Presentation on theme: "Innovative Supply Chain and Manufacturing Production Systems"— Presentation transcript:
1 Innovative Supply Chain and Manufacturing Production Systems For Presentation to the Annual Meeting of the Institute of Industrial EngineeringMontreal, CanadaJune 1, 2014Martin M. Stein, D.Sc.
2 The Toyota Production System and Proctor and Gamble’s, IWS The Toyota Production System created a new form of management where culture change and climate in the organization were fundamental elements of production process control Proctor and Gamble’s, Integrated Work System, is a major advance over TPM, with linkages to the supply chain. Plants are now able to produce product in response to inventory shortages. Competitive advantage will require the expansion of internal capabilities and the rapid transfer new programs globally including for use by potential acquisitions and new plants. Internal Capability will permit the use of internal resources that implement best practices on a step by step basis. The availability of a road map for implementation will provide an efficient and effective process for guiding companies toward excellence in supply chain and manufacturing.
3 Creating Leadership Opportunities for Culture Change The TRACC System provides new opportunities for leaders to harness the organization’s energy for culture change. Cross-functional teams become engaged in problem solving at all levels. Situational problems are solved by teams of front-line workers supported by technical staff members. Systemic problems are supported by supervisors, managers and technical staff who are dealing with recurring issues so they are not repetitive. Strategic challenges are surfaced by the mid level teams who identify barriers to strategic implementation. The TRACC System contains several modules that drive culture change and organizational development. The Leading and Managing Change module is designed to create a holistic overview of the organization and is extremely important for companies with silo organization structures. Enablers also are included in the Human Capital Module where human resources, competency testing and professional development implementation actions required by culture change are provided. The End to End, Demand Driven Organization Model (Stage 4 and 5) requires integration of business planning and the creation of a Center of Excellence that also facilitate culture change.
4 Benefits of Integrating Manufacturing and Supply Chain Coordination of supply and demand is a critical element in the design of an end to end, demand driven value network. The most advanced companies such as Procter & Gamble have recognized that there are significant potential benefits form integrating supply and demand planning. The savings potential from manufacturing at P & G was $ 1B but when the supply chain opportunities were incorporated, savings potential tripled to $ 3B! The logical structuring and systematic approach for continuous improvement that is required for a manufacturing process can be extended to include and integrate the supply chain components such as logistics, customer service and warehousing. The latest version of the TRACC system has been expanded to include 11 additional modules for Supply Chain components. The combination of these to the 11 components for manufacturing, now create a comprehensive set of 22 that include over 1300 best practice staged and structured implementation actions.
5 TRACC provides the platform for sustainable performance improvement for a balanced set of metrics 3 years1.63.0WORLDPerfect Order90%CLASS85%68%90%26%21%Deliver 20% More Perfect Orders……hold a third less inventory…72 Days54 Days…have lower SC costs equal to 5% of revenueLeaders and Laggards5477%Days of Inventory5821%68%SC Cost as % of Revenue6523%Performance24%7226%Practice MaturityExample adapted from AMR research and CCI results
6 Organisational Enabler The TRACC offering is functionally initiated and ensures integration and alignments to Strategic and Operational EnablersReturnSourceDeliverStrategySTRATEGIC ENABLERSOPERATIONAL ENABLERSORGANISATIONAL ENABLERSAlignTransformPlanMakeOperational EnablerOrganisational EnablerSUPPLIERCUSTOMERSupply Chain Strategy WorkshopsSupply Chain AlignmentLeading and Managing ChangeDemand PlanningSales & Operations PlanningSupply PlanningIntegrated Business PlanningProcurementHealth and SafetyEnvironmental Sustainability5STeamworkVisual ManagementFocused ImprovementAutonomous MaintenanceAsset CareSet-up Time ReductionQualityWarehouse ManagementTransport ManagementAdministrative ExcellenceTransactional ExcellenceHuman CapitalInnovateProduct Lifecycle Management
