1. 1 © The Delos Partnership 2004 Delos Excellence Project Implementation Process Design

2. 2 © The Delos Partnership 2004 Delos Change Journey MobiliseDesignCommunicateReviewUnderstand Identify quick Benefits Develop Change Vision InternalSell-in ReviewSystems Establish Resources Resources Gain quick Benefits Detailed Process Design Public/PrivateWorkshops DevelopSystems Develop Task Teams Gain early Benefits Document Policies etc InternalEducation CreateSystems EstablishOrganisation SecureBenefits Refine ASSESSContinueEducation RefineSystems GainTeamwork ASSESS Cost/Benefit Develop Bus Strategy InitialEducation AppointSponsor PILOTPILOTPILOT

3. 3 © The Delos Partnership 2004 Task Teams 1.Integrated Enterprise Planning 2.Innovation and Project Management 3.Customer Relationship Management 4.Supply Management – Internal and External 5.Support Activities 6.Performance Measures 7.Data Accuracy 8.Continuous Improvement 9.People and Culture

4. 4 © The Delos Partnership 2004 Task Force IntegratedEnterprisePlanningIntegratedEnterprisePlanning

5. 5 © The Delos Partnership 2004 Integrated Enterprise Planning Composition Sponsor [chair] Finance Director Operations Director Sales and Marketing Director HR Director IT Director Project Leader

6. 6 © The Delos Partnership 2004 Integrated Enterprise Planning External Education –Integrated Enterprise Planning Workshop –Detailed Process based workshops Internal Education –Process –Software –Behaviour Change requirements ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

7. 7 © The Delos Partnership 2004 Framework for Process Review Process Inputs Outputs People Behaviour/Culture Measures/Performance Indicators ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

8. 8 © The Delos Partnership 2004 IEP Benefits 1.Visibility 2.One set of numbers 3.Long-Term not short term 4.Easier to derive budget 5.Simulation 6.Financial review 7.Ability to deliver strategy ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

9. 9 © The Delos Partnership 2004 Integrated Enterprise Planning Issues to address : Process Ownership Operation of processes –Innovation –Demand –Supply –Support –Prioritisation –Senior Team Review Timetable of meetings Agenda Meeting attendees Family Groupings Performance Measures ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

10. 10 © The Delos Partnership 2004 Integrated Enterprise Planning - Issues 1.Link to Board Meeting Capital Expenditure Sourcing of Production Acquisition Business Restructuring Policy Changes 2.Dealing with major crises Need for fast track process ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

11. 11 © The Delos Partnership 2004 Integrated Enterprise Planning 1.Need for aggregation facility by family 2.Rolling 12 month picture 3.Actual to date plus rest of year 4.Spreadsheet or specialist software 5.Integration of Demand, Supply and Inventory/backlog targets ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

12. 12 © The Delos Partnership 2004 Integrated Enterprise Planning - Stages 1.Pilot activity 2.Have first meeting 3.Concentrate on one/two families 4.Add families asap 5.All families required to make it useful 6.Financials 7.Replace the budget

13. 13 © The Delos Partnership 2004 MD/Sponsor’s role 1.Call the first meeting 2.Encourage the fact that it is a different way of running the business Honesty, realism, trust Rolling budget 3.It involves more detail maybe than before 4.Attend each meeting

14. 14 © The Delos Partnership 2004 Integrated Enterprise Planning #ActivityTargetComplete 1Responsibility for implementation of Integrated Enterprise Planning assigned to MD or equivalent 2Initial Workshop on Sales and Operations Planning complete 3Product Families, Planning Horizon, and Time Fences agreed 4Performance measurements to be reported have been agreed 5Meeting cycle agreed and timetable for next 12 month published 6Process started with one Family 7All other families implemented in the process 8Financial linkage to Budget completed

15. 15 © The Delos Partnership 2004 Task Force InnovationAnd Project Management InnovationAnd

16. 16 © The Delos Partnership 2004 Task Team Innovation Process Owner [Chair] Marketing Manager Production Manager Industrial Engineering manager Purchasing Quality Research and Development

17. 17 © The Delos Partnership 2004 Innovation Education External Education –Project Management Workshop –PMI Accreditation –Software understanding Internal Education –Project Management course –Software understanding ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

