TOC in Procurement_Albert_16 TOCPA_April 2015_South Africa_with correction

16th International Conference of the TOC Practitioners Alliance - TOCPA

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April 23, 2015 Johannesburg, South Africa

16th International Conference of the

TOC Practitioners Alliance - TOCPAwww.tocpractice.com

TOC Driven Procurement Sharing the

implementation and results at two SA

implementations

Albert Van der Wat, Cargo Solutions, South Africa23rd April, 2015


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Albert Van der Wat

Albert was born and raised in Johannesburg,

and completed his Industrial and Systems

Engineering Degree at the University of

Pretoria in 2008. Albert is currently working

for CargoSolutions, as TOC consultant and

Symphony Implementer. Albert has a vast

knowledge of how Symphony can improve a

companys operations using TOC based

planning, execution and management tools.

In addition, Albert also uses the Symphony

Simulator as marketing tool to illustrate how

TOC and Dynamic Buffer Management can

improve Inventory carrying costsAlbert Van der WatE-mail: [email protected]: 0114858700Cell: 0834636232


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Scope of Presentation

Share insights in TOC Procurement with DBM Specifically in long lead time SKUs and Spare Parts How to improve on KPIs in Procurement, namely:

Reduce Stock Outs Reduce Overstocking

Inventory Quantities Inventory Value

Increase Inventory Turns

TOC Driven Procurement Sharing the

implementation and results Your logo


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Distribution Solution

Basic Distribution Solution

WH

FG

WH

/ DC

Store

/ DC

Customers

Customers

Factory


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Procurement Solution

Renewed Procurement Solution

WH

RM

WH

Consignm

ent Stock

Suppliers

Suppliers

Factory


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What do we want to Achieve?

Remove complexity of MRP

Constant reviewing of Min-Max levels

Reviewing MOQs and EBQs

Revising BOMs

Human constraints

Remove Evils of MRP

Having too much inventory

Having too little inventory

Help against the Bull Whip effect


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What is the Bull Whip Effect?

The bullwhip effect is an observed

phenomenon in forecast-driven distribution

channels. It refers to a trend of larger and larger

swings in inventory in response to changes in

customer demand (or forecast), as one looks at

firms further back in the supply Chain for a

product. Jay Forrester Industrial Dynamics

(1961)


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Bull Whip Effect

Image from: http://sinaslogisticsblog.blogspot.de/2010/04/bullwhip-effect.html


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Bi-modal Distribution

Carol Ptak - DDMRP


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Dynamic Buffer Management

Inventory resides Too Much in the Red

Zone Availability is at risk

Inventory is Too

Much in the

Green zone -

Buffer target is

decreased to

reduce

unnecessary

inventory cost

Consumption rate

temporarily

increases

Consumption rate is back to

normal rate again

Replenishment

requirement

Replenishment

execution

DBM

A Reminder


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Our Procurement Clients

Printing company

High value SKUs

MTO driven

Forecast dependent

Aviation company

Very demanding clients

Long lead times

High variability in usage


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South African Bank Note

Company

The TOC story at the

South African Bank Note

Company

Kobus Snyman, SABN, South Africa23rd April, 2015


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Name of the presenter

1990 - 1992B com (Cum Laude) ( Major in Business Economics , HR)1993 - 1997SABN HR Department , HR Administrator

1998Internal audit Diploma , Certificate in internal control

1997 - 2000SABN Finance Department Assets and Insurance

2000 2007SABN Finance department Assistant Cost Accountant

2008 Current ( Established SABN Logistics Department )SABN HOD Logistics Warehousing , Export , Imports , SecuritizedProduct Storage , Demand Control , Waste Management

K SnymanLogistics ManagerTel 012 521 1499Cell 084 600 1074


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Current Status Customers places annual orders based on forecasting Delivery planning is done for the financial year Inks and Paper comprise a very high % of product

cost focus area Inks and paper is now being replenished by vendors All SKUs are being ordered based on Symphony

recommendations Future

Vendor Managed Inventory (VMI) Vendor holding buffers to shorten supply lead time Reduce forecasting periods

