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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 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
r P
lan
nin
g Ex
ecu
tio
n
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
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
on
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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