Repetitive Flow Manufacturing in a Discrete Environment

Did you perceive an oxymoron in the headline? Many people do and that is one of the reasons why so often software implementations (especially SAP) for the production environment do not deliver the expected results. The wrong manufacturing type is applied.

Repetitive flow manufacturing is an approach to discrete manufacturing that contrasts with batch production. In its core, repetitive manufacturing strives to introduce flow onto production lines or cells and tries to avoid waste (overproduction, cycle time, scrap etc.) that often can be associated with batch production. 

Just imagine the production of shower heads for bathrooms. It’s a discrete manufacturing style and you may either produce in batches – drill the holes for 1000 spray plates first, then attach cover plates to these 1000 spray plates and then the hoses – or repetitively in that exactly one spray plate gets drilled and then it ‘flows’ to the cover plate attachment and then flows to the hose installation (while at the same time another spray plate is drilled). In the first case you’ll end up with a discrete production order to drill 1000 spray plates, another production order for the attachment of a thousand cover plates and yet another production order for a thousand hose installations.

In the latter case, however, you’ll end up with one! order to run and manufacture 1000 shower heads whereas spray plate, cover plate and hose installations are executed in a flow-like manner, continuously over a specific period of time.

There is much more detail to this but it becomes obvious very fast that repetitive execution (and planning) in a discrete environment is a much better choice and brings about many benefits (product costing instead of discrete order costing, order management and associated reduced steps, reduction of waste according to lean principles, enhanced transparency etc.)

But let’s not get too excited. Repetitive is not for every discrete manufacturer. If, for example, you are manufacturing custom railroad turnouts and every turn needs to be engineered from scratch, you will have a hard time flowing these products through a line. But that is quite alright! You want to treat and cost each one of these orders from the customer separately.

Do you really want to do that with 1000 shower heads?

Scheduling Levels for Integrated Long, Mid and Short Term Planning

Sometimes I wonder how much flexibility, great thought and opportunity for business improvement was packed into SAP-ERP. Yes, it's not the new, flashy poster child of SAP, but it has an enormous amount of functionality and features. the key is to find this stuff and apply it correctly. Just last week I was experiencing one of those magic moments when a certain function, which I didn't give the attention it deserves, makes perfect sense to solve a problem most people think SAP is not good at solving. The function helps with planning in the long, middle and short term as I describe in a previous blog Respecting your planning horizons. 

SAP ERP provides you with the ability to plan, sequence, level and schedule on three different levels. These levels somewhat correspond to the level of detail used in the horizons long-term, mid-term and short-term. For whatever reason, these scheduling levels are not very often used to their full potential but they provide excellent features to move your plan through the periods and fine-tune it along the way. You can, as an example, use different task lists for the long term as what you’re using for the short term. Also, you may decide to perform mid and long term scheduling period and rate based,  whereas you’re planning your capacity in the short term to specific dates and hours, even minutes.

This poses some interesting opportunities for your planning efficiency. As most people stick with discrete routings throughout all planning horizons, there is the great possibility to use a rough-cut planning profile for the long term, rate routings in the mid-term and for detailed planning in the short term we can determine exact, planned execution times with a routing or recipe.

If you do this, you’re effectively planning rates and periods (like 20 pieces for August and 5 pieces for week 25) for when specific, date based planning is too far out and you are planning your order’s capacity load onto a very specific point in time with its specific output quantity for the next – let’s say – four weeks. Remember that the short term planning horizon does not equal the frozen zone. In the short term you’re still planning with planned orders, whereas the frozen zone only contains released production orders.

