Supply Chain Wednesday: S&OP

Today’s

Vocabulary

(1) Backlog: Too much of something

We have a backlog of steel frames. It’s a waste of space and money. What happened?

(2) To control: To make sure something is at the right level

Inventory levels are carefully controlled. If they get too high, we lose money. If they get too low, we can be short of what we need.

(3) Planning horizon: A horizon is the farthest you can see. It comes from the earth. The horizon is the place where you can’t see further, the place where the sun sets.

Our planning horizon is four quarters. Beyond that, it’s more strategic plans than a careful process.

Today’s

Questions

1. What does it mean to create a production plan in the context of sales?

a. Sales and production influence each other

b. Sales influences the production plan

c. The production plan influences sales

2. What is an especially nice benefit of S&OP?

a. Everyone sees how their decisions influence the company’s other departments

b. Everyone sees how planning influences finance

c. Everyone sees how they can contribute to financial decisions

3. What’s the tone of “we need to involve marketing in this”?

a. Friendly

b. Direct

c. Worried

7 ________________________

SUPPLY CHAIN WEDNESDAY

________________________

Monthly_S&OP_ProcessBy Jeremy Schaar

Today on the blog you’ll learn about S&OP. You’ll also learn about some great links for further study. Finally, you’ll learn some real life expressions that you can use on the job.

Concept

S&OP means Sales and Operation Planning. What does it mean? Basically, a company decides how much they want to sell and how much they need to produce. S&OP is a process companies use to decide their manufacturing output and other activities in the context of the sales plan. Manufacturing output can also be called production plan. It decides production rates, controls inventories, and deals with backlogs. And everything should be done without too much hiring or firing. The planning horizon for the process is how far into the future the plan goes. To create a plan, companies use information from many departments: marketing, manufacturing, finance, etc.

Example

Here’s a great link to see a few real world S&OP charts.

Note two things. First, Enchange divides the processes between demand and supply. Second, everything influences everything else. This is key. S&OP is wonderful because it forces everyone in the company to consider all the parts. They’ll see how their decisions affect different parts of the company. For example, demand for a product influences finance decisions, but so does the actual production. It’s a big circle with everything influencing everything else.

For a successful S&OP, check out John Westerveld’s blog post at Kinaxis. He writes about six key elements.

1. Executive Commitment and involvement

2. S&OP is used to run the business

3. Accurate S&OP data

4. Solutions – not just problems

5. Scenario driven

6. Run effective meetings and keep meticulous minutes

On The Job

“ I am responsible for preparing our divisional S&OP plans.”

Use this sentence to describe your job. It’s a good one to use at a conference where you’re meeting new people.

“Our major suppliers and customers need to be a big part of the S&OP process.

Here I wrote “major suppliers and customers”, but it could be anyone you think needs to be part of the process. This is a strong, clear sentence. It’s not polite, but it is very direct and people will listen if you speak like this.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, A, B

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You Can Do It All Yourself But You Dont Have To

Supply Chain Wednesday: Harmonized Key Performance Indicators

Today’s

Vocabulary

(1) Indicator: Something that gives you information on something else

The unemployment rate is a good indicator of demand for new cars

(2) Volume: Amount, level

As volume increases, we can take advantage of economies of scale

(3) To be in conflict with: When two things cause problems by existing together

The supplier’s order specifications are in conflict with our best practices. We need to adjust one or the other.

Today’s

Questions

1. Which is least likely to be a KPI?

a. Sales Volume

b. Sales Leads

c. Sales Hires

2. What is a harmonized key performance indicator?

a. An indicator that works for all (or most) areas of a company

b. An indicator that increases profits

c. An indicator that is the same for the customer and for the company

3. How might a boss request more information?

a. I want everyone to mix up…

b. I want everyone to draw up…

c. I want everyone to move up…

7 ________________________

SUPPLY CHAIN WEDNESDAY

________________________

By Jeremy Schaar

Today on the blog you’ll learn about Harmonized Key Performance Indicators (KPI). You’ll learn about an example of how a company can create good indicators. Finally, you’ll learn some real life expressions that you can use on the job.

