16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Distribution Solution
Basic Distribution Solution
WH
FG
WH
/ DC
Store
/ DC
Customers
Customers
Factory
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Procurement Solution
Renewed Procurement Solution
WH
RM
WH
Consignm
ent Stock
Suppliers
Suppliers
Factory
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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)
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Bull Whip Effect
Image from: http://sinaslogisticsblog.blogspot.de/2010/04/bullwhip-effect.html
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Bi-modal Distribution
Carol Ptak - DDMRP
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Our Procurement Clients
Printing company
High value SKUs
MTO driven
Forecast dependent
Aviation company
Very demanding clients
Long lead times
High variability in usage
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
April 23, 2015 Johannesburg, South Africa
16th International Conference of the
TOC Practitioners Alliance - TOCPAwww.tocpractice.com
South African Bank Note
Company
The TOC story at the
South African Bank Note
Company
Kobus Snyman, SABN, South Africa23rd April, 2015
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
SABN Supply Chain
Printing Finishing Customers
Raw Mat
Spares
Buffer
Spares
Kanban
Kanban Kanban
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
SABN SKU Chart
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
CWH Stocked Out SKUs
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
CWH Colour Stats
Previous stock managementPrevious stock management
DBM implementedDBM implemented
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
All INK in CWH
Overstocked Overstocked
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
GWH Spares
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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)
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
April 23, 2015 Johannesburg, South Africa
16th International Conference of the
TOC Practitioners Alliance - TOCPAwww.tocpractice.com
Aerosud Aviation
The TOC story at Aerosud
Brian Ingram, Aerosud, South Africa23rd April, 2015
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
T: +27 (0)12 662 5041
C: +27 (0)82 901 9658
F: +27 (0)12 662 5169
www.aerosud.co.za
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Aerosud Aviation Business Model
Annual Turnover: 65mUSD (2014)
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Production Management the TOC
way.
How reliable are we now?
How do we become more reliable?
How do we remain reliable?
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Production System
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
How reliable are we now?
Buffer Penetration (
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
How reliable are we now?
Buffer Penetration (MTA only)
SOH+WIP
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Production System
Physical Deployment
System Implementation
- Cell Organisation
- Expediting Function
- Visual ToC Priority System - BRYG
- Daily priority Hitlist - BRYG
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
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.
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
PTS Colour Stats
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Consolidated PTS Raw
Warehouses
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Consolidated Stocked Out
SKUs
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Consolidated Inventory Value
Reduction
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
What does the future hold
1)Improved throughput
2)Improved visibility at all levels
3)Reduced Inventory
4)Reduced stock outs
16th International Conference of the TOC Practitioners Alliance - TOCPA
www.tocpractice.com
Questions
Any Questions for Kobus or Brian?
Top Related