18. 18 © The Delos Partnership 2004 Design 1.Stage Gate process 2.Business Case management 3.Prioritisation of projects 4.Project Review ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

19. 19 © The Delos Partnership 2004 Management of Innovation Stage/Gate Process Formal Process for Managing Project Gate 0 Gate 0 Gate 1 Gate 1 Gate 2 Gate 2 Gate 3 Gate 3 Gate 4 Gate 4 Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Review Investigate Financial Case Financial Case Develop Test Launch ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

20. 20 © The Delos Partnership 2004 Bill of Activity – Link with Planning Ship Pack Process Validation Process Validation Develop Process Develop Process Source Packs Source Packs Develop Artwork Develop Artwork Source Equipment Source Equipment Design Layout Design Layout Lt = 2 weeks Lt = 6 weeks Raw Material Raw Material Lt = 4 weeks Lt = 10 weeks Lt = 10 weeks Lt = 6 weeks Lt = 6 weeks ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

21. 21 © The Delos Partnership 2004 Benefits 1.Control over innovation 2.Fewer expensive mistakes 3.On time product introduction 4.Management of too many initiatives 5.Faster implementation timescale Thank goodness for the last minute or nothing will get done…. ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

22. 22 © The Delos Partnership 2004 Organisation 1.Innovation Manager 2.Programme Managers 3.Responsibility for Projects 4.Resource owners linked into Programme Managers 5.Cross-functional and team based activities ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

23. 23 © The Delos Partnership 2004 Innovations Manager Strategy Innovation Manager Development Ideas Project Plans Development Plans Supply Plans Project System Prioritised Plans ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

24. 24 © The Delos Partnership 2004 Systems 1.Standard Project Management tools Phases/Activities/Tasks GANTT and PERT Charts 2.Displays capacity 3.Multiple projects aggregated 4.Provides Earned Value Measurement 5.Critical Path analysis clear ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

25. 25 © The Delos Partnership 2004 Innovation Management #ActivityTargetComplete 1Responsibility for implementation of Innovation Management assigned to an Innovation process owner 2Initial Workshop on Innovation and Programme Management 3Stage Gate and Business Filter process defined. Agreement on sign off authority levels, and prioritisation 4Performance Measures for successful completion of milestones agreed. Earned Value calculation agreed. 5Software for Programme Management tested and signed off 6Cross Functional Programme management organisation established.

26. 26 © The Delos Partnership 2004 Task Force Sales Forecasting And Demand Management Sales Forecasting And Demand Management

27. 27 © The Delos Partnership 2004 Task Force Composition Marketing Director [chair] Sales Representative Purchasing Master Scheduling IT Manager Project Team Member

28. 28 © The Delos Partnership 2004 Education External Education –Sales Forecasting and Demand Management –Customer Relationship Management Internal Education –Process –Software –Performance Measurement ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

29. 29 © The Delos Partnership 2004 Design Issues to address: –Sales Forecasting Level, Unit of Measure, Horizon and Time Buckets Forecast Consumption Abnormal Demand –Customer Relationship Management Organisation around customers Use of Software Electronic links/Planning links –One set of numbers Link to targets and actual versus budget ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

30. 30 © The Delos Partnership 2004 Design - Issues 1.Responsibility for Forecast 2.Frequency of Forecasting 3.Management of Abnormal Demand 4.Sticking to the rules ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

31. 31 © The Delos Partnership 2004 Benefits 1.Visibility 2.Forecast by product – not just value 3.One set of numbers 4.Supply Chain can use numbers 5.Forecast Accuracy measure leads to stability 6.Know the customers ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

32. 32 © The Delos Partnership 2004 Organisation 1.Need for a Demand Manager 2.Link to Customer Services 3.Responsibility for Forecast Sales and Marketing 4.Customer Facing teams 5.Demand control versus planning ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

33. 33 © The Delos Partnership 2004 Systems 1.Specialist Forecasting system Linear regression Time series Simulation 2.Should be easy to understand 3.Capability to enter in Marketing/Sales input 4.Measures Forecast accuracy 5.Allows aggregation and proration easily 6.Customer Relationship system ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

34. 34 © The Delos Partnership 2004 Issues 1.Responsibility for Forecast 2.Can’t forecast – our business is different 3.Only forecast 20 % that account for 80 % of value 4.Only forecast by value 5.Only provide a forecast for 6 months 6.Forecast accuracy – but what about beating the budget ? 7.Salesmen should sell, and not waste time forecasting

