Due to inefficiencies in the supply chain planning process it appears that several of the symptoms occur at the same time. By changing the planning methods and optimizing their use the company can get a grip on the operations.
- High and wrong inventories
- Unreliable deliveries and low customer service levels
- Many urgent orders
- Long planning cycle times
- Operational inefficiencies
- Low capacity utilization’s
Demand Panning
In most cases demand planning management is an essential element of the supply chain planning process. (Master Production Scheduling, Inventory Management, Material Requirements Planning, Sales and Operations Planning, Detailed Scheduling…)
Demand planning is much more than extrapolating the historical demand. A good demand management process is built on 6 building blocks:
- An adequate forecasting product structure
- Forecasting techniques for regular sales and exceptional demand
- A good process to capture market information and introduce information about new products and exceptional demand
- A forecast consumption to follow up the demand
- A performance measurement system
- An adequate demand management organization
We often observe the following typical results by using:
- Stock level reduction: 20 to 30% inventory reduction are no exceptions
- Service level improvement: improvements of 3 to 10% of the service level are realistic (depends on the start situation)
- Efficiency improvement: reduction of order time, manipulation and transport costs
- Visibility improvement: visualization of real issues
- Structuring and standardization of processes
Inventory Management
In a lot of situations there is still much to gain in optimizing the inventory levels by using the adequate inventory management techniques that take into account the service level requirements and cost constraints. Stock reductions up to 30% while keeping or improving the service level are not an exception.
Together with your team we verify whether or not inventory should be held in a location, i.e. we formalize the stock holding strategy and the inventory deployment decisions. The next step is to decide how much stock should be held and to determine the replenishment procedures and policies. Different items with different characteristics will affect the techniques used and the procedures to set up. Fast moving goods, erratic demand items, new products, spare parts, require different approaches.
Sales & Operations Planning
Sales & Operations Planning is a vital piece in the planning environment of a company. It is the element of utmost importance to allow management to translate the company’s objectives into the operations and to align the different functions on a same plan. Aligning Marketing & Sales, R&D, Operations and Finance on the same plan taking into account business objectives of profitability, productivity, competitive customer service, etc.
To allow this process to occur the adequate tools on the one hand but more fundamentally the correct organization set up on the other hand are needed.
Production Planning
Depending on your needs Xeleos Consulting is able to help you to optimize all of your production planning processes in all their aspects. We assist you in setting up and developing the right techniques needed to determine the material priorities and capacity needs. We help you to answer following questions: How can we set up a medium-term production plan? Which type of forecasts do we need or can we work on customer orders? How should we take into account our bottle-necks? how should we determine the parameters for our Master Production Schedule and Material Requirements Plan? Can we use Just-In-Time techniques? Can we use cyclic planning techniques? Which constraints should be included in the plan?
Once the right planning techniques and processes have been determined, we help you to determine and implement the planning tools and information systems.
Distribution Planning
In an existing distribution network there are several ways to get the materials from the delivery points to the consuming points. In the distribution planning process the “best” material flows and stock levels will be identified and planned for. Several planning philosophies and techniques can be used to do so: push/pull, distribution requirements planning, optimization techniques, collaboration techniques like vendor managed inventories, …
The planning philosophy to choose will depend on the product, supply and market characteristics. For a planned situation it might also be necessary to use specific inventory deployment strategies to overcome shortages or overstocks. Last but not least it is also essential to identify the responsibilities and authorities on inventories and replenishment at the different levels in the distribution network.