Task lists are assigned to a planning horizon in the production version of a material as shown in below screen shot

In above example a discrete routing (with a group counter 1 out of routing group 500000002) is assigned to short term, detailed planning. Interestingly, a rate routing has been assigned to rate-based planning which effectively describes the mid-term. Often, one comes across the notion that rate routings are only used in repetitive manufacturing. However, that is not true as rate routings provide an exquisite instrument for period and rate-based planning. They describe a production process with an output rate from the operation (quantity per time) other than a discrete routing which uses the opposite: the time it takes to produce (time per quantity) a lot size. Most people would agree that planning period and rate based in the mid-term, more closely reflects the actual business process and allows for better planning results and manageability.

The settings in above figure also suggest that for the long term (rough-cut planning) a rough-cut planning profile is used. Rough-cut planning profiles are, similar to rate routings, also meant to plan for rates in periods. But that may be the only similarity.

You define your scheduling levels, and what happens to them, in customizing for planned order scheduling. This customizing table has its own transaction code – OPU5. An example of how the scheduling levels can be set up you can see in the screen shot above.

In this example, planned orders (order type LA) in plant 1000 and maintained with production supervisor 101 (production scheduler in the ‘work scheduling’ screen of the material master), will be scheduled and loaded with capacity requirements  for the short term (Detailed Scheduling) and the mid term (Rate Based Scheduling). Note that it is a choice that we use detailed scheduling for the short term and rate based scheduling for the mid term. The decision is done by the assignment of a rate or discrete routing and the type of planning table we will be using (period or date based planning table.

No scheduling or capacity records are generated for the long term (rough-cut planning)

.

You can see the results of these choices (settings) after you run the MRP Run with lead time scheduling. In the generated planned order you will see separate tabs for each scheduling level that was planned. These scheduling records can then be used in the respective planning horizons to plan capacity with the appropriate detail and time frame.

So what's the point in all of this? I think that using scheduling levels can elevate your planning to the next level. Given that you are respecting your planning horizons and you operate in a long, in a middle and in a short term planning horizon (and you also execute in a frozen zone), you can now control the level of detail you're planning with. But more importantly, using a rough-cut planning profile for the long term and a rate routing for the mid-term - and using the appropriate planning table, you can plan periods and rates where, in the past, you might have killed yourself planning exact dates and quantities. 

As an example... at my current client we use rate routings for the mid-term and the resulting rate based orders are scheduled and capacity leveled in the tabular or graphical planning table. In fact we are doing this in Long Term Planning in a simulative mode using transaction MS05. That way we can look at periods and move the rate based orders without having to deal with all the unnecessary detail of a detailed, discrete routing. According to the need to respect the planning horizons (as described in a previous blog post), we manage demand in the mid-term and capacity level simulative planned orders until we find the perfect demand program (as defined by the Planning Scenario in LTP). Once done, we hand over that demand program to MRP so that, by use of a discrete routing and the respective detail scheduling level, exact dates, times and quantities are determined in the short term.

The beauty is, that because of our upfront work in the mid term, the demand program should fall pretty well into the available capacity profile and there shouldn't be too much work in terms of detailed scheduling to do anymore. 

Using scheduling levels might not get you to the perfect system of planning for your capacity and customer delivery service, but it may be a great step forward to a more integrated system of handling and managing your orders (using standard SAP-ERP software functionality). 

In any case, you will have to be clear about where you are planning, what you are planning for and it what timeframe you'd like to use what level of detail first...

...or like Yogi Berra said: "If you don't know where you are going, you might wind up someplace else" 

Materials Planning with SAP... available 11/30 on amazon.com

Maybe you read my blog here or maybe our paths crossed at some point in time. In any case, if we ever discussed the subject of SAP in general or Materials Planning in particular, you know that I have a strong opinion on the way people implement and use it.

More often than not an organization drops functionality and transactions on to the planner, scheduler and buyer - providing minimal (transactional) training - only to expect far better results than ever before ("hey, we spent all this money for you to have these great transactions"). I do not believe that this is working out well and think it might cause even more frustration than there was before.

That is why I wouldn't rest until I got the chance to put my thoughts down in form of a book. Thanks to Rheinwerk Publishing (formerly Galileo), Kathy Spencer, Hareem Shafi and specially Emily Nicholls I was given the great opportunity.

