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Innovative Supply Chain and Manufacturing Production Systems. For Presentation to the Annual Meeting of the Institute of Industrial Engineering Montreal , Canada June 1 , 2014 Martin M. Stein, D.Sc. martin.stein@comcast.net 617-755-1960. - PowerPoint PPT Presentation
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Innovative Supply Chain and Manufacturing Production Systems
For Presentation to the Annual Meeting of the Institute of Industrial EngineeringMontreal, CanadaJune 1, 2014
Martin M. Stein, D.Sc. martin.stein@comcast.net 617-755-1960
© Competitive Capabilities International
Integrative Improvement Systemwww.etracc.netinfo@ccint.net
The Toyota Production System and Proctor and Gamble’s, IWS
The Toyota Production System created a new form of management where culture change and climate in the organization were fundamental elements of production process control
Proctor and Gamble’s, Integrated Work System, is a major advance over TPM, with linkages to the supply chain. Plants are now able to produce product in response to inventory shortages.
Competitive advantage will require the expansion of internal capabilities and the rapid transfer new programs globally including for use by potential acquisitions and new plants.
Internal Capability will permit the use of internal resources that implement best practices on a step by step basis. The availability of a road map for implementation will provide an efficient and effective process for guiding companies toward excellence in supply chain and manufacturing.
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Creating Leadership Opportunities for Culture ChangeThe TRACC System provides new opportunities for leaders to harness
the organization’s energy for culture change.Cross-functional teams become engaged in problem solving at all
levels. Situational problems are solved by teams of front-line workers supported by technical staff members. Systemic problems are supported by supervisors, managers and technical staff who are dealing with recurring issues so they are not repetitive. Strategic challenges are surfaced by the mid level teams who identify barriers to strategic implementation.
The TRACC System contains several modules that drive culture change and organizational development. The Leading and Managing Change module is designed to create a holistic overview of the organization and is extremely important for companies with silo organization structures. Enablers also are included in the Human Capital Module where human resources, competency testing and professional development implementation actions required by culture change are provided.
The End to End, Demand Driven Organization Model (Stage 4 and 5) requires integration of business planning and the creation of a Center of Excellence that also facilitate culture change.
3
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Benefits of Integrating Manufacturing and Supply ChainCoordination of supply and demand is a critical element in the design
of an end to end, demand driven value network.The most advanced companies such as Procter & Gamble have
recognized that there are significant potential benefits form integrating supply and demand planning.
The savings potential from manufacturing at P & G was $ 1B but when the supply chain opportunities were incorporated, savings potential tripled to $ 3B!
The logical structuring and systematic approach for continuous improvement that is required for a manufacturing process can be extended to include and integrate the supply chain components such as logistics, customer service and warehousing.
The latest version of the TRACC system has been expanded to include 11 additional modules for Supply Chain components. The combination of these to the 11 components for manufacturing, now create a comprehensive set of 22 that include over 1300 best practice staged and structured implementation actions.
