Intersite Pull / Golden Rules DRAFT October 5, 2007 BE-TL2-013-DRAFT-Intersite Golden Rules Business...
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Transcript of Intersite Pull / Golden Rules DRAFT October 5, 2007 BE-TL2-013-DRAFT-Intersite Golden Rules Business...
Intersite Pull / Intersite Pull / Golden RulesGolden Rules
DRAFT
October 5, 2007
BE-TL2-013-DRAFT-Intersite Golden Rules
Business ExcellenceBusiness Excellence
2BE-TL2-013-DRAFT-Intersite Golden Rules
Overview & Scope 3Objective – Intersite Pull 4Key Attributes of Intersite Pull 5Background - Intersite Pull 6Benefit of Intersite Pull 7House of FLE - Intersite Pull – Key Areas of Focus 8Intersite Pull Data Requirements 9Intersite Pull - Golden Rules 10Intersite Pull - Macro View – End to End Process 11Intersite Pull - Overall Process 12Intersite Pull Bin Sizing Guidelines for Puller & Pullee 13Intersite Pull – ROP Table 14Intersite Pull - Kanban Replenishment Time (KRT) 15 – 16Intersite Pull – How Does it Work? 17Intersite Pull – Cisco (Example) 18Intersite Pull Supplier Site – FG Supermarket Table 19Intersite Pull Implementation @ SAO – Example 20 – 23Exercise & Formats 24 - 28
ContentsSlide(s)
Table of Contents - Intersite Pull
3BE-TL2-013-DRAFT-Intersite Golden Rules
OverviewOverviewThe Global Planning solution for the Supply Chain network that improves decision making and optimizes end product and component flows between the different sites of Our Organization and supports decision-making processes like Master Plan and Standard Operations Plan (SOP). These simulation tools provide a proactive view of stocks or requirements allocation alternatives, both in product groups and on end products.
ScopeScopeConsumption from Customer Sites Supermarket generates Pull signal to Supplier Site when the ROP (Reorder Point) is reached.1. Automated signal goes to Supplier Site’s FG Supermarket owner
• Preferably signal also generates release on Blanket PO*• Site can start with Email as a signal with long term solution to be EDI
2. System generated Advanced Shipment Notice (ASN) sent to Customer Site
Overview & Scope
4BE-TL2-013-DRAFT-Intersite Golden Rules
The communication option offered in this solution orchestrates between several Sites. This partial replication of can be fully modeled and allows different Sites to be consolidated, while information can also be shared between several Sites on the Intersite Pull.
• Improvement of Customer Satisfaction: less obsolescence, in time deliveries, due-date compliance and etc.
• Increase your Profitability: by reducing costs (production costs, distribution costs, inventory costs, etc.)
• Increase Efficiency: improve your visibility, improve internal and external collaboration, anticipation of production and sourcing needs
Objective – Intersite Pull
5BE-TL2-013-DRAFT-Intersite Golden Rules
Withdraws needed Parts from preceding Process between Customers & Suppliers Sites
Preceding Process 'owns’ Supermarket ‘Purchasing’ Intervals derived from TAKT time ‘Purchased’ Quantities in Standardized Quantities Improve Overall Customer Satisfaction Reduce stocks and Costs to Improve Turnover plus Profit Margins Improve Procurements Optimize Production Resources Control the Complexity of Our Supply Chain Optimize Internal and External Collaboration
Key Attributes of Intersite Pull
6BE-TL2-013-DRAFT-Intersite Golden Rules
Next Evolution of FLE Optimal and Predictable Inventories at sites Connecting the dots – Line Encompasses Collaborative Effort with support from various functions Global Point of Contact by Function, not by region (mixed signals, multiple points
of contact). Consolidated Communication Channel, not Duplicative Calls. Accept more Responsibility and value add Functions Need to Collectively Simply Processes Create a more Efficient Information Flow-simplify and Rationalize tools. Assume the necessary Value-add Functions of a Supply Node Eliminate MUDA.