Because I did not want to write a technical 'transaction' book, this might be a bit different from what you expect from a typical SAPPRESS publication.

The book starts shipping November 30 and you can pre-order at amazon.com (http://www.amazon.com/Materials-Planning-SAP-Uwe-Goehring/dp/1493211978/ref=sr_1_1?ie=UTF8&qid=1444479768&sr=8-1&keywords=uwe+goehring)
Critique and suggestions are most welcome and I deeply hope that it can make a small difference to the better in your own organization...

Are you respecting your Planning Horizons?

SAP software provides excellent planning functions and capabilities. But before you can effectively use them one must define the planning horizons... some people, as I have seen often, do not necessarily mind if they're in the long, middle or short term for what transactions and tasks they perform.

As an example, it might happen that a scheduler turns a planned order into a production order several weeks or even months before production of that order starts. Or the forecast is worked by the MRP Run (and subsequently planned orders are generated) way beyond the short or even middle term.

At my current client, we have worked on a definition and rule set for planning, which I would like to share with you, so you may use it as a frame of reference if you find it useful.

Below graphic summarizes the concept and it must be said that there are two major rules valid in any planning system:

Rule of Planning #1: "There is a point in time after which planning activities end". This point in time is not today! It comes before today, exactly at the point where the frozen zone begins. Once you're in the frozen zone you are working with production orders. And production orders are supply elements that we are not planning with anymore. we're expediting on them, reschedule them, re-route operations to different work stations and react to exception messages they received from the MRP Run when actual results differ from the plan. If you find yourself looking for a tool to automatically re-assign and re-schedule within the frozen zone you either don't have a frozen zone or you're under the wrong assumption that the planning system should not only 'plan' but also fix deviations from the plan. These deviations are due to variability. And variability can only be buffered but not be planned. Especially not after it occurs.

Rule of Planning #2: "To plan your resources in the mid and long term level and manage demand - To plan your resources and sequence in the short term level, schedule and manage supply". It doesn't make sense to reshuffle planned orders in the long term. You shouldn't have any in the first place. In the long term you are working in SOP and therefore with a planning hierarchy, monthly demand figures and SOP orders that cause rough capacity requirements (and not detailed capacity requirements). In SOP you move the demand so that capacity violations are resolved. In the mid-term you should work with Long Term Planning (LTP) and its Planning Scenarios. A Planning Scenario contains a demand program which you can simulate (with simulated planned orders) for mid-term capacity planning. Here you should also work with the demand program until you find one that generates simulated planned orders which fit into your available capacity program. That is then the demand program (Planning Scenario) that you activate into the short term. Now you can run MRP on those Planned Independent Requirements and the resulting planned orders can be sequenced, leveled and scheduled in capacity planning. The latter activity was 'managing and scheduling supply' whereas the previous activities were concerned with 'leveling demand'

Those two rules we have persistently respected and followed in our efforts to build a standardized and integrated planning system everyone in the organization is using and looking at for continuous improvements.

The sales planners enter their forecast into product groups within a planning hierarchy. SOP Orders, statistical work centers and rough cut planning profiles are used to analyze the capacity situation for a horizon of 18 months out up to 5 years. Should we encounter a problem, we're moving the entire product group demand into a previous, less capacity constrained period or fill out a request for more capital expenditure to increase capacity and meet increasing customer demand.

When the leveled demand is dis-aggregated from the product group level to the actual product, we then transfer the demand profile into Long Term Planning (LTP) where we simulate various demand programs and generate stimulative supply. Requirements are determined for long lead time items and the procurement process is started if necessary. During Phase 1 of the mid term - 12 months to 18 months out in this example - we let demand changes from the SOP flow in and integrate these into the demand programs. In Phase 2 of the mid term, we perform detailed capacity planning with stimulative planned orders and find the best demand program that fits into our available capacity.

