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Turn Service Supply Chain into Profits with Value Chain Planning

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Presentation on theme: "Turn Service Supply Chain into Profits with Value Chain Planning"— Presentation transcript:

1 Turn Service Supply Chain into Profits with Value Chain Planning
Moshin Lee, Sr. Director, Oracle Value Chain Planning Product Management Graham Reid, Oracle Global Process Owner, Spares Planning

2 The following is intended to outline our general product direction
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

3 Program Agenda Evolving to best in class service parts and MRO planning with Oracle VCP Development Roadmap Case Study: Oracle’s use of VCP for service parts planning

4 COLLABORATION SERVICES
INTEGRATION SERVICES Siebel Hyperion E-Business Suite JD Edwards PeopleSoft Legacy Systems COLLABORATION SERVICES Value Chain Networks Demand Sensing and Parts Planning Asset Intensive Sales and Operations Planning Demand and Trade Management Supply and Distribution Strategic Planning and Postponement Planners Suppliers Contract Manufacturers Analysts Centers Carriers Customers Retail Stores and Optimization Scenario Planning & Analytics Engineered Systems & Solutions Data Oracle Value Chain Planning Solution Common foundation Single source of truth Centralized services Start anywhere, redo nothing Oracle offers a complete, deep and broad planning solution. Even though you can implement each product stand alone, you lay the foundation for the Value Chain Planning footprint as soon as you implement one – It will make it easier to deploy other products subsequently while at the same time reaping the benefits of the pre-built integrations. All products are integrated within the planning solution but also integrated with other sub systems such as Oracle ERP, CRM, Financial Planning, CRM, as well as has the ability to integrate with non Oracle systems. For now, I just want you to know that Oracle Value Chain Planning is a COMPLETE solution that shares a COMMON FOUNDATION and PLANNING DATA MANAGEMENT and is the SINGLE SOURCE OF TRUTH for all planning decisions (and that also have been designed to perform in the best possible way on the Oracle Engineered Systems)

5 Service and Maintenance Planning solution The Oracle difference: The right solution for the right problem DISTRIBUTION CENTRIC REPAIR CENTRIC ASSET INTENSIVE Multi-echelon distribution with rebalancing and fair share allocation Standard catalog driven parts, no part condition; standard bills Standard work orders for assembly, new buy orders Forecasting and replenishment, with optionally inventory optimization ASCP/IO/DM: CARQUEST, Orbotech Use part condition (“usable”, “defective”) Internal and external repair Part criticality matrix linked to forecasting rules Optimize redistribution and replenishment Account for supersession (repair to) in forecasting and replenishment Unified forecasting and replenishment UI Release recommendations to Depot Repair and Spares Management SPP/DM/IO: Oracle, Virgin Media, Virgin Mobile, Huawei, Teradata Maintain, repair, and overhaul complex equipment and installations Repair work order hierarchies Rotables and serialization Long range and operational planning – Balance material, resources and budgets Plan new buys, internal and external contractor repairs; plan maintenance repair schedules CMRO and EAM based execution ASCP/DM/IO/PS/GOP – CMRO/EAM integration: Korean Air {Presenter note: use this slide if there’s some confusion on the different segments between ASCP-CMRO, ASCP, SPP} Service is not the same for every product. You can have very complex engines or installations that require a special approach, as is supported by Oracle cMRO. When the key problem is focused on distributing and replenishing standard catalog parts and no significant repair and return element is present in your service operation, then a combination of Demantra and Distribution Planning (ASCP) is typically the best solution. If you do have a strong repair element, need to distinguish part condition and supersession and release recommendations for repair and new buy, then Service Parts Planning is the right solution and that is what we will talk about for the rest of this presentation. We have 2 dedicated sessions on Parts Planning and Asset Intensive Planning in tomorrow’s track, so to get more information on these solutions, I encourage you to attend those sessions.