35. 35 © The Delos Partnership 2004 Solutions 1.Sales and Marketing Director to lead 2.Employ good system to deal with 20 % by value, and manage through Demand Manager 3.Recognise Value forecast of no use 4.Adopt new Measures of Performance 5.Sales can save time through forecasting 6.Accurate data for CRM system

36. 36 © The Delos Partnership 2004 Customer Relationship Management #ActivityTargetComplete 1Responsibility for implementation of Customer Relationship Management assigned to an Demand process owner 2Initial Workshop on Sales Forecasting and Demand management and CRM 3Forecast process agreed around Level, Horizon, Units and Buckets, and frequency of update 4Responsibility for Sales Forecasting established with Sales and Marketing 5Policies on Forecast Consumption, abnormal demand, and use of Available to promise defined, and approved by Steering committee 6Software for Sales Forecasting and Demand management and Customer Relationship Management tested and signed off 7Demand Planning and Demand Management organisation set up under Sales and Marketing

37. 37 © The Delos Partnership 2004 Task Force MasterProductionSchedulingMasterProductionScheduling

38. 38 © The Delos Partnership 2004 Master Scheduling Task Force Composition Marketing Director [chair] Sales Purchasing Finance Master Scheduling IT Manager Project Team Member

39. 39 © The Delos Partnership 2004 Master Scheduling External Education –Supply Chain Techniques –Supplier Relationship management Internal Education –Process –Software –Performance Measurement –Behaviour Change ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

40. 40 © The Delos Partnership 2004 Master Scheduling Issues to address: –Make To stock/Make to Order/Assemble to Order –Manufacturing/Sub-Contract –Management of Field service Capability –Level at which to MPS –Use of Rough Cut and Detailed Capacity Planning –Use of Demonstrated Capacity –Available to Promise –Time Fences –How to handle Abnormal Demand –Link to Integrate Enterprise Planning –Creation of Work To Lists for Field Service –Responsibility to Plan the Work –Use of Action Messages ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

41. 41 © The Delos Partnership 2004 Master Scheduling Design is crucial Make to Order/Assemble to Order/Make to Stock Bill of Material structure to support this OE/Spares; Finished Goods/Bulk Forecast Consumption Available to Promise Handling of Field Sales/Implementation ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

42. 42 © The Delos Partnership 2004 Master Scheduling Policy Forecasting Process Field Sales Planning and Execution Management of Abnormal Demand Time Fences Responsibility for change Target Service Levels Safety Stock policies ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

43. 43 © The Delos Partnership 2004 Master Scheduling - benefits 1.Improved Delivery to Promise and request 2.Achievable Plan – Field Sales and Supply 3.No backlogs 4.Stability in the supply chain 5.Manufacturing know that they can make it 6.Field Service know that they can deliver it 7.Suppliers have achievable due dates ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

44. 44 © The Delos Partnership 2004 MPS Organisation Planning Organisation Supply Planning and Field Service Planning Vertical vs Horizontal Timing of new planners Training in new ways of working Independence Role of Sales and Marketing Role of Master Scheduler –Manages Supply Plans –Manages Field Service Plans ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

45. 45 © The Delos Partnership 2004 MPS Software needs 1.Firm Planned Order 2.Forecast Consumption 3.Abnormal Demand Filters 4.Available to Promise [2 level ?] 5.Aggregation 6.Rough Cut Capacity Planning 7.Time Fences 8.Forecast Interface 9.Order Entry Interface 10.Final Assembly Scheduling ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

46. 46 © The Delos Partnership 2004 Master Production Scheduling #ActivityTargetComplete 1Responsibility for implementation of Supply Management assigned to Marketing Process owner 2Initial Workshop on Sales Forecasting and Demand management and CRM 3Model for Master Scheduling established which specifies how Make To stock, Assemble To order and Engineer to Order will operated 4Software checked for ability to support the Master Scheduling model. 5Policies on Time Fences and Changes to Master Schedule agrees and approved by Steering committee 6Performance measures and target service levels agreed 7Master Scheduling Organisation established which follows Vertical Planning concept.