The activation of the demand program (transfer of Planned Independent Requirements into MRP) indicates the move from the mid term to the short term planning horizon. After MRP is run, planned orders are generated which we can sequence, level and schedule within available capacity on the bottleneck work center. 

The last planning activity then is to take all leveled and sequenced planned orders of, say, one week and perform a collective material availability check. Now you have ensured that all materials and the capacity is available for all the orders to be executed and you are ready to move these orders into the frozen zone. This is done by collectively converting the planned orders into production orders for the next week. From then on - within the frozen zone and into backorder scheduling - all planning has stopped. Anything that happens against the plan needs to be adjusted manually. If a work center is down, an alternative work center will have to be found and the sequence in the work order changed manually. 

This last point is especially important as I often get asked if one can automate this function. But in my personal opinion this is an impossible proposition. To actually do so one would have to build all possible cures to an exception into the basic data (production versions, alternative BoMs or routings, etc) and you can not possible do that. It is much better to have someone who is close to the exceptional situation pick an alternative and just change it into the order. 

...after all, that is the whole reason why we';re comparing 'actuals' to the 'schedule' and the 'plan'

trip report (and some personal views) from SAPPHIRENOW, Orlando May 2015

This past week I attended SAPPHIRENOW and ASUG, SAPs annual users conference in Orlando, FL By now quite an impressive event, it used to be a much more subdued meeting place for customers, partners, users and consultants. I have no idea how many people were there this year but it must have been close to the record attendance of some 20,000 in 2013. That's in stark contrast to the 500 or so that I mingled with at the Embassy Suites in the early 90's.

SAPPHIRENOW is an absolute mega event with a humongous show floor, demo labs, larger than life video screens and a demo area within which you could see how an airport or a harbour will manage their traffic in the future. All with gadget gallore... Apple iWatch, multi touch screens, huge displays etc etc. There is an abundance on demo booths, partner displays and HANA, HANA, HANA and HANA. It seems like everything is possible with HANA. As most of you know HANA is in memory computing and makes everything much, much faster and therefore opens possibilities never thought of before.

To me it looks like SAP's strategy is to move everything (and every customer) to HANA so that everyone is equipped with a basis on which modern information technology is limitless.

I like it... but what's in it for YOU? the customer! Hasso's number one priority... remember that?

Yes, there is S/4 HANA, the new ERP. Bill McDermott tells every employee, every partner and every consultant that the customers need to go to S/4 HANA. The promise is great, but sofar S/4 HANA only includes Simple Finance. I can't tell my customers to go and do that. What will ABB do with Simple Finance? And yes again, there will be development and sooner than later S/4 HANA is supposed to completely replace ERP. However, SAP already claims that the functionality will not be the same as in ERP. Its limited and there is much less standard functionality. "Are we moving backwards?", I ask. "No", is the reply, "most of the functionality will be developed by third party consultancies who provide the customers with perfectly customized functionality and solutions.

SAP as a platform instead of a standard software package? Maybe so, but when I think about that I am wondering how expensive that is going to be for the end user, the ultimate client (or has that changed? is the ultimate client still the end user??). First you pay for the software (platform) license and then you have to pay for the development, customization, process engineering. "So what's different from paying for the costly implementation?", you might ask. Think about it... All these complex transactions, processes and routines are not there any more (or to a limited degree). Do you really think that all those third party consultants (who weren't able to perfectly implement SAP software during the past 30 years) will now develop better solutions for you than SAP has done in the past? You think that those people who never understood how takt-based scheduling works in ERP will come up with a leaner approach to your repetitive lines? Do you believe that technologists who understand HANA will be able to help a materials planner develop effective replenishment policies AND develop the transactions that are necessary to monitor exceptions?

Only time will tell, but what's worrying me is that the customer does not really have a lot of options to choose from and Bill McDermott has different priorities today than Hasso Plattner did have in the late 90s.

