Oct

16

Getting started with Supplier Relationship Management

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While historically there has been a significant focus (rightly so) on processes and continuous improvement there is no getting away from the importance, for Supply Chain professionals, of people management skills.

Read the following sentence carefully:

Longer term close relationships deliver value (to both sides.)

That’s an important statement up there. Managed appropriately relationships between a buyer and his suppliers derive important value both monetary and strategically. Time for the next key sentence:

Relationships don’t just drive cost reduction.

While cost reduction is important it’s perhaps all too obvious route to go down. While many senior members of your organization may want to use relationship management to drive down cost superior supplier relationships do so much more.

Deeper value is derived through close collaboration, innovation flexibility and trust. Indeed, without adequate relationships in place, those benefits are unlikely to be forthcoming.

What types of relationships are there?

There are various types of relationships that can be had with suppliers – from adversarial, commercially driven ones where participants are kept at arm’s length to ones that are reflective of deeply committed strategic partnerships where business objectives and strategy are reflective of the relationship. And of course, there is everything in between.

Whilst business need (and action) are often what drives the nature of the relationship those participating in it can often set the tone and opportunities for success. Whilst it’s all well and good to talk about strategy and KPI’s it often comes down to key behaviors from senior participants in the relationship that set the way it will function.

Handled the wrong way with the wrong behaviours, it doesn’t matter how much time and effort you put in your likely to come away with little.

Supply chain relationship facilitators

As you’d expect, relationships don’t happen on their own and they need fostering. Relationship facilitators can be both participants and process.

As discussed above there needs to be a business need, a key driver in making the relationship happen but then this needs the right environment to grow.

An example of a simple but effective facilitation method is a regular business review. These things are common the world over, representatives of the buying/selling organization get together periodically to discuss the business, discuss issues, and talk about future work. This simple method of communication can be a powerful tone in that
· Senior representation underpins importance of action
· Provides a forum for both sides to be heard
· Re-enforces collaboration

This is but one of the countless tools at your disposal.

So what about your organization, does it value relationship management and development, how does it do it? We’d love to hear your feedback.

Oct

4

What are the problems with Master Production Scheduling

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In this article, we’ll take a look at some of the pitfalls around master production scheduling.

What is an MPS and where does it come from?

MPS stands for Master Production Schedule – The MPS sets the “drumbeat” of production setting the quantities of items to be manufactured in each range of time (Days/Weeks/Months) within the planning horizon.

The use of MPS as a tool is widespread in industry, it’s one of the most common methods to set production plans. However, it is not infallible and if not managed appropriately, it’ll have problems. Sometimes ones with dire consequences.

What happens when MPS goes wrong?

While there are various results from an MPS gone bad, one of the most common issues is that when the MPS fails not enough key parts (often for key customers) are produced. When it goes wrong all hell can break loose on production. For example, the sales team coupled with general management might discount the MPS and production capabilities and fall into the trap of overloading the master schedule, “make this now”, “do that next” often without the knowledge of dependencies or likely results. As a consequence, the production plan is missed and more often than not ‘prestige’ customer demands are met by high-cost overtime, racing to achieve a target that is then prone to quality issues and further issue.

So what are the likely issues that are common with Master Production Scheduling? Here’s our own top 10.

1/ The plan is not agreed

The first issue relates to the process in which the MPS gets created. Is it created from input from key departments backed up by data and facts or is it on a whim of a certain individual? Without an agreed plan bought off by all key stakeholders, you could end up building the wrong parts in the wrong quantities.

2/ The plan is not constrained

Sure your plan can say that you’ll build 10 Million widgets but do you have the resources to do it? Your MPS plan needs to be constrained with a view of key inputs (Materials, Workers, Plant + Equipment etc). Without it, it’s merely a list of wishes not backed up by any likelihood of success.

3/ Information doesn’t flow from other areas of the business

As in 1 if an MPS is successful it needs to take information from other areas of the business. An MPS is not an island, without information from Sales, manufacturing etc your plan may not be viable.

4/ Poor S&OP

MPS thrives on a well balanced and well executed S&OP process (Sales & Operational Planning). Having a cyclical review process so that the MPS remains both current and tuned helps your MPS shine.

5/ MPS is not flexible and becomes out of synch with demand patterns

Your MPS needs to stay fresh. For example what if your MPS sets out a plan that produces items that your customers no longer want? Perhaps you’ve introduced an updated model but the MPS is still churning out its vintage counterpart? Same is true with fluctuations in volume – if your S&OP works well (see point 4) then you’ll be OK.

6/ Time fences used are inappropriate

Time fences help define policy around when an MPS can be changed (i.e. within cumulative lead time). Time fences are a critical element of planning they define when things get released, helping to ensure items are built to plan. It’s ok having a wonderful MPS but if the mechanics of how it gets released to build are flawed well…..it’s going to be messy.

7/ Inexperienced MPS custodian

While MPS isn’t rocket science it does require the appropriate resource (with the right authority) to administer it. The best are likely to have a deep understanding of planning methods and principles and tend to be System Experts. That last point is often key, every ERP/MRP system has it’s own take on how MPS is executed (albeit following some common themes). Without the advanced knowledge of setting up the system appropriately and ensuring that all data needs are met could result in a dud.

8/ Actual demand falls short of forecast

We all know that demand is fluid and it changes frequently (why else would we have a forecast accuracy measure in S&OP right?) If your forecast becomes your MPS then all well and good but what happens if actual demand falls short of (or exceeds) the plan? How fluid is your planning process to compensate? The worst you can do is let your MPS go stale and not reflect actual requirement.

9/ The mix is wrong – common parts, complete assemblies etc

Your MPS is like a shopping list of the things you want to manufacture. It should cover most (if not all) of your forecast requirements. You can be tempted to focus in on those key items, ignoring the rest but if you do how will the work for those get launched?

10/ The MPS plan doesn’t get executed

You’ve gone to the trouble of creating your plan you’ve taken the inputs from your key colleagues, you’ve got the system setup correctly but your plan doesn’t get executed. One of the key reasons for this is often “well-intentioned medellers”, those who believe that they know best and the company would be best served by deviating from the plan and prioritizing resources to make something else. The only way of getting around this is to ensure that the whole organization is familiar with the MPS and that enforced through S&OP it gets signed off and mandated by senior management.

So there’s our top 10 list of potential MPS pitfalls, we’d love to hear yours in the feedback section below.