An Approach to bring Demand Visibility to Plant Managers
Arunima Thakur
HCL Technologies
Sudipta Mukherjee
HCL Technologies
ABSTRACT
This article aims to explore why visibility to demand information of various products is crucial to plant managers, what benefits an organization can derive from such visibility, and how they can adopt a system or technology based approach to get real time visibility.
The objective of is article is to bring out how we have approached this critical area and our thought leadership in developing a solution.
INTRODUCTION
As the global economy continues to be in recession, pressures within the manufacturing industry are intensifying. Manufacturers look for ways to increase revenue – and one of the areas that has gathered attention is demand management function through which enterprises are streamlining demand management process.Â
One of the critical pain points within manufacturers’ demand management process is an overall lack of visibility into planned and actual demand, and how this impacts operations. The majority of manufacturing companies do not have a single consensus view of demand across their entire operations, leading to silos of inefficiency and an inability to effectively allocate resources. Without this view of demand, efforts to refine demand management processes are inherently handicapped. This is also compounded by the acquisition of companies that are not effectively integrated. While it is possible for a model like this to work, it denies manufacturing companies the ability to rationalize processes and extract financial and operational benefits across the broader business.
According to AMR, a 5% improvement in demand visibility improves perfect order attainment by 10%.ÂAberdeen has found that 56% of the discrete manufacturing companies think synchronizing demand information with plant execution is a challenge. Better visibility into demand allows plants to reduce buffer inventory, utilize the assets better and stick to delivery dates.
MAIN SECTION
Typically plant personnel do not have visibility to real time demand information which does not allow them to have advance visibility of orders to be executed and schedule production accordingly. Controlling production and inventories based on delayed or lagged demand information easily leads to inefficient capacity utilization, poor product availability, and high stock levels which drives costs up. Further the missed orders impact overall customer satisfaction which could lead to potential loss of customers and thereby the business associated.
Currently, discrete manufacturers face the challenge that demand information resides in multiple applications like different ERP instances or custom developed application. No one has a single view of what the order scenario is on a particular day. Getting an understanding of the demand at product family/ SKU level drives plant manager to navigate through multiple screens which consumes much of his productive time and causing frustration. The business challenges faced by manufacturers in are as follows:
·       ÂDemand data is not visible near real time in a single dashboard
·       ÂAbsence of demand visibility prevents linking to it finite scheduling for better capacity utilization
·       ÂLack of synchronization at various levels – People, Machine, and Material to get better return on assets
·       ÂLack of demand visibility prevents organizations to adopt a lean manufacturing environment
Based on our research and understanding of the problem area we think that a possible way to solve this problem is to have a web based solution that allows manufacturers to sense demand and make it visible to operations for a JIT response (near real time). Hence we developed a solution called VisibleDemand.
The Solution provides a dashboard showing the real time demand information collected from disparate ERP applications where order information is captured. Further to this the user is able to see the sales order details which is be the lowest level of detail associated for the orders for a particular day. The dashboard also allows the plant manager to get information related to quantity to be produced, lead time of producing, existing inventory of end item, raw material required, existing Inventory of raw materials, name and ID of the work centers, time needed on the work centers involved.Â
Fig.1: Demand Data Drill down in Visible Demand
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The value delivered by this solution is tremendous when we consider a real life scenario where a company is running operations in multiple locations based out of multiple geographies, having hundred odd product families and some thousands of SKUs. The plant manager is challenged to get information what is the demand of a particular SKU at a given plant on the current date. Typically this information is obtained by asking the plant IT team, who will run various transactions within their ERP, prepare a consolidated report and hand it over to the plant manager. To get the level of details that Visible Demand provides will require the IT team to run through ten different screens within their ERP and will at least take 30 minutes to get SKU level detail. The time increases more if multiple SKU demand information is needed and demand for more and more past periods are needed. By the time the plant manager gets the information a lot of time is already wasted in just waiting for this important piece of information. The above scenario is only for the case where all sales order information is being entered within ERP only. Discrete manufacturing companies over the past few years have acquired multiple applications associated with same business process due to mergers and acquisitions.
Additionally, as the plant manager will always be interested in knowing items which consume maximum demand on a particular day, Visible Demand intelligently calculates and shows the top 5 SKUs along with the quantity that needs to be produced daily, weekly, monthly or quarterly basis.
High-level solution architecture of the Visible Demand Solution is shown below showing how the system functions. Being built on webdynpro platform the solution plug-in to any ERP system and pull sales order information. For non ERP data sources webdynpro can take input demand information in simple .csv file format.
