Novozymes has previously spent a lot of time deciding when a new
production should be started and how large a volume that was needed
to be produced.
Was the start-a-new-production-signal from the SAP system caused
by a new big order; the need to keep up with the forecast; or
because some items in stock were too close to expiry date?
“We were challenged by low accuracy on our forecasts, and we had
a relatively high stock level. Management asked if we in some way
could do it differently. We tried a num-ber of things, but it
didn’t create the preferred increase in accuracy”, says Peter
Christian Graae, Strategic Project Manager in Novozymes.
Thus, Novozymes and Syncronic decided to develop a pilot project
based on the Demand Driven Material Re-quirement Planning (DDMRP)
principles to clarify, if this would bring more accuracy into the
production planning.
Easy-to-understand conceptDDMRP fascinated Peter Christian Graae
because the concept is simple and easy to understand compared to a
traditional MRP method.
After all, as he expresses it, the question is whether you would
rather start a production when you think there is an order or when
you know there is an order.
“DDMRP is a hybrid between producing to order and produc-ing to
stock and has a good fit into our supply chain. And we have a clear
decoupling point in our chain, which is why it makes sense to make
a decision based on the DDMRP principle”, says Peter Christian
Graae.
In the pilot project, which involved selected item num-bers,
Novozymes built its DDMRP-concept from scratch within a week in
Excel. In addition, one week was spent on high-level simulation.
Data originated from daily data extractions from SAP.
Novozymes CASE:
DDMRP managing
production & inventory
After a successful pilot project Novozymes is ready to implement
DDMRP in a broader part of its planning
During the pilot project a number of fine tuning of the Excel
model were carried out to optimize parameters and various types of
stock levels.
“DDMRP gives us the best from two worlds and an unequivocal
signal of when to start a new production. Today, we only produce to
order and have recalculated our safety stock”, Peter Christian
Graae concludes.
Many BenefitsThe DDMRP pilot project is still running and
provides Novozymes with many benefits, according to Peter Christian
Graae:
The inventory for item numbers covered by the pilot project has
been significantly reduced.
The inventory is more balanced regarding days-on-hand.
Planning lead time is short-ened, and the production will
only begin if an order arrives. The signal that comes through
our channel is understandable because the model is so clear. And
because the signal
is easy to understand, we can continuously focus on
improving the signal. Every day we have scheduled
a short meeting – however, this is often cancelled because we
have
not had a signal to initiate production. The concept is based on
an alert setup
based on red, yellow and green colours. We only need to respond
if something is critical. DDMRP connects tactical planning level
with
operational execution.
“It is an exciting project. I have introduced it to various
parts of our organization, who also finds the project rather
excit-
ing. And I think it is fantastic that our management has dared
to allow us to try a completely new concept”, Peter Christian Graae
tells.
Based on the success of the pilot project, DDMRP will be rolled
into SAP. From there it will control the production planning for a
wide range of Novozymes finished items.
Initially, the DDMRP model is introduced into Novozyme’s SAP
system for those item numbers that have been a part of the pilot
project. Once it is running, the remaining item numbers will
follow.
Collaboration with SyncronicThe implementation of DDMRP has been
realized in a close collaboration with Syncronic. From the start,
Syncronic was a key part of the development of the overall concept
and identification of potential benefits.
Together, both parties have continuously reflected on
experiences from the pilot project and the achieved results. And
throughout the process, Syncronic has been a sparring partner for
Novozymes.
Going forward, Novozymes has chosen Syncronic to be responsible
for the implementation of a fully integrated DDMRP solution in
their SAP APO and SAP IBP planning modules. The implementation is
expected to run for three months, followed by a roll-out of the
solution to several other product areas and locations.
SyncronicContact us:
www.syncronic.com
Novozymes CASE:
DDMRP managing
production & inventory
Start with a manageable projectIf you consider implementing
DDMRP into your own organization, Peter Christian Graae recommend
beginning with a limited-scope pilot project, that is easy to under
stand and straightforward. He finds it very important not to
overcomplicate the task. According
to Peter Christian Graae, DDMRP is particularly suitable for
items with a relatively short lead time and that has a decoupling
point, where a clear signal can be delivered. Before DDMRP is
implemented into e.g. SAP it would be appropriate to make some
experiences by building up the pilot project in Excel.
The purpose of the pilot project is to gain some experiences and
results, which makes it easier to explain the concept and achieve
support from the rest of the orga-nization. Furthermore, the
project participants will become project ambassadors and help drive
the change management agenda.
SYNCRONIC APS, KIRKEBJERG ALLÉ 84, 2.TH., 2605 BRONDBY, DENMARK
| +45 7020 2103 | WWW.SYNCRONIC.COM
