alcatel lucent planning optimization proposal presentation

Copyright © 2011 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

Accenture Proposal on ASB Supply Chain Planning Optimization(Version: 0725) July 2011

1

http://www.alcatel-sbell.com.cn/

Preface – The Context

2

• Accenture is very pleased to have this opportunity to present our observation to the

Supply Chain Planning issue and provide optimization recommendation based on strong

NEP industrial experiences.

• Through the multiple years’ engagement with ASB in critical business solution and the

investigation on ASB’s Supply Chain area (such as ‘high inventory’ issue, FP optimization)

since last November, we deeply understood the key operational issues and respective

impacts to the business outcomes that ASB is facing.

• A systematic Optimization Solution including IT (FP) enhancement and new centralized

planning model is proposed to help ASB overcome the short-term operational issues and

establish ASB own long term efficient and reliable planning capability.

• We believe that the such a planning optimization is an achievable goal under the strong

commitment of entire ASB leadership team and outstanding execution ability of joint team

between ASB and Accenture.

Copyright © 2011 Accenture All Rights Reserved.


Table of Contents

Key Findings

Solution Highlight

Delivery Approach

Appendix

3

Integrated Supply Chain Planning Framework

4Copyright © 2011 Accenture All Rights Reserved.

Customer

Telecom

Enterprise

Regional Warehouse

ASB Supplier

EE parts Suppliers

Mech. Parts Suppliers

VMI (Module Components)

Cu

stom

er Po

rtal

Su

pp

lier Po

rtal

• Proc Plan

• Committed Proc Plan

Demand Planning(Forecast

Management)

Long Term Planning

Strategic Procurement

Capacity and MaterialPlanning

Sales and Operation Planning

• Sales Order (with CRD)

• Consolidated FCST

• Annual Plan

• Consensus FCST

• Annual Plan

• Inventory

• Consensus FCST• Sales Order (with desired ETD)• B/S Supply Plan

• Proc Plan for Cell• Inventory and Transaction

(Raw Material/WIP/FG)• Capacity Profile• Sales Order (with ETD)

• Sales Order (with ETD)

• Hub/VMI Inventory

• Committed Proc Plan for Module Components

• Capacity Profile

Order Management

ERP(Transaction data: Inv, PO, SO, WO)

• Planned Order

• Sales-Out• Sales Order (Sell-In)• W/H Inv

• Proc Plan

• Committed Proc Plan• Committed Strategic

Proc. Plan

• Sales Order• Inventory• Committed Proc

Plan for Key/Critical Parts

• Capacity Profile

• Sales-Out• Sales Order (Sell-In)• W/H Inv

• Consensus FCST/AATP

• Annual Plan

• Strategic Proc. Plan

• ATPConfirmation

• ATP

• Strategic Proc. Plan• Strategic

Proc. Plan

• Consensus FCST

• Sales Order

• Inventory

• Sales Order (with desired ETD)

• PO

Master Planning

• S&OP Plan

• Master Production Schedule

• Supply Plan to Suppliers

Product Development

Corporate StrategyAccount

Management

Opportunity Management

• Account Profile/Plan• Collected

Opportunities

• Opportunity volume with win rate

• Market Trend• Tech. Roadmap• Competitor Info.

Fulfillment(ATP)

• Sales Order (with CRD)

• Pickup Date

The Accenture Integrated Supply Chain Planning Framework is adopted to assess ASB’s Supply Chain Planning, focusing on IT System Support, Operating model, Data and People.

Observation on the Key Issues (1/2)


There are several key issues identified and categorized based on the framework:A. Lack of E2E supply chain planning and control mechanismB. Complex planning logic and insufficient analytical functionalityC. Planning staff's skills are insufficientD. Low data quality and weak data governance

* The detailed issue list is provided on the next page.


