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Lean E2E Supply Chain Planning
Meeting the Paradigm Change in the Chemical Industry

Logichem 2010, Düsseldorf

Dr. Jörg Schmid, Christoph Lieth
AGENDA




        1            Camelot – Thought Leader in LEAN SCM

        2            21st Century Supply Chain Planning Paradigm

        3            Lean Planning & Scheduling for Chemical Champions

        4            Your way forward




© Camelot IDPro AG                             2
Camelot – Thought Leader in LEAN SCM

Camelot IDPro – Your partner of choice

 Who we are
 Who we are                                    Where we are
                                               Where we are
    Management Consulting
    from strategies to results                                                            Camelot Group Europe

    Established 1996 in Germany
                                                                                     Camelot IDPro AG
    and the US. Now top ranking for
                                                                                      Cologne
                                                                                       Cologne
    the following industries:                                                         Mannheim (HQ)
                                                                                       Mannheim (HQ)
                                                                                      Munich
                                                                                       Munich
                                                                                      Zürich
                                                                                       Zürich
            Chemicals &                                                               Basel
                                                                                       Basel

            Petrochemicals
            Pharmaceuticals &                    Camelot Group USA

            Healthcare                           Camelot / /Bristlecone
                                                  Camelot Bristlecone
                                                 (Santa Clara, USA)
                                                  (Santa Clara, USA)
                                                                                                        Camelot / /BPS
                                                                                                         Camelot BPS
                                                                                                        (Helsinki)
                                                                                                         (Helsinki)
                                                 Camelot / /Profit Point
                                                  Camelot Profit Point
            Consumer Products                    (Wynnewood, Philadelphia, USA)
                                                  (Wynnewood, Philadelphia, USA)
                                                 Camelot / /enowa Services
                                                                                   Camelot / /Spain
                                                                                    Camelot Spain
                                                                                   (Barcelona)
                                                                                    (Barcelona)
                                                                                                        Camelot / /BPS
                                                                                                         Camelot BPS
                                                                                                        (Oslo)
                                                                                                         (Oslo)
                                                  Camelot enowa Services           Camelot / /Trilog    Camelot / /BPS
                                                 (Exton, Philadelphia, USA)         Camelot Trilog       Camelot BPS
                                                  (Exton, Philadelphia, USA)       (Milan)              (Budapest)       Camelot Group Asia
                                                                                    (Milan)              (Budapest)
     Operating worldwide, with an                                                  Camelot / /Coffra
                                                                                    Camelot Coffra
                                                                                   (Paris)
                                                                                                        Camelot / /BPS
                                                                                                         Camelot BPS
                                                                                                        (Tallinn)
                                                                                    (Paris)              (Tallinn)
    international network of more                                                                                        Camelot / /IDPro Asia
                                                                                                                          Camelot IDPro Asia
                                                                                                                         (Singapore)
                                                                                                                          (Singapore)
    than 320 consultants in Europe                                                                                       Camelot / /ISS Consulting
                                                                                                                          Camelot ISS Consulting
                                                                                                                         (Kuala Lumpur, Malaysia
                                                                                                                          (Kuala Lumpur, Malaysia
    and 1.200 consultants within the
    Camelot International Group




        Camelot IDPro is an international consulting organization with leading expertise in the Chemical,
         Camelot IDPro is an international consulting organization with leading expertise in the Chemical,
                                Pharmaceutical and Consumer Goods Industry
                                 Pharmaceutical and Consumer Goods Industry


© Camelot IDPro AG                                             3
Camelot – Thought Leader in LEAN SCM

We provide holistic consulting services along the entire Value Chain


                             What we offer

                Classic
 Management




               strategic
              consultancy



                                                     Camelot
                            Camelot IDPro             ITLab
 Operations




                                    Process and IT consultancy


                                                      Subcontractor

                                 Process &
              Strategy                               IM / Systems
                                Organization
                                                                      Camelot Core Competences

                                                                        Strategy & Operations Strategy Implementation

                                                                                Process & Value Chain Management
                                                                      Sourcing &     Operations &   Logistics &      Sales &
                                                                      Procurement    SCM            Transportation   Customer Service


                                                                            Organization & Business Transformation


       A full-service consultancy – with core competences in operations strategy implementation, holistic reengineering
       A full-service consultancy – with core competences in operations strategy implementation, holistic reengineering
       of Value Chains, as well as organizational alignment and business transformation.
       of Value Chains, as well as organizational alignment and business transformation.


5/5/2010
© Camelot IDPro AG                                                          4
                                                                            4
Camelot – Thought Leader in LEAN SCM

Camelot addresses the critical value chain levers of the process industry
with its key-services

 Management & Business                                                                                                                                                        Assess      Design       Implement     Sustain          Processes & Information

                                                                                                                                          Operational Strategy
                                                                                                                                                                                                                                                                                                                                    Strateg y




                                                                                                                                                                                                                        Lean Operations
                                                                                                                                                                                                                                                                                                             x                          Strateg y

                                                                                                                                                                                                                                                                                                                  x

                           Service                                                                                                                                                                                                                                                                      x




                                                                                                                                                                                        SC Performance
                                                                                                                                                                                                                                                                                                            Organizat ion                             Flo w design

                                                                                                                                                                                                                                                                                                                 Organizat ion                             Flo w design




                                                                                                                                                SC Strategy Development and
                                                                                                                                                                                                                                                                                                                                                       x
                                                                                                                                                                                                                                                                         Strateg y
                                                                                                                                                                                                                                                                                                                                                            x


                     Value Chain

                                                                                                                                                                                                                         Lean SCM
                                                                                                                                                                                                                                                                                     Flo w
                                                                                                                                                                                                                                                             Organizat ion
                                                                                                                                                                                                                                                                                     design

                     Excellence                                                                                                                                                                                                                                         Processes
                                                                                                                                                                                                                                                                                                        x
                                                                                                                                                                                                                                                                                                                                        x
                                                                                                                                                                                                                                                                                                                                   Processes




                                                                                                                                                                                        Assessment
                                                                                                                                                                                                                                                                                                                                       Processes
                      Triangle
      Costs
                                 Working
                                 Capital
                                                                                                                                                Alignment                                                                                                            Systems & Data
                                                                                                                                                                                                                                                                                              x




                                                                                                                                                                                                                         Operational Excellence
                                                                                                                                                                                                                                                                                                                                 Systems & Data

                                                                                                                                                                                                                                                                                                                                     Systems & Data




                                                                                                                                                SC Model Design                            Benchmarking
                                                                                                                                          Portfolio Management                             Opportunity                  Segmentation & Classification                                                                 A                     B                        C


                                                                                                                                                SKU Management                             Identification                                                                                         X
                                                                                                                                                                                                                         SCM Segmentation
                                                                                                                                                                                                                                                                                                  Y
                                                                                                                                                SC Customer Service Configuration                                        Process Classification
                                                                                                                                                                                                                                                                                                  Z
                                                                                                                                                Supplier Management & Development                Service

                                                                                                                                            Network Optimization &                                                      Process Improvement
                                                                                                                                            Working Capital Mgt                                Value Chain
                                                                                                                                                                                                                         SC Planning Processes (S&OP)                                                   Plan