Concept

Key Performance Indicators (KPI) are metrics a company uses to check how well they are performing. Examples of metrics include volume and how well you stay on schedule. Many different metrics can help track and motivate a department. For example, if the metric is volume, the production team will certainly do their best to produce the correct volume. If the metric is defects, then teams will try to reduce the number of defects.

The difficult situation is when metrics are in conflict. Manufacturing might need to choose between volume and defects. That’s hard, but management can direct manufacturing to focus on one thing. The bigger problem is when the metric for one department is in conflict with the metric for another department. For example, sales might be trying to increase orders. At the same time, manufacturing might be trying to decrease defects. A company with this situation could easily have too many orders

Example

Here’s a great link to a paper by Booz and Company. Scroll down to page seven and you’ll see a great example of a harmonized key performance indicator. Harmonized key performance indicators work well for all (or most) areas of a company. In the paper, they write about the cash conversion cycle. They write that this is “a single metric to focus everyone on the speed of moving things along the supply chain—a common theme that would impact the functional metrics of inventory, service levels, lead times, and quality.”

This should be the goal of key performance indicators. They should be metrics that work across departments. Ideally, they’ll be of use for your partners and clients as well.

On The Job

“ I want everyone to draw up a list of performance indicators that other departments could use.”

This sentence is a way to request people to think about harmonized key performance indicators. It’s something a boss would say to get more information.

“The problem is that our suppliers, our customers, and we all define the metrics differently. There’s no harmony among us.

The problem is that” is an easy way to start a sentence about a complaint. It clearly announces it. In this case the problem is about the harmony of metrics.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

C, A, B

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You Can Do It All Yourself But You Dont Have To

Supply Chain Wednesday: Visualization

Today’s

Vocabulary

(1) A bit: A little

I’m a bit hungry. Let’s eat a snack.

(2) Nerve: The self-confidence to do something

I don’t have the nerve to ask my boss for a raise. I wish I was more brave.

(3) Metric: A way to measure something

The primary metric is sales numbers, but customer satisfaction surveys are also important.

Today’s

Questions

1. Why is it a good idea to visualize your ideas?

a. They’ll be easier to understand

b. It gives you nerve

c. Both A and B

2. How can the Sherpa application help you?

a. You can perform better at meetings with better data

b. You can find metrics

c. You can visualize various metrics

3. Which sentence might you say to your boss?

a. We can do that, but here’s the impact.

b. If you do that, it will have a bad impact.

c. Show me a chart that lets me see the impact.

7 ________________________

SUPPLY CHAIN WEDNESDAY

________________________

1000 words By Jeremy Schaar

Today on the blog you’ll learn what it means to visualize ideas. You’ll also get some help understanding a cool blog. Finally, you’ll learn some real life expressions that you can use on the job.

Concept

To visualize an idea just means to create a picture that presents an idea. I might say that Company A sells oranges and apples to Company B, which uses all the apples for itself and sells half the organges to consumers and half to Company C. Or, I could visualize this idea like this:

visualized fruit

Example

Over at Kinaxis.com, Lora Cecere talks about the need to visualize ideas.

Her discussion is in the context of “chutzpah”. Chutzpah means nerve. And nerve means the self-confidence to say or do something.

She says that at S&OP meetings, the commercial team will sometimes makes a crazy request. They use visualization software (Llamasoft’s mobile Sherpa application), to show the impacts in pictures. Everyone at the meeting can quickly see an image that shows metrics such as financials, logistics, service, sustainability, and risk.

Sentence You Can Use On The Job

“We can do that, but here is the impact.”

This is a friendly sentence. You’re letting the other person make the decision and just giving them the information. It’s a good sentence to use with your boss or another decision maker.

“This is all a bit complicated. Let’s take a look at a visual representation of this data.”

This is a good sentence for a presentation. After you’ve explained something in words, you can show a picture to make your ideas clear.

“Please find a way to visualize this. We need it to be clearer.”

This sentence is a strong sentence from a boss. You can request that your team make the information cleared by using some image or graph.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

A, C, A

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You Can Do It All Yourself But You Dont Have To

Supply Chain Wednesday: Lean Production and Poka-Yoke

Today’s

Vocabulary

(1) Lean: Without waste

It’s a very lean operation. They don’t have money for anything that’s not essential.

