1. AG Barr Dem Man 1 © The Delos Partnership 2003 Supply and Demand Management Keeping inventory at the right level

2. AG Barr Dem Man 2 © The Delos Partnership 2003 What Determines Inventory? Average Demand = 100 per week Lead Time= 4 periods Safety Stock = 100 Order Quantity = 800 Lead Time Order Quantity S/S

3. AG Barr Dem Man 3 © The Delos Partnership 2003 Demand Management Forecast Consumption What is actually ordered vs forecast Abnormal Demand

4. AG Barr Dem Man 4 © The Delos Partnership 2003 Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise Cumulative ATP Master Schedule 75 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

5. AG Barr Dem Man 5 © The Delos Partnership 2003 Customer Profile Customer X 50per month Customer Y 10 per month Customer Z 5 per month Customers A… 35 per month Total =100 per month Forecast at End Item Level

6. AG Barr Dem Man 6 © The Delos Partnership 2003 End Item Level Forecast Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise 10075 Cumulative ATP Master Schedule 75 Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

7. AG Barr Dem Man 7 © The Delos Partnership 2003 End Item Level Forecast Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise 10075 Cumulative ATP Master Schedule 75 Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100 Customer Y wants 10; can we supply it ?

8. AG Barr Dem Man 8 © The Delos Partnership 2003 Forecast Consumption Review How your software works Make sure you have the right settings for you! Getting it wrong leads to: –Instability in the production plan –Excess Inventory –Poor Customer Service

9. AG Barr Dem Man 9 © The Delos Partnership 2003 Forecast Consumption – unused External Plan Demand may be less or more than forecast ! Actual customer demand should be monitored to see if shipment plan should be altered Actual customer demand should be monitored to see if forecast should be altered

10. AG Barr Dem Man 10 © The Delos Partnership 2003 Abnormal demand How to identify and how to manage

11. AG Barr Dem Man 11 © The Delos Partnership 2003 Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise Cumulative ATP Master Schedule 75 Cumul Schedule 000075 150 225 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

12. AG Barr Dem Man 12 © The Delos Partnership 2003 Customer Profile Customer X 50per month Customer Y 10 per month Customer Z 5 per month Customers A… 35 per month Total =100 per month Forecast at End Item Level

13. AG Barr Dem Man 13 © The Delos Partnership 2003 Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise Cumulative ATP Master Schedule 75 Cumul Schedule 000075 150 225 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100

14. AG Barr Dem Man 14 © The Delos Partnership 2003 Periods123456789101112 Forecast 25 20 Actual Demand Proj Avail Balance 7550250502505030106545 Available to Promise Cumulative ATP Master Schedule 75 Cumul Schedule 000075 150 225 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100 Customer Y wants 10; can we supply it ?

15. AG Barr Dem Man 15 © The Delos Partnership 2003 Periods123456789101112 Forecast 151525 20 Actual Demand 10 Proj Avail Balance 7550250502505030106545 Available to Promise 9075 Cumulative ATP 90 165 240 315 Master Schedule 75 Cumul Schedule 000075 150 225 End Item Level Forecast Part Number: 12345 Lead Time: 2 periods Safety Stock: 0 Min Ord Qty: 75 On Hand: 100 Customer Z wants 100; can we supply it ?

16. AG Barr Dem Man 16 © The Delos Partnership 2003 When can you promise the customer that they can have all the product ? How much is forecast and how much unforecast? How much is forecast and how much unforecast? How do you know how much is unforecast? How do you know how much is unforecast? What if they do not like your promise ? What if they do not like your promise ? Abnormal Demand Workshop

17. AG Barr Dem Man 17 © The Delos Partnership 2003 Sometimes we need to say no, when it really cannot be done, even if someone else may think that it can. Abnormal Demand

18. AG Barr Dem Man 18 © The Delos Partnership 2003 Ways to Manage Abnormal Demand Safety Capacity Safety Stock Manage the Product Range Reduce Lead Times Redesign the Product Sell something else!

19. AG Barr Dem Man 19 © The Delos Partnership 2003 Averages and Standard Deviations ObservationActualForecastSquared Error 1253025 22030100 330 0 46030900 54030100 61030400 730 0 84030100 92030100 10253025 Average Error = 13.2 Formula is Square Root of Average of these Numbers

20. AG Barr Dem Man 20 © The Delos Partnership 2003 Safety Stock - Maths Safety Stock = x K x Lead Time ErrorService Factor

21. AG Barr Dem Man 21 © The Delos Partnership 2003 Demand Management 1.Requires proper Forecast consumption techniques 2.Required proper recognition of abnormal demand 3.Required behaviour change

22. AG Barr Dem Man 22 © The Delos Partnership 2003 Basic Formula Item Data BOMs 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 ?