                                                                                                                                                Value Based Network Design                     Excellence                Harmonization & Consolidation      Source                                 Make                                         De liver
                                                                                                                                                                                                Triangle                 Logistics & Transportation Mgmt.
                                                                                                                                                Active Asset Management                Costs
                                                                                                                                                                                                           Working
                                                                                                                                                                                                           Capital       SC Collaboration
                                                                                                                                                Advanced Inventory Management

                                                                                                                                          Business Transformation &                                                     Information Technology                                                      SCM APO
                                                                                                                                                                                                                                                                                                    SCM APO
                                                                                                                                                                                                                                                                                                    APO 5.0 ICH
                                                                                                                                                                                                                                                                                                     APO 5.0 ICH                          XI
                                                                                                                                                                                                                                                                                                                                           XI
                                                                                                                                                                                                                                                                                                                                                           ALE




                                                                                                                                          Organization                                                                   Software Evaluation                                 BW 3.5
                                                                                                                                                                                                                                                                              BW 3.5              CIF
                                                                                                                                                                                                                                                                                                                   CIF



                                                                                                                                                                                                                                                                                                                                                                      R/3 4.7
                                                                                                                                                                                                                                                                                                                                                                       R/3 4.7


                                                                                                                                                Organizational Alignment
                                                                                                                                                                                                                                                                                                    R/3 4.6
                                                                                                                                                                                                                                                                                                    R/3 4.6


                                                                                                                                                                                                                         Blueprinting & Implementation
                                                                                                                                                                                                                                                                                                                      ALE          ECC 5.0
                                                                                                                                                                                                                                                                                                                                    ECC 5.0                          Supplier/
                                                                                                                                                                                                                                                                                                                                                                      Supplier/
                                                                                                                                                                                                                                                                                                    Inter-
                                                                                                                                                                                                                                                                                                     Inter-                          Inter--
                                                                                                                                                                                                                                                                                                                                      Inter                          Customer
                                                                                                                                                                                                                                                                                                                                                                     Customer
                                                                                                                                                                                                                                                                                                  company
                                                                                                                                                                                                                                                                                                   company                         company
                                                                                                                                                                                                                                                                                                                                    company



                                                                                                                                                Change Management
                                                                                                                                                                                        SC Compliance
                                                                                                                                          Performance Management                                                        Data Quality
                                                              Vision,
                                                             M ission,
                                                             Corporate
                                                             Strategy




                                                                                                                                                                                           Sustainability
          KPI
                                                                                                                            EBIT
          Key
                                                             Stra te gy upda te                                             ROI / ROCE
      Performance
                                                                                                                            EVA
       Indicators
                                      Define & cascad e                             Stra te gic le arnin g
                                         o bje cti ves
                                                           Strategic                   & fe edba ck


                                                           Planning
                                          Strate gic




                                                                                                                                                Business Planning
                                                                                  Strategy moni to ring
                                       action pl ann ing
                                                                                                                            Sales




                                                                                                                                                                                                                         Master Data Management (Process & Organization)
          BPI
                                                                                                                            CM
      Business Unit                                           Ta rget v lue s
                                                                       a
                                                                                                                            Costs




                                                                                                                                                                                           Risk Management
  Performance Indicators
                                                                                                                            COGS

                             Performance
                             Measu rement
                                                       Operational                                     Detai led
                                                                                                 op eration al pl ann ing
                                                        Planning
          PPI                                  Process                            Pl an executi on                          Forecast Accuracy
  Process Performance                        optimizati on
                                                                                                                            Cycle times




                                                                                                                                                Business Performance Management
       Indicators




                                                                                                                                                                                                                         Data Quality Evaluation & Improvement
                                                                                                                            Activity costs




                                                       Strategy to results…
                                                       Strategy to results…                                                                                                                      and
                                                                                                                                                                                                 and                                …Innovation to solution!
                                                                                                                                                                                                                                    …Innovation to solution!



© Camelot IDPro AG                                                                                                                                                                                 5
Camelot – Thought Leader in LEAN SCM

We have a profound industry expertise with strong focus on the process
industry
                                 Where we work
  Management




                  Classic
                 strategic
                consultancy      Strategic and
                              process consultancy


                                  Camelot IDPro
   Operations




                                           Process and IT consultancy

                                                          Subcontractor

                  Strategy             Process & Org.      IM / Systems
                                       Implementation




   Camelot IDPro AG - -aafully committed partner to make effective and efficient Value Chain Management for
    Camelot IDPro AG      fully committed partner to make effective and efficient Value Chain Management for
                 the Process Industry happen. Strategy to results. Innovations to solutions.
                  the Process Industry happen. Strategy to results. Innovations to solutions.


© Camelot IDPro AG                                                        6
AGENDA




        1            Camelot – Thought Leader in LEAN SCM

        2            21st Century Supply Chain Planning Paradigm

        3            Lean Planning & Scheduling for Chemical Champions

        4            Your way forward




© Camelot IDPro AG                             7
21st Century Supply Chain Planning Paradigm

Lean Planning and Scheduling

                                                 Lean Thinking
                                   How do Lean Principles shape planning
                                   and scheduling processes?




                               Processes
                                Processes             LPS                 Organization
                                                                           Organization
                                            •   Easy planning concept
                                            •   Low inventory levels
    Modern production                       •   Stable cap. utilization             Current challenges in
        systems                             •   Reduced lead times                  the chemical industry
                                            •   Less planning effort
     What are the                                                                         How can the planning
     requirements of Lean                                                                 approach
     Manufacturing to an                                                                  dramatically increase
     appropriate planning                             Information
                                                       Information                        customer service and
                                                        Systems
                                                         Systems
     approach?                                                                            reduce working capital
                                                                                          and costs?


© Camelot IDPro AG                                         8
21st Century Supply Chain Planning Paradigm

Classic forecast-based planning often ends in the planning loop trap
                                        Forecast
                                         Forecast
       Lead time                        required
                                         required
        Lead time

                                                                         Forecast deviation
                                                                         The longer the forecast
                                                                         horizon, the higher the
                                                                              forecast error
             Longer lead time                                                 ε
                                               Planning                                   t
                                               Loop Trap
                                                  LPS
                                         Impact of forecast deviation
                                      • Safety stock required
                                      • Short term production adjustments
                                      • Variability of capacity utilization


                                   Think lean and avoid the planning loop trap
                                    Think lean and avoid the planning loop trap


© Camelot IDPro AG                                       9
21st Century Supply Chain Planning Paradigm

Classic planning approach


                                               Forecast




                                                                                                 Consumption




          Production                              Inventory                       Customer

                           n                        Inventory
       Capacity utilizatio




                        In classic planning, demand variations are translated into production
                         In classic planning, demand variations are translated into production
                               while inventories are hardly utilized and kept untouched
                                while inventories are hardly utilized and kept untouched


© Camelot IDPro AG                                        10
21st Century Supply Chain Planning Paradigm

Lean Planning & Scheduling


                         Consumption trigger                     Order




                                                                                              Consumption




          Production                           Inventory                       Customer

                           n                     Inventory
       Capacity utilizatio




    LPS actively uses inventories to manage demand variability while keeping capacity utilization constant
     LPS actively uses inventories to manage demand variability while keeping capacity utilization constant


© Camelot IDPro AG                                    11
21st Century Supply Chain Planning Paradigm
                                                                                                                                 Pro
LPS: Paradigm change                                                                                                                 je   ct E
                                                                                                                                               xam
                                                                                                                                                  ple
        Stock is target (Classic planning)                                                     Capacity is target (LPS)