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TRACC provides the platform for sustainable performance improvement for a balanced set of metrics
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Practice Maturity
Perf
orm
ance
CLASS
WORLD
68%
77%
24%
3.01.63 years
90%
23%
Perfect Order
SC Cost as % of Revenue
68%
90%
26%
21%
Deliver 20% More Perfect Orders…
…hold a thirdless inventory…
72 Days
54 Days
…have lower SC costsequal to 5% of revenue
Leaders and Laggards85%
21%
72
65
54
58Days of Inventory
Example adapted from AMR research and CCI results
26%
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Integrative Improvement Systemwww.etracc.netinfo@ccint.net
The TRACC offering is functionally initiated and ensures integration and alignments to Strategic and Operational Enablers
Return
Source Deliver
Strategy
Align Transform
Plan
Make
Operational Enabler Organisational Enabler
SUPP
LIER
CUST
OMER
Supply Chain Strategy Workshops
Supply Chain Alignment
Leading and Managing Change
Demand Planning Sales & OperationsPlanning Supply Planning
Integrated Business Planning
Procurement Health and Safety
EnvironmentalSustainability
5S
Teamwork
Visual Management
FocusedImprovement
Autonomous Maintenance
Asset Care
Set-up TimeReduction
Quality
Warehouse Management
TransportManagement
Administrative Excellence
TransactionalExcellence Human Capital
InnovateProduct LifecycleManagement
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TRACC stages: The maturity growth is defined over 5 stages and the implementation sequence ensures sound foundations
Disconnected Basics established
• Misaligned• Ignorant• Fragmented• Controlling• Crises
Management• Fire fighting• Unclear strategy• Unclear goals• Undefined• Silo approaches• Ad hoc
Competent
• Identify• Selective
adoption• Recognition of
waste / value• Risk awareness• Value articulated• Prioritisation• Stabilisation• Clearly defined• Initial awareness• Understanding of
root causes
• Standardised• Integrated• Deployed• Knowledge
Expert• Consistent• Competent• Clear / focused• Available• Business process
driven• Addressing Root
causes
Aligned Excellence
• Simplicity• Sharing
Collaboration• Visibility• External /
Internal• Culture of
learning• Improvement• Best in the class
within industry• Eliminating root
causes of problems
• Culture of teaching
• International benchmarking
• Resilient• Virility• Dynamic• Predictive• Orchestrating• Shaping• Confidence &
Trust• Advanced
detection
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
DisconnectedBasics established
Competent
Aligned
DDVN
Stage 5
Stage 1 Stage 2Stage 3
Stage 4
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Planning TRACC’s: The Maturity Pathway
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Shaping
No Insight Functional Forecasts
Consensus Forecasts
DEMAND PLANNING
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
DisconnectedBasics established
Competent
Aligned
DDVN
Stage 5
Stage 1 Stage 2Stage 3
Stage 4
SUPPLY CHAIN
Disarray Basic Plans Reliable PlansSUPPLYPLANNING
Fragmented and Reactive
Rudimentary Integration
Aligned and Focused
SALES & OPSPLANNING
Sensing
INTEGRATED BUSINESS PLANNING
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Decision-making in Planning TRACC’s
9
DP
IBPSP S&OP
SCA
S&OP
DP
SP
Supply Chain Alignment• Determine customer segmentation and differentiated internal supply
chains• Network configuration decisions with regard to manufacturing facilities,
sourcing locations, distribution centres and routes• Collaboration decisions with regard to 2nd and 3rd tier customer and
suppliers• High capital investment decisions• High importance and high complexity• Long term — 3 to 5 years• Broad impact on entire internal and external supply chain and
organisation
Integrated Business Planning• Set direction and priorities for business• Decisions aimed at closing gap between supply chain
plans and financial objectives• Decisions on new products, new markets and new
improvement projects• Risk and opportunity based• High importance and high complexity• High investment decisions• Medium to long term — 18 to 24 months
Sales and Operation Planning• Balancing demand and supply• Controlling inventory• Product portfolio management• High-level capacity constraint decisions• Decision on reaching consensus on demand and supply
plans• Medium term — 6 to18 months• Execution of strategy
Supply Planning• Constrained supply plans• Finite capacity plans• Daily, weekly, monthly• Rough-cut plans — 18 to 24 month
horizon
Demand planning • Consensus demand plan• 18 to 24 month horizon
© Competitive Capabilities International
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Planning TRACC’s: Integration drives consolidation of Information and timing
CustomersSupplier
Strategic PlanningSupply Chain Alignment TRACC
CollaborationColla
bora
tion
Marketing and Sales planning
Demand Planning and Communication
MATERIALS PLANNINGMaterial Planning (MRP)
Material Releasing
CAPACITY PLANNINGResource Planning (RP)
Rough Cut CapacityPlanning (RCCP)
Capacity RequirementsPlanning (CRP)
Finite Loading
PRODUCTION PLANNINGProduction Planning (MPP)
ProductionScheduling (MPS)
FiniteScheduling (FPS)
DEPLOYMENT PLANNINGInventory Planning (IP)
Distribution DeploymentPlan (DRP)
Medium Term(weeks or months)
MaterialPlans
Short Term(days or weeks) Vendor Schedules
Medium Term(weeks or months)
Resource Availability
Short Term(days or weeks)
RCCP Plans orInfo
Short Term(weeks or months)
Requirements Capacity Plans
Medium Term(weeks or months)
ProductionPlans
Short Term(days or weeks)
Production Schedules
Short Term(hours or days)
FiniteSchedules
Medium Term(weeks or months)
Inventory Targets
Short Term(days or weeks)
Deployment Requirements
Make (Convert)Supply Demand
Customer-driven Supply Chain (i.e. pull based)
Purc
hase
ord
ers
Sales and OperationsPlanning TRACC
Shipment History
Business unit plansand budgets
Price plans, promotionschedules, etc.
