponement
Supermarket Here
Pull Components based on usage
Assemble to order
Backlog management here
Stock management here
www.Highmixlean.com
Supply chain issues from Executive Supply chain issues from Executive S & OPS & OP
Buying capacity or items in the long Buying capacity or items in the long term?term?• If capacity, rough cut capacity from the If capacity, rough cut capacity from the
Executive S & OP plan should be usedExecutive S & OP plan should be used• If items, must decide how to reconcile If items, must decide how to reconcile
plan with short term actualplan with short term actual
www.Highmixlean.com
Supply Chain IssuesSupply Chain Issues
Choices for material purchasingChoices for material purchasing• PullPull• MRPMRP• Rough Cut PlanningRough Cut Planning
All will make have problems on long All will make have problems on long lead time itemslead time items
Mix sensitivity matters hereMix sensitivity matters here
www.Highmixlean.com
Question & AnswerQuestion & Answer
www.Highmixlean.com
Thank You for AttendingThank You for Attending
Business cards are available.Business cards are available.
OrOr WWW.Highmixlean.comWWW.Highmixlean.com
OrOr 609-781-4830609-781-4830