      140                                                                            140
      120                                                                            120

      100                                                                            100

       80                                                                             80

       60                                                                             60
                                                                                      40
       40
                                                                                      20
       20
                                                                                       0
        0
   Period: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24        Period: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

        Consumption         Make        Capacity usage         Inventory             Consumption         Make        Capacity usage         Inventory



     Main Characteristics:                                                          Main Characteristics:

     • Asset reacts to demand variability                                           • Inventories address demand variability
        • Floating production quantities                                                • Repetitive production cycles
        • Inventory is hardly touched                                                   • Inventory actively used
     • Sub-optimal capacity utilization                                             • Stable capacity utilization



     The lean planning & scheduling approach has clear benefits for not too volatile high-volume products
      The lean planning & scheduling approach has clear benefits for not too volatile high-volume products


© Camelot IDPro AG                                                          12
21st Century Supply Chain Planning Paradigm

Lean SCM & LPS principles and benefits
                                                              Benefits of LPS at a glance:

                                                              • Simplified planning
                          E2E                                     • Planning is reduced to few
                     segmentation &                                 parameters
                     synchronization
     Tactical                                                     • Less planning effort
    parameter                            No forecast
                                           trigger            • Stable asset usage
      driven

                         LPS                                  • Smaller batches & shorter lead times
                                                              • Repetitive production patterns with
      Leveled
                                        Consumption             stable make quantities
      capacity
     utilization                            Pull
                                                                  • Learning effects
                      Active use of
                       inventories                                • Quality improvement
                                                                  • Easier supply chain collaboration
                                                              • More transparency facilitates E2E SC
                                                                coordination



 To adopt lean thinking in planning, various principles need to be followed to realize aawide range of benefits
  To adopt lean thinking in planning, various principles need to be followed to realize wide range of benefits


© Camelot IDPro AG                                     13
AGENDA




        1            Camelot – Thought Leader in LEAN SCM

        2            21st Century Supply Chain Planning Paradigm

        3            Lean Planning & Scheduling for Chemical Champions

        4            Your way forward




© Camelot IDPro AG                             14
Lean Planning & Scheduling for Chemical Champions

Lean SCM & Global LPS

                                                                                                                                                                                                                         S&OP

                      Intermediates                                    Finished Bulks                        Finished Goods                DC                                       Customer




   Strategic              Segmentation                                                               Tactical                        E2E SC Planning                                                                    Monitoring
SC Configuration                                                                                 Parameterization
                                                                                                                                                                           WIP               WIP                  FGI

                                                                                                            F

                                                                                                    E
                                                                                                                        A    RW                  L
                                                                                                                                                                           G

                                                                                                                                                                           H
                                                                                                                                                                                             D

                                                                                                                                                                                             E                    B
                           Variability


                                high
                                               Make to
                                               order
                                                         Campaign
                                                                                                                             cycle     L K J A
                                                                                                                                                                           I                 F                    C



                                                         Planning
                                                                                                    D
                                                                                                                             time
                                                                                                                                      Production                   Form.         Comp.                   Pack
                                                            Make to                                                     B               Cards
                               medium
                                                            forecast                                        C                                                                                A
                                                                       IRL / RW
                                                                       / Kanban
                                                                                     Flow


                                 low
                                                                                                                                           F                         F                       N O     A
                                                                                                                                                     A                      A            M
                                                                                                                                                                                                          B
                                                                                                                                       E                       E                     L
                                         low                medium            high                                                                                                  K                         C
                                                                                        Volume          Working Stock                                                                J                       D
                                                                                                                                       D                       D                         I
                                                                                                                                                     B                     B                             E
                                                                                                    Other Cycle Time Stock                               WIP                      WIP        H                    FGI

                                                                                                                             IRL
                                                                                                                                           C                         C                           G   F


                                                                                                    Safety Stock Demand

                                                                                                     Safety Stock Supply
                                                                                                                                            Form.                   Comp.                        Pack
                                                                                                         Policy Stock




                                                                                                                                                 Renewal


                                The LPS process is an end-to-end methodology,
                                 The LPS process is an end-to-end methodology,
        enabling the coordination and organization of the entire supply chain in an efficient and lean way
         enabling the coordination and organization of the entire supply chain in an efficient and lean way


© Camelot IDPro AG                                                                                                      15
Lean Planning & Scheduling for Chemical Champions

Define decoupling points and allocate inventory within the global supply
chain

                                                                                                                                                                                 Customer
          Mid Term                                                                                                                                                                Order
          Forecast                                                      Customer
                                                                         Order
                                                                                                                                                                                  Regional
         Long Lead          Raw                                                                      Consolidated FG Operation         FG Inner                                  Distribution
           Time            Materials                                  Intermediates                                                     Pack                                       Centre
          Materials                                                                                                    Milling &
                                    Working Stock
                                Other Cycle Time Stock       IM                  Working Stock
                                                                           Other Cycle Time Stock
                                                                                                                                               Working Stock
                                                                                                                                           Other Cycle Time Stock   Outer Pack          Working Stock
                                                                                                                                                                                    Other Cycle Time Stock
                                Safety Stock Demand                           Safety Stock Demand   Synthesis           Inner              Safety Stock Demand                      Safety Stock Demand


         Short Lead              Safety Stock Supply     Production           Safety Stock Supply                                           Safety Stock Supply      To Order        Safety Stock Supply
                                     Policy Stock                                Policy Stock
                                                                                                                       Packing                  Policy Stock                             Policy Stock



           Time
          Materials                                                                                             FIFO
                                                                                                                Push



              Call Off Signal                                   Pull Signal                                     Consolidated Pull Signal                              Replenishment Order




  •    Inventory in the regional distribution centres is replenished in line with actual consumption
  •    Postponement of outer packaging enables optimization of FG inventory
  •    Decoupling inventories for intermediates stage reduces the planning complexity
  •    To minimize the “bullwhip effect”, the actual customer demand is communicated using consumption pull

      Transparency and clarity in the E2E value streams regarding lead times, decoupling and inventory
       Transparency and clarity in the E2E value streams regarding lead times, decoupling and inventory
                                                tactics is key
                                                 tactics is key


© Camelot IDPro AG                                                                                      16
Lean Planning & Scheduling for Chemical Champions

Segment the portfolio to determine the best fitting supply mode

     Variability
                                   Make to
                                   order
             high
                                                Campaign
                                                Planning

                                                    Make to
                                                    forecast
           medium                                                  IRL / RW
                                                                   / Kanban
                                                                                        Flow


              low



                             low                    medium                   high
                                                                                             Volume

 The inventory and decoupling tactics as well as the supply mode set the framework for E2E lean planning
  The inventory and decoupling tactics as well as the supply mode set the framework for E2E lean planning


© Camelot IDPro AG                                    17
Lean Planning & Scheduling for Chemical Champions

Supply mode simulation
                                                                    ^                       /
               ^                d                                Variability       MTO

              Variability      MTO                                                         MTF

                              MTF     RW

                                             Flow
                                                                                                Volume

                                        Volume
                                                                    OEE          Service-level    Cost