Background - Intersite Pull
7BE-TL2-013-DRAFT-Intersite Golden Rules
The Benefits of the Intersite Pull based on Short & Long Term are as follows: Short Term
• Consumption Based Replenishment
• Better “Model Mix” Management
• Predictable Inventory
• Improved availability, Reduced Expediting
Long Term • Reduced churn in Order Management
• Reduced Liability due to Consumption based Pull
• Reduced Critical work for Supplier & Buyer
Simple to understand & easy to implement system
Benefits of Intersite Pull
8BE-TL2-013-DRAFT-Intersite Golden Rules
Goal of SPSTM : Add Value & Eliminate Waste…Relentlessly for Our Customers
Heijunka
Six Six SigmaSigma
Value Stream Map ® 5S ® Supermarkets ® SMED
JIT Jidoka
Stop @ Abnormality
Takt Time Production
Single Piece Flow
Pull Production
Autonomation
SequencingLevel Loading
House of FLE
Three Key Areas of Focus to support Intersite Pull
Intersite Pull – Key Areas of Focus
9BE-TL2-013-DRAFT-Intersite Golden Rules
Supplier Site Customer Site
• Manufacturing Lead Time
• Assembly Yield
• Standard Pack Size
• Minimum Production Qty
• Delivery Frequency
• Mfg Planning cycle time
• Customer Demand
• Customer Forecast
• Customer Service Levels
• Assembly Yield at Incoming
• Transit Time
• A, B , C Classification of Items
Intersite Pull Data Requirements
10BE-TL2-013-DRAFT-Intersite Golden Rules
Supplier Site (Pullee) Customer Site (Puller) Supplier Site not authorized to ship without pull signal [Supplier Site shall
automatically ship the Current Week Reservation Qty in the following week, if the Customer Site fail to Pull)
Ship within 24 hrs of Receiving Pull Trigger (Based on the Agreed Max Qty by Models. Note: Pull Quantities above the Max shall follow to Component Leadtimes)
Must Deliver 100% of Pull Qty and ensure that there is NO LINE DOWN Situation @ Customer’s Site (100% adherence shall only be applicable within the Agreed Max Qty by Models. Note: Pull Quantities above the Max shall be Replenished based on the Component Leadtimes)
Forecast is only Used for Material and Capacity Planning. ROP will be Re-Calculated in case of huge Demand change / Yield issue @ FGI
Supermarket Min/Max level to be reviewed and adjusted at Pre-defined Frequency
Response to forecast from Supplier Site within 24 - 48hrsFGI Supermarket planned for sustaining products only – NPI, EOL, Low Volume
BTO & One Time Order..... ExcludedSupplier Site will - Communicate FG Supermarket levels on weekly basis (e.g.
RTF, FG tracking log) Mfg Sequence at Supplier site is decided by FG Super Market trigger (if No Pull or
Reservation from Customer Site, then Supplier Site shall stop Production) System generated Advanced Shipment Notice (ASN) sent to Customer site
Consumption from Customer Site’s Supermarket generates Pull signal to Supplier Site when the ROP is reached
Forecast Leveling (Smoothing Algorithm) done at Customer SiteCustomer Site will communicate on a Weekly basis - Level Loaded 4
weeks rolling Reservation Qty with Purchase Order.Ownership of Liability of FGI (ECO, EOL, E&O…) Belongs to CustomerAutomated Signal goes to Supplier Site’s - FG SupermarketCustomer Site will - Communicate Supermarket levels and the Min /
Max Qty on a Weekly basisCustomer Site shall be responsible to organize Meeting or Conference
Call with Supplier Site for all Upsides above the Agreed Max FG Supermarket Quantity to review the Next appropriate cause of actions
Customer Site will continue to track & provide Performances of Actual Pull Vs. END CUSTOMERS Forecast
Onus of END CUSTOMERS T & C for all Claims lies with Customer Site
Intersite Pull - Golden Rules
11BE-TL2-013-DRAFT-Intersite Golden Rules
RM Supermarket
Receiving Dock
Kitting SMT,ICT, Functional
Test
Kitting Pack/ShipSupplierShipping
BTO
CustomerPull
BTO/CTOOrder Mgt
Order Mgt
HeijunkaHeijunka
WMS
Supplier Site Customer Site
Automated Signal
ROP Caluculator
ForecastGolden RulesNo Pull Signal – No Ship
Golden RulesSend Pull Signal @ ROP
Intersite Pull – Macro View – End to End
12BE-TL2-013-DRAFT-Intersite Golden Rules
Cus
tom
er
Supp
lier
Raw SM
Raw SMFG SMMfg
Orders
Forecast
Shipments
Orders
ROP
Final Assembly Transit
Supplier Site Customer Site
KIT
FG
Ship Ship
Forecast
Pull TriggerPull Trigger
Pull Trigger
ROP Pull Trigger
• Governed by Golden Rules
• Collaborative Approach : Lean, AM & Customer (if needed)
• Weekly Operating Mechanism
• FG SuperMarket “Dictates” Mfg Sequence at Supplier Site
Connecting Flextronics Sites with “Pull”
Intersite Pull – Overall Process
13BE-TL2-013-DRAFT-Intersite Golden Rules
Optimal Bin Size agreed to between Sites (Puller & Pullee)a. One Bin equals the Standard Package Quantity (SPQ)b. Bin can be, Plastic Bin, Container, Box, Pallet etc.c. Total Number of bins in loop depends on – ROP, Delivery
Frequency, MOQ, & Safety StockStart Condition – All Bins Full at Customer (Puller) and Supplier (Pullee)
Sites
Intersite Pull Bin Sizing Guidelines for Puller & Pullee
14BE-TL2-013-DRAFT-Intersite Golden Rules
Parameter Basic ROP Advanced ROP STD PO
Lead Time Guidance Replenishment (Mfg LT + Intransit LT) < 1 wk
Replenishment (Mfg LT + Intransit LT) > 1 wk All
Variability Guidance (STD/AWU) Low Variability (less than 1.25) Medium Variability (between 1.25 and 3) High Variability (greater than
3)
ABC Stratification (Rule) C Class, or common parts A & B Class All
Data for Avg Demand Last 2 Qtr "Actual" Customer Demand
Last 2 Qtr "Actual" Customer Demand & Next two Qtr Forecast used with different weightings depending on historical forecast accuracy.