Observation on the Key Issue (2/2)

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A. Lack of E2E supply chain planning and control mechanism

• Inefficient Planning Control

• Low Delivery Performance

• High Inventory

A1 - Planner lack of visibility of production execution progress

A2 - Overlapped work tasks between Supply Planner and MFG

C2 Trusting manual planning book rather than APS output

D. Low data quality and weak data governance

D1 Aging master data and transactional data result in wrong planning outputs

B. Complex planning logic and insufficient analytical functionality

A4 - Compared with short supply lead time, lower purchase price is more preferred A5 - Production plan was not executed due to lack of demand priority and capacity

C. Planning staff's skills are insufficent

B2 - Planning output has cross-feeding issue

B3 - Low performance and unpredictable system simulation results

C1 Insufficient knowledge to identify issue and trace back

A3 - MOQ (Minimal Order Qty) is not optimized for demand

D2 Lack of management process for data maintenance

B1 - RSP driven purchasing plan causes extra material inflow

B4 - Less accuracy and Issue-tracing function in Inventory Outlook tool

Root Causes List of IssuesOperation Impact

?

Lack of E2E supply chain planning and control mechanism

Low data quality and weak data governance

Complex planning logic and insufficient analytical functionality

Planning staff's skills are insufficient

Improvement Opportunities

Build Up Data Validation Mechanism

Systematic Planner’s Training Plan

Recruit experienced planning staff and Strengthen Training Execution

Analytical Tools to support Planning and Execution Monitoring

Planning Logic Optimization for RSP, Capacity Plan

Empowered (Planning) Team with required broader responsibilities for centrally planning and control

Daily System Operation Discipline and Audit


Factory Planning System Assessment and Simplification

Identified Improvement Opportunity

Root Causes

H

H

H

H

H

M

H

H

Executed by Joint Team Executed By ASBLegend

Considering the execution sequence of the improvement opportunities and the executor of each opportunity, the opportunities are grouped as ‘High’ and ‘Medium’ Priority.


Table of Contents

Key Findings

Solution Highlight

Delivery Approach

Appendix

8

Solution Map for Supply Chain Planning Optimization


Biz Requirements

are firmed


From To RSP drives Purchasing Plan ASP drives Purchasing Plan

Optimize Planning Logics – ASP drives Material Planning and Purchasing Execution (1/2)

Benefits of having Purchasing Plan based on ASP include1) Better synchronized material purchasing with semi-FG /FG production 2) Reduced risk for high inventory of material due to delay or shortage of some material (To-be-Reserved/To-be-

Available)

Corresponding change will be needed in the planning calendar: Procurement planning will be based on the ASP from DSB meeting.


Leading Practice

S&OP team Factories Sales Procurement

Optimize Planning Logics – ASP drives Material Planning and Purchasing Execution (2/2)


Cross-Feeds issues in FP were caused mainly by the conflict between priority and due date of demand orders. FP default function only can mitigate the conflict, unless by simplifying the priority or assigning material by due date only.

Optimize Planning Logics – Material Supply Logic Assessment: Cross-Feeds Issues

Planning Function Enhancement - Capacity Planning: A Complete FP Planning Cycle


2. Infinite Capacity, Finite Material Plan

3. Material Resolution:− add/delete receipts− expedite material arrival

4. Finite Capacity Balancing:− automated algorithms− manual procedures:

schedule over time, offload to alternates move work in time

6. Save Finite Material & Capacity Plan

5. Finite Scheduling− Automated algorithms− manual scheduling

1. Data Download

7. Preserve Plan and Upload Data

Planner Solve Planning Issues

SAP

A complete planning cycle includes finite material plan and capacity balancing. The most important is for Planner to Solve the Planning Issues in each stage with sufficient planning knowledge and familiarity with FP planning logic and UI.


Key work center planning method compares requirements to the available capacity at key work centers. It attempts to balance workloads broadly. In ASB, Accenture suggests that ASB only considers the constraints of critical equipment1.

Work Center 1 Work Center 2 Work Center 3 Work Center N…Routing Model for Detailed Capacity Model

Constraint of Critical EquipmentRouting Model for Key Work Center

1. One of the definition of critical equipment could be the capacity difficult to increase in 1-2 month.

Model Pros Cons

Key Work Center

1. Provide a feasible plan with capacity constraint2. Balance workloads broadly and prepare material in

consumption level3. Maintain routing data with limited efforts4. Easy to understand the planning results

1. Didn’t consider over all work centers’ situation in factory

FP Capacity Model

1. Capacity plan is detail to each work center2. Arrange over time by each work center

1. Huge efforts to maintain planning parameter for each work center

2. Difficult to explain planning result s

Planning Function Enhancement - Capacity Planning: Using Key Work Center Instead of FP Detailed Capacity Model

To Solve the Data Quality Issue, ASB need to reinforce Business Discipline and Set up Data Validation Mechanism including Process and Cross Function Team. Project team will identify Data Owners, Data Validation Process for planning related data objects .