Sales forecast
Sales forecastSales forecastSales forecast
Procurement TRACC
Cons
umer
ord
ers
Order Fulfilment TRACCWarehousing TRACCTransportation TRACC
Supply Planning TRACC
Demand Planning TRACC
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Case Study: Kellogg Latin America
Kellogg Latin America consists of 8 plants in Mexico, Brazil, Venezuela, Ecuador and Colombia. At present, 7 of these plants are utilizing the manufacturing TRACC system.
Recently, Kellogg Latin America, has added Supply Chain Alignment, Demand Planning, Supply Planning and Sales and Operations Planning modules of the expanded TRACC system for Supply Chain.
This region will be the first region at Kellogg’s to launch the Supply Chain modules.
In 2013-4, task forces will be organized to implement the Stage 1 to 3 Implementation best practices.
Initial conclusions are that there will be organizational change required to move to the end to end demand value based network.
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Implementation Philosophy
Operations excellence systems must show results by improving hard KPIs or they will lose support before they are embedded in the culture.
CLASSWORLD
Practice
Perf
orm
ance
Back of the pack
Stragglers
Can't go the distance
Contenders
Promising
Defining what 'good' lookslike and monitoring best practice implementation ensures a focus not oncurrent performance, but on long-term, sustainable market-beating performance.
X
Y
1 2 3 4 5
Embedding best practices underpins lasting performance. World class organisations drive performance improvement by standardising practices and continuously improving these standards.
12
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Case study: SABMiller - Practice Performance Ranking(presented at public conference)
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Case Study: SABMiller – Energy Usage (presented at public conference)
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Low
Hig
h
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Case Study: DuPont Production System (presented at public conference)
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Our DPS System (powered by TRACC) has returned $2 billion backto the business in the last two years.
DuPont:The TRACC Integrative Improvement System is the backbone for theDuPont Production System globally.
Paul Mocniak,Program Manager, DPS TRACC, DuPont, USA
© Competitive Capabilities International
Integrative Improvement Systemwww.etracc.netinfo@ccint.net
Case Study: DuPont integrated Improvement Approach (presented at public conference)
DPS Vision statementEveryone, everyday in pursuit of
Operations Excellence enabling DuPont to win in a dynamic world
Current and future
requirements for capability
and performance
Required business outcomes
Managing process
Keep focus on what really
matters, with the right people
Technical model
Applytools and
practices to drive focused improvement at all levels
Capability building
Insure the right skills and
coaching
Mindsets and behaviours
Aligncultural norms
with the organisation's vision, mission
Brought in to supportand sustain all aspects of DPS
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Case Study: Heinz integrated Improvement Approach (presented at public conference)
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Example: Quantification and Opportunity Prioritisation
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Performance Assessment$ Opportunity
Practice AssessmentHow sustainable are
your current practices?
