Planning for Solar Installation Company

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Planning for Solar Installation Company

©2021 Jade Global Inc. All rights reserved

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Introduction

Panel and Inverter Planning

Mountings and Miscellaneous Parts

Estimated Ship Date Calculation

Challenges

Benefits of the solution

Next Steps

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Table of Contents

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Introduction


Sungevity is a residential solar company founded in 2007 and has offices in Berkeley and Oakland, California. Sungevity uses an internet based approach to build and

design residential solar arrays by using online Maps and install the same. Sungevity offers 10 year Solar- Lease, allowing people to go solar with no money down making it as

easy and affordable as possible for its customers.

Jade Global is an Oracle Platinum Partner and a Systems Integrator, headquartered in San Jose, CA with global operations. Jade global implemented the planning solution

at Sungevity along with multiple other solutions for Sungevity business and supports Sungevity Oracle applications on an ongoing basis.

Material planning in a solar company has its own unique requirements. Demand is usually expressed in terms of KW/MW whereas supply is expressed in terms of number of

panels, inverters etc. For a solar installation project, lead times could be significantly high – usually 2-3 months.

There are number of other factors that play a significant role in determining the timing and progress of a project, such as design completion, utility and government approv-

als, and if it’s a leased project, finance availability. A predominantly leasing business of solar installation is very capital intensive and calls for smart material planning and

inventory management. To top that, supplier lead times are typically higher. There are significant volume discounts too that may influence procurement decisions.

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While the project moves from “Sold” to “Design Completed” status, demand typically changes from KW to individual panels and inverters, and finally to actual designed BOM

for the installation. Typical time from quote to sold is 30-60 days and from sold to design complete is 30-60 days. Once design is completed, material is shipped to the project

site within a week or two. At each stage, keeping a track of actual and estimated demand is crucial for timely completion of projects, which in turn impacts the cash flow

position. Sungevity currently operates in 2 geographies:

1. Southwest – primarily covers operations under one 3PL organization with all other locations – nettable and non nettable - defined as sub-inventories.

2. East coast – a different 3PL for warehousing and logistics and other locations defined as sub-inventories

A home grown CRM system maintains the project from quote to installation to grid-connection and beyond. The data is integrated to Oracle Projects and Order Management

on a daily basis.

Each project is tracked in Oracle Projects module under a project status. A lookup maintains estimated time to install based on project status. Demand due dates for entered

orders are determined based on project status and the time to install and updated on a daily basis.

Each organization has its own planning and at this point there is no planned material transfer between these organizations. Sungevity is currently using separate MRP for

each geography. It can be upgraded to ASCP when Sungevity expands its offering in many more geographies and consolidate warehouses.

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Panel and Inverter Planning


Panel cost is the biggest contributor to the cost of the installed solar project. It is therefore essential to manage panel demand and supply wisely. Strategically the company

needs to maintain multiple active sources for panels. Additional factors influencing buying decisions for panels include:

• Volume discounts provided for suppliers

• Storage cost with 3PL

• Transportation cost – truckload vs. less than truck load.

Panel demand could be classified in 3 distinct buckets:

• Panel quantity in booked orders - firm

• Panel quantity in entered orders – high probability with some chance of changes after design.

• Forecast in KW broken down in quantity needed for each panel part using planning BOM

Panel shipments from suppliers are typically received twice a month. The shipments are broken down by location in full truck loads. Inverters usually are ordered along with

panels from the same supplier. Even though each project needs just one or two inverters, they are costly and hence top the list of A class items. Demand are

supply are both pegged to panel quantity at a historical rate.

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Mountings and Miscellaneous Parts Planning


There are 2 categories of such items: Items with demand pegged to panel demand Items with fixed quantity per project The planning BOMs would store quantity of each

mounting items required for one panel item. For fixed quantity per project, the BOM component is set up as lot based.

Planning BOM Sample: Item: PLAN_ITEM Alternate: PANEL1

Examples:

Say 4 panel mounts are required per panel “Panel A” so an alternate BOM for the planning item “SUN_PLANNING_ITEM” would be created.

We created a program to calculate and load dependent demand for these items in a forecast.

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Item Basis Quantity From Date To Date

PANEL MOUNT1 Item 4 1-JAN-2012 30-MAR-2012

JUNCTION BOX Lot 1 1-JAN-2012

PANEL MOUNT2 Item 4 1-MAR-2012

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Planning Process

First 3 months demand is usually for sold projects. These projects are entered in Oracle Order management for panel and inverter parts only. Mountings and Miscellaneous

category items are not entered in sales orders till the design is completed. Once the final design is uploaded to the order, the order is flagged as design completed

using a DFF. Typically such orders are reviewed and booked in the same week and shipped within a week or two.

We defined a single forecast set in each geography (inventory org) with 2 forecasts as follows:

Standard Forecast: STD_FCT is for the SUN_PLANNING_ITEM entered as KW per period. It is based on marketing and sales forecast and business plan and usually starts 3

months from now.

