Apics pdm intro 4-13-10
-
Upload
toddjanderson -
Category
Business
-
view
374 -
download
0
Transcript of Apics pdm intro 4-13-10
Implementing Synchronized Planning in a Complex
Manufacturing Environment A Case Study
April 13, 2010
Terry Cook, CFO – Delkor Systems Inc. Rick Bernett, Partner -3sixty solution llc.
2
Thank You! for Supporting our APICS Chapter
Our goal is to share a real story along with a few insights we gained along the way: 1. Appreciation of the differences between the goals
of education and training 2. Ways to eliminate the ‘islands’ of information to
improve enterprise planning 3. Formalizing an effective agreement between the
sales function and operations 4. Creating the drum schedule based on the
strategic constraint and synchronizing MRP and final assembly to the drum schedule
5. A few tips on overcoming pitfalls of implementing change
3
Agenda
I. Overview of Delkor – Terry C II. Why We Started – Terry C III. How We Approached the Situation – Rick B IV. Results/Key Insights – Terry C V. Next Steps – Terry C
4
I. Overview of Delkor Systems Manufactures end of line packaging equipment Originally started in mid 1970’s Majority of business sold in 1990 with retirement of owner
The name ‘Delkor’, an idea, and 3 employees The idea turned out to be patentable - Spot-Pak® And the company grew to $37M averaging 20% per year
Employee count grew to 90 2 Buildings, one 35K Sq. Ft. and the other 22K Sq. Ft.
used for sub assembly and storage Key customers include Fortune 500 food companies Innovation and operating cost reduction is a key offering
to our customers
5
Trayfecta ® S Former Spot-Pak® Loader
Delkor Systems designs and manufactures end-of-line automated packaging systems
Our equipment provides robust, innovative solutions for carton forming and closing, top load case packing, tray packaging, and robotic palletizing
Overview of Delkor Systems (Con’t)
6
Historically, Delkor custom engineered, machined, assembled, tested and installed
Lead times were 18 – 22 weeks Machine prices vary from $10K to over $500K Typical machine consists of 3,000 parts About 30,000 items in Item Master File Internal machine shop Strong supplier network, most local Several Patents
Overview of Delkor Systems (Con’t)
7
Started first Company-wide strategic planning process (with guidance from Fred Green) Completed our first draft of key process maps and
SOP’s Completed first Corporate strategy meeting
Strengthened our management team with a new Director of Engineering and a new Director of Marketing
We had expanded our product lines beyond Spot-Pak® The economic uncertainty had finally caught up to
Delkor in Q2 08 – we had incoming orders, but they were declining, compared to the usual 20% growth we had become accustomed
II. Why We Started Spring 2008 -The Context
8
Why We Started (Con’t) This lull was seen as an opportunity to improved planning
functionality in our existing ERP system along with other strategic initiatives
Purchased the ERP system in 2003 Microsoft Dynamics NAV (Navision) Good handle of inventory status and cost information However not using MRP as a planning tool
Purchased Solid Works 3D CAD system in 2000 Several report writing tools available But as the company grew, the impact was felt in
numerous ways Inventory crept to unacceptably high levels Expediting activity increased Rework in assembly increased to unacceptable levels Overall work environment became overly reactive
Current planning processes limiting continued growth
9
Engaged 3sixtysolution to guide the overall project Retained our Navision support (Solution Dynamics) for
key technical support Following the initial 3sixty solution assessment, we
agreed on phase 1 scope – Material Planning fundamentals
This included: Standard vocabulary (using APICS as reference point) Educational workshops (key assumptions, necessary
conditions, limitations etc.) Viable Master Scheduling process Full MRP functionality in test database
Goal to complete by 6/30/2008
Why We Started (Con’t)
10
III. Our Approach
Kicked off with a full day offsite education session with Senior Management
Fully utilized the existing MRP project team including: Terry Cook - CFO and project sponsor Dirk Norgaard - Inventory mgr. Jenny Mate - Business Analyst Tom Tetzlaff - Production mgr. Met twice weekly – maintained action registry and project plan etc.
