Supply Chain in Maintenance

Supply Chain In Maintenance

Supporting

Services

Process

Operations

LPG Plant

Old Model 1

Maintenance

Warehouse

Purchasing

Transport

Finance

Old Model 2

LPG Production

Plant Sustainability

Finance Human

Resource

LPG Plant

Natural Gas Process Control Product Storage Product Loading

Purchasing & Transportation

Warehouse & Transportation

Maintenance

Activity

Asset

Reliability

Supply Chain Model

LPG Production

Plant Sustainability

Finance Human

Resource

Maintenance Quality

Accounting Production

Quality

Administration

Supply Chain

Supply Chain Processes

• SCM is concerned with the management and control of the flows of

– material,

– information, and

– finances.

• The task of SCM is to:

– design,

– plan, and

– Execute

the activities at the different stages.

Supply Chain

SCM in a Supply Network

Suppliers

Demand

Services

Cash

Information

Activity

SCOR Model Functions

SCOR Hierarchy

SC Planning

SC Planning

Execution Planning &

Scheduling Work

Request

Delivery Material

Planning & Information Sharing

Maintenance Technical Support Stakeholders Logistics Supplier

Purchasing &

Logistics

Maintenance Activity

Asset Reliability

Low Quality (Financial, Transport)

Unreliable Delivery

Poor Utilization of Resource Capacity

Accumulation of Work Orders

Increasing Backlog

No Metrics Tracking

Improvement Resisted

Additional Complexity Plant Sustainability

Integration in SC

Segmentation

Segmentation Charts

Definitions

•Response Time

–Does Requester send on short notice and expect quick service or is a longer lead time acceptable?

–Customers buying custom machinery would plan the purchase in advance and expect some lead time before the product could be delivered.

•Service Level

–Do requesters expect all products to be available for immediate delivery or will they accept partial deliveries of products and longer lead times?

–Customers who order a custom-built new machine tool expect to wait a while before delivery.

Warehouse

• A system that runs day-to-day operations of a DC.

• Controls item putaway, picking, packing, and delivery.

• Features: – Transportation management,

– Order management,

– Yard management,

– Distribution,

– Labor management, and

– Warehouse optimization

Warehouse Management Systems

Logistics & Distribution

• Logistics: getting the right material to the right place at the right time in the right quantity.

– Traffic Management:

• The selection, scheduling & control of carriers (for both internal & external materials.

– Distribution Management:

• The packaging, storing & handling of products in transit to the end-user.

Distribution System

Inventory

• Inventory is spread throughout the supply chain and includes everything from:

– raw material to

– work in process

that are held by any party in a supply chain.

• Cycle Inventory

– The amount of inventory needed to satisfy demand for the product in the period between purchases of the product.

• Safety Stock

– Inventory that is held as a buffer against uncertainty.

• Seasonal Inventory

– This is inventory built up in anticipation of predictable increases in demand that occur at certain times of the year.

Inventory Types

Min-Max Inventory Control

1. Forced-ordering system

• The trigger for ordering is the end of the review period.

2. Fixed order quantity

• The trigger for ordering is when the facility reaches the minimum level.

3. Fixed order cycle

• The trigger for ordering is the end of the review period for the commodities that are at the minimum level.

Fixed Order Quantity

TIME

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**REORDER QUANTITY (Q)

LEAD TIME (L)

MAXIMUM RATE OF USAGE WITHOUT STOCK-OUT

Q Q

STOCK LEVEL

*REORDER LEVEL POINT (A)

EXPECTED RATE OF USAGE (R)

BUFFER STOCK LEVEL

Fixed Order Cycle

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*ORDER UP TO LEVEL

**REORDER QUANTITY

Q1

STOCK LEVEL

BUFFER STOCK LEVEL

TIME

Q2

Q2

Q3

Q3

LEAD TIME (L)

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. LEAD TIME (L)

REVIEW PERIOD (T)

REVIEW PERIOD (T)

Cover period

**REORDER QUANTITY

Common Causes of Stock Outs

Quantity

Time

R

SS

L

Q Demand Uncertainty

Quantity

Time

R

SS

L

Q

Lead Time Variability

(LT = Cycle Time + Transit Time)

Quantity

Time

R

SS

Q

Supply Uncertainty

Enabling SCM

Levels of Planning

SC Strategies

•It allows engineers to purchase supplies to their requirements. •It only start activity once the work order is released. •This creates additional wait time for the requester to receive the product, •But allows for more flexible customization compared to purchasing from retailers' shelves.

MTO Strategy

Business Strategies

Implementing a state-of-the-art industry standard

Business Plan

•Low Cost •Differentiated •Horizontal Focus

Business Strategy

•MTO

SC Strategy

•Industry Standard: Asset Management

Supply Chain Management •State-of-the-Art:

Oracle eAM Excel ???

Business Plan

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource M

aste

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Bu

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P

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• Logistics

• SCM

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Mas

ter

Pla

nn

ing

Exe

cuti

on

Bu

sin

ess

P

lan

• Logistics

• SCM

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Mas

ter

Pla

nn

ing

Exe

cuti

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Forecasting

Bu

sin

ess

P

lan

• Logistics

• SCM

Principles of Forecasting

• Forecasts are usually wrong.

• Every forecast should include an estimate of error.

• Forecasts are more accurate for families or groups.

• Forecasts are more accurate for nearer periods.

Deterministic Probabilistic

Forecasting Influence

• Forecasting errors can increase the total cost of ownership for a product

- inventory carrying costs,

- obsolete inventory,

- lack of sufficient inventory, and

- quality due to accepting marginal products to prevent stock out.