Copyright © 2011 Accenture All Rights Reserved. 15

Business Data Generation/Updates

Business Discipline

Data Validation Process

Master data: • Purchase lead time,• Production lead timeTransactional data• Purchase order, • Sales order, • Production order

Data Quality and Competence Enhancement - Data Validation Process


A holistic user training Plan will be tailored and applied with focus on Planning team experience and skill, especially the system related skills and Planning Issue troubleshooting skills.

Time

Skill

sD

egre

e of

Spe

cific

trai

ning

con

tent

PlanningIntroduction

Process

System

Basic Supply Chain, planning knowledge training

Process level training specific to a planning function or planning cycle

Complex Scenario based training,/workshop, Leading Practice and soft skill trainings.

Tier 1 Tier 2 Tier 4

Concept focus Issue Solving FocusProcess focus

Main Responsibilities:- Create and evolve planning models- Analyse root cause for SC

performance issuesRequired skills:- Statistics- Planning- Data analysis- Coordination

Planning

Illustration

AdvancedTraining/Workshop

Transactional training of system, including master data setup, system calculation logic, data analysis and operation

System focus

Tier 3

Data Quality and Competence Enhancement - Training Plan for Planners

Solution Map for Supply Chain Planning Optimization


Preliminary Thoughts Based on Best Practice and ASB’s Issue


• Inefficient Planning Control

• Low Delivery Performance

• High Inventory



C2 Trust manual planning book rather than APS output


D1 Aging master data and transactional data result in wrong planning outputs.


A4 - Compared with short supply lead time, Lower purchase price is more preferred A5 - Production plan was not executed due to lack of demand priority and capacity

C. Planning staff's skills are insufficient




A3 - MOQ (Minimal Order Qty) is not optimized for demand

D2 Lack of Management Process for Data Maintenance

B1 - RSP driven Purchasing plan cause extra material inflow

B4 - Less Accuracy and Issue-tracing function in Inventory Outlook tool


Issue to Address by “Control Tower”

Root Causes The List of IssuesOperation Impact

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• SPD currently has no control on Production: Launch Plan is not followed

• SPD doesn’t have visibility of Production Order status

Control Tower is introduced to build in the right control on production!

A Reflection of the Issue- Weak Interlock between Supply Planning and Production

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Establish a “Control Tower” - Framework

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Focus on Production Execution based on certain SLA (e.g., production lead-time vs. actual load) Accept/commit MOs according to agreed production lead-timeConduct detailed production scheduling to fulfill MOs as

committed, considering priority set by Control Tower

• Convert PR into PO, approve the PO and place to supplier ASAP

• Monitor PO status and push for delivery on time

Aimed to deliver the goods when it is needed (to reduce inventory) and faster

Centrally coordinate supply planning and execution processes for all products, mainly by…• Having accurate and real time visibility for supply chain data/information• Driving for one feasible supply plan via effective DSB, with both material/capacity availability• Coordinating purchasing and production to realize the supply plan and managing inventory

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Coordination Mechanism to strengthen Interlock, which is enabled by…• Process steps and communication structure• Key Check Point, regular/event-driven review and decision-making cycle• R&R, KPIs, Regulation and escalation rule• Visibility of info and analytics required (e.g., capacity availability and load status)

Establish a “Control Tower” - Coordination Mechanism

21

Illustration



Deliverables for Process/Business Rule related to “Control Tower” will consist of follows:• Process Overview/Walk through (detail

activity/timing/business rule)• Process Swimlane and Activity Description

Process Swimlane and Activity Description

Key Activities, Inputs/Outputs of “Control Tower”

Process Overview/Walk through

Illustration

Illustration

Key Activities:• Generate one supply plan, aligned across BDs (DP/SPD/MML/IPL) and

modify the plan based on the latest supply/demand picture• Coordinate Material Purchasing and Semi-FG/FG Manufacturing activities

by controlling POs/MOs, and monitor status of PO/MO/Inventory, and make adjustment