7 TRACC stages: The maturity growth is defined over 5 stages and the implementation sequence ensures sound foundationsDisconnectedBasics establishedCompetentAlignedDDVNStage 5Stage 1Stage 2Stage 3Stage 4Stage 1Stage 2Stage 3Stage 4Stage 5DisconnectedBasics establishedCompetentAlignedExcellenceMisalignedIgnorantFragmentedControllingCrises ManagementFire fightingUnclear strategyUnclear goalsUndefinedSilo approachesAd hocIdentifySelective adoptionRecognition of waste / valueRisk awarenessValue articulatedPrioritisationStabilisationClearly definedInitial awarenessUnderstanding of root causesStandardisedIntegratedDeployedKnowledge ExpertConsistentCompetentClear / focusedAvailableBusiness process drivenAddressing Root causesSimplicitySharing CollaborationVisibilityExternal / InternalCulture of learningImprovementBest in the class within industryEliminating root causes of problemsCulture of teachingInternational benchmarkingResilientVirilityDynamicPredictiveOrchestratingShapingConfidence & TrustAdvanced detection
8 Planning TRACC’s: The Maturity Pathway Stage 1Stage 2Stage 3Stage 4Stage 5DisconnectedBasics establishedCompetentAlignedDDVNSUPPLY CHAINNo InsightFunctional ForecastsConsensus ForecastsDEMANDPLANNINGSensingINTEGRATED BUSINESS PLANNINGShapingDisarrayBasic PlansReliable PlansSUPPLYPLANNINGFragmented and ReactiveRudimentary IntegrationAligned and FocusedSALES & OPSPLANNING
9 Decision-making in Planning TRACC’s Supply Chain AlignmentDetermine customer segmentation and differentiated internal supply chainsNetwork configuration decisions with regard to manufacturing facilities, sourcing locations, distribution centres and routesCollaboration decisions with regard to 2nd and 3rd tier customer and suppliersHigh capital investment decisionsHigh importance and high complexityLong term — 3 to 5 yearsBroad impact on entire internal and external supply chain and organisationIntegrated Business PlanningSet direction and priorities for businessDecisions aimed at closing gap between supply chain plans and financial objectivesDecisions on new products, new markets and new improvement projectsRisk and opportunity basedHigh importance and high complexityHigh investment decisionsMedium to long term — 18 to 24 monthsDPIBPSPS&OPSCASales and Operation PlanningBalancing demand and supplyControlling inventoryProduct portfolio managementHigh-level capacity constraint decisionsDecision on reaching consensus on demand and supply plansMedium term — 6 to18 monthsExecution of strategySupply PlanningConstrained supply plansFinite capacity plansDaily, weekly, monthlyRough-cut plans — 18 to 24 month horizonDemand planningConsensus demand plan18 to 24 month horizon99
10 Planning TRACC’s: Integration drives consolidation of Information and timing CustomersSupplierStrategic PlanningSupply Chain Alignment TRACCCollaborationMarketing and Sales planningDemand Planning and CommunicationMATERIALS PLANNINGMaterial Planning (MRP)Material ReleasingCAPACITY PLANNINGResource Planning (RP)Rough Cut Capacity Planning (RCCP)Capacity Requirements Planning (CRP)Finite LoadingPRODUCTION PLANNINGProduction Planning (MPP)Production Scheduling (MPS)Finite Scheduling (FPS)DEPLOYMENT PLANNINGInventory Planning (IP)Distribution Deployment Plan (DRP)Medium Term (weeks or months)Material PlansShort Term (days or weeks)Vendor SchedulesResource AvailabilityRCCP Plans or InfoShort Term (weeks or months)Requirements Capacity PlansProduction PlansProduction SchedulesShort Term (hours or days)Finite SchedulesInventory TargetsDeployment RequirementsMake (Convert)SupplyDemandCustomer-driven Supply Chain (i.e. pull based)Purchase ordersSales and Operations Planning TRACCShipment HistoryBusiness unit plans and budgetsPrice plans, promotion schedules, etc.Sales forecastProcurement TRACCConsumer ordersOrder Fulfilment TRACCWarehousing TRACCTransportation TRACCSupply Planning TRACCDemand Planning TRACC
11 Case Study: Kellogg Latin America Kellogg Latin America consists of 8 plants in Mexico, Brazil, Venezuela, Ecuador and Colombia. At present, 7 of these plants are utilizing the manufacturing TRACC system. Recently, Kellogg Latin America, has added Supply Chain Alignment, Demand Planning, Supply Planning and Sales and Operations Planning modules of the expanded TRACC system for Supply Chain. This region will be the first region at Kellogg’s to launch the Supply Chain modules. In , task forces will be organized to implement the Stage 1 to 3 Implementation best practices. Initial conclusions are that there will be organizational change required to move to the end to end demand value based network.