Next, held a series of educational workshops covering all relevant topics (i.e. MRP mechanics etc.)
Needed to integrate this initiative with the new strategic planning process
11
Order Fulfillment Process
Assembly
Assembly
Assembly
Assembly
Ship
Assemble to Order
Kitting
Machine Shop
Suppliers
Make to Stock 25%
Order Engr.
Machine Shop
Suppliers Make to
Order 75%
Delkor was predominately engineer–to-order About 75% MTO & 25% MTS
12
A Few Pinch Points!
Assembly
Assembly
Assembly
Assembly
Ship Stores
Machine Shop
Suppliers
Order Engr.
Machine Shop
Suppliers
Highly skilled Techs!
Excellent Inventory Accuracy
Make to Stock items
Based on Min-Max
Shortages/ Stealing/
Rework / Excess $$
Late Drawings
The Green Blob!
Hand-Offs
13
New Direction As part of the new Strategic Plan, Delkor decided to
greatly increase Product Standardization From 25% to 75% Standardized items From 75% to 25% Custom Items
A Major Engineering initiative! More important, a major culture change! But it created a new opportunity on how to proceed
14
1. Training vs. Education
Education Deals with understanding underlying concepts and
principles Helps to understand how various functions relate to
each other Answer the ‘why’ questions Connecting the dots Provides context
15
Education at Delkor
A key objective was education! Directors and key managers attended most of the
workshops! Workshops included time for dialogue!
Solidify understanding and acceptance Worked to get agreement on:
The specific problems we were addressing (scope) The reasons why the proposed direction would
solve the problems Recognize possible negative consequences and
address directly
16
Education & Constancy of Purpose Deming Point #1 - Constancy of Purpose
Repeat, repeat and repeat until the “aha’s” happen! Discipline to avoid the easy ‘outs’ or ‘controversy’ A few eggs must be broken to make an omelet!
Communicate “Formally” Quarterly company reviews Weekly status reports to CEO and Directors Bulletin boards etc.
More importantly, communicate “Informally” Not over hyping, but honestly explain what and why we
are doing this transformation Explain the likely organizational changes/roles
personally to individuals
17
2. Creating the Bridges to the ‘Islands’ of information
Assembly
Assembly
Assembly
Assembly
Ship
Assembly had info
Kitting
Inventory Control had
Info
Order Engr. Machine
Shop
Suppliers Engineering
had Info
The machine Shop had
info
Purchasing had Info
Sales had Info
Sr. Mgt had Info
There were tons of data, but little credible “information!”
18
Engineering has full design authority A 3D software product (Solid Works) was used to
accomplish their work – the initial BOM resides in Solid Works
ERP system resides in Navision Bills of Material must be transferred from Solid Works
to Navision Initially, this was a manual process!
Engineering Solid Works
BOM
ERP (Navision)
BOM
Bridge 1 Solid Works CAD to Navision ERP ®
19
A critical information interface had to be created Delkor IT (Paul C) worked to create electronic
transfer from Solid Works to Navision’s BOM file This “BOM Push” was a major and critical IT effort
We decided to wait until this was complete before going live with full MRP It also forced us to improve the ECN process
Bridge 1 (Con’t)
Engineering Solid Works
BOM
ERP (Navision)
BOM
20
While MRP was ‘installed’, it was configured in a basic Min/Max mode – i.e. treated dependent items as independent demand
To get full MRP benefits, we had to re-configure it Updated numerous planning parameters
With the new standardization effort, agreed to master schedule at the key option level Planning BOM
Agreed to test full MRP functionality using a pilot product line (Trayfecta) in the test data base To reduce internal effort we got assistance from Solution
Dynamics
22
Using Planning BOM’s, the MPS is manually entered into Navision Custom parts, of course, are build to order
With MPS, Inventory File and BOM’s, the MRP calculates all dependent material needs (i.e. planned orders) Agreed to floor stocking where it was practical
Full MRP Functionality
23
Custom items are designed and built to order, thus the process starts with a Request for Proposal (RFP) If customer accepted the proposal, had to create a Sales
Order in Navision - a manual process Agreed to purchase a product configurator that is a
bolt-on application to our Navision ERP System This project is still in process!