• Organize regular meeting to review Inventory , demand vs. supply situation and delivery performance, and define/execute improvement actions

Inputs• Supply: Stock of raw material and Semi-FG, PO status and WIP of Semi-

FG/FG, capacity• Demand: SOs, Demand Forecast, other indication regarding customer

demand/ordering behavior, buffer stock target, customer change requestOutputs• Supply plan, Material Requirement Plan, Call-off (POs/MOs), modification

to POs/MOs/Supply Plan, improvement actions regarding excess/aging stock

Leading Practice

Establish a “Control Tower” - Process & Business Rule


A KPI “Tree” will be developed as below illustration to ensure that Performance expectations be in sync, and related functions (i.e. SPD, IPL Manufacturing, MML) share accountability to meet those goals.

• Collection of KPI as-is definitions incl. calculation Logics, reference period, legacy system, data availability

• Review as-is KPIs and define to-be KPIs in a form of KPI tree, either by reassigning as-is, or introducing new ones. Description of KPI to-be definitions incl. calculation logics, reference period, and setup the KPI Tree → First draft

• Discussion and review of to-be definitions with business responsible persons → Second draft

• Verification of discrepancies and review with responsible persons and experts in the business areas

Illustration

Approach Key Deliverables• KPIs

– DR/DP/CLIP/RLIP– Order Lead-time– Production Throughput Time– Production adherence to Schedule– Inventory Turnover/Stock Reach– Aging Stock/Blocked Stock

• KPI “Tree”

• KPI calculation logic

Illustration

StartPOD

available ?Yes

No

No

WithinDelivery

window ?

PGI + ETZ =KTU

Pull in fromKTU ? 0 %

100 %

Yes LTE2=1 LTE3=0

WithinDelivery

window ?

Yes LTE2=1 LTE3=0

Pull in fromKTU ?

Yes LTE2=0 LTE3=1

IsPGI >=WT

?

NoNo0 %

End

No

POD = KTU?

100 %Yes

LTE2=1LTE3=0

Yes LTE2=1 LTE3=0

End

End

WithinDelivery

Window ?

Yes LTE2=0 LTE3=1

Incoterms =DDU/DDP ?

No

Yes

PGI = ATU?

Yes LTE2=1 LTE3=0

No

No

No

LTE2=0LTE3=0

No

LTE2=0LTE3=0

Credit LimitReleased

Date Check

Yes

NoWithin

Deliverywindow ?

Yes LTE2=1 LTE3=0

No

IsPGI >= WT

?

Yes LTE2=0 LTE3=1

Yes

No

Illustration

Establish a “Control Tower” - KPIs

Based on the business process solution design, IT requirements can be defined, which may include the following aspects:• Real time access to information needed for “Control Tower” to fulfill the coordination

responsibility (SAP R3/APS-FP)– PO/MO status, and delay report– Material shortage list– Inventory status and outlook– Purchasing Lead-time and Manufacturing Lead-time

• Timely analytical report or dashboard which may provide…– Insight about supply planning and execution key performance– Monitor mechanism with alert functionality, e.g., report indicating where there is or would

have an issue if nothing be done

Below deliverable will be carried out after the IT functional requirements are defined:• To-be IT requirement list• Fit & Gap analysis versus As-is IT capability• Business Requirement for IT system


Establish a “Control Tower” - IT Requirement Analysis



C2 Trust manual planning book rather than APS output

D1 Aging master data and transactional data result in wrong planning outputs.

A4 - Compared with short supply lead time, Lower purchase price is more preferred

A5 - Production plan was not executed due to lack of demand priority and capacity




A3 - MOQ (minimal order qty) is not optimized for demand

D2 Lack of Management Process for Data Maintenance

B1 - RSP driven Purchasing plan cause extra material inflow

B4 - Less Accuracy and Issue-tracing function in Inventory Outlook tool




C. Planning staff's skills are inadequate


Solution Coverage Summary

Y

Y

Y

P

P

Y

Y

P

P

P

Y

Y

Y

Y N PFully Covered Not covered Partially covered

25


Table of Contents

Key Findings

Solution Highlight

Delivery Approach

Appendix

26


Tailored Work Approach

27Phase I Phase II

By considering the principle of ‘quick launch’ and dependency with overall operation direction, Accenture suggests a steady working approach to achieve the phased objectives: • Phase I, completed within 15 weeks, mainly focusing on FP enhancement and the ‘One Control Tower’ Design • Phase II, following Phase I, mainly focusing on the deployment of the ‘Control Tower’ to the operational environment. The deployment could be in multiple waves, starting from 2 Product Lines, e.g. Optics, Wireline.