12 Implementation Philosophy Embedding best practices underpins lasting performance. World class organisations drive performance improvement by standardising practices and continuously improving these standards.Operations excellence systems must show results by improving hard KPIs or they will lose support before they are embedded in the culture.CLASSWORLDPracticePerformanceBack of the packStragglersCan't go the distanceContendersPromisingDefining what 'good' looks like and monitoring best practice implementation ensures a focus not on current performance, but on long-term, sustainable market-beating performance.XY12345121212
13 Case study: SABMiller - Practice Performance Ranking (presented at public conference)
14 Case Study: SABMiller – Energy Usage (presented at public conference) Low High
15 Case Study: DuPont Production System (presented at public conference) DuPont: The TRACC Integrative Improvement System is the backbone for the DuPont Production System globally.Our DPS System (powered by TRACC) has returned $2 billion back to the business in the last two years.Paul Mocniak, Program Manager, DPS TRACC, DuPont, USA
16 Case Study: DuPont integrated Improvement Approach (presented at public conference) DPS Vision statementEveryone, everyday in pursuit of Operations Excellence enabling DuPont to win in a dynamic worldCurrent and future requirements for capability and performanceRequired business outcomesManaging processKeep focus on what really matters, with the right peopleTechnical modelApply tools and practices to drive focused improvement at all levelsCapability buildingInsure the right skills and coachingMindsets and behavioursAlign cultural norms with the organisation's vision, missionBrought in to support and sustain all aspects of DPS
17 Case Study: Heinz integrated Improvement Approach (presented at public conference)
18 Example: Quantification and Opportunity Prioritisation Performance Assessment$ OpportunityPractice AssessmentHow sustainable areyour current practices?
20 Example: Full TRACC implementation and support AM on shop floorDowntime trend
21 Kellogg LatAm – TRACC Results Strong Correlation between TRACC maturity and OEE Practice Maturity
22 Kellogg LatAm – TRACC Results Strong Correlation between TRACC maturity and Plant Performance
23 TRACC Practice Maturity 1.62.2Practice Maturity Improvement
24 Improvement Potential CLASE1.6192%90%MUNDIAL87%84%Processing65%55%95%55%30%45%OEE37%Packaging12345Maturity of Practices
25 Improvement Potential 4%12%5341CLASEMUNDIAL1.6127.0%6.0%5.4%5.0%WasteMaturity of Practices
26 Kellogg Australia – Botany Plant TRACC Manufacturing Practices Overview
27 Kellogg Australia – Botany Pilot Plant OEE analysis
28 The evolution from traditional CI to Integrative Improvement Systems 70% of companies are between Stage 2 and 2.5Companies below Stage 4 are unlikely to successfully replicate the long-term performance culture exhibited by the likes of Toyota & P & G5. Learning NetworkIntegrative Improvement deployed across networkCulture of Innovation and Sharing of Know HowEntire Global Network4. Integrative Improvement SystemCodified and integrated implementation(Strategic, Systemic and Situational)Process123453. Functional ExcellenceStructured implementation approach within the functions (Systemic)Functional2. Expert BasedImplementation approach based on the capability of the local expertProject1. No Continuous ImprovementNo Continuous Improvement Plans or structure
29 Enabling Execution ………“to improve everything”…… The pursuit towards operational excellence to date has been characterized by functional improvements and project based methodologies such as Six Sigma and Lean. Functional excellence and pockets of Lean do not create the organization capability required to step change operational competence, particularly when applied to complex global companies. There are just too many intricate process interdependencies across the end to end supply chain.The challenge for organizations is to manage and coordinate a sequenced and prioritized set of inter related actions across multiple functions, departments and the global network to execute strategy.Insight
30 Integrative Improvement across a global network requires a codified set of prioritized and sequenced work.2015“……everything must improve……”VISIONA company needs to provide a prioritized, holistic and integrated set of work packages that allows each and every part of the organization to execute the many pieces of work in a synchronized way that transforms the entire organization towards process based excellence2015201420132012We are going to hear today from companies such as Heinz, Du Pont, MillerCoors, Lion and Suncoke about their Integrative Improvement Systems which are all based on the TRACC system. So once again, thanks for coming. I am going to save a transition back to Dean and introduce our first key note speaker……..
31 Integrative Improvement across a global network requires a codified set of prioritized and sequenced work.“……everything must improve……”VISIONA company needs to provide a prioritized, holistic and integrated set of work packages that allows each and every part of the organization to execute the many pieces of work in a synchronized way that transforms the entire organization towards process based excellence20162015201420132012We are going to hear today from companies such as Heinz, Du Pont, MillerCoors, Lion and Suncoke about their Integrative Improvement Systems which are all based on the TRACC system. So once again, thanks for coming. I am going to save a transition back to Dean and introduce our first key note speaker……..KWS AdvancedKWS BasicsKEY
32 Relevance for Industrial Engineers? Plant managers will be motivating change and accountability for each of the process based teams. Decision making and priorities are facilitated by the existence of a structured approach for developing improvement in each of the critical process areas. Metrics and benchmarks can be used to guide the teams from the changes in levels of maturity ratings to important process measures such as OEE. Regional and central headquarters staff will facilitate the development of standardized definitions and performance measures, sharing of best practices and tracking KPI’s. Plants that have achieved the greatest success and the greatest relative improvement will be recognized and rewarded.