Sunday, December 11, 2016

Planning for the unknown

As I am working with clients on their planning system, we usually roll out planning horizons, planning hierarchies and planning strategies in order to provide a framework for the planners by which they can repeatedly anticipate actual demand and plan for it ahead of time.

However, at a worrisome rate, I find out all too often that such a system does not exist at all. Planners seem to think that because its impossible to figure out exactly what's coming, we better wait until it's happening. Especially when we're in the business of highly customizable products, we tend to hold off on planning capacity, materials and labor requirements until we have a better idea what the customer wants. That is dangerous and downright inefficient. Luckily, we're not in a life or death situation with these orders, so we'll get by without planning. It just costs us a lot of money and time.

But imagine the same thinking would be applied in more serious, life threatening situations. Put yourself on a flight from Newark to LA. You just boarded and settled into your seat when the captain and co-pilot engage with the board engineer and the crew in the middle aisle to discuss weight and balance of the airplane. The discussion might go something like this: 

Flight attendant: "Today we have 80 passengers, which fills the plane to 65% "
Pilot: "How's the weight distributed"
Flight attendant: "most of them are seated forward cabin"
Engineer: "if the weight isn't distributed evenly, we might crash into the forest behind the end of the runway because we can't take off... and if we take off we might have a real disturbing flight behavior by the airplane"
Co-Pilot: "yeah, I had that on a flight into Fort Lauderdale last year and we had to rig the airplane nose up for the entire flight, which burned so much fuel we almost ran out"
Pilot: "That's not good... so let's see how we can distribute the passengers a bit... how about the luggage below?"
Flight attendance: "that's done. I don't know where they put it?"
Pilot: "hey guys, that's really scary but we have to get these customers to their destination, otherwise we get a bad track record for on time delivery. Let's just go and hope for the best"

I don't think you would want to eavesdrop on a conversation like that. And don't worry, this kind of talk never happens on an airplane (I hope) because flight crews are obligated to plan ahead, anticipate what could happen and put policies in place for eventualities.

But why do we only do that when life is on the line? Can't we take financial and competitive situations seriously enough so that it warrants good planning?

I dare you to take a long hard look at your planning and compare it to that of a situation as described above. There is no excuse to not reserve capacity and to not balance the production line, spreading out the work (whether it comes in exactly like you anticipated or not) evenly... to put buffers in place (inventory, capacity and time) by which you quote delivery times... and work with a set of policies that get you to operate at the edge of your possible performance boundaries... no matter what exact situation plays out later.

Be prepared... it pays off whether lives are saved or (only) your customer service is improved.

Saturday, December 10, 2016

implementing #S/4 HANA, #simplelogistics

In a previous blog post I got pretty enthusiastic about Hasso Plattner’s promise of making it easy to switch from ECC 6.0 over to S/4 HANA. Now, eight months later, I am spending Thanksgiving weekend at a client site which is struggling (like I have never seen before) to go live with “simple logistics” and other S/4 HANA applications. All I can help with is to define a process for the generation of a production schedule that they need to have ready before next Monday, when they plan to flip the switch. All the other technical problems I can’t help with as I am not familiar with the new S/4 HANA features (neither are any of the other consultants, I believe, as it’s a bit difficult to get documentation… to say the least). But even the stuff I know from ECC and all previous versions of SAP Logistics… a lot of it isn’t there anymore! It got cut out during SAP’s “simplification” efforts for S/4 HANA. And they “simplified” everything that wasn’t used much (not considering that the reason it might not have been used much was because it wasn’t known.

Ok… so let me understand this: good functionality was taken out in the new, “enhanced” (and more expensive) version of SAP software because it wasn’t used much? Because an MRP type V V was badly documented and very rarely taught to any user, you take it out of the feature list? Because no one was ever able to make good use of fantastic functions like picking from various scheduling levels in the production version (so that you can use different planning objects and different levels of detail in different planning horizons)… simply made unavailable? And because only few people could figure out how to use the grandiose sequencing board to schedule a flow line by takt, you disable that entire feature? How should I now schedule the final assembly line here at my client?

I find it very worrisome that for the first time in my 27 year SAP consulting carrier, I find myself dealing with a newer version that has less functionality than the old. And that is being called “Simplification”?

