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
Contract Mfg Sitex

You

3rd PL

Sub Assy Mfg Retail

Hubx

Distribution

Customers

Operation Dilemma - Industry Drivers

Demand Variability
Late and Often Incorrect Customer Forecasts
Develop Sell Plan Finance Market Service/ Maintain Fulfill Human Resources Projects Procure

Increasing Product Complexity

Custom and Highly Integrated Product Designs

Manufacture

Fast Product Obsolescence & Limited Profit Opportunity

Continued Emergence of Lower Cost Producers

Decreasing Product Lifecycles

Margin Erosion

Industry Transformation
Today Tomorrow

Customer forecast errors

result in missed deliveries

Demand variability does not

adversely impact service levels

Excessive inventories

Planning for strategic inventory

management

Outsource to fill product line

gaps and reduce cost

Outsource anything that is noncore and not proprietary

Independently developed
products for broad use

Customer-specific designs and

products

Manual and point-to-point

collaboration

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 Productivity 25-80% 30%

Profit Margin
Inventory Carrying Cost Order Fulfillment Time

5-15%
25-60% 30-50%

Total Supply Chain Costs

Source: Pittiglio Rabin Todd & McGrath (PRTM)

25-50%

Why ASCP, Not MRP

Features Oracle Tools

MRP
Material-related

ASCP
Material-related Capacity-related Production/Operation scheduling Holistic processes

Core Objectives Planning Procedure

Planning Scope Facility
Planning Scope Material Decision-making Support

Sequential processes

Single-site model
All planned item in one

Multi-sites model
Both,Two-level planning Supported Enabled

Constrained/Optimized Planning Not supported

Not enabled

Performance Indicators
ATP Statement Generation

None
Not supported Stuck to due-date Limited

KPIs provided
Supported Priority prior to due-date Diversified

Planning by Priority Biz Solution Extension

Move from MRP to Advanced Planning

Factory Supp1
Comp RT-SMT
RT-DIP RT-ASY TR

Hub1
TR

Cust1

Supp2
Outsourcing
RT-Outside TR Comp

Cust2

Factory Supp2
Comp RT-SMT RT-DIP RT-ASY TR

Hub1
TR

Cust3

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

Factory Supp1
Comp RT-SMT RT-DIP RT-ASY TR

Hub1
TR

Cust1

Supp2 Outsourcing
RT-Outside TR Comp

Cust2

Factory Supp2
Comp RT-SMT RT-DIP RT-ASY TR

Hub1
TR

Cust3

Cust4
TR

Problem Size :Num of Org : 9 Level of BOM : 8

Num of Item :50000 Level of Routing: 3~5

Num of Suppliers:500 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

Factory- TW Supp1
RT-SMT RT-DIP RT-ASY TR

6.
Hub1
TR

Cust1

2.Comp Semi-FG supplied by Factory-CN

Supp2
TR

Bonded vs non-Bonded

Outsourcing
RT-Outside Comp

Hub2

Cust2
TR

3. Alternate Sourcing from Factory-CN

Factory- CN Supp3
Comp RT-SMT RT-DIP RT-ASY TR

Hub3

TR

Cust3

Cust4
TR

Move from MRP to Advanced Planning

Business Gains
Business Gains PAIN Point Multi-ORG Planning Did in Legacy Apps 2 ORG w/ Guts feeling 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

Alternate Item & Routing

Just Guess the numbers

Capacity fulfillment for Internal production & outside supplier Order Promise

1.Capacity did not consider in MRP 2.Buyer always push Supplier like firefighting

1.Sales call PMC 2.PMC feedback Promise Date 1.PMC consume FCST w/ SO in Excel manually Forecast consumed by Sales Order 2.Input the Net Value into MRP

Move from MRP to Advanced Planning

How we approach it

A Planners 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
Added Value
Constrained global master plan for key components and resources Plus constrained site level detailed plan Improve plan quality by recommend alternates plan across all sites A singleGenerate feasible plans Reduce planning cycle time Improved exception resolution Online planning Integrated performance management Constrained single holistic plan for the entire supply chain Improve plan quality by recommend alternates Generate feasible plans Priority based decisions Cost based optimization

Optimized

Optimized ASCP (Plan Optimization)

Option 2
Constrained ASCP (Single Holistic Plan)

Constrained

ORACLE ASCP

Service

Rapid Time To Value

Constrained ASCP (Multiple Sequential Plan)

Option 1

Unconstrained

Readiness Assessment

Unconstrained ASCP (Multi-Site MRP)

Time
Phase 2 2.5 Month Phase 3 1 Month

Oracle Applications (10.7, 11.0, 11i)

Phase 0 1 Wk

Phase 1 2.5 Month

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