                OEE         Service-level   Cost




                     Best supply modes



   Simulation based analysis supports the optimal segmentation and allocation of supply modes regarding
    Simulation based analysis supports the optimal segmentation and allocation of supply modes regarding
                                               KPI trade-offs
                                                KPI trade-offs

© Camelot IDPro AG                                  18
Lean Planning  Scheduling for Chemical Champions



                                               Forecast and product
             Segmentation and                 life cycle management
                                                                                                                        Renewal
             SC planning modes

                                                                     Optimization of tactical
                                                                         SC parameters
                             Network planning
                               and capacity
                                                                                                                                                l Controlling
                                alignment                                                                                         Rhythm Whee
                                                                                     lanning
                                                                               hain P
                                                                     upply C
                                                          G   lobal S

                                                                                                                                                      ment
                                                                                                                                            RW Attain
                                                                                  l Scheduling
                                                                      Rhythm Whee
                                                                                                     IRL

                                                                                           Pull               CTR
                   el Desig          n
        Rhythm Whe                                                                                make        skip

                                                                                                         CI     Order
                                                                                     PO
                                     time
                        - Rhythm e
                                  nc
                         - Seque                                                                                              RW As-Is
                                  ior
                          - Behav
                                   ity
                           - Capac
                              usage

                              esign      ed
                      RW As-D
                                                  RW As-Designed




                              The rhythm wheel process is an integral part of global lean SCM
                               The rhythm wheel process is an integral part of global lean SCM


© Camelot IDPro AG                                                                        19
Lean Planning  Scheduling for Chemical Champions



Value Chain           Inter-            Finished            Finished
                     mediates            bulks               goods               DC              Customer


Supply
Modes                                                                                        Rhythm Wheel
                                                                                                Design
                                              F
 MTO                                                   A                     • Allocate products on the
                                        E                                      wheel

                                                                             • Define optimal sequence
Kanban                                  D                                    • Define production quantities
                                                      B                        based on reference demand

  IRL                                        C                               • Define planned cycle time 
  RW                                                                           upper / lower boundary

                                                                             • KPI-based evaluation
                                                                               (utilization, service level,
 Flow                Rhythm Wheel                                              OEE, etc.)
                      leveled asset



            The better the production levelling, the higher the performance of the production system
             The better the production levelling, the higher the performance of the production system


© Camelot IDPro AG                                     20
Lean Planning  Scheduling for Chemical Champions



Value Chain           Inter-            Finished              Finished
                     mediates            bulks                 goods                   DC                  Customer


Supply
Modes                                                                                                  Rhythm Wheel
                                                                                                        Scheduling
                                                Current Inventory  IRL ?
                          F                              MAKE
 MTO                            A
                      E


                      D                                                                           I nventory
                              B                 Current Inventory  IRL ?
Kanban                    C
                                                          SKIP                                    R eplenishment
                                                                                                  L evel

  IRL                                                                          Working Stock
  RW                                                                         Other Cycle Stock
                                                                            Safety Stock Demand
                                                                            Safety Stock Supply
                                                                                Policy Stock
 Flow                Rhythm Wheel
                      leveled asset                                              Stock



            The production decisions are based on aasimple rule and purely consumption pull driven
             The production decisions are based on simple rule and purely consumption pull driven


© Camelot IDPro AG                                       21
Lean Planning  Scheduling for Chemical Champions



Value Chain            Inter-             Finished              Finished
                      mediates             bulks                 goods                   DC                  Customer


Supply
Modes                                                                                                     Rhythm Wheel
                                                                                                           Scheduling
                                                12d
                           F
 MTO
 VMI                             A
                       E                  Cycle
                                          time
                       D
                                B
Kanban                     C
                                                  8d
                                                                                                    IRL
  IRL                                                                           Working Stock
  RW                                                                          Other Cycle Stock               Demand
                                                                             Safety Stock Demand

                                                                              Safety Stock Supply
                                                                                 Policy Stock
 Flow                Rhythm Wheel
                      leveled asset                                                Stock



                     Cutting of outliers moves variability of response from production to inventory
                      Cutting of outliers moves variability of response from production to inventory


© Camelot IDPro AG                                         22
Lean Planning  Scheduling for Chemical Champions



Value Chain           Inter-            Finished             Finished
                     mediates            bulks                goods                 DC                Customer


Supply
Modes                                                                                                Lean KPIs

                      Rhythm Time Attainment (RTA)
                      • Tracks cycle length over time                               Process Behavior Chart RTA
 MTO
 VMI                                                                        F
                                                                                    12
                      • Evaluates the difference between            E
                                                                                A
                                                                                    10
                        the planned and actual cycle time                           8
                                                                        D                0   1 2 3 4 5 6 7
                      • Shows variations in capacity                        C
                                                                                B
                                                                                                cycles
Kanban
                        utilization

                       Run To Target (RTT)
  IRL                                                                                qty     RTT Quantities
  RW                   • Shows required and actual
                                                                                    30                        Total
                         production quantities in every cycle                       20
                                                                                                              orders
                                                                                                              Total
                                                                                                              qty
                       • Tracks order fulfillment                                   10

                                                                                         0   1 2 3 4 5 6 7
 Flow                  • Evaluates the efficiency of the                                        cycles
                         chosen cycle length boundaries



              Measurable and comprehensible KPIs enable effective planning process management
               Measurable and comprehensible KPIs enable effective planning process management


© Camelot IDPro AG                                      23
Lean Planning  Scheduling for Chemical Champions

E2E Supply Chain synchronization with LPS

                                                    F           F
                            F                                       A
                                    A                   A   E
                       E                        E
                                                            D
                                                                    B
                                                D               C
                        D                               B
                                    B               C
                            C




                     Intermediates              Finished        Finished        DC    Customer
                                                  Bulk           Goods




                                                                                                                       IRL
               tmax                                             Calibrate synchronization
     RW                                                                                             Working Stock
                                        F                         via parameter setting           Other Cycle Stock
     Cycle                                  A

     length
                                E
                                    API                                                          Safety Stock Demand

                tmin            D
                                        C
                                            B                                                    Safety Stock Supply
                                                                                                     Policy Stock




     The configuration of the few LPS parameters enables the synchronization of the global supply chain
      The configuration of the few LPS parameters enables the synchronization of the global supply chain


© Camelot IDPro AG                                                         24
Lean Planning  Scheduling for Chemical Champions

E2E Supply Chain synchronization with LPS


                                                                                                SC response
          SC response          tmax
                                                                               tmin = tmax
                                                      F                               F
                                                          A                               A
                                              E                                  E


                                              D                                   D

                               tmin                   C
                                                          B                           C
                                                                                          B




                                                              Trade-off
                           Flexible response                                    Smooth SC




         ?     E
                   F
                       A
                             ?        E
                                          F
                                                  A
                                                              ?   E
                                                                      F
                                                                           A
                                                                                  Variability

               D                                                  D
                       B              D                                    B
                   C                      C
                                              B                       C




           Intermediates       Finished Bulk                  Finished Goods
                                                                                                      Volume




          Adjust the parameters and balance response and flexibility to synchronize your supply chain
           Adjust the parameters and balance response and flexibility to synchronize your supply chain


© Camelot IDPro AG                                                        25
Lean Planning  Scheduling for Chemical Champions

Lean Planning process aligned organization

                   Process                                                                         Performance

                                                                                                   • Total
                                                                                                   Total
                   Configuration                                                                   • SC cost-to-serve
                                                                                                        cost-to-serve
                                                     Strategic SCM Board                           • SC Continuity
                                                                                                        Continuity
                                                                                                   • Responsiveness
                                                                                                   • Responsiveness
                   Segmentation
                                                                                                   • Total
                                                                                                   Total
                                                  Global Tactical SC Planning                        Inventories
                                                                                                   • Inventories
                                                          Committee                                • Capacity util.
                                                                                                     Capacity util.
                                                                                                   • Service level
                                                                                                   • Service level
                  Parameterization
  SOP/ Renewal




                                                                                                   Site
                                            Site Tactical                   Site Tactical          • Inventories
                                              Planning                        Planning             • Capacity util.
                      E2E LPS               Department                      Department             • Service level
                                                                                                   • RTA, RTT,…



                                              Execution                      Execution             • Process stability
                                                                                                     Process stability
                    Monitoring                                                                     • Equipment avail.
                                               Teams                          Teams                  Equipment avail.