Maybe I am now one of those old people that I thought didn't understand what was happening when I was young... maybe those HANA people will change the world. I only hope its different from what facebook, uber, whatsapp and google glass or apple watch consider valuable and revolutionary.

Report from the SAP Info Days by bigbyte in NYC

Last Wednesday and Thursday (April 22nd and 23rd 2015) bigbyte software systems inc (www.bigbytesoftware.com) organized a little conference in its offices at 88 Pine Street in downtown Manhattan. The idea was to bring together existing user with interested parties to discuss SAP's Add-On Tools for SAP-ERP software. An attendance of 35 people filled up our training room to the max and during the two days the group accomplished utmost information sharing combined with maximum interaction.

bigbyte kicked off the sessions on Wednesday morning with a presentation on how to implement a 'Model of Effective Materials Planning'. The Model includes the four pillars of
- Prioritized Portfolio Management
- Automated and Periodic Policy Setting
- Intelligent Exception Monitoring
- Sustainable Inventory Optimization
If  executed within clearly defined performance boundaries, using a policy playbook and a trained and competent Materials Planner, one should experience high service levels, low inventory holding cost and short cycle times. One particularly important statement was displayed on a single slide: "This is where the magic happens"

The slide stresses on the importance to bring together Tools to get the job done in an automated fashion, a framework of operations where performance boundaries and policies are defined with a strategy and a competent user.

Marc Hoppe from SAP Germany then focused on the 'Tool' part of this triangle and demonstrated the SAP Add-On Tools which he and his team at SAP developed over the years to further enhance, update and optimize SAP-ERP. He started out with a live-demo of the MRP Monitor for segmentation and policy update, continuing with a Safety Stock and Reorder Point Simulator, a Lot Sizing Simulator and the Inventory Controlling Cockpit, all Add-On Tool that provide a lot more automation, increase transparency and generally increase the efficiency of the SAP-ERP software.

The SAP Add-On Tool's main functions are to perform a 'Parameter Optimization', which serves as an excellent basis to make major strides towards Integrated Business Planning (or SAP's new IBP suit).

After lunch, Jim McCann from Greene Tweed presented how his company adopted some of the Add-On Tools and shared his experience with them. From his talk it became obvious that for a long time he was looking to perform segmentation and subsequent parameter optimization by class and just couldn't do it effectively in standard SAP. The MRP Monitor with its capability to do an XYZ analysis and also separate the short from the long lead time items and the ability to do a lifecycle analysis looked very promising. In combination with a Simulator that sets the Reorder Points and calculates service levels and safety stocks he made huge strides towards the effective system of continuous materials planning optimization. 

Marc Hoppe then went on to demo SCPI - the brand new Add-On Tool for benchmarking and performance measuring. SCPI stands for SAP Supply Chain Performance Index and measures performance in up to ten major KPIs. Individual KPIs are measured on a lower level and then aggregated with a weighting system. 

Day 2 started out with a bigbyte presentation on Effective Production Scheduling Methods. How can you introduce flow into your production lines? What is repetitive manufacturing with SAP and why do we sometimes forget to tel this SAP system whether the product is MTS or MTO... where some of the yopics discussed.

The Capacity Data Monitor, Capacity Requirements Monitor and the Production Controlling Cockpit wee some of the Add-On Tools demonstrated by Marc before Cheryl Jones from the Tennant Company in Minneapolis talked about her company's success using some of the Tools for over 2 years now. Her main message: "The Add-On Tools provide tremendous efficiency improvements and automation but you'll have to manage change... break down existing mental models... and instill a culture of using SAP as what it is: a tool and nothing but a tool (a great one too)"

After more demos Cristina Leahu from Cargill took center stage: "We acquired the Tools in 2011 and started to roll them out right away. But believe me, Cargill is a big company and to standardize such a 'monster' is no easy feat". She talked about the problems and issues she has been faced with the need for standardization and automation in a global company whee every plant had developed their own system and different levels of control persist. Developing Standard User Guidelines with Standard User Policies being used across the board is her answer.