28

The Accenture Management Consulting Difference


For any inquiries or comments on this proposal, Please contact [email protected].

Thank you!

mailto:[email protected]


Table of Contents

Key Findings

Solution Highlight

Delivery Approach

Appendix

29


Accenture China Introduction (1/3)Overview

Beijing

Shanghai

Taipei

Hong Kong

Dalian

Guangzhou

Chengdu

• Accenture has been a key player in the Greater China market for 20 years.

• We have about 5,000 professionals working in offices in 7 cities.

• We provide full range of services – Consulting, Technology and Outsourcing.

• Our business is growing at CAGR ~30% since beginning of 2000.

• We serve clients across all our industry segments in and from China.

• Our CEO is the sponsor of our business and is personally and actively involved.


Accenture China Introduction (2/3)Operating Model

FinancialServices

Health & Public Service

Products ResourcesCommunications & High Tech

Strategy

Customer Relationship Management

Finance & Performance Management

Supply Chain Management

Process & Innovation Performance

Marketing Science

Talent & Organization Performance

Change Management

Risk Management

Service Management

Sustainability

Service Oriented Architecture

Network Technology

Data Center Technology & Operations

Portals and Content Management

Security Solutions

Software as a Service (SAAS)

Application Renewal

Enterprise Architecture

Information Management

Infrastructure Solutions

IT Strategy and Transformation

Microsoft/SAP/Oracle Solutions

Performance Engineering

Business Process Outsourcing

Application Outsourcing

Technology Infrastructure Outsourcing

Management consulting

Technology

Outsourcing

We conduct business through five industry-focused operating groups. Our three growth platforms underpin emphasis on high-performance business.


Accenture China Introduction (3/3)Key Facts of C&HT China / APAC

• Partnering with ASB since 2006 and proven in delivering the promise on time with high quality.

- Delivery Excellence based in China serving on a global scale.- “A dedicated global network” providing a unique Business & IS integrated skills set, and

consistent delivery quality and competitive cost.- Deep Understanding of Alcatel-Lucent core business critical application.

• Selected C&HT Clients – Over 50% of our current clients have been clients for the past 3 years;– All of the telecom operators in China are clients of Accenture. Some are also ALU’s clients in

China and APAC.

http://www.nokia.com.cn/

http://www.nokiasiemensnetworks.com/

http://www.utstar.com.cn/index.aspx

http://www.hkunicom.com/index.php


Backup Slides

Supply Chain Planning Building Blocks and System Mapping


Firewall

Supply Chain Planning

Quotes and Orders

PP & MRPMES EMSPP & MRP

MESPP & MRP

MES

Requests

Promises

ProductionPlan

PrioritizedDemand

Enterprise:Allocation RulesBusiness ObjectivesModeling What-If Scenarios

Individual Site:Business ObjectivesParametersConstraints

Demand Planning

DemandCollaborationCustomer

Enterprise Planning

Site Planning

RequestedForecast

RequestedOrder

CommittedForecast

ATP/AATPQuantity

DemandFulfillment ERP

eSupply

A specify planning system only covers part of function(s) in supply planning. Most of time Kinaxis RR will play the role in the Enterprise Planning Level where is similar with i2-MP.



Firewall


Quotes and Orders


MESPP & MRP

MES

Requests

Promises

ProductionPlan

PrioritizedDemand



Demand Planning


Enterprise Planning

Site Planning

RequestedForecast

RequestedOrder

CommittedForecast

ATP/AATPQuantity


eSupply

i2-DM

i2-MP

i2-FP

i2-OP




Firewall


Quotes and Orders


MESPP & MRP

MES

Requests

Promises

ProductionPlan

PrioritizedDemand



Demand Planning


Enterprise Planning

Site Planning

RequestedForecast

RequestedOrder

CommittedForecast

ATP/AATPQuantity


eSupply

i2-DM

i2-MP

i2-FP

i2-OP


Kinaxis RR Covers


Control Tower

Production

Material Stock Semi-FG/FG Stock

Inputs to Production • Production Launch Plan

(Production Orders)• Priority• Corrective Actions

Feedback• Production Capacity

Availability• Production Order Status

Report• Delay Report/Recovery

Plan

Measure/Track/Review/Act (Escalate if needed)