                    LPS enables an agile planning organisation with clearly defined roles and responsibilities
                     LPS enables an agile planning organisation with clearly defined roles and responsibilities


© Camelot IDPro AG                                              26
Lean Planning  Scheduling for Chemical Champions

IT landscape for lean supply chain planning  scheduling


                                                             Reporting


                                                                                  Planning System
     Global Components




                                                               SOP


                         MDM       Demand Planning                    LEAN parameter planning and
                         EAI                                                 optimization
                         …
                                   Network Planning                    LEAN planning
                                                                          methods
                                                                        configuration
                                    Master Planning                                       Monitoring

                                                                     Lean planning
                               Fine Planning  Scheduling          methods application




  The Lean Planning IT implementation extends organically the existing landscape and enables full leverage
   The Lean Planning IT implementation extends organically the existing landscape and enables full leverage
                                         of common components
                                          of common components


© Camelot IDPro AG                                      27
AGENDA




        1            Camelot – Thought Leader in LEAN SCM

        2            21st Century Supply Chain Planning Paradigm

        3            Lean Planning  Scheduling for Chemical Champions

        4            Your way forward




© Camelot IDPro AG                             28
Lean Planning  Scheduling (LPS) – Your way forward

Summary
                                                              Benefits of LPS at a glance:

                                                              • Simplified planning
                          E2E                                     • Planning is reduced to few
                     segmentation                                  parameters
                     synchronization
     Tactical                                                     • Less planning effort
    parameter                           No forecast
                                          trigger             • Stable asset usage
      driven

                         LPS                                  • Smaller batches  shorter lead times
                                                              • Repetitive production patterns with
      Leveled
                                       Consumption              stable make quantities
      capacity
     utilization                           Pull
                                                                  • Learning effects
                      Active use of
                       inventories                                • Quality improvement
                                                                  • Easier supply chain collaboration
                                                              • More transparency facilitates E2E SC
                                                                coordination



 Adopting lean thinking in planning, various principles need to be followed to realize aawide range of benefits
  Adopting lean thinking in planning, various principles need to be followed to realize wide range of benefits


© Camelot IDPro AG                                    29
Lean Planning  Scheduling (LPS) – Your way forward

The journey to world class end-to-en value chain management



                                                         Supply Chain Configuration


                                                             Lean Supply Chain Planning

                                                                  Lean Scheduling

                                 Procurement       Production            Inventory     Distribution       Demand
     Planning




                                   Planning         Planning              Planning      Planning          Planning

                                                    Organization  Change Management
                                                             Monitoring  Reporting
                                                                   Data  IT
     Execution




                                    Source            Make          Warehousing          Deliver          Invoice

                                    Vendor          Lean                                                  Lean
                                  Integration    Manufacturing                Lean Logistics          Administration

                                                         Supply Chain Configuration


                 Benefits do not need to occur in area of implementation, but will materialise in the end-to-end process




5/5/2010
© Camelot IDPro AG                                                  30
Lean Planning  Scheduling (LPS) – Your way forward

Camelot offers the full toolset for lean SCM achieving operational excellence
Appr-
oach

                                                        Respect the                         Waste
                          Customer first
                                                         individual                      elimination
Princi-
 ples




             Continuous               Standar-
                                                            Takt               Flow                     Pull
            Improvement               dization


            Simulation                                                                                VSM
                                                          Event          Lean Planning
             Parameter-            Segmentation                                                   (Value Stream
                                                       Management         Scheduling               Mapping)
            optimization

                     5S             Visualization          KPIs              Kaizen                    DMAIC
                                                                                                 (problem solving)
 Tools




            Leveled Flow                                                       IRL                Perfect Plant
                                       Kanban          Rhythm Wheel         (Inventory             (Shop-Floor
               Design                                                     Target Setting)          Integration)

                 OEE                    SMED            Flexibility /        JiS / JiT                 PCO
          (Overall Equipment        (Single Minute      Complexity           (Just in            (Process Centric
            Effectiveness)         Exchange of Dies)      Design         Sequence / Time)          Organization)

                 TPM                                                        VMI / SMI              SOP and
                                                       Data Quality
           (Total Productive           Gemba                             (Vendor / supplier        Parameter
             Maintenance)                              Management         mgd inventory)            Renewal


              All tools contribute to the overall approach and principles on the journey to lean SCM


5/5/2010
© Camelot IDPro AG                                            31
Lean Planning  Scheduling (LPS) – Your way forward

As Lean Thought Leader we continuously explore the topic further
Multi-Stage LPS :

•   SC topology optimization
•   Global parameter optimization                                                                                      Prof. Thonemann
•   Synchronization of lean planning                                                                                   Universität Mannheim,
                                                                                                                       Seminar für SCM und Management Science
    instruments over entire SC              RW cycle length            RW cycle length           RW cycle length
                                        T                          T                         T


•   Analytical multi-stage variation
    analysis                                                  t                          t                         t


                                            Global service level



Linkage: LPS and other areas:
                                                                                                                       Prof. Pfohl
•   Root-cause analysis of                                                                                             Technische Universität Darmstadt,
                                                                                                                       Fachgebiet Unternehmensführung u. Logistik
    deviations
•   Mapping to financial KPIs
•   Collaboration business models                                                                Required IRL

    across the value chain
•   Organizational deployment
                                                                                                                       Prof. Fleischmann
                                                                                                                       Universität Mannheim,
                                                                                                                       Lehrstuhl für ABWL und Logistik
LPS Tools:

•   ERP / APS extensions
•   Cloud computing
•   Advanced planning methods
•   Simultaneous optimization                                                                                          Prof. Rehof
                                                                                                                       Fraunhofer Institut für Software und
    engines                                                                                                            Systemtechnik ISST




© Camelot IDPro AG                                                      32
Thank you for your attention!