Marc Hoppe explaining SCPI

The final 90 minutes of the Info Days were spent with discussions about building a users group for the SAP Add-On Tools where experiences are shared, problems are logged and solved and regular meetings are organized.

Thanks for two fun-filled and very interesting days in downtown Manhattan. I believe the SAP Add-On Tools are off for a great time in North America!

Seeing things differently...

For a long time now, I have been involved with materials planning with SAP in so many industries. We've all been trying so many functions and features available in SAP and in a long time... not much has changed with the basic view we have of how it's working.

In the beginning there was MRP, where diligent planners were exploding Bills of Material and handily figuring out ordering quantities and dates for purchased parts. This was pre-60's and nothing has basically changed since. yes, MRP II was coming to introduce capacity leveling as an additional step and doing it with computers. Then ERP integrated Materials Planning with HR, Sales, Finance and much more. eventually the new big thing of Advanced Planning Systems was trying to automate everything without human intervention. Supply Chain Management, Big Data, In Memory Computing, Cloud Computing, Mobility... (somebody stop me...) all promising a better world and none of it ever delivering any improvement on the problem at hand: optimizing the ordring process to hold perfect inventories for good availability and service levels.

Do we need another point of view? Aristotle, a long time ago, was talking about the use of simile and metaphor, and the underlying capacity to see similarity in dissimilars - as genius. David Katz M.D., Director at the Yale Prevention Center then picks up on an interesting idea in his article about 'The Obesity Fix'. What if we look at the problem in a different way and consider Health like Wealth and see obesity like drowning? All of a sudden mental models shift and break apart. If health is like wealth it becomes something we invest in and live for... Dr. Katz: "We care about it both for our own sake, and the sake of those we love. We recognize most get-rich-quick proposals as scams; we are sensible about money. We don't spend everything we have today; we think about the future, and save for it. We get financial guidance from genuine experts, not just anybody who had a piggy bank once."

And Dr. Katz continues about seeing obesity like drowning: "If instead, we treated obesity more like drowning, we would tell the truth about food. We would not market multicolored marshmallows to children as part of a complete breakfast. We would not willfully mislead about the perilous currents in the modern food supply. We would not look on passively as an entire population of non-swimmers started wading in over their heads." 

Seeing things differently is not a new concept, it's just an underwhelmingly utilized skill... Man Ray did it all the time...

...so did William Wegman with his Weimaraners Man Ray and Fay Ray

I love metaphors and looking at things differently. It gives us a desperately needed new point of view. So what about materials planning? how can we get to a better place?  what is the metaphor or simile? 

Maybe we should use the perspective of System Thinking. Looking at things more holistically and considering feedback, interaction and behavior a bit more and not being so fixated on  individual process and transactions. With it causal loop diagram provide us with a new way to 'see' whereas stock and flow charts provide a useful metaphor to interpret the behavior of agents and describe the system's structure for better interpretation and decision making.

I have been looking into the world of Thinking in Systems for a while now and am still looking for good applications in the SAP supply chain. There are some very promising features and opportunities turning up. I'd appreciate any interactions with colleagues interested in the same subject... 

SAP Add-On Tool Info Days in NYC - April 22nd and 23rd

On April 22nd and 23rd of this year we will host the second SAP Add on Tool Info Days. Marc Hoppe from SAP, Thorsten Raab from Blue Harbors and myself will present Inventory Optimization strategies, effective Materials Planning and Production Scheduling methods; all enhanced, automated and made more effective with the integrated SAP Add On Tools

Also speaking will Cheryl Jones from the Tennant Company and Jim McCann from Greene Tweed, both SAP customers enjoying the Add On Tools.

It will be an interesting, fun filled two days in downtown Manhattan.

Register today