1. SCT Paramters 1© The Delos Partnership 2005 Supply Chain Techniques The parameters

2. SCT Paramters 2© The Delos Partnership 2005 Part Maintenance in CINCOM

3. SCT Paramters 3© The Delos Partnership 2005 MRP “Spreadsheet”

4. SCT Paramters 4© The Delos Partnership 2005 What determines Lead Time ? Pick time Set up Time Run Time Queue Moves Waits… Reprioritisation Shortages Firefighting….. Should only include these

5. SCT Paramters 5© The Delos Partnership 2005 Lead Times Works order Due date - Into stock Works order Due date - Into stock Works order Release date - from stock Works order Release date - from stock Works order Due date - Into stock Works order Due date - Into stock Works order Release date - from stock Works order Release date - from stock Works order Ready for Release date Works order Ready for Release date Works order Ready for Release date Works order Ready for Release date Purchase order Release date Purchase order Release date

6. SCT Paramters 6© The Delos Partnership 2005 Lead Times Works order Due date - Into stock Works order Due date - Into stock Works order Release date - from stock Works order Release date - from stock Works order Due date - Into stock Works order Due date - Into stock Works order Release date - from stock Works order Release date - from stock Works order Ready for Release date Works order Ready for Release date Works order Ready for Release date Works order Ready for Release date Purchase order Release date Purchase order Release date Cumulative Lead Time

7. SCT Paramters 7© The Delos Partnership 2005 Economic Order Quantity Minimum Cost

8. SCT Paramters 8© The Delos Partnership 2005 Pareto Analysis - 80:20 rule Class/Value % by value% by volumeOrder Frequency “A” Class Parts 80201/day or 1/week “B” Class Parts 15301/fortnight or 1/month “C” Class Parts 5501/quarter Vilfredo Pareto was a 19th century economist who observed that 80% of Italy's wealth was owned by 20% of the population. Vilfredo Pareto was a 19th century economist who observed that 80% of Italy's wealth was owned by 20% of the population.

9. SCT Paramters 9© The Delos Partnership 2005 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

10. SCT Paramters 10© The Delos Partnership 2005 Correct parameters Having the correct choice for the parameters is an often crucially missed opportunity for : Reducing inventory Improving flexibility Improving service levels

11. SCT Paramters 11© The Delos Partnership 2005 Accuracy of Data “Data accuracy is an attitude of mind” – Hal Mather

12. SCT Paramters 12© The Delos Partnership 2005 Bills of Materials 1.Key link in MRP 2.Vital for Costing 3.Link to Drawings Must be 100 % accurate

13. SCT Paramters 13© The Delos Partnership 2005 Definition of Accuracy Check accuracy of single level Bills of Materials   Quantity per   Unit of measure   Part Number   Description   Completeness Red Pen Part Number 14356 Red Pen Part Number 14356 Pen Barrel Part Number 43768 Pen Barrel Part Number 43768 Finished Nib Part Number 76452 Finished Nib Part Number 76452 Cap Part Number 89563 Cap Part Number 89563

14. SCT Paramters 14© The Delos Partnership 2005 Definition of Accuracy Number of Single Level Bills of Materials right Number of Single Level Bills Audited X 100 %

15. SCT Paramters 15© The Delos Partnership 2005 Routings Data accuracy Routings represent instructions to make Capture Standard times Used for Capacity planning Used for costing resource

16. SCT Paramters 16© The Delos Partnership 2005 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 :

17. SCT Paramters 17© The Delos Partnership 2005 Definition of Routing Accuracy Number of Routings correct Number of Routings audited X 100 %

18. SCT Paramters 18© The Delos Partnership 2005 Inventory Accuracy How to get to 98 %

19. SCT Paramters 19© The Delos Partnership 2005 Inventory Accuracy Vital to have 100 % accuracy of inventory: – In the stores – On the shop floor – Anywhere in the company Vital to have 100 % accuracy of work in process

20. SCT Paramters 20© The Delos Partnership 2005 How Accurate Is This Data ? ItemCounted Quantity Value ( £’s)Computer Record Value ( £’s) 12351995 1000 12352996 1000 12353997 1000 12357998 1000 12358999 1000 123591000 123601001 1000 123721002 1000 123731003 1000 123741004 1000 123751005 1000 TOTAL11,000£ 11,00011,000£ 11,000

21. SCT Paramters 21© The Delos Partnership 2005 How Accurate Is This Data ? Inventory status Stores Location ST001 Factory F0001 Part Number 91121 200 Location ST001 200 Location F0001 0 Count 100

22. SCT Paramters 22© The Delos Partnership 2005 Definition of Accuracy Number of correct counts Number of items counted Item = product by location X 100 %

23. SCT Paramters 23© The Delos Partnership 2005 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

24. SCT Paramters 24© The Delos Partnership 2005 Discrete Issue 1.Release order : allocate materials 2.Paperwork received in stores 3.Items picked 4.Issued to factory etc. 5.On hand balance downdated StageAllocatedOn HandAvailable Step 10100 Step 2100 0 Step 3100 0 Step 4100 0 Step 5000

25. SCT Paramters 25© The Delos Partnership 2005 Backflush Technique Backflushing is a technique for downdating inventory Uses Bill of Material to work out what has been used Supports an environment in which works orders are not used Allows bulk replenishment Simplifies material control

26. SCT Paramters 26© The Delos Partnership 2005 Backflushing Prerequisites  Timing of transactions  Report Production in Timely manner  Scrap/Yield/Exception reporting needs to be done quickly  Bill of material accuracy needs to be 100 %  Point of Use Inventory Accuracy needs to be > 95 %  Routings need to be 100 % accurate  Bill of Material change control needs to be excellent

27. SCT Paramters 27© The Delos Partnership 2005 10. Never Give up Continue with Control Group Continue with Process control cycle counting forever –Informal disciplines will creep back