1. Operational Excellence Demand Management and Master Scheduling

2. Vas Dem MPS - 2 © The Delos Partnership 2004 The Delos Model For Business Integration Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply

3. Vas Dem MPS - 3 © The Delos Partnership 2004 Customer Relationship Management Strategy Customer relationship Manager Sales and Marketing System Forecast Plan Manufacturing And Purchasing ERP System Consensus Forecast

4. Vas Dem MPS - 4 © The Delos Partnership 2004 Basic Formula Item Data BOM’s And Routes Stock And Capacity Master Schedule ForecastsOrders Suppliers Factories What do they Actually Want ? What have We got ? What does it need ? What do we need to do ? What do we think they Want ?

5. Vas Dem MPS - 5 © The Delos Partnership 2004 Master Schedule

6. Vas Dem MPS - 6 © The Delos Partnership 2004 123456 as MPS Item

7. Vas Dem MPS - 7 © The Delos Partnership 2004 Examples of MPS Items 1.Product Sold ex-stock to Customer 2.Spares Item Lamp Software 3.Scheduled Maintenance Activity 4.Repair item returned for rework 5.Original Equipment – machine …….. Any others ??

8. Vas Dem MPS - 8 © The Delos Partnership 2004 Customer profile Customer Demand Customer A 2500 per month Customer B 1250 per month Customer C 500 per month Customers D.. 750 per month

9. Vas Dem MPS - 9 © The Delos Partnership 2004 Forecast Consumption

10. Vas Dem MPS - 10 © The Delos Partnership 2004 Bill of Materials Structure 123459 Label 1 Each Purchased 123457 Bottle Manufactured 123461 Cardboard Material 1 EA Purchased 123462 Label 1 Each Purchased 123460 Cardboard Box 1 EA Manufactured 123456 Disposable Unit in Pack 1 EA Manufactured 123458 Bottle 1 Each Purchased Lead Time = 2 week Lead Time = 3 weeks Lead Time = 1 weeks Lead Time = 2 week Lead Time = 1 week Lead Time = 5 weeks What is Cumulative Lead Time ?

11. Vas Dem MPS - 11 © The Delos Partnership 2004 Master Scheduling Management Horizon PLAN MANAGE EXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Integrated Enterprise Planning Process Capacity and Materials “firm” Release Orders Firm Planned Orders

12. Vas Dem MPS - 12 © The Delos Partnership 2004 Time Fence Policy Horizon YES PERHAPS NO Cumulative Lead Time Firm Planned Orders Material Capacity Can I change the schedule ? the schedule ?

13. Vas Dem MPS - 13 © The Delos Partnership 2004 Abnormal Demand - Workshop

14. Vas Dem MPS - 14 © The Delos Partnership 2004 All incoming customer orders should be screened (evaluated) for normal/abnormal demand characteristics. Abnormal Demand

15. Vas Dem MPS - 15 © The Delos Partnership 2004 This needs to be done on an exception basis in order to be practical. Don’t consume the forecast if the demand is abnormal. Abnormal demand does not consume the forecast

16. Vas Dem MPS - 16 © The Delos Partnership 2004 Identifying Abnormal Demands Individual Customer Order –Demand Source Customer Market Sector Trade Sector Export vs UK –Quantity Size Of Order –For that customer [e.g. > 10 for customer Y] –For any customer [e.g. > 5 for any other than X] % Of Forecast Cumulative Demand –Track Variances to date in week or month Keep it simple !

17. Vas Dem MPS - 17 © The Delos Partnership 2004 Tracking Abnormal Demand Cum Demand End of Week 1 End of Week 2 End of Week 3 End of Week 4 ActionReviewIncrease?Increase Future? Upper306090120 Forecast255075100 Limit20406080 ActionReviewDecrease?Decrease Future ?

18. Vas Dem MPS - 18 © The Delos Partnership 2004 Each abnormal order must be coded with an abnormal demand flag so that the planning system will not consume the forecast. This can be done through the order entry system or after the fact when the demand resides in the planning system – but before the Master Schedule is recalculated! Software requirement

19. Vas Dem MPS - 19 © The Delos Partnership 2004 Process to Manage Demand Check if Forecast is normal If normal – promise it Recalculate Available to Promise Consume the Forecast Recalculate PAB If abnormal 1.Check if any is normal 2.Promise normal part of Forecast Recalculate Available to Promise Consume the Forecast Recalculate PAB For remaining abnormal demand lDetermine agreeable promise date lAdvise customer lAgree any risks to other customers lRecalculate Available to Promise lConsume the Forecast lRecalculate PAB lReview action messages in MPS

20. Vas Dem MPS - 20 © The Delos Partnership 2004 Abnormal Demand Policy Company needs to have a policy that states the process and mechanism for identifying and dealing with abnormal demands Accountability needs to be established with Sales and Marketing - the originators of the Forecast ! Abnormal Demand Policy

21. Vas Dem MPS - 21 © The Delos Partnership 2004 Ways to Manage Abnormal Demand Safety Capacity Safety Stock Manage the Product Range Reduce Lead Times Redesign the Product Sell something else!

22. Vas Dem MPS - 22 © The Delos Partnership 2004 What Is Safety Stock? Safety stock is a request for buffer that is: –Time related –Quantity related –Or both In order to meet variations from forecast demand in terms of: –Timing –Quantity –Both

23. Vas Dem MPS - 23 © The Delos Partnership 2004 How Much Safety Stock Should You Have? Statistically calculated to maintain an agreed service level for existing products Estimated with judgment for new product and promotion to reduce market exposure Agreed with customers in order to protect them

24. Vas Dem MPS - 24 © The Delos Partnership 2004 Safety Stock - Effect Planned projected available stock calculated not to Go below Safety Stock

25. Vas Dem MPS - 25 © The Delos Partnership 2004 Time Fences Demand Time Fence –Controls when forecasts disappear Material Time Fence –Controls when Planned orders become firm orders Capacity Time Fence –Indicates where capacity is an issue for increasing demand

26. Vas Dem MPS - 26 © The Delos Partnership 2004 Workshop 1.What would be the right time fence policies in the business ? 2.How will they be reflected in the system ? 3.What behaviours need to change ?

27. Vas Dem MPS - 27 © The Delos Partnership 2004 Master Scheduler Strategy Sales Forecasts Customer Orders Manufacturing Plan Purchasing Plan MRP System Balanced Plan Master Scheduler

28. Vas Dem MPS - 28 © The Delos Partnership 2004 Master Scheduler GeneralManager ProgrammeManagers CustomerServices FactoryManagers SupplierManagers Engineers Quality Finance

29. Vas Dem MPS - 29 © The Delos Partnership 2004 MPS Job Description ? 5 Years experience on Shop Floor 5 Years experience in Purchasing 5 Years in Programme Management 5 Years in Engineering 5 Years in Finance 5 Years in Customer Service BA in Engineering, MBA in Business Studies …. 30 years old ….. £ 1,000 per month

30. Vas Dem MPS - 30 © The Delos Partnership 2004 Workshop What do other functions need to do to make the MPS job easier ? How well do other functions understand what needs to be done ? Where is particular work required ?