47. 47 © The Delos Partnership 2004 Task Force SupplierRelationshipManagementSupplierRelationshipManagement

48. 48 © The Delos Partnership 2004 Task Force Supply Chain process owner Purchasing Planning Finance Development Stores Systems Project Team member

49. 49 © The Delos Partnership 2004 Education External Education –Procurement Master Class –Supplier Relationship Management Internal Education [to suppliers] –New ways of working –Use of e-procurement Internal Education [to employees] –Effective Procurement ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

50. 50 © The Delos Partnership 2004 Design Procurement separate from Supplier Management Measurement of suppliers –Right First Time –Quality Focus on Total Value –Total Cost Reduction –Total Cost avoidance ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

51. 51 © The Delos Partnership 2004 Supplier Relationship Management Clear Vendor agreements Vendor contracts and agreements Measurement –Delivery –Price –Quality –Lead Times Use of e-procurement ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

52. 52 © The Delos Partnership 2004 Procurement Analyse products and suppliers –Major/Minor –Critical/non-critical Analyse total spend Look for opportunities Set targets for cost reduction ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

53. 53 © The Delos Partnership 2004 Benefits Total cost reduction Effective negotiation Lead time reduction Quality improvement Inventory reduction On time deliveries Co-development programmes Integration Long-term co-operation ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

54. 54 © The Delos Partnership 2004 Organisation Procurement Management –Buyers who understand supplier processes –Buyers who can make deals Supplier Relationship Management –Manages schedules –Deals with day to day issues –Encourages early warning –Keeps system up to date ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

55. 55 © The Delos Partnership 2004 System Vendor Schedule Total spend analysis by : –Category of spend –Value Performance Measures –On time –Quality Make vs buy options ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

56. 56 © The Delos Partnership 2004 Creation of Vendor Schedule 12345678 Projected Gross Requirements 10 20 Scheduled Receipts20 Projected Available Balance 30 Planned Order Release Supplier Schedule Part Number : 14356 D escription : Red Pen Line Part Number DescriptionQtyScrap PerFactor 1043768Pen Barrel10.0 2076452Finished Nib10.0 3089563Cap10.0 Bills of Material Planning Data Lead Times Order Quantities Safety Stock

57. 57 © The Delos Partnership 2004 Vendor Schedule Part No. 1/78/715/722/729/75/812/819/826/8SeptOct12 m Total 2346720 80 960 2456610 3060 1040 354673570 35 140 1680 1437620 40 1601801920 2543610 4080620 Supplier : ACME Grinding Equipment Limited OrdersPay for materialsVisibility Orders :PartQtyDue 14532623467201/7

58. 58 © The Delos Partnership 2004 Purchasing Task Force #ActivityTargetComplete 1Task Force established with Purchasing as the Task Force Leader 2Establish Vendor Scheduling reporting process, and use. 3Determine Purchasing Strategy based on current spend map 4Determine measurement criteria for suppliers, and establish SMART goals to be shared with suppliers 5Carry out Education programme with suppliers focussing on the key elements of the Purchasing strategy. 6Set up Qualified Vendor group 7Set up organisation that differentiated between Procurement and schedulers.

59. 59 © The Delos Partnership 2004 Task Force Accuracy Of all Business Data Accuracy Of all Business Data

60. 60 © The Delos Partnership 2004 Data Accuracy All data needs to be accurate Bills of Materials Routings Inventory Work Centre Planning Data Customer/Vendor data Project Team Member

61. 61 © The Delos Partnership 2004 Data Accuracy Sub-Teams ? Inventory Bills of Materials Routings Planning Data Customer Data Vendor Data Financial Data

62. 62 © The Delos Partnership 2004 Data Accuracy External Education –Data Accuracy Course –Bill of Material Course –Inventory Accuracy Course Internal Education –Bills of Materials [Quality, Structure and Change Control] –Routings –Inventory –Planning Data –Customer and Vendor Data ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

63. 63 © The Delos Partnership 2004 Task Force Bills of Materials Materials

64. 64 © The Delos Partnership 2004 BOM Task Force Composition Technical Director [chair] Planning Marketing Purchasing Manufacturing Project Team Member