Oh well… as I am walking around the office, I run into (rather almost trip over) people that have spent the last 4 weeks working day and night… some going up to 4 days and nights on 3 to 4 hours of sleep. That is no “simple” feat at all!

Monday, December 5, 2016

Product Wheel Scheduling with SAP (Process Industry)

Product Wheel scheduling is a concept which allows for standardized, noise-reduced production of fast and slow moving products made to stock and made to order. It came about first as a tool to introduce ‘lean’ principle – which were thought out primarily in the automotive industry – to process manufacturers. Product Wheels find now widespread acceptance in the chemical, pharmaceutical and food processing industry as it allows for the scheduling of large batches and considers the difficulties with switching over from one product batch to another.
There are some specifics to be considered when using the product wheel in the process industries and, with this writing, I’d like to provide you with some ideas on how a product wheel could be configured into SAP.

What is Product Wheel Scheduling?

If your company is a process manufacturer, you most likely mix, blend, cure or otherwise process your products on a production line. One of the characteristics of processed products is that you can't disassemble them. An automobile you can usually 'unscrew' and put the components back in inventory (even though that is not true 100%, it is an approximation to generalize the difference between process and discrete manufacturing).
Also, in process manufacturing you may have by- and co-products; unfinished yield that may be re-introduced into the process. And you often can't predict what exactly comes out of the process. So you have to work with ranges (of specifications) and chemical formulas. All of that is provided with recipes and process orders in PP-PI. As "lean manufacturing" came primarily from the automotive industry, process manufacturers always asked the question if they can reduce waste as well. Why not? You cannot introduce 'one piece flow' but that's not the only lean principle. Why not heijunka level a production program or make every product every interval (EPEI)?
Peter L. King has written a book, “Lean for the Process Industries. Dealing with Complexity”, which beautifully translates all the 'automotive lean principles' to process manufacturing. One of the most interesting ideas is the 'product wheel' is that it represents heijunka for processed products. Products wheels allow you to schedule, capacity level and sequence your production program all at the same time. It is a mixed model scheduling concept which allows you to automatically fill a processing line to it's capacity, in a setup-optimized sequence, ensuring that the smallest possible lot size is processed as many times as possible within a planning cycle.
Within this concept the circle represents the lengths of the planning cycle, each spoke is a batch size (the lengths in time to produce it) of a specific product and the gap in between represents the time it takes to setup, clean or prep the line for the next product. Note that there are spokes for MTO and spokes for MTS. The MTS spokes are planned based on a forecast, whereas the MTO spokes are reserved time / capacity which can be filled by customer requests which are made to order.

A planner will first identify how much time is available during a planning cycle to get around the wheel. If that time span is one week, we simply sequence the total forecasted quantity for all products on that line and for the week around the wheel. If, with that, we get 2/3rds around the wheel, then there is 1/3 available for MTO capacity and setup time. Peter L. King calls that open time PIT – Process Improvement Time.
The Product Wheel is a production scheduling method with its design based on average demand but it is executed to actual demand. The phases to use a Product Wheels are:
1.       Identify the location (line or line segment) on your production floor where the product wheel is to be used for scheduling
2.       Design a standard sequence using all the products which may be produced on the line
3.       Determine the lengths and periodicity of the cycle of the wheel
4.       Schedule or load the product wheel for the next cycle so that it meets planned demand
5.       Execute the schedule for the cycle according to the plan and fulfill incoming orders from inventory
The last point is of special importance as this provides adherence to the core philosophy of product wheel scheduling: produce to inventory according to a set plan in a frozen zone and fulfill actual demand from inventory which was replenished from the previous production cycle
Product Wheel scheduling brings with it transparency and insights that help to continuously optimize the way we produce. A uniform, level production schedule will maximize equipment and labor utilization, and smooth out requirements for raw materials. One of lean manufacturing’s major change in thinking is that we must take variable demand and find a way to distribute it evenly. Product Wheel scheduling does exactly that. It goes away from scheduling customer demand on an instantaneous basis, but rather integrates the variable demand into some longer time frame