Forecasting Benefits • Essential for smooth operations of business organizations,

• Estimates of the occurrence, timing, or magnitude of uncertain future events,

• Costs of forecasting:

– excess labor;

– excess materials;

– expediting costs;

– lost revenues.

Forecasting Estimates

• Predicting future events,

• Usually demand behavior over a time frame,

• Qualitative methods

– Based on subjective methods.

• Quantitative methods

– Based on mathematical formulas or statistical methos.

Demand Behavior

Demand Behavior

Time (a) Trend

Time (d) Trend with seasonal pattern

Time (c) Seasonal pattern

Time (b) Cycle

De

ma

nd

De

ma

nd

De

ma

nd

De

ma

nd

Random movement

150 –

125 –

100 –

75 –

50 –

25 –

0 – | | | | | | | | | | |

Jan Feb Mar Apr May June July Aug Sept Oct Nov

5-month

3-month

Actual

Ord

ers

Month

• Average several periods of data.

• Dampen, smooth out changes.

• Use when demand is stable with no trend or seasonal pattern.

Moving Average Method

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 – | | | | | | | | | | | |

1 2 3 4 5 6 7 8 9 10 11 12

= 0.50 Actual

Ord

ers

Month

= 0.30

• Averaging method

• Weights most recent data more strongly

• Reacts more to recent changes

• Widely used, accurate method

Exponential Smoothing Method

Forecast Control

• Reasons for out-of-control forecasts

– Change in trend

– Appearance of cycle

– Weather changes

– Projects

– Outsourcing

– Politics

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Mas

ter

Pla

nn

ing

Exe

cuti

on

Operations Planning

Forecasting

Bu

sin

ess

P

lan

• Logistics

• SCM

•Plant Manager, •Supply Chain Manager, •Maintenance Managers, •Master Scheduler, •Accounting Manager, •Logistics Manager, and •Materials Manager.

Participants

Make to Stock Make to Order

•The purpose is to update the plan (demand, operations, finances) as a result of changes in the external and internal environments.

–Even though the logic of OP is simple, implementing is not.

–Implementing it requires people to make changes and to do some aspects of their jobs differently.

–It will take an investment of time to fully digest and become comfortable with the new methods because this is not an extension of past experience.

Meeting

The First Meeting

•It is intended to be primarily a learning experience. •It won’t be perfect and may not even be highly polished

–we may not have all the data we need,

–We are working to get all the data, but

–we do not want to delay the implementation by waiting for data. •The frequency and timing should be aligned with financial processes.

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Rough-cut Capacity Planning

Mas

ter

Pla

nn

ing

Exe

cuti

on

Operations Planning

Master Schedule

Forecasting

Demand Management

Bu

sin

ess

P

lan

• Logistics

• SCM

Production Chasing Strategy

Production Leveling Strategy

RCCP

Demand Management

Master Schedule

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Rough-cut Capacity Planning

Mas

ter

Pla

nn

ing

Exe

cuti

on

Capacity Requirements

Planning

Operations Planning

Master Schedule

Material Requirements

Planning

Forecasting

Demand Management

Bu

sin

ess

P

lan

• Logistics

• SCM

CRP

Calculation Work Load

MRP

• Planner

• Mgr

• SE

• JE

Manufacturing Planning & Control (MPC)

Material Demand Resource

Resource Planning

Rough-cut Capacity Planning

Mas

ter

Pla

nn

ing

Exe

cuti

on

Capacity Requirements

Planning

Capacity Control

Operations Planning

Master Schedule

Material Requirements

Planning

Production Activity Control

Final Assembly Schedule

Forecasting

Demand Management

Distribution Requirements

Planning

Bu

sin

ess

P

lan

• Logistics

• SCM

DRP

•It organizes inventory requirements on central supplies

Distribution Requirements

Planning

Warehouse Weekly List

Purchase Weekly List

Finance Weekly List

Transport Weekly List

PAC & FAS

•It is responsible for executing the master schedule and the material requirements plan. •It takes the form of I/O control and WO sequencing on a daily basis. •It creates and monitors the FAS on a daily basis.

Capacity Control

•It measures WO completion and compares it with the capacity plan. •It determines if the variance exceeds pre-established limits. •It takes corrective action to get back on plan if limits exceeded. •It is carried out on a daily basis.

Boundaries and Definitions • Define all system components and boundaries.

– WO Boundary,

– Inventory delivery nature,

– Metrics,

– Responsibility assignment,

– Planning phases frequencies, and

– etc.

A Framework For Managing The Supply Chain

1 Develop a supply

chain strategy

2 Gather supply

chain information

3 Develop effective partnerships and

alliances

4 Pilot new supply chain solutions

5 Organize for supply chain performance

6 Develop

measurement system for supply chain

performance

• Develop a supply chain strategy

– Service level requirements,

– Plant and distribution network design,

– Inventory management,

– Business processes,

– Organizational design and training requirements,

– Performance metrics and goals.

A Framework For Managing The Supply Chain

• Pilot new supply chain solutions

– Successful supply chain improvement including

• Involvement of key stakeholders, suppliers, requesters and employees,

• Selection of scope and environment, focusing on avoiding risk,

• Identification of the key questions that the pilot must answer.

A Framework For Managing The Supply Chain

• Develop measurement systems for supply chain performance

– On time in full,

– Internal defect rates,

– Cost reduction,

– Stock turns,

– Order to delivery lead time,

– Flexibility.

A Framework For Managing The Supply Chain

Implementation Timeline

May

Jun

Jul

Oracle Setup

Implementation Timeline

May Jun Jul Aug Sep Oct Nov Dec Jan Feb

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