MPRSES8-MPSPerance.ppt

Master Planning of Resources,Session 8 Measuring Performance and Validating the Plan,Master Planning of Resources, ver. 2.0December 2001,8-2,Master Planning of Resources,Session 1: The Business Planning Process Session 2: Forecasting Demand Session 3: Demand Management and Customer Service Session 4: Distribution Planning Session 5: The Sales and Operations Planning Process Session 6: The Master Scheduling Process Session 7: Managing the Master Scheduling Process Session 8: Measuring Performance and Validating the Plan,Master Planning of Resources, ver. 2.0December 2001,8-3,Session 8 Objectives,Explain why it is important to measure demand forecast performance Identify and discuss ways in which the sales and operations planning process is reviewed Identify and discuss elements of a master scheduling policy Identify and discuss performance measures of master scheduling Identify and discuss elements of the customer service measurement process,Master Planning of Resources, ver. 2.0December 2001,8-4,Master Planning of Resources Model,Master Planning of Resources, ver. 2.0December 2001,8-5,Importance of Performance Measurements,Measurements influence behavior Cannot control what is not measured Continued business success requires appropriate performance measurements,Master Planning of Resources, ver. 2.0December 2001,8-6,Performance Measurement System,“A system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, good,service, business, etc. A performance measurement system consists of a criterion, a standard, and a measure.” APICS Dictionary, 9th ed.,Master Planning of Resources, ver. 2.0December 2001,8-7,Traditional Performance Measurements,Based on financial measurements Historically based, not future oriented ROI may not translate to all levels Financial results relatively easy to obtain Stress controlnot goal-setting Tendency toward localized goals Not always developed/implemented at all levels,Master Planning of Resources, ver. 2.0December 2001,8-8,Non-Traditional (Proactive) Performance Measurements,Relate to organizations strategic goals Incorporate key business drivers of the organization Orient toward Business processes Integration Customers Incorporate, but not be limited to, financial performance,Master Planning of Resources, ver. 2.0December 2001,8-9,Non-Traditional (Proactive) Performance Measurements (cont.),Relatively few in number Communicated and understood at all levels of the organization Developed and implemented at all levels of the organization through employee empowerment Linked to business processes which have “owners” who are accountable for process performance and improvement,Master Planning of Resources, ver. 2.0December 2001,8-10,Development of Performance Measurements,Measurements should be consistent with business strategies, goals, and vision Clarify, simplify, and determine source of data Engage all organizational levels in development Ensure strategic alignment of measurements in all levels Collect data for a trial period, review and adjust,Master Planning of Resources, ver. 2.0December 2001,8-11,Development of Performance Measurements (cont.),Establish performance goals for achievement Communicate metrics throughout organization Talk up success, encourage continued improvement Set challenges for the next performance level Periodically review metrics for relevance to strategic plan,Master Planning of Resources, ver. 2.0December 2001,8-12,Customer Service,Customer service definition Customer acquisition Customer retention,Master Planning of Resources, ver. 2.0December 2001,8-13,What Does the Customer Want?,Support Quality Delivery Service Value,Master Planning of Resources, ver. 2.0December 2001,8-14,Customer Service Measurements,Support Number of customers retained Amount of repeat purchases per year compared with total customer base Total number of customers Growth of customer base versus target,Master Planning of Resources, ver. 2.0December 2001,8-15,Customer Service Measurements (cont.),QualityInternal Metrics Defects per million Cost of quality Prevention Appraisal Internal failures External failures Hours of employee quality training Hours of unscheduled machine downtime,Master Planning of Resources, ver. 2.0December 2001,8-16,Customer Service Measurements (cont.),QualityExternal Metrics Cost of qualityexternal failures Mean time between failures (MTBF) Mean time to repair (MTTR) Number of customer Complaints Warranty claims Product recalls Number of unscheduled service calls,Master Planning of Resources, ver. 2.0December 2001,8-17,Customer Service Measurements (cont.),Delivery Percent of orders delivered on time Percent of orders delivered complete on time Value of orders delivered on time Number of past due orders Extent of past due situation Off-the-shelf availability Order cycle time,Master