N/A
Lead Time Replenishment Time (Days) Replenishment Time (Days) Any
Standard Deviation Last 2 Qtr "Actual" Customer Demand Last 2 Qtr "Actual" Customer Demand N/A
Z (NormsInv of Service Level) C-99.995% (Suggested) B- 95%, C-99.995% (Suggested) 0
# of Pulls within Qtr (Frequency) Rulw > 5 > 5 ≤5
ROP Execution
1. Trigger when OH + OO is < ROP 2. Trigger Qty = Avg Demand Over Repl. Time (Bin Size calculated) 3. Supplier Site delivers from FG SM w/in 24hrs 4. No W.O. release to Mfg at Supplier site till trigger from FG SM is rec'd
1. Trigger when OH + OO is < ROP 2. Trigger Qty = Avg Demand Over Repl. Time (Bin Size Calculated) 3. Supplier Site delivers from FG SM w/in 24hrs 4. No W.O. release to Mfg at Supplier site till trigger from FG SM is rec'd
1. Trigger "PO" when Projected OH < 0 (or SS value) at or inside LT plus Order Policy 2. Trigger Qty = Delta of OH and GR at or inside LT and ABC order policy rules. 3. Supplier site holds no FG, builds to order
Inte
rsite
Intersite Pull – ROP (Re-order Point) Table
15BE-TL2-013-DRAFT-Intersite Golden Rules
ProcessPlanning
ManufacturingCycle Time
Transit toCustomer Site
OrderProcessing
TransitSupplier
Site
MaterialReceiving
Inter Site - Kanban Replenishment Time (KRT)
Customer Site
HugeVariation
Needs to be “Predictable”
Intersite Pull - Kanban Replenishment Time (KRT)
16BE-TL2-013-DRAFT-Intersite Golden Rules
FGSuperMarket
Transit toCustomer Site
OrderProcessing
TransitSupplier
Site
MaterialReceiving
Inter Site - Kanban Replenishment Time (KRT)
Customer Site
24 Hrs
Mfg Lead Time
Intersite Pull - Kanban Replenishment Time (KRT)
17BE-TL2-013-DRAFT-Intersite Golden Rules
SOLECTRON
SOLECTRON
• Pull Confirmation
• Shipments as per Pull
• Shipment Documents
• FG Supermarket
• Blanket PO
• Pull Trigger
TAKT TIME
NEW
NEW
NEW
SOLECTRON
SOLECTRON
SupplierSite
Customer Site
Intersite Pull – How Does it Work?
18BE-TL2-013-DRAFT-Intersite Golden Rules
Penang DFPenang PCBA
Austin DF
Austin PCBA
MarketForecast
MarketForecast
1. Receive & enter market Forecast2. Create a Production Plan3. Maintain safety-stock4. Net on-hand5. Maintain M/B codes.6. Maintain supplier % splits.7. Maintain supplier lead-times8. Transmit net demand to suppliers.9. Receive supplier confirmations?
3rd party suppliers
3rd party suppliers
DF Sites
Potentialfor SLRCFAAnalysis
1. Receive & enter DF net demand2. Create a Production Plan3. Maintain safety-stock4. Net on-hand5. Maintain M/B codes.6. Maintain supplier % splits.7. Maintain supplier lead-times8. Transmit net demand to suppliers.9. Receive supplier confirmations?