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Chemical Supply Chain

  • 1. Lean E2E Supply Chain Planning Meeting the Paradigm Change in the Chemical Industry Logichem 2010, Düsseldorf Dr. Jörg Schmid, Christoph Lieth
  • 2. AGENDA 1 Camelot – Thought Leader in LEAN SCM 2 21st Century Supply Chain Planning Paradigm 3 Lean Planning & Scheduling for Chemical Champions 4 Your way forward © Camelot IDPro AG 2
  • 3. Camelot – Thought Leader in LEAN SCM Camelot IDPro – Your partner of choice Who we are Who we are Where we are Where we are Management Consulting from strategies to results Camelot Group Europe Established 1996 in Germany Camelot IDPro AG and the US. Now top ranking for Cologne Cologne the following industries: Mannheim (HQ) Mannheim (HQ) Munich Munich Zürich Zürich Chemicals & Basel Basel Petrochemicals Pharmaceuticals & Camelot Group USA Healthcare Camelot / /Bristlecone Camelot Bristlecone (Santa Clara, USA) (Santa Clara, USA) Camelot / /BPS Camelot BPS (Helsinki) (Helsinki) Camelot / /Profit Point Camelot Profit Point Consumer Products (Wynnewood, Philadelphia, USA) (Wynnewood, Philadelphia, USA) Camelot / /enowa Services Camelot / /Spain Camelot Spain (Barcelona) (Barcelona) Camelot / /BPS Camelot BPS (Oslo) (Oslo) Camelot enowa Services Camelot / /Trilog Camelot / /BPS (Exton, Philadelphia, USA) Camelot Trilog Camelot BPS (Exton, Philadelphia, USA) (Milan) (Budapest) Camelot Group Asia (Milan) (Budapest) Operating worldwide, with an Camelot / /Coffra Camelot Coffra (Paris) Camelot / /BPS Camelot BPS (Tallinn) (Paris) (Tallinn) international network of more Camelot / /IDPro Asia Camelot IDPro Asia (Singapore) (Singapore) than 320 consultants in Europe Camelot / /ISS Consulting Camelot ISS Consulting (Kuala Lumpur, Malaysia (Kuala Lumpur, Malaysia and 1.200 consultants within the Camelot International Group Camelot IDPro is an international consulting organization with leading expertise in the Chemical, Camelot IDPro is an international consulting organization with leading expertise in the Chemical, Pharmaceutical and Consumer Goods Industry Pharmaceutical and Consumer Goods Industry © Camelot IDPro AG 3
  • 4. Camelot – Thought Leader in LEAN SCM We provide holistic consulting services along the entire Value Chain What we offer Classic Management strategic consultancy Camelot Camelot IDPro ITLab Operations Process and IT consultancy Subcontractor Process & Strategy IM / Systems Organization Camelot Core Competences Strategy & Operations Strategy Implementation Process & Value Chain Management Sourcing & Operations & Logistics & Sales & Procurement SCM Transportation Customer Service Organization & Business Transformation A full-service consultancy – with core competences in operations strategy implementation, holistic reengineering A full-service consultancy – with core competences in operations strategy implementation, holistic reengineering of Value Chains, as well as organizational alignment and business transformation. of Value Chains, as well as organizational alignment and business transformation. 5/5/2010 © Camelot IDPro AG 4 4
  • 5. Camelot – Thought Leader in LEAN SCM Camelot addresses the critical value chain levers of the process industry with its key-services Management & Business Assess Design Implement Sustain Processes & Information Operational Strategy Strateg y Lean Operations x Strateg y x Service x SC Performance Organizat ion Flo w design Organizat ion Flo w design SC Strategy Development and x Strateg y x Value Chain Lean SCM Flo w Organizat ion design Excellence Processes x x Processes Assessment Processes Triangle Costs Working Capital Alignment Systems & Data x Operational Excellence Systems & Data Systems & Data SC Model Design Benchmarking Portfolio Management Opportunity Segmentation & Classification A B C SKU Management Identification X SCM Segmentation Y SC Customer Service Configuration Process Classification Z Supplier Management & Development Service Network Optimization & Process Improvement Working Capital Mgt Value Chain SC Planning Processes (S&OP) Plan Value Based Network Design Excellence Harmonization & Consolidation Source Make De liver Triangle Logistics & Transportation Mgmt. Active Asset Management Costs Working Capital SC Collaboration Advanced Inventory Management Business Transformation & Information Technology SCM APO SCM APO APO 5.0 ICH APO 5.0 ICH XI XI ALE Organization Software Evaluation BW 3.5 BW 3.5 CIF CIF R/3 4.7 R/3 4.7 Organizational Alignment R/3 4.6 R/3 4.6 Blueprinting & Implementation ALE ECC 5.0 ECC 5.0 Supplier/ Supplier/ Inter- Inter- Inter-- Inter Customer Customer company company company company Change Management SC Compliance Performance Management Data Quality Vision, M ission, Corporate Strategy Sustainability KPI EBIT Key Stra te gy upda te ROI / ROCE Performance EVA Indicators Define & cascad e Stra te gic le arnin g o bje cti ves Strategic & fe edba ck Planning Strate gic Business Planning Strategy moni to ring action pl ann ing Sales Master Data Management (Process & Organization) BPI CM Business Unit Ta rget v lue s a Costs Risk Management Performance Indicators COGS Performance Measu rement Operational Detai led op eration al pl ann ing Planning PPI Process Pl an executi on Forecast Accuracy Process Performance optimizati on Cycle times Business Performance Management Indicators Data Quality Evaluation & Improvement Activity costs Strategy to results… Strategy to results… and and …Innovation to solution! …Innovation to solution! © Camelot IDPro AG 5
  • 6. Camelot – Thought Leader in LEAN SCM We have a profound industry expertise with strong focus on the process industry Where we work Management Classic strategic consultancy Strategic and process consultancy Camelot IDPro Operations Process and IT consultancy Subcontractor Strategy Process & Org. IM / Systems Implementation Camelot IDPro AG - -aafully committed partner to make effective and efficient Value Chain Management for Camelot IDPro AG fully committed partner to make effective and efficient Value Chain Management for the Process Industry happen. Strategy to results. Innovations to solutions. the Process Industry happen. Strategy to results. Innovations to solutions. © Camelot IDPro AG 6
  • 7. AGENDA 1 Camelot – Thought Leader in LEAN SCM 2 21st Century Supply Chain Planning Paradigm 3 Lean Planning & Scheduling for Chemical Champions 4 Your way forward © Camelot IDPro AG 7
  • 8. 21st Century Supply Chain Planning Paradigm Lean Planning and Scheduling Lean Thinking How do Lean Principles shape planning and scheduling processes? Processes Processes LPS Organization Organization • Easy planning concept • Low inventory levels Modern production • Stable cap. utilization Current challenges in systems • Reduced lead times the chemical industry • Less planning effort What are the How can the planning requirements of Lean approach Manufacturing to an dramatically increase appropriate planning Information Information customer service and Systems Systems approach? reduce working capital and costs? © Camelot IDPro AG 8
  • 9. 21st Century Supply Chain Planning Paradigm Classic forecast-based planning often ends in the planning loop trap Forecast Forecast Lead time required required Lead time Forecast deviation The longer the forecast horizon, the higher the forecast error Longer lead time ε Planning t Loop Trap LPS Impact of forecast deviation • Safety stock required • Short term production adjustments • Variability of capacity utilization Think lean and avoid the planning loop trap Think lean and avoid the planning loop trap © Camelot IDPro AG 9
