Keefe Ho

Principal Consultant
 Move from MRP to Advanced Planning
– Case Sharing
•The Coverage of Advanced Planning in Industry

•Operation Dilemma - Industry Drivers

•Why Advanced Planning, Not MRP

•Case Background - The Problem & Business Requirement

•How we approach it

•Share Lessen Learnt with You

The Coverage of Advanced Planning in Industry
2nd Suppliers Component Mfg
Supply Base
You
Contract Mfg
Sitex

3rd PL

Sub Assy
Mfg

Retail

Hubx

Distribution Customers
 Operation Dilemma - Industry Drivers
Demand Increasing
Variability Product
Complexity
Late and Often Incorrect Custom and Highly
Customer Forecasts Integrated Product Designs

Develop
Sell
Plan
Finance
Market Human Resources
Procure
Projects
Service/
Maintain Manufacture
Fulfill

Fast Product Obsolescence Continued Emergence of

& Limited Profit Opportunity Lower Cost Producers

Decreasing
Product Margin
Lifecycles Erosion
 Industry Transformation
Today
• Customer forecast errors
result in missed deliveries
• Excessive inventories
• Outsource to fill product line
gaps and reduce cost
• Independently developed
products for broad use
• Manual and point-to-point
collaboration
Tomorrow
• Demand variability does not
adversely impact service levels
• Planning for strategic inventory
management
• Outsource anything that is non-
core and not proprietary
• Customer-specific designs and
products
• Pervasive network collaboration
 Industry Goals
Improve Customer Responsiveness
Accept Your Customers’ Bad Forecasts
Gain Real-Time Global Supply & Demand Visibility

Sustain Profitability & Improve Margins

Focus on Core Competencies
Streamline Operations, Manage Costs

Reduce Time-to-Market
Invest in R&D for “Next Gen” Technologies
Convert Design Ins into Design Wins
Industry Opportunities

Forecast Accuracy 25-80%

Productivity 30%
Profit Margin 5-15%

Inventory Carrying Cost 25-60%

Order Fulfillment Time 30-50%
Total Supply Chain Costs 25-50%

Source: Pittiglio Rabin Todd & McGrath (PRTM)

 Why ASCP, Not MRP
Oracle Tools
Features MRP ASCP
 Material-related
 Capacity-related
Core Objectives Material-related
 Production/Operation
scheduling
Planning Procedure Sequential processes Holistic processes
Planning Scope – Facility Single-site model Multi-sites model
Planning Scope – Material All planned item in one Both,Two-level planning
Constrained/Optimized Planning Not supported Supported
Decision-making Support Not enabled Enabled
Performance Indicators None KPIs provided
ATP Statement Generation Not supported Supported
Planning by Priority Stuck to due-date Priority prior to due-date
Biz Solution Extension Limited Diversified
 Move from MRP to Advanced Planning
Constraint Based Global Master Plan
Focus: Key Components
Factory
Supp1 Business
RT-SMT Purpose:
RT-DIP RT-ASY
Hub1 Cust1
TR TR
• Global procumbent
Comp
• Capacity Allocation
Supp2 • Production schedule for each site
• InterOrg Transfer
Outsourcing

Global Order
RT-Outside
Cust2

Promising
TR
Comp
Constraint Based Site Level Plan
Focus: All Components
Business Purpose:
•Site Level Factory
Planned PR/PO, local buy RT-SMT RT-DIP RT-ASY Hub1 Cust3
Supp2
Planned WO TR TR

Comp

Cust4
TR
 Move from MRP to Advanced Planning

• Case Background –
The Problem & Business Requirement
• Multiple Legal Entity & Multiple Inventory Organization
spread in TW & CN
• Frequent product updates
• High consumer demand
• Limited manufacturing capacity
• Long lead times (Long Planning Cycle)
• Powerful retailers
 Move from MRP to Advanced Planning
The Problems or Pains

2. Multiple
4. Factory
Over Stock & Obsolescence
TWFactory
gets Sale Orders
Supp1 CN shipsRT-SMT
ProductsRT-DIP RT-ASY
Hub1 Cust1
TR TR
TW as
CompSourcer & Buyer

1. Inaccurately, FCST
Supply Multiple Factory (not single)

consumed by SO
Supp2
Adjust Site Level : Planned PR/PO
Outsourcing
RT-Outside
Cust2
TR
Comp

3. Multiple Production Line

Adjust Site Level Capacity :
Factory
RT-DIP RT-ASY Hub1
Supp2 Planned RT-SMT
WO TR TR
Cust3

Comp

Cust4
TR

Problem Size :Num of Org : 9 Num of Item :50000 Num of Suppliers:500

Level of BOM : 8 Level of Routing: 3~5 Num of Operation/per Routing: 1~2
 Move from MRP to Advanced Planning
• Business Requirement
• Multi-Org Planning: Single global supply chain plan to execute from

• Intelligent Substitution of Items: To be able to optimize the inventory by

minimizing the creation of new supplies when the demand can be
satisfied by substitution, thus reducing inventory carrying cost, reducing
obsolescence and increasing the service levels.