65. 65 © The Delos Partnership 2004 Steps to getting BOM Accuracy 1.Identify how to get to one single Database 2.Assign responsibility for accuracy 3.Check accuracy of sample group 4.Get over emotional issues of part numbers 5.Create BOM policies 6.Get Control group to 100 % 7.Fix Database 8.Implement Change control process 9.Continuously Monitor accuracy ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

66. 66 © The Delos Partnership 2004 BOM Task Force Issues to address Part numbers – non significant Planning Bill and Configuration What goes on the BOM Backflush or not Structure [simplify] Engineering/Product Change Control Link to Design/Development systems Phase in/Phase Out Responsibility ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

67. 67 © The Delos Partnership 2004 BOM Structuring 1.Planning/ Stocking levels 2.Implications on Costing 3.Forecasting issues 4.How to enter orders 5.Master Schedule vs Final Assembly Schedule 6.Product Specifications/Quality Documentation ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

68. 68 © The Delos Partnership 2004 BOM Change Control 1.Establish Formal process for controlling changes to Part Numbers, BOM’s and routes 2.Request for Change 3.Documentation to support changes Engineering change request Engineering change Notice Audit trail of changes 4.Techniques for phasing in/phasing out of materials 5.BOM Change control group to monitor changes ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

69. 69 © The Delos Partnership 2004 Example of Data Change Form Change Note Number :Date of Request : __/__/__Change Type : Add/Amend/Delete Originator:Effective Date: -Requested __/__/__ -Actual __/__/__ Part number : Department :BOM Attached ? : Y/N Other Related Changes : Reason for Request for change Notification given to :Tick Description of Change :Development Manufacturing Planning Financial Consequences of Change :Purchasing Quality Sales and Marketing Approved by :Date of Approval __/__/__Regulatory

70. 70 © The Delos Partnership 2004 Example of Data Change Form ProductionQuantity on hand:Rework and Scrap Value Quantity in WIP :Routing Change PurchasingSupplier :New Part Number New Cost :New Order Qty On order :New Safety Stock QualitySpecifications :New Lead Time Test requirements:Customer Code DevelopmentReference no,:Vendor Code BOM Change note:Batch control SalesCustomersFinancial Projection attached: Y/N Quantity on hand FinanceStandard CostData Controller : RegulatoryStandards affected

71. 71 © The Delos Partnership 2004 Benefits 1.Accurate Costs 2.No duplication 3.Ordering of right product in right quantity 4.Managed introduction of products – less obsolescence 5.Suppliers deliver right product at right time ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

72. 72 © The Delos Partnership 2004 Organisation 1.Responsibility for Add,Amend Delete 2.BOM Administrator 3.BOM Approval Group ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

73. 73 © The Delos Partnership 2004 Systems 1.Can accommodate design/development 2.Phantoms/Pseudos 3.Configuration ability 4.Where used facility 5.Single Level/Multiple level 6.Two level Planning Bill ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

74. 74 © The Delos Partnership 2004 Process for getting Data Right Sample Group Audit Fix Data Base Sample Group

75. 75 © The Delos Partnership 2004 Data Quality – Bills of Material #ActivityTargetComplete 1Task Force established with responsibility set up under Development department 2Bill of Material objectives agreed, with Target accuracy of 100 % of all BOM’s 3Sample of current Bills of Material used to verify current level of accuracy of BOM’s 4Bill of Material Policy Established on Accuracy of BOM’s and agreed 5Correction of Database undertaken for the whole database. 6Procedure for reporting of BOM inaccuracy completed and established. 7Process for prompt correction of Bills of Materials within Development department agreed and established. 8Bill of material Administrator role defined and filled within the Planning Deparment

76. 76 © The Delos Partnership 2004 Data Quality – Structure of Bills of Material #ActivityTargetComplete 1Task Force established with responsibility set up under Planning Function 2Structure of BOM’s agreed with reference to the MPS task force and decision on MTS/ATO/MTO 3Software checked to ensure that configuration ability is supported 4Resource identified for restructuring of Bills of Materials. 5Bill of Material Database populated with restructured Bills of materials. 6Restructured Bills of Materials verified for accuracy as part of Bill of Material Quality audit.