  • 10. 21st Century Supply Chain Planning Paradigm Classic planning approach Forecast Consumption Production Inventory Customer n Inventory Capacity utilizatio In classic planning, demand variations are translated into production In classic planning, demand variations are translated into production while inventories are hardly utilized and kept untouched while inventories are hardly utilized and kept untouched © Camelot IDPro AG 10
  • 11. 21st Century Supply Chain Planning Paradigm Lean Planning & Scheduling Consumption trigger Order Consumption Production Inventory Customer n Inventory Capacity utilizatio LPS actively uses inventories to manage demand variability while keeping capacity utilization constant LPS actively uses inventories to manage demand variability while keeping capacity utilization constant © Camelot IDPro AG 11
  • 12. 21st Century Supply Chain Planning Paradigm Pro LPS: Paradigm change je ct E xam ple Stock is target (Classic planning) Capacity is target (LPS) 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Period: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Period: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Consumption Make Capacity usage Inventory Consumption Make Capacity usage Inventory Main Characteristics: Main Characteristics: • Asset reacts to demand variability • Inventories address demand variability • Floating production quantities • Repetitive production cycles • Inventory is hardly touched • Inventory actively used • Sub-optimal capacity utilization • Stable capacity utilization The lean planning & scheduling approach has clear benefits for not too volatile high-volume products The lean planning & scheduling approach has clear benefits for not too volatile high-volume products © Camelot IDPro AG 12
  • 13. 21st Century Supply Chain Planning Paradigm Lean SCM & LPS principles and benefits Benefits of LPS at a glance: • Simplified planning E2E • Planning is reduced to few segmentation & parameters synchronization Tactical • Less planning effort parameter No forecast trigger • Stable asset usage driven LPS • Smaller batches & shorter lead times • Repetitive production patterns with Leveled Consumption stable make quantities capacity utilization Pull • Learning effects Active use of inventories • Quality improvement • Easier supply chain collaboration • More transparency facilitates E2E SC coordination To adopt lean thinking in planning, various principles need to be followed to realize aawide range of benefits To adopt lean thinking in planning, various principles need to be followed to realize wide range of benefits © Camelot IDPro AG 13
  • 14. AGENDA 1 Camelot – Thought Leader in LEAN SCM 2 21st Century Supply Chain Planning Paradigm 3 Lean Planning & Scheduling for Chemical Champions 4 Your way forward © Camelot IDPro AG 14
  • 15. Lean Planning & Scheduling for Chemical Champions Lean SCM & Global LPS S&OP Intermediates Finished Bulks Finished Goods DC Customer Strategic Segmentation Tactical E2E SC Planning Monitoring SC Configuration Parameterization WIP WIP FGI F E A RW L G H D E B Variability high Make to order Campaign cycle L K J A I F C Planning D time Production Form. Comp. Pack Make to B Cards medium forecast C A IRL / RW / Kanban Flow low F F N O A A A M B E E L low medium high K C Volume Working Stock J D D D I B B E Other Cycle Time Stock WIP WIP H FGI IRL C C G F Safety Stock Demand Safety Stock Supply Form. Comp. Pack Policy Stock Renewal The LPS process is an end-to-end methodology, The LPS process is an end-to-end methodology, enabling the coordination and organization of the entire supply chain in an efficient and lean way enabling the coordination and organization of the entire supply chain in an efficient and lean way © Camelot IDPro AG 15
  • 16. Lean Planning & Scheduling for Chemical Champions Define decoupling points and allocate inventory within the global supply chain Customer Mid Term Order Forecast Customer Order Regional Long Lead Raw Consolidated FG Operation FG Inner Distribution Time Materials Intermediates Pack Centre Materials Milling & Working Stock Other Cycle Time Stock IM Working Stock Other Cycle Time Stock Working Stock Other Cycle Time Stock Outer Pack Working Stock Other Cycle Time Stock Safety Stock Demand Safety Stock Demand Synthesis Inner Safety Stock Demand Safety Stock Demand Short Lead Safety Stock Supply Production Safety Stock Supply Safety Stock Supply To Order Safety Stock Supply Policy Stock Policy Stock Packing Policy Stock Policy Stock Time Materials FIFO Push Call Off Signal Pull Signal Consolidated Pull Signal Replenishment Order • Inventory in the regional distribution centres is replenished in line with actual consumption • Postponement of outer packaging enables optimization of FG inventory • Decoupling inventories for intermediates stage reduces the planning complexity • To minimize the “bullwhip effect”, the actual customer demand is communicated using consumption pull Transparency and clarity in the E2E value streams regarding lead times, decoupling and inventory Transparency and clarity in the E2E value streams regarding lead times, decoupling and inventory tactics is key tactics is key © Camelot IDPro AG 16
  • 17. Lean Planning & Scheduling for Chemical Champions Segment the portfolio to determine the best fitting supply mode Variability Make to order high Campaign Planning Make to forecast medium IRL / RW / Kanban Flow low low medium high Volume The inventory and decoupling tactics as well as the supply mode set the framework for E2E lean planning The inventory and decoupling tactics as well as the supply mode set the framework for E2E lean planning © Camelot IDPro AG 17
  • 18. Lean Planning & Scheduling for Chemical Champions Supply mode simulation ^ / ^ d Variability MTO Variability MTO MTF MTF RW Flow Volume Volume OEE Service-level Cost OEE Service-level Cost Best supply modes Simulation based analysis supports the optimal segmentation and allocation of supply modes regarding Simulation based analysis supports the optimal segmentation and allocation of supply modes regarding KPI trade-offs KPI trade-offs © Camelot IDPro AG 18
  • 19. Lean Planning Scheduling for Chemical Champions Forecast and product Segmentation and life cycle management Renewal SC planning modes Optimization of tactical SC parameters Network planning and capacity l Controlling alignment Rhythm Whee lanning hain P upply C G lobal S ment RW Attain l Scheduling Rhythm Whee IRL Pull CTR el Desig n Rhythm Whe make skip CI Order PO time - Rhythm e nc - Seque RW As-Is ior - Behav ity - Capac usage esign ed RW As-D RW As-Designed The rhythm wheel process is an integral part of global lean SCM The rhythm wheel process is an integral part of global lean SCM © Camelot IDPro AG 19
  • 20. Lean Planning Scheduling for Chemical Champions Value Chain Inter- Finished Finished mediates bulks goods DC Customer Supply Modes Rhythm Wheel Design F MTO A • Allocate products on the E wheel • Define optimal sequence Kanban D • Define production quantities B based on reference demand IRL C • Define planned cycle time RW upper / lower boundary • KPI-based evaluation (utilization, service level, Flow Rhythm Wheel OEE, etc.) leveled asset The better the production levelling, the higher the performance of the production system The better the production levelling, the higher the performance of the production system © Camelot IDPro AG 20
  • 21. Lean Planning Scheduling for Chemical Champions Value Chain Inter- Finished Finished mediates bulks goods DC Customer Supply Modes Rhythm Wheel Scheduling Current Inventory IRL ? F MAKE MTO A E D I nventory B Current Inventory IRL ? Kanban C SKIP R eplenishment L evel IRL Working Stock RW Other Cycle Stock Safety Stock Demand Safety Stock Supply Policy Stock Flow Rhythm Wheel leveled asset Stock The production decisions are based on aasimple rule and purely consumption pull driven The production decisions are based on simple rule and purely consumption pull driven © Camelot IDPro AG 21