Fig.2: Visible Demand High Level Architecture
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The Salient features of Demand solution are that demand can be visualized across different time intervals (quarterly, monthly, weekly and daily) at both product family and SKU level. It gives the ability to drill down sales order details from the aggregate demand for a period at a product family level to a single SKU level for a particular day. The dashboard also allows the plant manager to get information related to quantity to be produced, lead time of producing, existing inventory of end item, raw material required, existing Inventory of raw materials, name and ID of the work centers, time needed on the work centers involved. Visible Demand can be linked to any source of disparate ERP systems and even non ERP applications used for capturing sales order information. It gives the ability to compare multiple SKUs within same screen to understand the demand trend. Visible Demand intelligently calculates and shows the top 5 SKUs along with the quantity that needs to be produced daily, weekly, monthly or quarterly basis. This allows the plant manager to focus on those items which consume maximum demand on a particular day.
Significant benefits that can be obtained by implementing this solution. The solution allows monitoring demand in near real time (no time lapse of 24 hrs/ 48 hrs). Also another advantage is that it aggregates demand information from ERP and even non ERP applications. So the plant manager gets a consolidated view of demand through this application. Also the simplified GUI offered by this solution allows easy interpretation of demand information. So it is possible to see demand data aggregated at different level of SKU, product families, time intervals and also at the same time do a demand trend analysis of any desired set of products. Being developed on Web Dynpro platform ensures easy integration and faster deployment.
Some of the business benefits that accrue by implementing this solution are – operating cost savings, working capital savings and revenue increase. Operating cost savings can be obtained through increased production efficiencies of approximately 3%, improvement in personnel productivity of approximately 9.5%, and reduction in obsolescence and waste of approximately 42.5%. Working capital savings can be due to reduced inventory levels around 11%, increase in inventory turns, improvement in asset utilization around 12.5%, and decrease in cash-to-cash cycle time of around 20%. The revenue increase will mainly be due to increased fill-rates due to real time demand visibility and reduced out-of-stocks.
FUTURE TRENDS
The proposed solution in its current scope gives demand visibility to plant managers, the plant scheduling part has not been touched here. The idea is that after getting visibility in the sales orders the plant manager will prioritize the orders and schedule the plant accordingly.
As a next step, a possible improvement could be to link this solution to the scheduling system the company uses. As a result of this integration, as and when new orders come in, the information will be fed to plant scheduling system to re work on the schedules and come out with new order promise dates based on the constraints of people, machine and material.
CONCLUSION
The ever increasing competition, increasing input costs, pressure on margins, needs manufacturers to operate in an efficient and effective manner by streamlining their operations. One of the areas to improve performance is to have a plant environment where there is complete visibility into demand information. The VisibleDemand solution allows plant manager to get the much needed real time demand view through a simple web based system. This allows organizations to get working capital savings ( in terms of reduced inventory levels, increased inventory turns, improved asset utilization, and decreased cash-to-cash cycle time). Also there is increased operating cost savings through increased production efficiency.
REFERENCES
Lora Cecere, Debra Hofman, Roddy Martin, and Laura Preslan, The Handbook for Becoming Demand Driven, AMR Research, July 2005
Lora Cecere and Roddy Martin, What Is Demand Visibility, AMR Research, March 2006
Matthew Littlefield, Demand Driven Manufacturing, November 2007, Aberdeen Group,
Nari Viswanathan, Demand Management in Discrete Industries:Order to Delivery Excellence, November 2007, Aberdeen Group
Nari Viswanathan, Dave Ebeling, Achieving Order-to-Delivery Excellence in Discrete Industries,
CONTACT
Arunima Thakur is the Head of Vertical Solutions for Discrete and Industrial Manufacturing practice at HCL.
Arunima has over 18 years of leadership experience and her areas of expertise include manufacturing operations management, MRP, Lean, and Six Sigma consulting.
Arunima’s e-mail id is thakura@hcl.in
Arunima’s Educational qualifications include
1.    ÂA Bachelor’s Degree in Electrical Engineering
2.    ÂA Master’s Degree in Mechanical and Aerospace Engineering, WVU; followed by e-learning - (business discipline) from HBRP and U21.Â
3.    ÂGeneral Motors Leadership Training from GMI, Ford Design Institute Training, Lean certification, Six Sigma certification(s)
Sudipta Mukherjee has over 2 years of experience in Discrete and Industrial Manufacturing practice at HCL.
Sudipta’s e-mail id is sudipta.mukherjee@hcl.in
Sudipta’s educational background includes a Bachelor’s Degree in Metallurgical Engineering followed by MBA from SPJain Institute of Management & Research, Mumbai.
Definitions, Acronyms, Abbreviations
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ERP
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enterprise resource planning
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JIT
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Just in time
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SKU
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Stock keeping unit
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