PowerPoint Presentation

OVO. Supply Planning. By – Dr. Amol Khedkar.

Recap – S&OP process, Activities performed in S&OP Supply planning and strategic fit – steps, processes & obstacles Master Production Schedule Bill of Material Materials Requirement Planning Common Obstacles in Supply Planning Determinants of supply Decision making under demand uncertainty & variability Aggregate planning & aggregate planning strategies Types of manufacturing environment VMI Purchasing vs Procurement Role of a supply planner.

Sales and operations planning (S&OP) is monthly integrated planning process that aligns demand, supply, and financial planning..

Executive S&OP Business leaders are Owners of the step. • Present the consensus plan and get management buy-in Process metrics presented, input/advice received, actions notedl The final product is One Forecast, aligned Data Collection and New product planning • Sales History, customers forecast input, sales & Marketing teams input. • Product planning — Launching & Phasing out • Ownership -i Product Management team between S&OP and Finance Consensus All functions review demand plans, supply response. All functions agree on One plan • Ownership — Mid level Management • Co-ordinated by demand and Supply planners. Executive Data collection & New product plan S&OP Stepwise Ownership Consensus .1 Demand Planning Supply Planning Demand Planning • Inputs received, consolidated, analyzed, Outlier Management and rolled-up plan prepared for supply review Ownership Sales Management • Co-ordinated by Demand Planners Supply Planning Demand plan compared to current capacity and inventory plans • Gaps and actions defined to meet demand. • Rough cut Inventory and Capacity plan created to align with Demand plan • Ownership Production / Operations Management.

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Approved Demand Plan  supply planning process starts post an approved demand plan. T.

Heavy Equipment / Engineering Industry - Operations Clipart - Free Transparent PNG Clipart Images Download.

Heavy Equipment / Engineering Industry - Operations Clipart - Free Transparent PNG Clipart Images Download.

Heavy Equipment / Engineering Industry - Operations Clipart - Free Transparent PNG Clipart Images Download.

Material Resource Planning Plans items that have "dependent" demand Demand is passed down because of the need to produce an item MRP is run daily to expedite parts required to produce the plan Master Production Schedule Plans items that have "direct" demand (or independent demand) Demand is directly from customer requirements (or forecasted requirements) MPS is run weekly based on orders and forecast for that period.

Interlink. Customer Orders. Sales Forecast. MPS. BOM.

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Yan . —Suzhou uzhou Jiaxi Ha hou Shao x i a i Zhou n zhou.

Price of Related Goods (as per law of supply) The law of supply states that the supply increases as the price increases, and falls when prices fall . (ex. Java Phones vs Android Phones) For an instance if farmer can produce wheat, rice and Soya bean at same cost – Let’s say that the price of wheat rises. Hence, it becomes more profitable for firms to supply wheat as compared to corn or soya bean. Hence, the supply of wheat will rise, whereas the supply of corn and soya bean will experience a fall. Price of the Factors of Production Production of a good involves many costs (land, labor, capital and raw material, transportation). If there is a rise in the price of a particular factor of production, then the cost of making goods increase . Ex. - rise in the cost of land will have a large effect on the cost of producing wheat / rice State of Technology Technological innovations and inventions tend to make it possible to produce better quality and/or quantity of goods using the same resources. Therefore, the state of technology can increase or decrease the supply of certain goods . Example – Farming through animals vs through farming equipment's.

Government Policy Commodity taxes like excise duty, import duties, GST, etc. have a huge impact on the cost of production. These taxes can raise overall costs. On the other hand, subsidies reduce the cost of production and usually lead to an increase in supply . Number of sellers: More sellers in the market increase the market supply . Example – Sellers of Android phone vs sellers of Java phone. Expectation for future prices: If producers expect future price to be higher, they will try to hold on to their inventories and offer the products to the buyers in the future, thus they can capture the higher price. Other Factors There are many other factors affecting the supply of goods or services like the government’s industrial and foreign policies, the goals of the firm, infrastructural facilities , natural calamities, market structure, natural factors etc ..

1. Maintain transparent, proactive relationships with your suppliers. Ensure your key suppliers have full visibility in your projected demand, preferably in real-time, to secure inventory for building safety stocks. Having good visibility of both demand and supply enables an organization to manage demand signals more accurately 2. Activate alternate sources of supply. If you have multi-sourced key inputs, move quickly to activate secondary supplier relationships and secure additional critical inventory and capacity. 3. Reduce lead times. Long lead times increase the probability of supply discontinuity, so find ways to reduce lead time from sources of supply. It also allows you to react quickly to changing demand..