  • 22. Lean Planning Scheduling for Chemical Champions Value Chain Inter- Finished Finished mediates bulks goods DC Customer Supply Modes Rhythm Wheel Scheduling 12d F MTO VMI A E Cycle time D B Kanban C 8d IRL IRL Working Stock RW Other Cycle Stock Demand Safety Stock Demand Safety Stock Supply Policy Stock Flow Rhythm Wheel leveled asset Stock Cutting of outliers moves variability of response from production to inventory Cutting of outliers moves variability of response from production to inventory © Camelot IDPro AG 22
  • 23. Lean Planning Scheduling for Chemical Champions Value Chain Inter- Finished Finished mediates bulks goods DC Customer Supply Modes Lean KPIs Rhythm Time Attainment (RTA) • Tracks cycle length over time Process Behavior Chart RTA MTO VMI F 12 • Evaluates the difference between E A 10 the planned and actual cycle time 8 D 0 1 2 3 4 5 6 7 • Shows variations in capacity C B cycles Kanban utilization Run To Target (RTT) IRL qty RTT Quantities RW • Shows required and actual 30 Total production quantities in every cycle 20 orders Total qty • Tracks order fulfillment 10 0 1 2 3 4 5 6 7 Flow • Evaluates the efficiency of the cycles chosen cycle length boundaries Measurable and comprehensible KPIs enable effective planning process management Measurable and comprehensible KPIs enable effective planning process management © Camelot IDPro AG 23
  • 24. Lean Planning Scheduling for Chemical Champions E2E Supply Chain synchronization with LPS F F F A A A E E E D B D C D B B C C Intermediates Finished Finished DC Customer Bulk Goods IRL tmax Calibrate synchronization RW Working Stock F via parameter setting Other Cycle Stock Cycle A length E API Safety Stock Demand tmin D C B Safety Stock Supply Policy Stock The configuration of the few LPS parameters enables the synchronization of the global supply chain The configuration of the few LPS parameters enables the synchronization of the global supply chain © Camelot IDPro AG 24
  • 25. Lean Planning Scheduling for Chemical Champions E2E Supply Chain synchronization with LPS SC response SC response tmax tmin = tmax F F A A E E D D tmin C B C B Trade-off Flexible response Smooth SC ? E F A ? E F A ? E F A Variability D D B D B C C B C Intermediates Finished Bulk Finished Goods Volume Adjust the parameters and balance response and flexibility to synchronize your supply chain Adjust the parameters and balance response and flexibility to synchronize your supply chain © Camelot IDPro AG 25
  • 26. Lean Planning Scheduling for Chemical Champions Lean Planning process aligned organization Process Performance • Total Total Configuration • SC cost-to-serve cost-to-serve Strategic SCM Board • SC Continuity Continuity • Responsiveness • Responsiveness Segmentation • Total Total Global Tactical SC Planning Inventories • Inventories Committee • Capacity util. Capacity util. • Service level • Service level Parameterization SOP/ Renewal Site Site Tactical Site Tactical • Inventories Planning Planning • Capacity util. E2E LPS Department Department • Service level • RTA, RTT,… Execution Execution • Process stability Process stability Monitoring • Equipment avail. Teams Teams Equipment avail. LPS enables an agile planning organisation with clearly defined roles and responsibilities LPS enables an agile planning organisation with clearly defined roles and responsibilities © Camelot IDPro AG 26
  • 27. Lean Planning Scheduling for Chemical Champions IT landscape for lean supply chain planning scheduling Reporting Planning System Global Components SOP MDM Demand Planning LEAN parameter planning and EAI optimization … Network Planning LEAN planning methods configuration Master Planning Monitoring Lean planning Fine Planning Scheduling methods application The Lean Planning IT implementation extends organically the existing landscape and enables full leverage The Lean Planning IT implementation extends organically the existing landscape and enables full leverage of common components of common components © Camelot IDPro AG 27
  • 28. AGENDA 1 Camelot – Thought Leader in LEAN SCM 2 21st Century Supply Chain Planning Paradigm 3 Lean Planning Scheduling for Chemical Champions 4 Your way forward © Camelot IDPro AG 28
  • 29. Lean Planning Scheduling (LPS) – Your way forward Summary Benefits of LPS at a glance: • Simplified planning E2E • Planning is reduced to few segmentation parameters synchronization Tactical • Less planning effort parameter No forecast trigger • Stable asset usage driven LPS • Smaller batches shorter lead times • Repetitive production patterns with Leveled Consumption stable make quantities capacity utilization Pull • Learning effects Active use of inventories • Quality improvement • Easier supply chain collaboration • More transparency facilitates E2E SC coordination Adopting lean thinking in planning, various principles need to be followed to realize aawide range of benefits Adopting lean thinking in planning, various principles need to be followed to realize wide range of benefits © Camelot IDPro AG 29
  • 30. Lean Planning Scheduling (LPS) – Your way forward The journey to world class end-to-en value chain management Supply Chain Configuration Lean Supply Chain Planning Lean Scheduling Procurement Production Inventory Distribution Demand Planning Planning Planning Planning Planning Planning Organization Change Management Monitoring Reporting Data IT Execution Source Make Warehousing Deliver Invoice Vendor Lean Lean Integration Manufacturing Lean Logistics Administration Supply Chain Configuration Benefits do not need to occur in area of implementation, but will materialise in the end-to-end process 5/5/2010 © Camelot IDPro AG 30
  • 31. Lean Planning Scheduling (LPS) – Your way forward Camelot offers the full toolset for lean SCM achieving operational excellence Appr- oach Respect the Waste Customer first individual elimination Princi- ples Continuous Standar- Takt Flow Pull Improvement dization Simulation VSM Event Lean Planning Parameter- Segmentation (Value Stream Management Scheduling Mapping) optimization 5S Visualization KPIs Kaizen DMAIC (problem solving) Tools Leveled Flow IRL Perfect Plant Kanban Rhythm Wheel (Inventory (Shop-Floor Design Target Setting) Integration) OEE SMED Flexibility / JiS / JiT PCO (Overall Equipment (Single Minute Complexity (Just in (Process Centric Effectiveness) Exchange of Dies) Design Sequence / Time) Organization) TPM VMI / SMI SOP and Data Quality (Total Productive Gemba (Vendor / supplier Parameter Maintenance) Management mgd inventory) Renewal All tools contribute to the overall approach and principles on the journey to lean SCM 5/5/2010 © Camelot IDPro AG 31
  • 32. Lean Planning Scheduling (LPS) – Your way forward As Lean Thought Leader we continuously explore the topic further Multi-Stage LPS : • SC topology optimization • Global parameter optimization Prof. Thonemann • Synchronization of lean planning Universität Mannheim, Seminar für SCM und Management Science instruments over entire SC RW cycle length RW cycle length RW cycle length T T T • Analytical multi-stage variation analysis t t t Global service level Linkage: LPS and other areas: Prof. Pfohl • Root-cause analysis of Technische Universität Darmstadt, Fachgebiet Unternehmensführung u. Logistik deviations • Mapping to financial KPIs • Collaboration business models Required IRL across the value chain • Organizational deployment Prof. Fleischmann Universität Mannheim, Lehrstuhl für ABWL und Logistik LPS Tools: • ERP / APS extensions • Cloud computing • Advanced planning methods • Simultaneous optimization Prof. Rehof Fraunhofer Institut für Software und engines Systemtechnik ISST © Camelot IDPro AG 32
  • 33. Thank you for your attention!