© Competitive Capabilities International
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9
Phase 3: Performance Management Control LoopsExample
Hour Shift Day Week Month Quarter Year
CorporateVP SC
SiteSite manager
DepartmentDept manager
AreaTeam leaders
Process - LineTeam
MachineOperator
1-2 hour review
P-Q-D
alignment
feedback Shift Review
P-Q-D
Shift Review
P-Q-D
Day Review
P-Q-D-C-S-M
Day Review
P-Q-D-C-S-M
Week Review
P-Q-D-C-S-M
Week Review
P-Q-D-C-S-M
Month Review
P-Q-D-C-S-M
Month Review
P-Q-D-C-S-M
Month Review
P-Q-D-C-S-M
Quarter Review
P-Q-D-C-S-M
Quarter Review
P-Q-D-C-S-M
Year Review
P-Q-D-C-S-M
P-D-C-A
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Example:Full TRACC implementation and support
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AM on shop floor Downtime trend
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Kellogg LatAm – TRACC ResultsStrong Correlation between TRACC maturity and OEE
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Practice Maturity
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Kellogg LatAm – TRACC ResultsStrong Correlation between TRACC maturity and Plant Performance
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TRACC Practice Maturity
1.6 2.2
Practice Maturity
Improvement
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Improvement Potential95%
55%
30% 53 41
1.61
2
Processing
Packaging
37%
45%
84%87%
90%
55%
92%
65%
OEE
Maturity of Practices
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Improvement Potential4%
12%53 41
1.61
2
7.0%
6.0%5.4% 5.0%
Waste
Maturity of Practices
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Kellogg Australia – Botany PlantTRACC Manufacturing Practices Overview
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Kellogg Australia – Botany Pilot Plant OEE analysis
2009
Jan
2009
Feb
2009
Mar
2009
Apr
2009
May
2009
Jun
2009
Jul
2009
Aug
2009
Sep
2009
Oct
2009
Nov
2009
Dec
2010
Jan
2010
Feb
2010
Mar
2010
Apr
2010
May
2010
Jun
2010
Jul
2010
Aug
2010
Sep
2010
Oct
2010
Nov
2010
Dec
2011
Jan
2011
Feb
2011
Mar
2011
Apr
2011
May
2011
Jun
2011
Jul
2011
Aug
2011
Sep
2011
Oct
2011
Nov30
35
40
45
50
55
60
65
70
OEE OEE
Moving average (OEE)
OE
E (%
)
March 2011
TRACC Starts42% to
62%
Korea Benchmark-
ing
Aug 2009K-lean
Phase 1
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The evolution from traditional CI to Integrative Improvement Systems
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3
4
5
1. No Continuous Improvement
No Continuous ImprovementPlans or structure
3. Functional Excellence
Structured implementation approachwithin the functions(Systemic)Functional
5. Learning Network
Integrative Improvement deployed across networkCulture of Innovation and Sharing of Know HowEntire Global Network
2. Expert Based
Implementation approach based onthe capability of the local expertProject
4. Integrative Improvement System
Codified and integrated implementation(Strategic, Systemic and Situational)Process
• 70% of companies are between Stage 2 and 2.5
• Companies below Stage 4 are unlikely to successfully replicate the long-term performance culture exhibited by the likes of Toyota & P & G
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Enabling Execution
The pursuit towards operational excellence to date has been characterized by functional improvements and project based methodologies such as Six Sigma and Lean. Functional excellence and pockets of Lean do not create the organization capability required to step change operational competence, particularly when applied to complex global companies. There are just too many intricate process interdependencies across the end to end supply chain.
The challenge for organizations is to manage and coordinate a sequenced and prioritized set of inter related actions across multiple functions, departments and the global network to execute strategy.
Insight
………“to improve everything”……
29
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Integrative Improvement across a global network requires a codified set of prioritized and sequenced work.
VISION
2012
2013
2014
2015
2015
A company needs to provide a prioritized, holistic and integrated set of work packages that allows each and every part of the organization to execute the many pieces of work in a synchronized way that transforms the entire organization towards process based excellence
“……everything must improve……”
© Competitive Capabilities International
Integrative Improvement Systemwww.etracc.netinfo@ccint.net
Integrative Improvement across a global network requires a codified set of prioritized and sequenced work.
VISION
2012
2013
2014
2015
2016
A company needs to provide a prioritized, holistic and integrated set of work packages that allows each and every part of the organization to execute the many pieces of work in a synchronized way that transforms the entire organization towards process based excellence
“……everything must improve……”
KWS Basics
KWS Advanced
KEY
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Relevance for Industrial Engineers?
Plant managers will be motivating change and accountability for each of the process based teams.
Decision making and priorities are facilitated by the existence of a structured approach for developing improvement in each of the critical process areas.
Metrics and benchmarks can be used to guide the teams from the changes in levels of maturity ratings to important process measures such as OEE.
Regional and central headquarters staff will facilitate the development of standardized definitions and performance measures, sharing of best practices and tracking KPI’s.
Plants that have achieved the greatest success and the greatest relative improvement will be recognized and rewarded.
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