Coordination Mechanism to strengthen Interlock between Planning and Production, which is enabled by…• Detailed process steps and communication structure• Key Check Point, regular/event-driven review and decision-making cycle• KPIs, R&R, Regulation and escalation rule• Visibility of info and analytics required

Establish a “Control Tower” - Detailed Rule of Coordination Mechanism

Establish a “Control Tower” - Major Changes

From… To…

Decentralized coordination and weak interlocks

Centralized coordination and strengthened interlocks

38

As-is

Supply Planning

Semi-FG/FG Manufacturing

Material Purchasing

Weak Interlock: • Production launch Plan not

followed due to…– No enough production

capacity– Missing materials

caused by double counting

– Plan not reflecting real demand priority

• Production order status in MES not linked to SAP

Weak Interlock:• Late in conversion of PR

to PO for missing vendor quota info.

• Inaccurate material availability info. in the system, due to, e.g., material double booked for production orders

• High MOQ vs. actual usage

• Focus on material availability check, which is manually done

• Create production launch plan based on FP run, but w/o– Doing capacity availability check– Knowing actual demand priority

• Schedule production according to real material and capacity availability

• Consider the actual priority of sales orders

• Sometimes do their only planning

• Handle POs w/o considering the demand priority• Convert PR to PO, but not proactively clean up

pending PR• Record PO status in the system, but no specific

actions improving quality of material availability info.

39

To-be

Control Tower

Semi-FG/FG Manufacturing

Material Purchasing

Strengthened Interlock: • Executable Production Launch

Plan (PLP), as already balanced w/ both material /capacity availability, as well as actual demand priority

• Install additional coordination mechanism to PLP release,

• Control Tower drive for corrective actions based on timely feedback of MOs status

Strengthened Interlock:Add additional coordination mechanism to ensure• Smooth and fast process

from PR, to PO approve/ issue

• Accurate/reliable material availability info. in the system

• Timely actions on delayed material and cancel/pull-in/ push-out request

Centrally coordinate supply planning and execution over E2E processes for all IPL products• Driving for one aligned and feasible supply plan via effective DSB meeting,

considering both material/capacity constraints• Synchronizing material purchasing and Semi-FG/FG production to realize

the supply plan and manage inventory at each stage, by controlling the release of PR/MO (based on actual demand priority)

• Accept/commit MOs according to agreed production lead-time

• Conduct detailed production scheduling to fulfill MOs as committed, considering priority set by Control Tower

• Convert PR into PO, approve the PO and place to supplier ASAP

• Monitor PO status and push for delivery on time

40

Credential – Demand Planning Optimization


• A global design and manufacturing partner for the telecommunications and electronics industries based in Finland but acquired by Taiwan-based Liteon in 2007. Its service offering covers the whole product lifecycle from industrial design to manufacturing and logistics. The client has operation in 12 countries while the 2 manufacturing sites in China (Beijing and Guangzhou) are becoming the biggest revenue contributor.

• The client strives to win more business share from the critical customer, through increasing the global operation performance. Hence the top management sets the two major goals, to increase the service performance and to reduce the cost. The implementation of Lean Manufacturing Program identified an urgent need to standardize & improve the Demand Planning process to further cut DOS (Days of Supply) and at the same time improve customer service level.

• Following the lean manufacture program, Accenture extended the engagement to laid out and execute the demand planning optimization program :

• DP Assessment and key findings analysis

• Unplanned and/or irregular customer demands have a dramatic effect on the client’s operations and inventory

• An Excel based tool (DP Tool) has been designed and implemented for demand leveling based on volatile demand patterns with various strategies

• Encourage mutual benefits across the Supply Chain – Customer/Supplier Collaboration. Forecast performance monitoring tool has been implemented to support “fact based” discussion in the regular collaboration meeting and KPI / collaboration process defined

• Through this Demand Planning Optimization program, the client has established sustainable plant Demand Planning competence:

• Established the foundation for “Maximize revenue” through capacity optimization mechanism

• Enabled capability to level demand and reduced impact of poor quality demand data on client production and F/G inventory

• Established regular fact-based communications with customers to address mutual issues, build trust, and take corrective and preventative actions

• Improved visibility to the impact of demand change

• Financial benefit to client

• F/G Inventory level of target 3 projects ( contributed 70% of total MGZ F/G value) decreased 30% in 10 weeks supported by DP control with strong sales.

