Operational Excellence Integrated Enterprise Planning - one set of numbers

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

Vas IEP - 3 © The Delos Partnership 2004 Objectives for Integrated Enterprise Planning One set of numbers at all times Integrated Plans Realistic Plans Teamwork Communication of goals and objectives Decisions made in timely fashion Consistent performance measures Delivery of the Strategy

Vas IEP - 4 © The Delos Partnership 2004 Vertical Functional Organisation MD Sales Marketing Technical Operations Finance HR R&DR&D R&DR&D MKTGMKTG MKTGMKTG SALESSALES SALESSALES OPSOPS OPSOPS ACCTSACCTS ACCTSACCTS HRHR HRHR Directors Managers Supervisors/Team Leaders

Vas IEP - 5 © The Delos Partnership 2004 Disintegrated Business Planning Long term plan Short term Plan Medium Term Plan

Vas IEP - 6 © The Delos Partnership 2004 Lack of Visibility Year to date is below budget and last year, and therefore there is an urgent need to cut costs, and reduce inventory, in order to improve cash flow…

Vas IEP - 7 © The Delos Partnership 2004 Integrated Enterprise Planning Annual Operating Plan Monthly Review Master Production Schedule Supplier Schedule Factory Schedule Volume [Family] Value 42 months horizon Volume [Family] Value 30 months horizon Volume SKU Value 18 months horizon Volume [Part number] Value 18 months horizon

Vas IEP - 8 © The Delos Partnership 2004 Customer Relationship Strategy 1.First Decide if you are Make to Stock or Make To Order 2.Then work out the production plans Inventory Production Make To Stock Sales/ Shipments Order Book Sales Orders Production/ Shipments Make To Order

Vas IEP - 9 © The Delos Partnership 2004 Customer Relationship Strategy Design Purchase Intermediate Manufacture Sub-assemble Finish Distribute Where Do you meet The Customer ? StockTo Order

Vas IEP - 10 © The Delos Partnership 2004 Inventory Management Inventory is not something that can be managed – it is a result Forecasts Actual SalesActual Production Planned Production

Vas IEP - 11 © The Delos Partnership 2004 Make to Stock Production = Demand Plan + (Inventory Target- Current Inventory) = ) PRODUCTION STOCK

Vas IEP - 12 © The Delos Partnership 2004 Integrated Enterprise Planning -3-2 Demand Plan 120 Actual Demand Difference 512 Cum Diff 416 Months Last Demand Plan 120 New Demand Plan Difference Cum Diff Months Q4Q Supply Plan 125 Actual Supply Difference Cum Diff Last Supply Plan New Supply Plan Difference Cum Diff Q4Q Stock Plan Actual Stock Difference Last Stock Plan8691 New Stock Plan Difference Q4Q1 Make – To- Stock : Family Units

Vas IEP - 13 © The Delos Partnership 2004 Make to Order Production = Demand Plan + (Current Order Book - Orderbook Target) = ) PRODUCTION ORDER BOOK

Vas IEP - 14 © The Delos Partnership 2004 Integrated Business Planning -3-2 Demand Plan 70 Actual Demand Difference 1510 Cum Diff 616 Months Last Demand Plan 70 New Demand Plan Difference Cum Diff Months Q4Q Supply Plan 75 Actual Supply Difference Cum Diff Last Supply Plan New Supply Plan Difference Cum Diff Q4Q Order Book Plan Actual Orders Difference Last Plan4641 New Plan Difference Q4Q1 41 Make – To- Order – Family Units

Vas IEP - 15 © The Delos Partnership 2004 Family Summary Major Changes New Product included in Forecast USA Distributor Forecast included Major Assumptions Competition will reduce price by 5c % Launch in Q3 takes place Major Threats Decisions Required Investment of $ 0.5 m in additional capacity for New Product Failure to gain registration in ……

Vas IEP - 16 © The Delos Partnership 2004 Rough Cut Capacity Planning Objective –Translate SOP Family Volumes into Capacity Requirement –Test validity of plan against demonstrated capacity How –Use Planning profiles –Use Critical Resources –Use Demonstrated Capacity Result –Possible problem areas

Vas IEP - 17 © The Delos Partnership 2004 Rough Cut Capacity Planning Required Capacity Demonstrated Capacity Family Volumes x Rate per hour Family Volumes x Rate per hour Actual Production Per month Actual Production Per month Critical Resources

Vas IEP - 18 © The Delos Partnership 2004 The plan must be in balance

Vas IEP - 19 © The Delos Partnership 2004 Workshop Break into three groups and, using the numbers given, come with a revised plan

Vas IEP - 20 © The Delos Partnership 2004 Integrated Enterprise Planning -3-2 Demand Plan 120 Actual Demand Difference 512 Cum Diff 416 Months Last Demand Plan 120 New Demand Plan Difference Cum Diff Months Q4Q Supply Plan 125 Actual Supply Difference Cum Diff Last Supply Plan New Supply Plan Difference Cum Diff Q4Q Stock Plan Actual Stock Difference Last Stock Plan8691 New Stock Plan Difference Q4Q1 Make – To- Stock : Bottle Family ‘OOO Units

Vas IEP - 21 © The Delos Partnership 2004 Integrated Enterprise Planning Process To gather information an IEP needs –Formal process for inclusion of data –Time for analysis of information –Discussions to get to conclusions –Timely acquisition of information

Vas IEP - 22 © The Delos Partnership 2004 Integrated Enterprise Planning ACTIONACTION Week 1Week 2Week 3Week 4 Innovation Review Innovation Review Customer Demand Review Customer Demand Review Supply Plan Review Supply Plan Review Priority Review Priority Review STAGE 1 STAGE 2 Senior Team Review Senior Team Review STAGE 5 STAGE 7 STAGE 4 STAGE 3 Support STAGE 6

Vas IEP - 23 © The Delos Partnership 2004 Characteristics of IEP Formal set of meetings Agendas “pre-set” Linked series of meetings Focus on right decisions being made at right level Preparation is key Facts not opinions Long-term and not short-term focus

Vas IEP - 24 © The Delos Partnership 2004 Integrated Enterprise Planning Summary –One set of numbers –Teamwork –Manages the constant change –Rolling Business Plan –Replaces Budget –Sound basis for decision making