6 Improve spare parts planning
Parts Forecasting Replenishment Analysis Support intermittent demand patterns Leverage highly accurate Bayesian engine Population and failure rate based forecasting Forecasting based on supersession Analyze and fix exceptions Supersession-based planning Plan reallocation and transfer of parts Plan internal and external repair before new buy Release planning recommendations to Execution Single UI for forecasting and replenishment Part and supersession chain centric analysis Zone and enterprise views Planner work lists Personal and public queries Auto-release rules Oracle Service Parts Planning is a robust and comprehensive solution that offers an end to end parts planning process. SERVICE Simultaneously forecast, replenish and redistribute your service parts across your service supply chain More accurately forecast your service parts Proven Bayesian statistical forecasting engine inside for highest accuracy Account for intermittent, seasonal, and fast moving demand patterns Leverage composite forecasting (shipments, usages, returns) Use service failure rates Optimize the replenishment and redistribution of parts across the extended service network, integrated with Service Execution

7 Integrated planning and execution
Reduce cost via pre-built integration Execute to plan Global parts inventory visibility across all service organizations Out-of-the-box integration with Oracle Spares Management and Oracle Depot Repair Release depot repair orders, reschedules, and transfers Release spares management new buy purchase orders, repair orders, and transfers Improve planner productivity through automation of release Execute internal and external repairs Oracle Service Parts Planning is seamlessly integrated with the Execution applications, eliminating the need to built integration between planning and transaction systems and saving implementation time.

8 Service planner workbench
Work list driven actions Supersession Integrated demand and supply planning Pegging view And here some examples of the tools that give service parts planners the tools they need to make better decisions productively.

9 Multi-echelon postponement
Evolve to best in class spare parts planning Advanced Forecasting Multi-echelon postponement Plan analytics Forecast new service level agreements at customer and customer site level Forecast new parts based on part characteristics Centralized demand management for service and manufacturing Enable simultaneous forecasting of end items and spare parts Consider causal factors Analyze impact of new service level agreements on safety stock policies Simulate the impact of inventory budget reductions Simulate trade offs between service levels and cost Manage postponement decisions across all service facilities Monitor service level agreement adherence Monitor repair versus new buy trend patterns Review service parts inventory performance Compare plans and trends over time Involve key managers You can extend the core Service Parts Planning solution to more advanced business processes: You can optionally use Oracle Demantra Demand Management and Demantra Advanced Forecasting and Demand Modeling with Oracle Service Parts Planning if you have one of the following requirements: Forecast customer specific service level agreements Operate a centralized forecasting/demand planning organization that creates forecasts for production and service parts Advanced forecasting based on part characteristics or causal factors

10 Evolve – optimize spares stocking
Minimize SLA portfolio cost Account for detailed service level and fulfillment lead time targets Deploy inventory to meet entire SLA portfolio Account for repair, lead time, space, budget constraints Simulate SLA scenarios 99%, 2 hours 97%, 4 hours 92%, 24 hours

11 Evolve – Monitor parts planning performance
360 degree visibility Monitor service level agreement adherence Monitor effective use of repairable parts before buying new Compare changes between plans and analyze trends Analyze spare parts inventory performance The addition of Oracle Advanced Planning Command Center can provide aggregate level planning views and analysis that easily can be shared with other decisions makers in the organization

12 Maintenance scenario planning and S&OP
Asset Intensive Planning with VCP Prebuilt integration with EBS CMRO and EAM Maintenance scenario planning and S&OP Balance supply and determine repair Integrated maintenance scenario to support total cost of fleet operation – CMRO Unit Maintenance Plan, EAM Budget Forecast, Demantra non-Maintenance Forecast, ASCP Planned Repair Orders Projection of resource utilization – Global, organization, department Projection of total material requirements – Calculate retention levels and justify disposal actions Projection of maintenance cost Calculate planning factors Scenario planning: select specific CMRO product classification (simulations) and EAM budget forecasts as basis for planning Match defective demands with defective supplies Plan repairs of complex subassemblies and components Plan purchases, internal maintenance, and contractor maintenance Consider repair capacity and material availability Consider CMRO and EAM repair BOMs and routings Consider resource (equipment) downtime due to preventive maintenance We have integrated CMRO and EAM with ASCP, GOP, IO, Demantra DM, and PS

13 Asset Intensive Planning with VCP
Prebuilt integration with EBS CMRO and EAM Planning Factors – Business needs Solution What is the non-routine material and resources associated with a Maintenance Requirement (MR)? What is the total material and resources associated with a components item’s repair? What is the difference between Engineering failure rates and actual failure rates? What are the material and resources associated with flight operations? Calculate planning factors based on non-routine resource and material requirements and incorporate into CMRO MR definition Supports routine historical analysis contrasted to CMRO Engineering definition Forecast non-UMP visit forecast and leverage to build flight schedules in CMRO (pre-flight, post-flight and transit visits are not contained in Unit Maintenance Plan) The S&OP process for Asset Intensive Planning basically relies on addressing the business needs around Planning Factors.