4. Timely update inventory policy and planning. Timely review and adjust inventory and capacity – ensure better handling of demand variability, most companies won’t have inventory buffers for the magnitude of disruption caused by external factors. 5. Use S&OP to align demand & supply - Effectively aligning demand management with supply management enables both business functions to quickly react to changing realities.

MTS: (Make to Stock) Product made to a forecast before any committed orders come in. Example – Maggie, Parle G Biscuits. MTO : (Make to Order) Products not held in inventory. Raw material buying, manufacturing & assembly after a committed order comes in. Example – Make to order furniture's. ATO : (Assemble to Order) Product where raw components are held in stock and the finished product is assembled after the order comes in. Example - Personal computers (Stocks of motherboards, graphic cards, processors, monitors, keyboards) ETO : (Engineer to order) Complex structures and customer specified projects which were never built before and make it impossible to be handled with standard variations. Example – Construction of Bridge, Construction of house..

Brief comparison of all 4 strategies Make to Stock Finished good is stocked Enginnering is complete Delivery is possible on same or next day. Assemble to Order Subassemblies / subcomponents are stocked Engineering is complete but configurations may need design specification Delivery is possible as per capacity. Make to Order No Finished good or No Engineer to Order No Finished good or No Subassemblies/subcomponen Subassemblies/subcompon Delivery Lead times ts are stocked Engineering is complete but configurations may need design specification Delivery is possible as per capacity. and stocked products •s FG Start after getting customer Start after cust«ner ents are stocked Engineering is Required Delivery is possible as per capacity. Make to Stock Assemble to Order Make to Order Engineer to Order Start after cust«ner Design Inventory (Raw or Purchase subassemblies) Assemble / Manufacture Inventory Shipping (Finished Goods).

Aggregate planning defines the necessary production inputs for a good or service (including facilities, workforce, raw materials and inventory levels ) to maintain consistent delivery dates, all while keeping costs down Aggregate planning is a method for developing an overall manufacturing plan that ensures uninterrupted production at a facility . Aggregate production planning typically is applied to a 3- to 18-month period. It defines The quantity to be outsourced / subcontracting of items overtime of labor, numbers to be hired and fired in each period and the amount of inventory to be held in stock and to be backlogged for each period are decided..

Level Strategy Keep a level workforce throughout the planning period, thereby maintaining a constant production capacity May produce backorders Avoids firing, hiring, and training costs Chase Strategy Adjust production capacity to match demand possibly by hiring/firing workers Avoids backorders May incur firing, hiring, and training costs Combination Strategy Some combination of the Level and Chase strategies Reduces backorders Reduces firing, hiring, and training costs.

Vendor managed inventory (VMI) is a supply chain agreement where the supplier takes control of the inventory management decisions for the seller or retailer ..

Procurernent Purchasing Identify a need Research and source supplier Create supplier list Issue RFQ Evaluate supplier quotes Build supplier relationship Analyse KPIs and margins Perforn• quality check Receive product/service Negotiate contracts Receive purchase requisition Evalute received RFQ Create Purchase Orders Process payrnent to supplier QA Of product / service Receipt of product / service.

Setting & assessing the required inventory levels and storage capabilities of the business . Keeping right inventory at right time. Reducing Excess and Obsolete inventory. Counting and tracking inventory across multiple locations. Collaborating with vendors for flawless deliveries, cost negotiations. Collaborate with demand planners for approved demand and adjustments in supply plans. Planning production requirements and coordinate with production to ensure for flawless production capacity. Creating inventory reports and presenting suggestions to the supply chain leadership.

111 VII. Thank You !!.

Best practices for supply planning forms a supply structure that satisfies the demand effectively and efficiently by Maintenance of stock levels / policies, production and sourcing parameters (lead time, minimum order quantities, lot sizes, etc.). Vendor-managed inventory, strategic partnerships with suppliers and third-party manufacturers. Inventory visibility and flexible manufacturing to minimize the effects of demand volatility.

Function or department of the organization that plans, acquires, stores, moves... and controls the resources and the flow of materials required for production, assembly or for direct use of customer Material management is the planning, directing, controlling & co-ordination of all those activities concerned with material and inventory requirements, from the point of their inception till their availability into manufacturing process.

Key Challenges in Materials Management function Supply discontinuity Breakdown of information flow Demand and supply uncertainty Lower inventory turnovers Inventory accuracy Inaccurate forecasts Excess and obsolete Inventory Inflexible capacity On time deliveries from supplier inventory assortment and classification methods Inventory holding costs.

Objectives of Materials Management.