77. 77 © The Delos Partnership 2004 Data Quality – Bills of Material Change Control #ActivityTargetComplete 1Task Force established with responsibility set up under Planning Function 2Current change control procedures and policies reviewed for completeness 3Software review of functionality for Change Control completed, and documented 4New Procedures for BOM Change control identified, and established with policies in place for handling phase in and phase out 5New procedures reviewed and agreed through pilot process 6BOM Change control group established to review impact of proposed design and development changes

78. 78 © The Delos Partnership 2004 Task Force RoutingsAnd Work Centres RoutingsAnd

79. 79 © The Delos Partnership 2004 Steps to getting Routing Accuracy 1.Identify how to get to one single Database 2.Assign responsibility for accuracy 3.Check accuracy of control group 4.Create Routing and Work Centre policies 5.Get Control group to 100 % 6.Fix Database 7.Implement Strong Change control process 8.Continuously Monitor accuracy

80. 80 © The Delos Partnership 2004 ROUTING ACCURACY Basis : Represents the way that the product is made and moves through the factory via work centres Missing/Unnecessary Operation Missing Work Centre Wrong Operation Sequence Wrong Work Centre No REALISTIC Standard Missing/Unnecessary Operation Missing Work Centre Wrong Operation Sequence Wrong Work Centre No REALISTIC Standard Types of Error :

81. 81 © The Delos Partnership 2004 Ways to check accuracy of Routing  Check with knowledgeable people  Track product through manufacture  Assemble absolutely according to routing  Performance measures shows Late or early completion of product

82. 82 © The Delos Partnership 2004 Task Force InventoryAndWork-in-ProcessInventoryAndWork-in-Process

83. 83 © The Delos Partnership 2004 Inventory Task Team Composition Warehouse Manager [chair] Stores Supervisors Production manager Purchasing Logistics Planning Project Team Member

84. 84 © The Delos Partnership 2004 Steps to Gaining Inventory Accuracy 1.Establish levels of current accuracy 2.Establish control group to identify causes of errors 3.Review material flows 4.Create Limited Access 5.Define systems and processes 6.Educate users 7.Train users 8.Cycle count 9.Eliminate annual physical 10.Never give up the challenge ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

85. 85 © The Delos Partnership 2004 Inventory Task Team Issues to address Limited access to stores Process flows Backflushing or not Accuracy of equipment Number of locations Cycle counting People in stores Getting rid of the annual physical ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

86. 86 © The Delos Partnership 2004 Cycle Counting 1.Part number cycle counting Random ABC Method 2.Location cycle counting Fixed cycle by location Count what is easy to count Skip large amounts 3.Eliminate Annual physical ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

87. 87 © The Delos Partnership 2004 Benefits 1.Less time spent looking 2.Reliable system 3.Accurate promises to customer 4.Less surprise write-offs 5.Less inventory 6.Planning system can be used ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

88. 88 © The Delos Partnership 2004 Organisation 1.Warehouse Manager responsible for accuracy 2.Stores people responsible for accuracy 3.Supervisors responsible for lineside accuracy 4.Only recognised personnel allowed in stores ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

89. 89 © The Delos Partnership 2004 Systems 1.Multiple Locations 2.Locating system by location and part number 3.System reports Stock Status by part number Stock status by location Transaction history by Part number 4.Backflushing ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

90. 90 © The Delos Partnership 2004 Process for getting Data Right Control Group Audit Fix Data Base Control Group

91. 91 © The Delos Partnership 2004 Data Quality - Inventory #ActivityTargetComplete 1Task Force established with responsibility set up under Warehouse Manager 2Inventory Data Quality objectives agreed, with Target accuracy of 98 % of all items with 0 tolerance 3Process for movement of inventory, and recording of Inventory Transactions completed 4Review of required equipment and technology completed and recommendations accepted 5Control Group cycle counting established, in order to identify errors 6Control Group achieves 100 % 7Policies and Procedures for Inventory process in Stores and Factory agreed and communicated. 8Initialisation of Balances complete 9Systematic Audit established using Process Control cycle counting.