14 Asset Intensive Planning with VCP
Prebuilt integration with EBS CMRO and EAM Maintenance Scheduling – Business needs Solution Which visits are early, on-time or late and why? What tasks are on the critical path? What is the total machine, crew, and tool utilization across visits, or for a specific visit? How much of the utilization is associated with routine versus non- routine work? What is the impact of taking down production equipment for maintenance? What is impact of rescheduling the EAM maintenance? What is the average visit duration by visit type (PDM, Engine Overhaul)? How can Visit throughput be maximized? Schedule CMRO Visits taking into account visit dates, milestones, task hierarchies, and prec. constraints View CMRO work breakdown structure and critical path Schedule Visits while considering EAM preventative maintenance Override EAM preventative maintenance Model key constraints on the shop floor (crew, machine, tool – capacity and calendars) Manually re-sequence visits Respect inventory reservations Constrain dates based on outside processing schedule Create multiple simulations and compare (on time, now late, KPIs) In addition, we enable robust support for scheduling of maintenance work … {Presenter note: please unhide the next 4 slides if a customer is really interested to find out more details about our ASSET INTENSIVE enhancements}

15 Asset Intensive Planning with VCP Process flow
Resource utilization Total cost Non-UMP visit forecast Detailed maintenance schedule Complex Maintenance Repair and Overhaul Planning factors VCP Demand Management and S&OP Historical and projected fleet size Historical and projected fleet utilization Historical visits and usage History for non-maintenance products Visits and Visit WBS Enterprise Asset Management Order Management Historical EAM usage Adjusted WO dates Forecast for non-maintenance products Planned maintenance requirements & Planned UMP and Production Visit Work Orders Rebuildable activities, WOs, and Forecasted WOs Work Orders Total material requirements Demand variability The S&OP process for Asset Intensive Planning basically relies on addressing the business needs around Planning Factors. {Presenter note: please unhide the next 4 slides if a customer is really interested to find out more details about our ASSET INTENSIVE enhancements} ASCP plan results (material and resource requirements) VCP Production Scheduling VCP Advanced Supply Chain Planning VCP Inventory Optimization Service levels Budgets Target SS Planned repair orders Time phased SS Planned orders

16 Maintenance scheduler workbench
Schedule around preventative maintenance Analyze key performance indicators Analyze maintenance schedule exceptions Analyze critical path And here some examples of the tools that give maintenance schedulers the tools they need to make better decisions productively.

17 Development Roadmap

18 Recent Updates and Future Plans Service and Maintenance Planning
and Demantra and Demantra VCP Asset Intensive Planning Material planning for complex maintenance Asset material planning for equip maintenance Maintenance detailed scheduling (critical path) Long term maint forecasting tied to fleet fcst Inventory Optimization Warehouse capacity Service Parts Planning Sourcing priorities for inventory rebalancing Service Planning Analytics (APCC) Performance enh (archive plan) Inventory Optimization Category level service level targets Unified planning and analytics Extreme intermittency enh In-Memory applications R2 Front port of Front port of Dem Technology upgrades 2012 2013 2014 Asset Intensive Planning Aggregate work order support Service Parts Planning Reserve safety stock Service Parts Planning (candidates) Maximize repair vs. demand lateness tradeoff Replenish before rebalancing … and more As you can see from this eye chart, we have been very busy, and a lot of you have not upgraded to any of this … (talk through some of the highlights). and Demantra VCP

19 Case Study

20 Oracle Internal Implementation
Deploying Value Chain Planning for Hardware Spares Oracle Hardware Support Overview Implementation footprint Service Supply Planning Process Benefits Achieved Lessons Learned Looking Forward

21 Oracle Systems Support Overview
167 product lines 17K unique spares 376 spares Inventory Organizations 2.6M item-org combinations 285 physical warehouses 4600 employees in Systems Support $2.4B systems Support Revenue Mention that the VCP db is 7+