• Alternate Routing: Optimal use of resources to build the products by

selecting the best available alternate routings.

• Capacity fulfillment for Internal production & outside supplier

• Accurate Order Promising

• Building a well defined forecasting process and ability to consume the

sales orders from the forecast.
 Move from MRP to Advanced Planning
Business Requirements

1. Customer MIT only

3. Accept MIC
1. Factory-TW supply Hub1~N
Factory- TW

6.
Supp1 RT-SMT RT-DIP RT-ASY
Hub1 Cust1
TR TR
2.CompSemi-FG supplied by Factory-CN

Bonded vs non-Bonded
Supp2
TR
Outsourcing
RT-Outside
Hub2
Cust2
TR
Comp

4. Alternate Routing from OSP

3. Alternate Sourcing from Factory-CN

Factory- CN
RT-SMT RT-DIP RT-ASY Hub3 Cust3
Supp3 TR TR

5.Comp
Factory-TW provide CKD to Factory-CN
Cust4
Factory-CN=Priority Capacity TR
 Move from MRP to Advanced Planning
• Business Gains
Business Gains
PAIN Point Did in Legacy Apps
Multi-ORG Planning 2 ORG w/ Guts feeling
Alternate Item & Routing Just Guess the numbers
Capacity fulfillment for 1.Capacity did not consider in MRP
Internal production & outside 2.Buyer always push Supplier
supplier like firefighting
1.Sales call PMC
Order Promise
2.PMC feedback Promise Date
1.PMC consume FCST
Forecast consumed by Sales Order w/ SO in Excel manually
2.Input the Net Value into MRP
Doing in Oracle
9 ORGs w/ Scientific Data within 2 hrs
1.Regularly maintain Alternate Routing &
Alternate Item
2.If Master routing is full,
alternate routing will be initiated
3.Keep watching
this progressive improvement
1.Reflect the real capacity status
2.quick judgement on OSP or not
1.Sales directly get Promise Date
while SO is created
1.No manual involvement on consumption
2.Help Sales focus on FCST and
SO accuracy
Move from MRP
to Advanced Planning

•How we approach it
 A Planner’s Daily Life in a Week
• Wed: FCST & SO Enter
Run Consume plan( Data Collection , ODP generate FCST)
Sales review consumption report and modify FCST
Run ASCP-I (capacity & critical item )
Host Interlock Meeting between GPMC+LPMC+Sales
------------------------------------------------------------------------------------------------
• Thu: Interlock meeting (Check ASCP-I + Modify SO, FO Shipping Date…)
GPMC run Net Change (modify capacity, make item schedule)
PO release for Critical Item + Commit Critical Item Schedule
Data Collection (SO/INV/WIP/PO only)
Run ASCP-II (capacity & All item )
--------------------------------------------------------------------------------------------------------
• Fri : Release PO,IR,WO
 Move from MRP to Advanced Planning

• Share Lessen Learnt with You

• Phase Approach for Advanced Planning
 From MRP to Advanced Planning
A Rapid ROI Approach
• Constrained single holistic • Priority based decisions
plan for the entire supply • Cost based optimization
Added chain
Value • Improve plan quality by
• Constrained global master recommend alternates
•
plan for key components and Generate feasible plans Optimized ASCP
resources (Plan Optimization)
Optimized
• Plus constrained site level
detailed plan Option 2
• Improve plan quality by
ORACLE
recommend alternates
Constrained ASCP Rapid
ASCP
• Generate
• A single feasible
plan across plans
all sites
Service Time To Value
(Single Holistic Plan)

Constrained • Reduce planning cycle time

• Improved exception resolution
• Online planning Constrained ASCP
(Multiple Sequential Plan)
• Integrated performance
management
Option 1

Unconstrained Readiness Unconstrained ASCP

Assessment (Multi-Site MRP)
Time

Oracle Applications Phase 0 Phase 1 Phase 2 Phase 3

(10.7, 11.0, 11i) 1 Wk 2.5 Month 2.5 Month
1 Month

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Q&
A