92. 92 © The Delos Partnership 2004 Task Force Item Master and Planning Data Item Master and Planning Data

93. 93 © The Delos Partnership 2004 Planning Data Task Team Composition Operations Director [chair] Manufacturing Purchasing Industrial Engineer Planning Project Team Member

94. 94 © The Delos Partnership 2004 Item Master Data Used in Planning Part number Description Unit of measure Make or buy Lead time Firm Planned Fence Order quantity Minimums and multiples Safety stock Scrap factor Yield factor Engineering drawing number Commodity code Family code Planner/buyer code Customer address and code number Suppliers address and code number All must be accurate And thought through correctly

95. 95 © The Delos Partnership 2004 Planning Data Task Team Issues to address Lead Time consistent with Manufacturing Lead Time Safety Stocks though through and understood Order Quantities set up in line with Manufacturing/Purchasing common- sense. ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

96. 96 © The Delos Partnership 2004 Task Force Finance and Support Task Force Finance and Support Task Force

97. 97 © The Delos Partnership 2004 Task Force Finance Director [chair] Materials Manufacturing Marketing Quality Purchasing Project Team Member

98. 98 © The Delos Partnership 2004 Support Task Force External Education –Top Management Course Internal Education –Financial Planning and Costing –New Performance Measures ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

99. 99 © The Delos Partnership 2004 Finance Design Link Annual Budget to IEP process Costing updated from system Financial planning based on IEP Eliminate unnecessary financial inspection Eliminate Annual physical stock check ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

100. 100 © The Delos Partnership 2004 Benefits Less duplication of data Eliminate wasted time on budget preparation More accurate costs Save time and money on inventory calculation Better base information ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

101. 101 © The Delos Partnership 2004 Finance systems Integration of financial planning with volume planning 36-42 months horizon Costing direct from BOM’s and routings Development of KPI’s from Data Warehouse Simulation ability for what-ifs ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

102. 102 © The Delos Partnership 2004 Finance Task Force #ActivityTargetComplete 1Task Force established with Finance manager as the Task Force Leader 2Establish Costing process based on BOM’s to reflect Standard or Average actual costs 3Determine how Accounts Payable, Accounts Receivable and General Ledger will work 4Develop process for providing Financial Planning process as linked to the IEP process 5Establish how the Budget will be prepared from the ERP system 6Develop reports from the system that will generate Cash Flow reports and simulations

103. 103 © The Delos Partnership 2004 Task Force PerformanceMeasuresPerformanceMeasures

104. 104 © The Delos Partnership 2004 Task Force HR Director [chair] Finance Quality Sales and Marketing Manufacturing Procurement Development Project Team Member

105. 105 © The Delos Partnership 2004 Performance Measures External Education –Performance Measures Internal Education –New Performance Measures ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

106. 106 © The Delos Partnership 2004 New KPI’s 1.Review Strategy 2.Determine key objectives 3.Develop the Delos Seven Measures 4.Assign responsibility 5.Establish root cause analysis 6.Develop Goal Deployment and relationship to Personal Goals ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

107. 107 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

108. 108 © The Delos Partnership 2004 Link to Organisational Hierarchy Managing Director Directors/Process Owners Managers/Team Leaders Operators/Team members LINK THEM VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

109. 109 © The Delos Partnership 2004 Root Cause Analysis Inaccurate Forecast Inaccurate Forecast People Processes Pessimism/Optimism Lack of Time Lack of Trust Systems Data Lack of Sales Plan NPD Process Lack of Forecasting System Customer EDI System Inaccurate Actual Demand Data Wrong Code ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

110. 110 © The Delos Partnership 2004 Benefits 1.Alignment to strategy 2.Congruent goals 3.Cascaded objectives and targets 4.Focus on operational measures and not results 5.Improved Return on Capital Employed ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

111. 111 © The Delos Partnership 2004 Organisation 1.Develop Process owners 2.Cross functional development of processes 3.Tie measures to personal goals 4.Personal Development plans 5.Teams to develop processes – not functional silos ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

112. 112 © The Delos Partnership 2004 Process Measures Ownership SalesProdTechLogMktg New Product Process NPD Owner Sourcing Process Supply Owner Customer Process Demand Owner NPD Owner Creative Process Business Support – Finance, IT, HR Senior Management Team ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

113. 113 © The Delos Partnership 2004 System 1.Data Warehouse to store Information 2.Create reports direct from system 3.Needs storage of original promise date to customers and suppliers 4.Needs Forecast accuracy reports 5.Needs collection of data on deliveries to customers 6.Visibility of results for suppliers ASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS

114. 114 © The Delos Partnership 2004 Measures - Issues 1.Traditional approach 2.Silo management 3.Corporate reporting process 4.Focus on Financial reporting 5.Actual versus budget