23. AG Barr Dem Man 23 © The Delos Partnership 2003 Planned Orders Planned Orders Capacity Requirements Plan Component Plan Red Item 14356 Sub-Item 43781 2 per Automatic re-plan Plans Matched sets of Parts Plans hours for CRP

24. AG Barr Dem Man 24 © The Delos Partnership 2003 Master Scheduling Management Horizon PLAN MANAGE EXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Global Sales and Operations Planning Process Capacity and Materials firm Release Orders

25. AG Barr Dem Man 25 © The Delos Partnership 2003 Master Scheduling Management Horizon PLAN MANAGE EXECUTE Cumulative Lead Time Add or subtract To capacity Strong Link to Global Sales and Operations Planning Process Capacity and Materials firm Release Orders Firm Planned Orders

26. AG Barr Dem Man 26 © The Delos Partnership 2003 Material Planning 1.Master Scheduler works to Action messages 2.Only release orders when materials available 3.Bottom up replan to get out of problems 4.Use Firm Planned orders for stability and control

27. AG Barr Dem Man 27 © The Delos Partnership 2003 Planned Orders Planned/ Firm planned Orders Capacity Requirements Plan Component Plan Red Item 14356 Sub-Item 43781 2 per Automatic re-plan Plans Matched sets of Parts Plans hours for CRP

28. AG Barr Dem Man 28 © The Delos Partnership 2003 Forms of Capacity Planning Two types of Capacity Planning Rough Cut Capacity Planning –Crucial for GSOP –Also can be used at MPS level Detailed Capacity Planning –Information for each work centre –Each Level of BOM

29. AG Barr Dem Man 29 © The Delos Partnership 2003 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

30. AG Barr Dem Man 30 © The Delos Partnership 2003 Rough Cut Profile Key Resources UnitsFamilies ABCDEF Forging Supplier Units2442 Machining Hrs121420510 Quality Assurance Hrs3531072 Plating Hrs2516 Assembly Hrs4725 Test Hrs37925 Hours per 000 units

31. AG Barr Dem Man 31 © The Delos Partnership 2003 RCCP Planning Result Month 5 Key Resources Required Production VolumesCapacity A 22 B 20 C 35 D 10 E 15 F 15 ReqDemMax Forging Supplier 44804030194200300 Machining26449020075150117910001200 Quality Assurance 6610010510010530506500750 Plating401751090315280320 Assembly881407050348500550 Test661403152075616580696

32. AG Barr Dem Man 32 © The Delos Partnership 2003 Capacity Requirements Plan Opn No Work Centre OperationSetRun 1045Inspect0.50.10 2055Mix1.00.5 3065Pack1.00.2 Routing Work Centre Information 8 Planned Order Release 0Projected Available Balance 25Scheduled Receipts 202020Projected Gross Requirements 97654321 Periods 5 5 5 5 10 10 -15 -15 10 10 -10 25 25 15 15

33. AG Barr Dem Man 33 © The Delos Partnership 2003 Capacity Plan resolution

34. AG Barr Dem Man 34 © The Delos Partnership 2003 Finite versus Infinite

35. AG Barr Dem Man 35 © The Delos Partnership 2003 Problems with Finite Conceals issues Assumes that nothing can be done about capacity Makes Customer order late or reschedules supplier No consideration of what-if No accountability

36. AG Barr Dem Man 36 © The Delos Partnership 2003 Creation of Work to List 12345678 Projected Gross Requirements 10 20 Scheduled Receipts20 Projected Available Balance 30 Planned Order Release Opn No Work Centre OperationSetRun 1045Inspect0.50.10 2055Mix1.00.5 3065Pack1.00.2 Routing Work Centre Information

37. AG Barr Dem Man 37 © The Delos Partnership 2003 Work To List Order No.Part No.DescriptionQuantityOpn Number Opn Start Date Opn Due Date Order Due Date Set up Time Run TimeNext/Prev WC Status 40724575Barrel201010/312/324/510.07.520Q 40343678Cap401009/0313/327/50.02.030R 40947823Cap20 14/316/323/410.08.030S 41132672Top103014/318/321/48.010.060Q Order No.Part No.DescriptionQuantityOpn Number Opn Start Date Opn Due Date Order Due Date Set up Time Run TimeNext?prev WC Status 42025763Body30 10/313/323/43.05.040R 42534732Barrel20 11/314/322/45.010.020R 43032567Top254013/315/327/42.07.020Q 44047823Cap400514/317/304/045.07.020Q Work Centre Number 10 Description : Turning Date : 12/3 Jobs Currently at Work Centre Jobs Coming to this Work Centre

38. AG Barr Dem Man 38 © The Delos Partnership 2003 Kanban Means visible signal Replaces need for Work to List Replaced by –Card –Empty square –Tennis Ball –Empty package

39. AG Barr Dem Man 39 © The Delos Partnership 2003 Time Fence Policy Horizon YES PERHAPS NO Cumulative Lead Time Firm Planned Orders Material Capacity Can I change the schedule ? the schedule ?