Business Situation

How Accenture Helped Key Business Benefits

41

Credential – Supply Planning Optimization


• The client’s as-is supply chain planning is not integrated and is facing various challenges to balance overall demand and supply, keep lowest inventory cost and support business increase.

• GZ and SH plants get different sales forecast, also SH plant only use SH DC inventory to consume whole country’s forecast.

• Sales forecast is generated manually only at SKU level. No clear safety stock & inventory policy in Beijing & Chengdu DC

• Requirement buffer added not only sales forecast but also production plan

• No distribution plan to trigger the replenishment to DC inventory

Business Challenge

• Demand Management:

• Formalize forecast generation process

• Support Pre-S&OP and S&OP meeting to get consensus forecast

• Support finance Sales Forecast ($ value) provided to US

• Supply Planning Optimization:

• Generate MPS automatically by using MPS lite tool to leverage forecast in demand planning initiative

• Leverage MRP Functionality in MISys to automatically calculate raw material requirement

• Provide data maintenance requirement to end users

• Unify forecast source in GZ and SH plants to avoid excess demand to operation

• Use simple statistic forecast algorithm plus sales gain & loss input by forecast tool to align different requirement between sales (national view) and operation (Location view)

• Plan the transportation replenishment by locations & production source at one planning action

• Upgrade Material Manager & planner’s role from data calculation to Exception Management


42

Credential – Inventory Optimization


• A leading consumer electronics product manufacturer. Its costs were not competitively reduced due to lack of sourcing strategies for key direct materials components; procurement operation effectiveness and efficiency control/monitoring was needed.

• Fragmented supply base and lack of cross-project communications averts buyer power leveraging, sub-optimizing supplier competitive mix and cost structure.

• Lack of communications between R&D/Project Management and Procurement generates mis-alignment between product requirements and individual component specifications.

• The value of As-Is inventory level has 50B NTD in total.

Business Challenge

• Accenture is engaged to executed and managed the 7 step strategic sourcing methodology, integrating Procurement, As-Is Inventory Analysis and reduction execution, R&D and Project Management, to develop sourcing strategies for 4 direct material key commodities.

• Developed commodity design guidelines with R&D and Project Management to identify product differentiation costs and component usage by specifications

• Identified market intelligence and conducted key spend data analysis to aggregate buyer power in order to support fact-based negotiations with suppliers.

• A 10 weeks inventory assessment and quick optimization is executed.

• Achieved 10%+ in cost savings from baseline costs, discounted by calculated market adjustment for 4 direct material key commodities (LCD, Connectors, SDRAM components, and DC/DC converters). Annual savings of >$US10m

• Estimated 2004 component roadmap and volume usage by specifications for fact-based negotiations.

• Successfully conducted 15+ supplier negotiations using fact-based negotiations package, utilizing “hot buttons” to achieve Maximum Supportable Solution (MSS) for almost all of the suppliers.

• The inventory has reduced to 32B NTD and is well-maintained around this level through the optimized process design in this project.


43

Establish a “Control Tower” - Scope Coverage


• S&OP vs. MPS and Material Planning• Supply Planning vs. Material Purchasing• Supply Planning vs. Manufacturing• Material Purchasing vs. Manufacturing

Interlock Between Planning/Execution Stages

•APS-FP, Including Inventory Outlook function resided in SDB

•SAP R/3

IT Applications

•SPD•DP

•DSL : Global DP•Other : Local DP

•MML•IPL

Operation Unit

•Optics•Wireless•Wireline

Product Line


Review Planning Output

Planning Problem Analysis

Simulation & Corrective action

Inventory Outlook Review

Issue Trace Down & Cause Analysis

Taken Corrective action

Correction Action Follow up

Correction Action Monitoring

The preliminary direction to reform the ‘Inventory Outlook’:

•Actively present visibility of To-Be inventory and trigger proactive actions in Inventory Controlling.