115. 115 © The Delos Partnership 2004 Measures - solutions 1.Involve Corporate in development of measurement 2.Develop IEP in place of Annual budget 3.Eliminate many financial reports 4.Develop process ownership

116. 116 © The Delos Partnership 2004 People Values TraditionalNowFuture Process problems Not my jobOwnershipAccountability Management Style SuperviseFacilitator/ Team Leader Coach Working Style IndividualTeamEmpowered Teams Training and Education Non-existentLuxuryNecessity KnowledgeIgnorantUnderstandsExpert Attitude to People LiabilityCostAsset

117. 117 © The Delos Partnership 2004 Today’s Rewards Managing Director gets bonus if budget profit exceeded Marketing Director gets promoted if he beats profit target and budget Manufacturing Director gets paid if overheads recovered Technical Director gets delighted if complexity achieved Finance Director becomes Group FD if inventory reduced

118. 118 © The Delos Partnership 2004 Tomorrow’s Rewards Based on targets and milestones Based on forward looking objectives Based on constant appraisal Based on throughput not output Need to recognise value of teams Recognises inventory as a liability

119. 119 © The Delos Partnership 2004 Appraisal Process Continual through the S & OP process Should involve 180˚ appraisal and appraisal of peers through honest feedback Requires enhanced people and team skills Give and receive constructive review Requires removal of blame culture Reduced need for the cult of the hero

120. 120 © The Delos Partnership 2004 Link the Appraisal Process to the Strategy Strategy Grow Business Grow Business Increase Market Share Increase Market ShareMeasuresStrategy Grow Business Grow Business Increase Market Share Increase Market ShareMeasures Sales Manager …. …. ….. ….. …... …... Sales Manager …. …. ….. ….. …... …... Planning Manager …. …. ….. ….. …... …... Planning Manager …. …. ….. ….. …... …... R & D Manager …. …. ….. ….. …... …... R & D Manager …. …. ….. ….. …... …... New Product Director …. …. ….. ….. …... …... New Product Director …. …. ….. ….. …... …... Customer Director …. …. ….. ….. …... …... Customer Director …. …. ….. ….. …... …... Supply Director …. …. ….. ….. …... …... Supply Director …. …. ….. ….. …... …...

121. 121 © The Delos Partnership 2004 Goal Deployment Employees Owner Supply Chain Owner Innovation Owner Community Owner Customer Owner Shareholder Owner TARGETS Senior Management Business Support Supply Management Demand Management New Activity Management PERSPECTIVE Process Owners GOALSGOALS Objectives PROCESS

122. 122 © The Delos Partnership 2004 Performance Measures #ActivityTargetComplete 1Task Force established with Finance manager as the Task Force Leader 2Establish Vision, Goal and Objectives together with Targets for achieving the objectives 3Establish how the system will provide Performance measures, and data for problem solving 4Carry out Benchmarking exercise to establish best in class performance for targets 5Layout Process ownership, and responsibility for cascaded sets of measures 6Review current reward structures, and establish new performance measures contained within Personal Development Plans

123. 123 © The Delos Partnership 2004 Key activities MONTHS Activity0-344-789-1111-1415 EducationProject TeamPilotManagersPilotUsers InternalPilotLive IEPDefine ProcessPilotPilot processPilotAdd all familiesPilotLive InnovationDefine ProcessPilotDefine policiesPilotEstablish organisationPilotLive Demand PlanDefine ProcessPilotDefine PoliciesPilotEstablish organisationPilotLive MPSMTS v ATOPilotDefine PoliciesPilotEstablish organisationPilotLive IRA AccuracyControl GroupInitCycle CountingPilotLive BOM AccuracyFind ErrorsFix ErrorsUploadLive BOM StructureDefineRestructure and set up all Bills of MaterialsLive RoutingsFind errorsFix ErrorsLive Planning DataDefineSet upLive PurchasingDevelop Purchasing ToolsPilotEducate all vendorsLive ManufacturingDevelop Lean ManufacturingPilotEstablish across businessLive FinanceDevelop costing and IEP/Budget LinkPilotDevelop costs, Inv and WIP valuesLive MeasuresDevelop Vision, objectives and measuresPilotEstablish across businessLive SoftwarePT debugPilotCarry out Software modifications and interfacesPilotLive