SABN Supply Chain


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SABN Supply Chain

Printing Finishing Customers

Raw Mat

Spares

Buffer

Spares

Kanban

Kanban Kanban


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SABN Raw Materials

SKUs Inks, paper, spares etc currently

managing approximately 6000 SKUs

All SKUs are now managed using Symphony

with DBM

Long lead time items are challenging , but

become less challenging once supplier buy in

and view buffers daily


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SABN Raw Materials

Old Mode of Operation

Ordering was done on out of stock / replace &

forecast

Un desirable events (UDEs) / Challenges

Overstocking,

Stock outs,

MRP challenges,

Forecast Challenges,

Reorder methodology on MRP , complicated

formula and not working


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SABN and TOC

Introduced TOC by Supply Chain Executive

Reasons for change out of stock , stop start ,

over stocking..

To go live , massive clean up , determine

buffers , check integrity of stock , categories

(Critical / lead time) , motivated staff


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SABN SKU Chart


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TOC and Procurement

Stock Location

SKU DescriptionInventory at

TransitBP Transit

Inventory at Site

BP Site Black / Red Reason UOM Replenishment Time GL Code Requisition Quantity PO Quantity Buffer Size

CWH CONSUMABLE 0.00 100% 0.00 100% Project consumption M 21 INCO 0.00 0.00 2.00

CWH PPE 975.00 2% 1.00 99% Spike in consumption EA 23 INPC 750.00 225.00 1,000.00

CWH CHEMICAL 0.00 67% 25.00 67% Annual cleaning of factory LT 18 INCL 0.00 0.00 75.00

CWH CONSUMABLE 192.00 1% 105.00 65% EA 21 INCO 192.00 0.00 300.00

CWH SPARE 0.00 34% 132.00 34% EA 90 INCO 0.00 0.00 200.00

CWH BOX 5,996.00 -366% 1,000.00 33% EA 20 INPA 0.00 5,996.00 1,500.00

CWH CONSUMABLE 0.00 -1% 2,010.00 -1% MM 21 INCO 0.00 0.00 2,000.00

CWH SPARE 0.00 -5% 42.00 -5% EA 21 INCO 0.00 0.00 40.00


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CWH Stocked Out SKUs


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CWH Colour Stats

Previous stock managementPrevious stock management

DBM implementedDBM implemented


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All INK in CWH

Overstocked Overstocked


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GWH Spares


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The Future at SABN

Process of giving suppliers access to symphony

High volume suppliers move to VMI

Supplier has Symphony access and long term pricing

Supplier creates requisition based in Symphony

SABN converts requisition to order

Supplier dispatch

SABN manages buffers (DBM) based on

SABN production planning (SKU phase in and out)


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Aerosud Aviation

The TOC story at Aerosud

Brian Ingram, Aerosud, South Africa23rd April, 2015


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Brian Ingram

I am the Supply Chain Director at Aerosud Aviationbased in Centurion Pretoria.

I have been with the company for 16 years.

I have a mechanical engineering background andhave spent the majority of my working life in theaviation/Aerospace field

BRIAN INGRAM

SUPPLY CHAIN DIRECTOR

[email protected]

T: +27 (0)12 662 5041

C: +27 (0)82 901 9658

F: +27 (0)12 662 5169

www.aerosud.co.za


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Group Introduction

Current Group Organisation

Board of DirectorsBoard of Directors

Design and Development of aviation Products

Industrialization & Make to Print

Manufacture of Composites, Thermoplastics, CFRTP, Deep drawn

Pressings, Welding, Treatments, Sheet metal parts, Machined

components and medium sized assemblies

Since 1990


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Aerosud Aviation Business Model

Summary of Customers and Products

Aerosud Aviation parts delivered to:

4 500 B737 850 B777 3 500 A320 30 A400M 25 A350

Vacuum Formed and

Lay-up parts and

Assemblies

600 part number

4 500 p/m

Sheet metal Electrical

Rack assemblies

600 part numbers

25 000 p/m

C-class wing parts and

welded track can

assemblies

500 part numbers

40 000 p/m

C-class parts

1 000 part numbers

4 000 p/m

Cockpit linings, Cargo

lining Wing Tip and Galley

3 000 part numbers

10 000 p/m

Track Cans and CFRTP

Frame Clips

800 part numbers

10 000 p/m

A320 34 >> 36 >> 46

B737 31 >> 34 >> 42

A400 >> 1 >> 2.5

A350 >> 2 >> 3

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


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Aerosud Aviation Business Model

Annual Turnover: 65mUSD (2014)


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Supply Chain

International Procurement

Manufacturing & Tools

1%

Others2%

Raw Materials75%

Detail Parts14%

Services8%

Annual International spend 25 mUSD

3500 SKUs

580 Suppliers

US = 65%

Europe = 25%

UK = 10%

Lead Times up to 12 months with an average lead time of

90 days

High amount of Life Limited SKUs

High cost of individual materials


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Addressing Industry Challenges an Aerosud View

Key Strategic Elements

Maintain technology investment and Engineering capability

99% on-time delivery and a preferred supplier

Implementation of ToC methodology

Increase level/complexity/size of assembly work

Increase order book based on current range of process approvals with moderate expansion

Expand local content and supplier base (make-buy decisions)

Expand Local and International Partnerships


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Business Systems

Integrating Business requirements

Business Process Management

Shop Floor Data

Collection

Operational Processes and Procedures (OPPS)

(EN/AS 9100 Compliant)

ERP

SolutionInventory

Production

Management

SFDC

Detail parts

tracking

Priority

Management

Part Quality

Reporting

WIP

ManagementPLM

Solution

PDM

EBOM/MBOM

ConfigurationWorkflow

SYMPHONYPurchasing

WIKIWINGS

Financial

Management

Manufacturing

Engineering Tool OMEGA

Subcon

Management

T O C


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Production Management the TOC

way.

How reliable are we now?

How do we become more reliable?

How do we remain reliable?


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Production System


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Buffer Penetration (


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Buffer Penetration (MTA only)

SOH+WIP


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How do we become more

reliable?

Flow Rate performance

Value Stream view Project or flow group view (per job Class i.e. S, M, V, L, other)

Cell view (CCR, Monitor, other)

Value Stream Cell View : CCR & Monitor


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How do we remain reliable?

Planning reliability

Buffer size management Buffer Trace

Settings management

Execution reliability

Protective Capacity history per cell

PC Profile in value stream

Reason codes for not achieving flow

NRFT


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Production System

Data Set-up & Management make-to-availability VS make-to-order

W

I

P

E

B

Q

33%

66%

100%

T

o

C

u

s

t

o

m

e

r

L

A

U

N

C

H

B

u

f

f

e

r

BUFFER PENETRATION

S

O

H

M

A

K

E

T

O

A

V

A

I

L

A

B

I

L

I

T

Y

MTO Lead time

t = NOW

20

20

20

20

Time

SOs

qty

SOs that are post-due

SOs falling outside the launch window

To

Cu

stom

er

LAU

NC

H

BUFFER PENETRATION

M

A

K

E

T

O

O

R

D

E

R


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Production System

Physical Deployment

System Implementation

- Cell Organisation

- Expediting Function

- Visual ToC Priority System - BRYG

- Daily priority Hitlist - BRYG


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Aerosud Raw Materials

Complex supply chain together with volatility

in customer demand, presents many

challenges to any inventory management

system.

TOC purchasing methodology, driven via

Symphony software, has shown many

advantages not the least of which is visibility

that allows for improved inventory

management.


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PTS Colour Stats


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Consolidated PTS Raw

Warehouses


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Consolidated Stocked Out

SKUs


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Consolidated Inventory Value

Reduction


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What does the future hold

1)Improved throughput

2)Improved visibility at all levels

3)Reduced Inventory

4)Reduced stock outs


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Questions

Any Questions for Kobus or Brian?

TOC in Procurement_Albert_16 TOCPA_April 2015_South Africa_with correction

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