Planning of Resources, ver. 2.0December 2001,8-18,Customer Service Measurements (cont.),Service Number of responses for improving delivery Number of requests for delivering smaller lots more frequently Number of inquiries on order status Time to respond to order status inquiries Overall level of customer satisfaction,Master Planning of Resources, ver. 2.0December 2001,8-19,Customer Service Measurements (cont.),Value Commodities typically purchased on basis of price Value purchase considers: Quality Delivery Service Value concept:,Master Planning of Resources, ver. 2.0December 2001,8-20,Customer Service Scorecard,Master Planning of Resources, ver. 2.0December 2001,8-21,What Is the Level of Customer Service?,Item Cost In Stock PO# Order Qty 100 2500 4 #1 4 101 1000 0 #1 2 101 1000 0 #2 2,Calculate the Customer Service Measurements: Piece item fill rate Revenue () fill rate Line item fill rate Order complete fill rate,Master Planning of Resources, ver. 2.0December 2001,8-22,Fill Rate Calculation,Customer Service 50% Piece item fill rate 71% Revenue () fill rate 33% Line item fill rate 0% Order complete fill rate,Item Cost In Stock PO# Order Qty 100 2500 4 #1 4 101 1000 0 #1 2 101 1000 0 #2 2,Master Planning of Resources, ver. 2.0December 2001,8-23,Measuring Forecast Performance,Forecast accuracy Actual vs. forecast The magnitude of the standard deviation The magnitude of the mean absolute deviation Tracking signals Outliers and demand filters,Master Planning of Resources, ver. 2.0December 2001,8-24,Validating the Production Plan,Is production plan achievable? Are resources over/under- loaded? By how much and when? How will changes impact resource loads? What is the financial impact on sales, production, inventory? Should changes be accepted?,Master Planning of Resources, ver. 2.0December 2001,8-25,Measuring S&OP Performance,Review historical performance,Identify causes for variation from plan,Set targets for future performance,Ensure consistency with previous plans,Master Planning of Resources, ver. 2.0December 2001,8-26,MS Performance Measurements,Customer service measurements On-time delivery Line-item fill rate Percent of work orders completed each week Percent of weekly change to MPS Production floor interruptions due to Scheduling Supply concerns,Master Planning of Resources, ver. 2.0December 2001,8-27,MS Performance Measurements (cont.),Number of time fence rule violations per number of orders in a period Number of past due orders Backlog level Lead time reduction Inventory turns Days of supply Excess/obsolete inventory,Master Planning of Resources, ver. 2.0December 2001,8-28,Validating and Maintaining the MPS,Consistency to the production plan MPS focuses on customer satisfaction and resource optimization Forecast consumption can be used to plan for future customer orders Order promising, request/commit/recommit process must be in place Review change process must be in place MPS must be realistic and achievable,Master Planning of Resources, ver. 2.0December 2001,8-29,Validating and Maintaining the MPS (cont.),MPS must be realistic and achievable Regular review and revision is needed Master scheduler needs to use tools such as Time fences Safety stock Rough-cut capacity planning used to validate the MPS,Master Planning of Resources, ver. 2.0December 2001,8-30,Master Scheduling Management Issues,Master scheduling policy Describes organizational responsibilities Defines approval cycle for the master production schedule Establishes time fences and change management procedures Establishes methods of forecast consumption Establishes methods of forecast relief Defines forecast review guidelines Defines master scheduling techniques Order promising guidelines Make-to-stock, make-to-order strategies,Master Planning of Resources, ver. 2.0December 2001,8-31,What Is an Effective Schedule?,Production System Tradeoffs,Inventory usage (costs),Customer delivery,Manufacturing “efficiency” (schedule),Master Planning of Resources, ver. 2.0December 2001,8-32,The Goals of Master Scheduling,To balance supply and demand priorities To develop practical solutions to supply constraints To prioritize and allocate supply to customer demands To establish a strategy to avoid overloaded schedules and unbalanced conditions To create a schedule with attainable completion dates that satisfy customer needs,Master Planning of Resources, ver. 2.0December 2001,8-33,Symptoms of Poor Master Scheduling,Unreliable delivery promises Persistent past due orders Excess inventory Expediting selected orders Excessive schedule changes Upper management scheduling intervention Excessive overtime or idle time End-of-month shipping surge Front-loaded schedule Lack of accountability,Master Planning of Resources, ver. 2.0December 2001,8-34,Keeping the MPS Realistic,Adapting the MPS to changing demand conditions A