Luxfer Gas Cylinders – S&OP Process Improvement Aditya Tandon MBA Candidate – Wake Forest University

Project Objective Improve the efficiency of the S&OP Process Revamp the Capacity Planning Model Old model focused on earlier plant setup of Luxfer Gas Cylinders Ease data exchange between Sales, Production and Finance teams

Methodology Lean Six Sigma – Reduce waste in the process – Process Improvement Six Sigma DMAIC Framework DEFINE – the goals of the improvement activity MEASURE – the existing system and establish metrics ANALYZE – the system to eliminate waste IMPROVE – the system CONTROL – the new system

Define Phase - Project Charter Project Statement: Improve the Graham Interface with the S&OP Process Project Scope: Automate Capacity Planning Model Automate inventory, overtime and labor hours calculations Improve information exchange between different levels in the process Mission: Reduce the time taken for Capacity Planning Forecast and Financial Forecast Reduce man-days in S&OP Process Improve process efficiency by reducing error susceptibility Define Measure Analyze Improve Control

Customers Mike Mensel – Project Sponsor Jeff Riddell – Responsible for the Sales Forecast Jack Nauman – Responsible for the Capacity Plan Bill Simonsen – Responsible for the Financial Forecast William Birdwell – Responsible for Overtime and Labor calculations

Milestones

Measure Phase - Process Maps Measure the current process Define Measure Analyze Improve Control

Capacity Planning

Capacity Planning Analysis

Financial Forecast Process Map

Analyze Phase Analyze Cause and Effect Diagrams Analyze the current process to separate the value-added activities from Non-Value Added Define Measure Analyze Improve Control

S&OP Cycle Time

Capacity Planning Model Efficiency

Value Add / Non-Value Add Activities

Improve Phase - Factors Considered Reduce the Non-Value add activities Incorporate mix of cylinders Automate calculations reducing probability of errors Rework calculations to be incorporated Ingot inventory calculations Calculate overtime for each month Ease of use Reduce manual effort Define Measure Analyze Improve Control

Send data to corresponding teams New Process Production Planning Planning Analysis Start Compare and analyze the required hours with available hours for each machine center Repeat the capacity adjustment for the auto-hydro to reduce overtime to zero. Also consider the Rework inventory Repeat the capacity adjustment for the Pack to reduce overtime to maximum of two days considering the weekend days Repeat the process for all months in the forecast For the front side are we exceeding production capacity? Consume either US FG Inventory or UK Inventory in order to reduce production hours Yes No Stop 3 – 4 hrs 10 min Start 5 min Analyze each work center for the capacity and over time Send data to corresponding teams Create new folder for the current month. Copy Sales Forecast Run the efficiency report for each machine center and export the output to the same folder Get the PPH and Sales Forecast Data Calculate actual inventory for each machine center and for UK 30 min

New Financial Forecast Process

Value Add / Non-Value Add Activities

New Model – Master Data Sap data – Efficiency Report Parts per hour calculation based on this info Helps in Ingot Calculations Sap data – Efficiency Report

Plant Stats Shift employee statistics to calculate Productivity Machine center outputs to calculate the available capacity Actual Inventory levels from SAP

Graham Back and Front Plan Directly linked to Master Data - % is based on whether considered in the respective machine center Detailed Analysis - differentiates between categories of Inventories Impacts the actual inventory status of UK, Finished Goods, Rework and Sub-Assembly inventory User friendly with Financial Forecast model

Ingot Inventory Based on Front Plan production projections Forecasts the Ingot required each month to meet forecast Calculates the current month actual Ingot consumption

Mix based capacity forecast Total hours required for the month Calculates production effort considering the mix in the forecast Capacity required in hours for each machine center Enables better planning with an accurate forecast Considers optional improvement in production capacity Limits the production improvement based on management decision Similar implementation for each machine center

Forecast Summary Summary comparing the Required and Available capacity at the three machine centers Required capacity based on the Mix of cylinders Calculate Overtime/Excess Capacity at the three machine centers

Forecast Summary (contd.) Inventory updates linked to the consumption and builds made in the Graham Front and Back Plan Actual inventory status at the end of each month for Sub-assemblies, rework, finished goods, Ingot and UK Inventory

Inventory $ projections Added feature to the production model for ease of data transfer to the Financial model Estimates the dollar amount of inventory existing in the plant

Control Phase Develop parameter checks to ensure all input variables are in specifications Develop a control plan that determines follow-up actions incase the process is outside control limits Develop run charts to analyze the final results Define Measure Analyze Improve Control

Control Input parameters Restriction on the variation from standard Comparison of Upper and Lower Limits Limits to a 15% variation Weighted average calculated data for various configurations on the back-side of the plant

Front – Side Run Chart Based on upper limit of 3000 parts produced per day and lower limit of 2200 parts per day Limit decided by management semi-annually Limits updated on the Hourly calculation sheet

Auto – Hydro and Pack Run Chart

Key Improvements Accurate forecast based on the mix of the cylinders – Error % reduced from 25% to 2-3% Reduction of waste – non-value added activities Production forecast effort reduced by 60% i.e. 1.5 man-days Financial forecast effort reduced by 30% i.e. 1 man-day Easy transition of information between Production model and Financial Model Detailed inventory consumption Ingot forecast Accurate overtime forecasted for production labor

Learning's Importance of forecasting Various variables such as mix, labor etc. that lead to an accurate forecast Understanding variables critical for a successful manufacturing business such as absorption, spending etc. Importance of planning – DMAIC approach Asking right questions in Voice Of Customer

Thank You