Will create the demands (Options) in Navision Reduce RFP complexity Reduce manual data entry
RFP Process Stand alone
Order Entry Navision)
Sales Process
Bridge 3 RFP’s to Order Entry
25
Value is created when we sell something – the process starts with Sales!
Delkor provides capital equipment thus sales process is long & complex 1-2 years not uncommon
3. Sales Buy-In A Necessity for ERP Success
Sales involves other groups Applications engineering – Quotes, Proposals & Changes Engineering – Is design viable? Assembly – Can we actually build it? Finance – Are we going to make money?
Sales staff is technically capable, but focus on sales, not forecasting
What we needed for effective planning was a ?
26
Conceptually S&OP is easy! Even the details are not too involved
Sales & Operations Planning Version 1.0
Initial Sales Forecast
Formal S&OP Meeting
Recommendations
Pre-Meeting
Capacity Check
Updated Sales & Production
Plan
The real challenge is changing old nasty habits!
27
Required CEO’s direct involvement (with a key push from the CFO!)
This took several iterations! We back slid at least several times But we pushed forward
Sales Customer Mgt. System (ACT) re-implemented Guidelines on inclusion to sales forecast agreed Forecasting is still more art than science!
New Approach – if something ‘big’ happened, no hallway orders-meet as a team and agree from there Discipline! Old habits die slow & must be driven from the
top! Note, if the above is not possible
– It’s a Show Stopper!!
Creating the S&OP Process at Delkor
28
Summary thus Far 1. Provided educational workshops 2. Bridged many ‘information islands’
BOM Push Full MRP capability Order Entry Configurator (in process)
3. Formal S&OP in place (i.e. Bridge #4)
But we did not want bridges to nowhere! Still had not yet fully
synchronized the order fulfillment process
29
4. The Strategic Constraint - Drum Beat The Theory of Constraints (TOC) includes the 5
Focusing Steps: 1. Identify 2. Exploit 3. Subordinate 4. Elevate 5. Start Over
In 2008 the true system constraint was obviously external - the ‘market’ The sales team worked to ‘exploit’ this constraint,
but this is another story unto itself Internally, however, we needed to identify the
strategic constraint – a logical control point to synch up all other activities
30
A daily “Engineering Release” meeting was held to provide downstream resources as what they could work on the next few days Engineers were rushed and stressed Someone was always waiting for some information from
engineering-specifically, mechanical engineering)
Design Engineering
Assembly Machine Shop
Purchasing
A new drawing
31
Step 1 – Determine the Strategic Constraint Where should the internal constraint be located? It depends!
E.g. what is the natural constraint of a Boeing 767?
Kitting Order Entry Engr.
Machine Shop
Suppliers
Assembly
Assembly
Assembly
Assembly
ECN’s
Recall, Delkor designs and builds machinery
32
Step 2-Exploit How to Best Utilize Engineering?
What actions would allow us to get the biggest bang for the buck in engineering? New Director of Engineer – Adam Koller Training in updated Solid Works CAD system New roles – e.g. have tech run interference between
assembly, machine shop etc. to cover the most common design issues
Improved ECN process
Improved upfront scrutiny of sales order proposals – validate we can do what customer wants
Stop the bad multi-tasking (huge urban myth!)
Create a finite schedule for Mechanical Engineering which would be used to synch up all other operations- “Drum” Schedule
33
How to Schedule Engineering?
July Aug Sept Oct Nov Dec
Project ABC
Create a finite schedule (drum beat) based on mechanical engineering capacity and customer needs We had several false starts Agreed on a simple Gantt Chart – using MS Project
Project 123
Project XYZ
• Stagger Mech. Engr in the most effective way to assure capacity not exceeded
• Time Estimates based on complexity of project
34
Step 3 – Subordinate by Synching Up Once we had created the Drum, we could easily
forward schedule all key downstream tasks
Mech. Engr. Review
Elect. Engr.