Intersite Pull – Cisco (Example)
19BE-TL2-013-DRAFT-Intersite Golden Rules
Revenue
Frequency
Mfg LT
Make to Forecast Decide Make to Order
80 % List 70 % List <70 % List
> 8 Wk/Qtr
> 1 Week
4-8 Wk/Qtr
0.5-1 Wk
< 4 Wk/Qtr
< 0.5 Week
Intersite Pull Supplier SiteFG Supermarket Table (Example)
20BE-TL2-013-DRAFT-Intersite Golden Rules
Before After
Part Yield: 100% ImprovementPart Yield: 100% Improvement Yield: 100%Yield: 92.6%
Inventory : 58% ImprovementInventory : 58% Improvement Total DOS: 10 daysDOS: 24 Days
Replenishment CT: 94% ImprovementReplenishment CT: 94% Improvement Time: 10 hours Time: 170 hours
Shi
nei:
Mac
hini
ng O
pera
tions
Asy
st -O
ps:
3PL
War
ehou
seA
syst
-Ops
:In
tern
al W
HA
syst
-Ops
:P
rod
Floo
r
Machining operations manufactures the parts and ship to Asyst Ops based on Forecast and PO loaded.High raw material inventory
Shipped parts stored in external WH which will be picked upon WO trigger
WO picked parts will be staged at internal WH for shipment to prod floor
Parts de-kitted and staged on the prod floor
Shi
nei:
Mac
hini
ng O
pera
tions
Shi
nei:
M/C
sup
erm
arke
tA
syst
-Ops
:In
tern
al W
HA
syst
-Ops
:P
rod
Floo
r
-- 2 bin Kanban, with empty bin as trigger
-- 5 days WIP
Pull
Pull
-- Daily Milk Run from machining operations for replenishing empty bins
-- 2 days WIP
Pull-- Material pull from Asyst-Ops WH
will trigger machining ops to start producing parts
-- 2 days WIP
-- Parts production trigger from Machining Ops WH
-- 1 days WIP
Start to End
Star
t to
End
Intersite Pull Implementation @ SAO – Example # 1
21BE-TL2-013-DRAFT-Intersite Golden Rules
Before Kaizen After Kaizen
Operations Problem Action Taken ResultsHigh RM Inventory
Long material delivery lead time
Set up KANBAN System from supermarketto supplier to facilitate a pull system.
Establish a Min-Max System to replenishMaterial
To proliferate the “kanban pull” for 9 other local suppliers by end Feb
Trial run on 21 parts from supplierZephyr; inventory reduced by20% for the 21 selected parts
Supplier delivery lead time reduced from 3 days to 1 day
Warehouse
Transferring Kanban Card to Kanban post when material is at Min level
Buyer acknowledge pull signal and awaiting supplier to pick up kanban card daily
Intersite Pull Implementation @ SAO – Example # 2
22BE-TL2-013-DRAFT-Intersite Golden Rules
FG DOS : 85% ImprovementFG DOS : 85% Improvement
WIP DOS : 66% Improvement WIP DOS : 66% Improvement
2 Days14 Days
9 Days 3 Days
Customer: Asyst
Establish FG Supermarket Precision Machining Section Before After
FG Super Market
• No Visual Management
• No FG Supermarket
• High WIP & FG Inventory
2-Bin System with Visual Management
Intersite Pull Implementation @ SAO – Example # 3
23BE-TL2-013-DRAFT-Intersite Golden Rules
Before Kaizen After Kaizen
Setting Up of Floor Stock Supermarket Before Kaizen
After Kaizen
• Enable Pull system, Kanban, Min-Max, implementation, and in turn reduce excess inventories• 5S and Kit inventory accuracy of 99%• reduced picking & kitting cycle time from 35.7 mins to 55 Second Per Kit• Reduction of space by 20% from 5787 to 4648 sq ft
2 Bin System
Kanban System
Kit Case Kanban
Intersite Pull Implementation @ SAO – Example # 4
24BE-TL2-013-DRAFT-Intersite Golden Rules
Let us Visit Our Operations&
Find Parts Supplied by Our Sister Sites to Develop Intersite Pull Opportunities
Remember!!!Don’t Solve it…….Just Do It!
Exercise
25BE-TL2-013-DRAFT-Intersite Golden Rules
Microsoft Excel Worksheet
Overall Inter-site Pull Tracker
26BE-TL2-013-DRAFT-Intersite Golden Rules
Intersite Pull Performance Chart (Inventory & OTD %)
0
0
0
1
1
1
1
Tota
l Inv
ento
ry (U
S$M
)
00000111111
Inte
rsite
Pul
l Per
form
ance
Total Inventory (M$)RequestMet 100%% OTD for Pull Signals 0% 0% 0% 0% 0% 0% 0% 0%
Sep '06 Oct '06 Nov-06 Feb-07 May-07 Jun-07 Jul-07 Aug-07
Intersite Pull Performance Chart (Inventory & OTD %)
27BE-TL2-013-DRAFT-Intersite Golden Rules
Number of Parts on InterSite Pull
Frequency of Pull per Week Status
to
Pull Signal Actual Pull
% #DIV/0!
Actual Qty Shipped in accordance = Pull Signal
Intersite Pull Performance Summary
Inter Site Pull Location
Actual Qty Shipped to less than Pull SignalActual Qty Shipped to less than Pull Signal with No Risk
Intersite Pull Performance Summary
28BE-TL2-013-DRAFT-Intersite Golden Rules
Microsoft Excel Worksheet
Intersite Pull Daily Performance Tracker