Basis Date End Date No. of Buckets Quantity

Period 01-Jul-2012 30-Sep-2012 3 1500

Period 1-Oct-2012 31-Dec-2012 3 1700

Period 1-Jan-2013 31-Mar-2013 3 1900

This forecast is intended to be broken down into individual parts using a planning BOM for the SUN_PLANNING_ITEM. This BOM would break KW based demand into

individual parts including panels, invertors and mountings. This forecast is intended to be broken down into individual parts using a planning BOM for the SUN_PLAN-

NING_ITEM. This BOM would break KW based demand into individual parts including panels, invertors and mountings.

Example of Planning BOM to explode standard forecast:

Item: SUN_PLANNING_ITEM

Alternate Name: Null UOM: KW

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Dependent Demand: DEP_DMD is the calculated forecast for mountings and miscellaneous items using entered orders for panels and invertors breaking it up using the

alternate BOM for planning item with alternate name corresponding to the panel part number.

Example: Assuming following data, dependent demand is calculated as below

1. Panel quantity entered in a sales order is 24 2. Estimated scheduled ship date of 15-Mar-2012

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Code = Project Status Code

Meaning = Number of days from now.

Description = Project status

Estimated Ship Date Calculation:

The estimated ship date for projects is a factor of project status and defined in a lookup as

follows:

Project updates happen in CRM and updated in Oracle Projects and Order Management on

a daily basis. The program to update estimated ship date (demand due date) looks

at the current project status and calculates the estimated shipping date using above

lookup. Example: For a project 12345 which is in CAP1 status, the estimated

shipping date would be,

24-Apr-2012 + 50 days = 13-Jun-2012

Planning Steps

1. Run the program to update schedule ship dates for entered orders.

2. Run the program to calculate dependent demand based on entered orders.

3. Run MDS load program to load MDS from forecast set with standard forecast and dependent demand by selecting to explode all forecasts and include all orders.

4. Run MRP without including sales orders (they are already included in MDS).

5. Review, make changes if required, and release purchase requisitions and purchase orders.

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Challenges

Although the process looks simple, and serves the objective of replacing spreadsheet based planning, it had its own challenges.

• Planning is heavily data dependent and accuracy and timeliness of input data is critical to get the right plan recommendations. We faced multiple challenges in

getting accurate and timely CRM data in Oracle. Especially installer information was not synchronized between the 2 systems leading to too many exceptions in CRM to

Oracle integration.

• In some cases mountings and other parts were added to entered orders leading to duplication of demand. The program to populate dependent demand had to be

changed to exclude such items using item categories. Ensuring accuracy for item categories took some time.

• Currently, inter-org transfers and transit times are not factored in the solution.

Benefits of the solution

Planning can now be performed using a systemic solution with surety of results and recommendations instead of working with too many connected spreadsheets.

Planning can be done faster and more frequently (from a monthly planning cycle to weekly planning cycle).

Strategic planning changes such as phasing in/out of a key supplier can be factored in very easily using BOM effective dates The solution is very simple and easy to

work with and maintain. It has been designed using MRP but is scalable to ASCP without much effort or rework in the design.

While designing and testing this solution, we surfaced out a number of data inconsistencies between different systems and deployed solutions to take care of the same.

This made the overall IT systems more coherent.

The benefits for this solution include:

Weekly planning cycle has the potential to reduce overall inventory by

• 2 weeks’ worth of supply. • This results in reduced 3PL carrying cost.

• Lower chance of obsolescence • Better user productivity

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Next Steps

As the business expands to additional regions and states and it becomes less economical to maintain a warehouse in each region, the obvious next step would be to use

ASCP to determine which warehouse to use for fulfilling demands. Also there would be a need to plan material transfers between warehouses. Currently ATP is not an

issue but as number of projects increase, using ATP to determine ship dates would be a good option. Once Sungevity decides to use project BOMs and installed base

information in Oracle, project level planning can be performed. Finally, real time integration with 3PLs, suppliers and installers would make the planning more timely

and accurate.

Another major focus for Sungevity would be to implement some advanced demand management tool like Demantra.

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About Jade Global


Jade Global provides enterprise business application implementations, integrations, software product engineering, cloud services, technology advisory, testing, and

managed services across diverse industries. We are headquartered in San Jose, California with U.S. offices in Philadelphia and Los Angeles. Jade Global is an Oracle

Platinum Cloud Select partner, Salesforce Silver Partner, ServiceNow Silver partner, Boomi Elite Partner, Snowflake Select and Microsoft Gold partner. We have additional

strategic partnerships with NetSuite and AWS. Jade Global has been recognized as one of the fastest-growing companies in North America by Inc. 5000 and was featured on

the Fastest Growing Private Companies list in the Silicon Valley Business Journal. For more information, please visit www.jadeglobal.com

www.jadeglobal.com [email protected]

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Planning for Solar Installation Company

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