Milk Run in FMCG Industry - Abhai Tripathi

abhai.tripathi@us.fujitsu.com 937-489-0272

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Agenda
What is milk run planning Challenges faced ASCP Fundamentals Oracle functional design Business benefits Lessons learned Q&A

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What is milk run planning?

Mexican Vendors

International Border

US Vendors

BOL

Mexico Plant

Maquiladora Accounting US Plant

A Maquiladora or maquila is a factory in Mexico that imports materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then re-exports the assembled product, usually back to the originating country.

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What is milk run planning?

Its a pull based system Virtual Kanban but specific to a FG model No inventory build up in advance at the destination plant (Mexico in this case) Each trailer will carry a kit for a specific FG model and fixed lot size

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What is milk run planning?

Truck will start from US plant with make parts (Sub assemblies) En-route it will pick purchased parts from vendors Milk run parts will be shipped only a day in advance of their due date, sometimes a shift before If any of the parts is not filled for that day, the milk run will be cancelled and FG schedule will be modified as per availability of next kit

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Challenges faced
Very less floor space in MX plant for storing parts Milk run parts will be shipped only a day in advance of their due date, sometimes a shift before Frequent FG schedule changes often due to demand schedule changes Prompt vendor communication for any schedule changes Legacy MRP not responsive enough to changes (lead times, finite scheduling, etc.)

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Challenges faced
Manual and laborious process for generating Milk run parts list Often milk runs were missed because of disconnected subassembly and FG planning Excel based Shop floor scheduling mostly based on the tribal knowledge of the scheduler, very time taking Since milk run parts are model specific, any excess inventory increases the risk of obsolescence

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ASCP Fundamentals - Planning Flow

Schedule Options

Supply Agreements

ASLs Sourcing Rules

ASCP
Schedulers WB Approved Reqs / Rels Plan Run

Data Collection Data Collection

Oracle Master / Txn Data

Build, Confirm and Send Schedules Dock Ship iSupplier Portal Vendor Ships Dock Ship Vendor 1 Vendor 2 Vendor Ships Dock Receive Goods

Demand Forecast

Manufacturing Plant

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ASCP Fundamentals - Oracle Setups required Order Modifiers

Fixed Days Supply
The planning process suggests planned order quantities that cover

net requirements for the period defined by this value.

Fixed Order Quantity

The planning process suggests planned order with an order quantity

that is equal to the fixed order quantity.

Fixed Lot Multiplier

The planning process suggests planned order with an order quantity

that is a multiple of the fixed lot size multiplier quantity.

Minimum order Quantity

The planning process suggests planned order with an order quantity

that is at least equal to or greater than minimum order quantity.

Maximum Order Quantity

The planning process suggests planned order with an order quantity

that is at the most equal to or less than maximum order quantity.

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ASCP Fundamentals Time Fences

Time Fences
Planning Time Fence: A planning time fence of x days freezes planned orders in the interval [plan start date, plan start date + x]. This eliminates near-term disruptions to the manufacturing schedule. If plan start date is non-working day, it takes the next working day. The planning engine does not create planned orders earlier than Planning Time Fence date. It schedules planned orders as follows depending on supply type: Make supplies: Start Date of the first operations first resource on or after Planning Time Fence Date. Purchased supplies: Dock Date on or after Planning Time Fence Date Transfer supplies: Start Date at the receiving organization on or after Planning Time Fence Date. Demand Time Fence: Select an option to determine a point in time inside which the planning process ignores forecast demand and considers only sales order demand when calculating gross requirements. This reduces the risk of carrying excess inventory Release Time Fence: A release time fence of x days automatically firms and releases to the execution system planned orders in the time interval [plan start date, plan start date + x]. Subsequent planning runs then treat these planned orders as scheduled receipts, not subject to manipulation via order modifiers. This reduces planning nervousness. If plan start date is non-working day, it takes the next working day.

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ASCP Fundamentals - Lead Times

Lead Times
Preprocessing: The time required to place a purchase order or create a discrete job or schedule. This is also known as the paperwork or planning time Processing: The time required for a supplier or your transfer from facility to deliver an item to your receiving dock or for you to manufacture an item. For make items, this is also known as manufacturing lead time. For buy and transfer items, it includes in-transit time to your facility. Post processing: The time required to receive a buy or transfer item from the receiving dock to inventory. Fixed: The time required to complete the tasks to make an assembly that are independent of order quantity, for example, setup, fixed run time, or teardown times. Variable: The time required to complete the tasks to make an assembly that depend on order quantity, for example, run time. Oracle Bills of Material concurrent processes calculate this time. Lead Time Lot Size: The typical quantity of the item that you buy, make or transfer. The default value is item attribute Standard Lot Size (set by Oracle Cost Management). Oracle Bills of Material concurrent process Calculate Manufacturing Lead Time uses this value to compute Processing. Cumulative Manufacturing: For make items, the time required to make the item if you have all of the buy items in inventory and have to make all subassemblies and the item itself. Cumulative Total: For make items, the time required to make the item if you have to purchase all of the buy items, make all subassemblies, and make the item itself.