22 Oracle Spares Warehouse Distribution
Leipzig T1 Lockbourne T1 T2 - 83 T3 - 58 T2 - 17 T3 - 54 Miami T1 T2 - 11 T3 - 15 T1 Singapore Putting everything in one system with one set of part numbers and the ability to share demand and supply globally, allowed us to rationalize our spare parts network Using Inventory Optimization showed us that we could have better service levels with lower inventory, by pushing inventory back into distribution centers and using today’s fast logistics to get the parts to the customers. We were able to reduce spare parts stocking locations from almost 1,500 to just about 500 Tier Description Planned Tier 1 Distribution Center SPP Tier 2 Country Warehouse Tier 3 Local Warehouse Tier 4 Small/Unmanned WH Min-Max Tier 5 On –Site Spares Tier 6 Field Technicians N/A Tier 7 Repair Vendors Tier 8 Scrap Agents

23 Inventory Organization Structure
Tier Description Planned Tier 1 Distribution Center SPP in VCP Tier 2 Country Warehouse Tier 3 Local Warehouse Tier 4 Unmanned Warehouse Min-Max Tier 5 Managed On -Sites Tier 6 Field Technicians Spares Management Tier 7 Repair Vendors Tier 8 Scrap Agents

24 Oracle Spares Planning with VCP
Right Part, Right Place, Right Time at the Right Cost Business Challenges Solution Disparate, local planning, procurement, stocking and repair processes Disjointed view of inventory levels, purchasing activity and delivered level of service Focus on Service as a profit center Implement a single, global VCP solution Single source of truth Utilize intelligent forecasting, optimized stocking strategies to drive lowest cost of operations while increasing level of service

25 Oracle Hardware Spares Supply Chain VCP Footprint
Value Chain Planning Collections Items/BOMs Sourcing Rules Purchase Orders Repair Orders Shipments Suppliers Customers Order Types Demand Class Organizations Inventory Locations Contracts Supersessions Demantra Demand Management Service Parts Planning Orders Buy Repair Transfer Inventory Optimization Advanced Planning Command Center GSI: Order Management, Master Data, Field Service, Spares Management, Business Intelligence E-Business Suite - Global Single Instance

26 Planning Calendar Monthly Weekly Daily Statistical Forecast
Leading Indicator Forecast Weekly Rebalancing Inventory Optimization Weekly Sub-Set Daily Collections Regional Plans APCC Refresh 3 SPP Regional Plans (Sunday – Thursday w/ auto-release) Collection Runs (before each regional plan) APAC Plan (SPP-APAC completes by 6:00 AM SGT) EMEA Spares Replenishment Plan (SPP-EMEA completes by 6:00 AM GMT) AMER Spares Replenishment Plan (SPP-AMER completes 4:00 AM PST ) SPP Rebalancing Plans (run each week end) Inventory Optimization Plans (run each week end) Demantra Forecasting LI & Accumulate with front-loading are published weekly Statistical Forecast is run monthly APCC (Reporting) refreshed daily

27 Key Success Factors Shared vision and cross-functional executive sponsorship Invest in process governance Define global, standard process Align business process with application technology Data validation & migration Change management

28 Reverse Supply Chain Transformation
Results Spare parts inventory $800 million to $400 million MAPE improved by 20% , BIAS down to single digits Backorders reduced by 50% , Service 90+% Risk pooling used in Inventory Optimization $20M reduction in spare parts safety stock Improved collaboration across Support organization Better decisions based on a single source of truth

29 Looking Forward Differentiated Stocking Strategies
Rationalize placement of non-critical spares to maximize risk pooling Focus on high value, critical spares close to point of use

30

31 Oracle Value Chain Summit
Empowering the Modern Value Chain Explore How New Solutions Within Social, Mobile, Analytics & the Cloud are Helping Companies Transform Supply Chains into Modern Value Chains February 3-5, 2014 – San Jose McEnery Convention Center Hands-on workshops, solutions demonstrations & more than 200 sessions on topics in 6 complementary solution areas: Product Value Chain, Manufacturing, Enterprise Asset Management, Logistics, Planning & Procurement Early bird registration opens soon –

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