(2) Implement: To start using a process

We need to implement a new training program. The old one is terrible.

(3) To eliminate: To remove, delete, destroy, etc.

If we don’t eliminate the waste around here, we’ll all lose our jobs.

Today’s

Questions

1. Why is lean manufacturing popular?

a. It adds value to products

b. It eliminates stuff that doesn’t add value to a product

c. Both A and B

2. Which one of these is an example of poka-yoke?

a. A rubber bar that prevents tall trucks from entering a warehouse

b. A manager that finds a faster way to process orders

c. A robot that brings the correct items to you

3. How might you explain poka-yoke to someone?

a. It’s things that reduce waste

b. It’s things that add value to a product

c. It’s things that stop us from making a mistake

7 ________________________

SUPPLY CHAIN WEDNESDAY

________________________

By Jeremy Schaar

sewing

Today on the blog you’ll learn what lean manufacturing is. You’ll learn about a specific way to implement lean manufacturing and you’ll learn three sentences that you might use on the job.

Concept Lean manufacturing is when you try to make everything add value to the final product. If it doesn’t add value to the final product, then you don’t do it. You eliminate it.

Here’s a simple example: Imagine that your company packs and ships books. Every time you finish packing a box with books, you check to make sure everything is tight by shaking the box. However, you never repack the books. They’re always tight. You can eliminate the shaking. It’s not adding any value.

Lean manufacturing is always looking for ways to eliminate things that don’t add value.

Example Toyota is famous for lean manufacturing. They have many ways of making sure everything adds value to the final product. One way is called “poka-yoke”. It’s a Japanese term that basically means “avoiding mistakes”. The idea is to build things into the system that will stop mistakes that would subtract value.

Here are some examples of poka-yoke:

  • A safety on a gun, so you can’t fire it accidentally
  • A loud beeping sound when a truck moves backwards, so no one gets hit
  • A check-list that makes sure you’ve done all the tasks
  • A picture of what a completed item should look like

On The Job Here are some sentences you might use at your job

Starting a conversation: I was reading about this Japanese idea of poka-yoka. Do you know about it?

Explaining poka-yoke: Basically, it’s anything that prevents us from making mistakes

Making a suggestion: I was thinking there might be some easy ways for us implement poka-yoke and reduce errors around here.

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, A, C

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You Can Do It All Yourself But You Dont Have To

Supply Chain Wednesday–Three Chart Types

Today’s

Vocabulary

(1) Flow: Movement.

Water flows down a river and supplies flow out of China and into the world.

(2) Parento Principle: 80% of the effects come from 20% of the causes.

It’s the Parento principle. 80% of the complaints come from 20% of the customers.

(3) Chart: A picture version of data

Charts are so much more useful than written explanations.

Today’s

Questions

1. Why might you use a flow chart?

a. To show how things change over time

b. To show steps in a process

c. To show which problem is the biggest

2. Why might you use a run chart?

a. To show how things change over time

b. To show steps in a process

c. To show which problem is the biggest

3. What might you use a Parento chart?

a. To show how things change over time

b. To show steps in a process

c. To show which problem is the biggest

7 ________________________

SUPPLY CHAIN WEDNESDAY

________________________

By Jeremy Schaar

Today on the blog, we’ll review three common charts. You’ll learn some good vocabulary and you’ll learn some good ways to help your business succeed.

Flowchart: Flowcharts show the steps in a process. Here’s a simple example from EmeraldInsight.

flow chart

Run chart: Run charts are all about time. Think of any chart that has time on the X-axis and some other data on the Y-axis. Here’s a simple example of pies sold by a bakery over a year.

pies

Pareto chart: Pareto charts show how important different things are. For example, you might have lots of 100 late orders. You want to know the different causes of the late orders and how important each cause is. Here’s an example from http://whatis.techtarget.com/

pareto_chart_customer-complaints

Got questions or comments? How about practicing some new vocabulary and posting your thoughts on the blog, Facebook, or Twitter?

CHECK YOUR ANSWERS!

Answers To Today’s Questions

B, A, C

——————————————

You Can Do It All Yourself But You Dont Have To

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