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ASCP Fundamentals - Lead Times

(Suggested) due date

Due date for Supply = Dock date + Post Processing lead time Dock date = Ship date + In transit Lead time Date on which shipment leaves the Shipping Org = Start date + Processing Lead time Start of manufacturing activities in manufacturing Org

(Suggested) Dock date

(Suggested) Ship date

(Suggested) Start date

(Suggested) Order date

Order date = Start date Pre Processing Lead time Calculated based on Receiving Org calendar

Need By date

For purchase orders, the need by date from the purchase order line. If the purchase order is rescheduled, the same as if the supply is a planned order. For planned orders and open make orders, the date the supply is due, the Sugg Due Date of end item demand. Only applies to rescheduled supplies. Sugg Due Date of the supply before the reschedule. Only applies to buy items with rescheduled supplies. Sugg Dock Date of the supply before the reschedule.

Old Due date

Old Dock date

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ASCP Fundamentals - Lead Times

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ASCP Fundamentals - Planning Constraints Constrained

Enforce Demand Due Dates Enforce Capacity Constraints Buckets Resource Constrained Material

Scheduling
Minutes Hours Daily

Planned Resources
All Resources Bottleneck Resource Group

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Oracle functional design

Milk Run Flow
1
Trailer Tracker (10 Day Schedule Report Detail)

2 Milk Run Kit Pick List GL/Foreman

3 Scan KIT LPNs to Trailer LPN Milk Run Loader Manually fill Load Sheet Manual Load Sheet

3a
Validate Contents in Triler Using System and Physical agains the Load Sheet

GL/Foreman

GL/Foreman

4 Ship Confirm Trailer -InterOrg Intransit Shipment

5 Run Maquiladora Extract GL/Foreman

6 Manual Update of System Generated Maquiladora extract (if Needed) CAM Process

7 Maquiladora extract sent to FTP directory

8 Customs Invoice Document

Gl/Foreman

9 Prepare BOL (Manual) GL/Foreman

10 Packing List (Maquiladora Extract)

11 Truck departs US Plant

12

Update Truck Departed status on the Shipment (Optional)

Cross Border 13 MX Parts PickUp

13 US Parts PickUp

14 Kit Parts Intransit Ship express receipt into MX Plant Unloader/ Fork Lift Dirvier

15 Supplier Parts PO Receipts GL/Foreman

Customization Legacy System

Standard Oracle Manual

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Oracle functional design

Oracle modules considered for mapping milk run process are: ASCP Manufacturing Scheduling Inventory WMS WIP i-Supplier and Supplier Scheduling Fixed order quantity on FG models Shipment network and inter-org lead times Separate planner code for grouping milk run items Each trailer given a fixed LPN and trailer mapped as container items

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Oracle functional design

Flattened FG BOM Milk run parts list generated from the component requirement of FG jobs Pick list customization for milk run parts (make and buy) to print the LPN barcode and group them by individual FG job and sorted in the order they will be picked Customization for generating Maquiladora accounting feed from Oracle shipment number

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Business benefits
Better utilization of floor space in MX plant for inventory movement Just in time shipment of milk run parts, not more than a day in advance Long term visibility of the material and resource requirements Increased responsiveness to Frequent FG schedule changes Improved vendor communication for any schedule changes

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Business benefits
Faster and accurate generation of Milk run parts shipment list Efficient Shop floor scheduling based on finite model Decreased obsolescence of parts Increased visibility of inventory and empty trailers Improved ageing analysis resulting in savings of duties and taxes in Mexico

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Lessons learned
Simpler the solution, better it is Too many constraints increases the nervousness of the system Inventory traceability is the key to day to day operation, especially when the BOM is large for end assembly I wish we live in ideal world, we dont! Have a little safety stock

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Lessons learned
Accurate lead times are as important to planning as accurate driving directions Use planning category and planner codes intelligently. They help in segmenting the plan output Lesser the order modifiers, better the plan performance

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Questions and Answers

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