•Continuously Support the Corrective actions initiated by planning and Inventory Review Meetings.

•Review and Improve the existing inventory data accuracy source, refine the functionality as needed. .

SDB

inventory roadmap-MRD

0

10

20

30

40

50

60

70

80

W752 W802 W804 W806 W808 W810 W812 W814 W816 W818 W820 W822 W824 W826 W828

ME

PR_be_Consumed

PR_be_Reserved

PR_Available

PR_Need_Cancel

PO_be_Consumed

Inventory_be_Consumed

PO_be_Reserved

Inventory_be_Reserved

PO_Need_Cancel

Inventory_Extra

PO_Available

Inventory_Available

Establish a “Control Tower” - IT Requirement Analysis (2/3)

Control Tower

Key Features to be considered: Inventory Outlook for all materials Highlight of materials ‘to be Reserved’ , ‘to be

Available’ and ‘to be Extra’ Correlation Analysis

45

We will bring an experienced team with the right skills and work collaboratively with ASB to create a strong project governance structure

Copyright © 2011 Accenture All Rights Reserved. 46

* The resumes of key project delivery team are attached in the appendix for the further evaluation.

Business Design / Pilot SupportTraining / Data Validation

/Pilot

Project Management

• Kang Yi (ACN) – Business Analyst • Kelvin Cao ACN) – Business Analyst • Ella Hu (ACN) – Business Analyst• XXX (ACN) – Business Analyst• TBD (ASB) - Members from OP SPD• TBD (ASB) - Members from CIO \ BPR

Team

• Laura Li (ACN) – Change Management• TBD (ASB) - Members from CIO

• Lin Yu (ASB) – Business PM• Li Peng (ASB) – Technical PM• Kang Yi (ACN) – Business PM

Accenture SME Team• Kevin Lin (ACN) – Supply Chain• August Lin (ACN) – Supply Chain Planning

Steering Committee• XXX (OP)• Swee-Soong Yu (ASB CIO)

FP Enhancement

• Laura Li (ACN) –Data Management• XXX (ACN) – FP Functional Consultant• Chris Liu (ACN) – FP Integration Consultant• XXX (ACN) – FP Developer #1• XXX (ACN) – FP Developer #2 • XXX (ASB) – FP Internal Consultant

ASB Core TeamThe directors from • Quality and Process (Chen Wen Jie) • CIO (Liu Xin-xin, Zhao Yi)

• Yu Hongbiao (ACN)

Accenture Resources Summary: 1 FTE BPM / Business Solution Lead 1 FTE TPM / Technical Solution Lead 3 FTEs for Business Analyst 1 FTE for FP Functional Consultant 2 FTEs for FP Integration Consultant ?? FTEs for SAP Consultant

Total of Resources – 8 FTEs

Communication & Change ManagementGather

Stakeholder Expectations

Change Planning Stakeholder Engagement / Launch Tailored-Communication

Project Management

Progress Control / Governance / Risk & Issue Resolution

Post-DeploymentDeployment ExecutionDeployment Preparation

Develop Execution

Plan

Execute Deployment PlanManage Deployment Capability

Conduct Staging Rollout

Conduct Pilots

Deployment/ Operations Support

Fine-tune Solution/Plan for Subsequent Deployment Assess and

Confirm Deployment

SolutionAssess

Readiness

Monitor/ Value

Realization

Launch Training/ Coaching

Transition DeployedSolution

Co

nfi

rm D

eplo

ymen

t R

ead

ines

s

Au

tho

rize

Dep

loym

ent

Pla

n f

or

Dep

loym

ent

Establish Capability

Business Deployment Framework

47

Establish a “Control Tower” - Major Change in Operating Model


From… To…

• Material Planning/Production Launch Plan without Capacity Constraint

• Material Planning and Production Planning (with Capacity Constraint)

• Dedicated team to provide Analytic support

• Centrally coordination • Manage Inventory

• Production Dept does their own Production Plan

• No Visibility of Production

Illustrative ONLY

Illustrative ONLY

alcatel lucent planning optimization proposal presentation

Technology

order sales

plan sales order inventory

operation planning sales

etd sales order

sales order sell

material planning sales

fulfillment atp sales

supply chain planning