 Implementing the Product Wheel with SAP

First  perform a segmentation to classify our products (the ones we manufacture) into four categories:
u  MTS high volume – every cycle - these are your front running items. You are are maintaining an inventory level which provides high availability (high service levels) to your customers
u  MTS low volume - every other cycle - these products are demanded less frequently and find their ray onto the product wheel only every other cycle or even on c, every third or fourth cycle
u  Only when inventory requirement is breached - here we are dealing with products which are demanded only from time to time. However, we cannot afford to wait with production until we have the customer order in place because our customers would no of accept to wait out the replenishment time but rather buyfrom some place else. This is why, for these products, we will keep some inventory and trigger more production based an A breach of a reorder point.
u  MTO - for products with infrequent demand which happen to be valuable, perishable and/or relatively short to replenish, we trigger production only when a customer order is present.
While performing the segmentation you’ll have to consider some determining factors that may be described as follows:
u  Cost of inventory – requires short cycles
u  Cost of change over – requires long cycles
u  Shelf life – requires short cycles
u  Short term product demand variability
u  Minimum practical lot size
Then, before you can use the product wheel for production scheduling you must define some standards. If you hold an annual strategy meeting, this is the best time to set the wheel’s cycle duration, performance boundaries and identify the places where the wheel is used for scheduling.
Once these decisions were made, one can implement the standard steps and sequence by which a planner may design and subsequently run or schedule the product wheel. Some of the steps to implement product wheel scheduling are given below.

1.       Value Stream Map – create an SAP value stream map with all master data, decoupling points and pacemaker / wheel locations
2.       Where on the floor? – decide the locations where you want to run product wheel scheduling
3.       Demand volume and segmentation – perform the segmentation as described above
4.       Sequencing – establish a changeover matrix
5.    Wheel time (cycle) – fastest, most economical, shelf life, demand variability, min lot size
6.    Wheel frequency for each product
7.    Distribute products across cycles - balance cycle to cycle
8.    Visualize wheel cycles – diagrams
9.    Calculate inventory requirements

To define the standard sequence (as suggested under point 9) proceed as follows:
A standard sequence provides a template for the actual sequence. In it we identify all products which could ever run on the line and provide a mechanism by which every actual sequence (with only those products on the schedule which are actually demanded in that cycle) will go by.
To set the standard sequence in SAP we are using the setup matrix with its fields SETUP GROUP CATEGORY and SETUP GROUP KEY. Configuring the settings to the fields in SAP’s customizing will enable us to define each product’s place in the sequence. This is done in the product’s standard routing or recipe. Go to the sequence of operations and from there drill into the details of the operation with your production line. In there you will find the fields  SETUP GROUP CATEGORY and SETUP GROUP KEY. Pick from the list of options those values which place the product you are maintaining into the right place of the sequence as shown below

For the routing displayed above we pick group “C” which places the product on top of the sequence. Next we pick the setup group key.

Value 2 is being picked here which places the product in second place within the third group “C” (which was picked as setup group category) of the sequence
If you keep on assigning setup group category (the group) and setup group key (the sequence within the group) to the routings of the materials you manufacture, you are, in fact, building a standard sequence by which these products fall into place should they be demanded and a planned order is present.
Next I’ll demonstrate how orders can be scheduled using this sequence by way of the Dispatch Sequence in SAP’s scheduling transaction CM25.

Product Wheel Scheduling with CM25

After all settings (changeover matrix, sequence schedule, routing data, material master policy) have been setup, we can now schedule the infinite supply plan, generated by the MRP Run, into a finite supply plan using transaction CM25.
As you can see below, all generated, unscheduled planned orders are visible in the order pool in the bottom window.

What we need to do is to pick the frozen zone period and schedule relevant (within the time period) orders from the pool onto the processing line. This must be done within the available capacity and in the correct sequence.
To determine the correct sequence we must use the dispatch key that uses the changeover matrix we configured in the system. This is done by way of the strategy profile.

You can now select all the relevant planned orders from the pool and push the dispatch button. This will distribute the orders in a given sequence, within the available capacity on the processing line.
The result can be seen here

Product wheel scheduling can run very automated in SAP if you put in some work upfront to set up all the relevant master data.

Friday, December 2, 2016

Production Scheduling (with SAP) for Managers - Pune, India February 25 and 26, 2017

I will be holding a two day seminar on production scheduling in Pune, India. For more info or registration please click the link below

Production Scheduling for Manager