Integ. Machining
Engr. Release
Pick
Assemble
MPS
MRP
Orders
BOM
Suppliers
Drum
• Use the Pick Date to trigger MPS due dates
• Lot size set at L4L • True demand pull for
all dependent items
• The buffer is the backlog
• Only release if ALL conditions are a ‘GO’!
35
Example of MS Project Drum & Load Report
• Mechanical Engineering is the control point for capacity, but secondary view in assembly is also checked
Load Report
36
Step 3 – Dealing with Murphy Murphy lives in a plant, Delkor was no different We needed to buffer against Murphy
1. Between Engineering and Production 2. Between Production and Shipping
We used two time buffers
Mech. Engr. Review
Elect. Engr.
Integ. Machining
Engr. Release
Pick
Assemble Suppliers
Drum
37
Summary Created the Drum based on finite capacity and
customer needs at Mechanical Engineering Schedule downstream action accordingly Synchronize the MPS/MRP to the release and pick dates
established
Mech. Engr. Review
Elect. Engr.
Integ. Ship Machining Assemble
BOM Release & load MPS
Parts Due Date
Protect against Murphy – add 2 buffers
Drum
Engr. Completion Buffer
Shipping Buffer
New policy - No order until specifications understood and engineering samples in-house
38
Step 3 of TOC - “Subordination” - is the toughest nut to crack!
Requires new habits e.g. Push back on sales until idea can be validated Using different measures for decision making
Explore Throughput Accounting vs. GAAP based Avoiding the temptation to pull work ahead to keep
everyone ‘busy’ Cannibalizing material from one project to another Trying to ‘save’ set ups by using large lot sizes Leaning out too much-resulting in lack of protective
capacity
Challenges
39
A weekly production status meeting held Review Drum Schedule and Buffer Consumption
Master Scheduler facilitates meeting, actions and issues entered real time (& hyper-linked to production log)
Application Engineers provide project management support
The use of the Drum provides a enterprise-wide easy to view picture of all engineering and operational activities
Drum
40
5. Tips on Implementing Change CEO must be educated and understand this is not a
software thing – but a new way to conduct business CFO must be on-board!
Do not assume the nodding of heads implies understanding
Assure all agree on the problem at hand – don’t assume this is true!
Gain agree on the general direction of the solution first
Acknowledge concerns on possible negative consequences – provide viable workarounds with their involvement
Maintain constancy of purpose - plan to repeat this many times!
41
From 1. Decentralized information 2. Questionable information 3. Informal hallway decision
making 4. Manually interface between
CAD & ERP 5. Project schedules informally
and inconsistently updated 6. Unaware of strategic control
point
Results & Key Insights To
1. Centralized Information 2. Confident information 3. Formal decision making
(S&OP) 4. Electronic interface from CAD
to ERP 5. Project schedules formally
and consistently updated 6. Leveraging of strategic
control point
42
Education We tried to do it ourselves, but we did not understand the
underlying principals Needed to learn the underlying concepts to see how to apply to
Delkor Moved to thinking of Delkor as an assemble-to-order company and
how to structure processes to support that type of manufacturing Visibility
There is a central repository of information, (Navision and the Drum schedule)
Formalization of communication Dramatic Reduced Hallway meetings Installed and executed SOP meetings to make decisions based upon
input from all functions which then can be executed (I.E. setting ship dates while addressing load and customer requirements)
BOM Push Had been started but really it took action to support MRP project
We now have accurate data in Navision with little manual input thus freeing up a FTE to address other needs in the production/purchasing department
Results
43
Productivity Improvements
Comparing 2008 to 2009 we: Reduced Engineering
time ≈ 25% Reduced Assembly
time ≈ 33%
44
We doubled throughput capacity with only a 10% headcount increase
Reduced Inventory 18% Improved Pick % from high 80% to high 90% Less Chaos
Overall
45
Hold the gains! Complete product configurator process Continue to improve ECN process Continued strategic growth
V. Next Steps