stukalov&guzhova_eng_8 tocpa_oct 2013

From a pilot project to

company-wide roll-out

Dmitriy Stukalov, Elena Guzhova

Lighting Technologies, Moscow

October 2013

26-27 October 2013, Moscow

www.tocpractice.com

8th International Conference of the

TOC Practitioners Alliance - TOCPA

Lighting Technologies

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

LLC "Lighting Technologies Trading Company".

building 2, 2B, Otradnaya Str. Moscow, Russia 127273

Tel: +7 (495) 995-55-95, +7 (495) 411-99-48, Fax: +7 (495) 995-55-96

ltcompany.com, info@msk.ltcompany.com

Dmitriy Stukalov

Deputy Director for Strategy and

Production Development

d.stukalov@ltcompany.com

Elena Guzhova

Head of the Group for Planning and

Forecasting, Internal Logistics

Department

e.guzhova@ltcompany.com

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• Lighting Technologies International Group of Companies is one of the largest manufacturer and supplier of modern energy efficient lighting decisions with 15 years of experience.

• Our core competence is developing, manufacturing and selling of general and special purpose lighting fittings.

• More than 2500 modifications of lighting fixtures are in the company’s product range.

Lighting Technologies

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Production technologies: metal processing, powder painting, plastic and aluminum casting, assembly operations.

Lighting Technologies

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• High inventory level. There are no items requested by the customers. The warehouse is full with slow-moving SKUs.

• Continuously from shift to shift growing “debt” of production units. Did not fit the plan based on production norms. Debt is ‘repaid’ during week-ends.

• Seasonal demand and the need to balance production on the basis of the forecast. Forecasts frequently fail.

Visible production problems

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• Production was planned on the basis of forecast. Low level of “matching the forecast”.

• Lack of principles for transparent planning. Understanding of production process is based on the experience of some “key” employees. Coordination of production was made during production meetings –with raised voices.

Main causes for the problems

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Project team

Svetlana Lobanov а

Natal'yaBurlachenko

Veronika Shnaider

Elena Guzhova Sergey Popov

Dmitriy Loginov

Yuliya Dubrovina

Natalya Dobrovolskaya

Natalya Promyslova

KlavdiyaMaltseva

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• Separate product subsets that subordinate to standard models of customer demand (MTA, MTO).

• Calculate buffer parameters to work with MTA products.

• Develop a set of procedures to implement the MTA-based production planning.

• Disseminate the results to the whole line of MTA products.

• Develop a Terms of Reference for automation.

Pilot project objectives

MTA production buffer

ProductionProduction

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Pilot project objectives

Purchasing of

component

parts

Production of

semi-finished

goods

Assembly FG warehouse

The pilot project envisaged creation of an MTA buffer for order issue to production

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

The data was taken from a corporate ERP system (1SUPP), processes in an Excel file and taken into account for making production orders (with manual corrections).

Technical side of the project

Receiving data about orders and

availability

Export of the data to Excel

Processing data to calculate buffer

status

Making work orders to productions

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

MTA file in Excel

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Colors (to show

buffer condition) demonstrating S

KU

availability level in the pilot project as of 6 m

onths.

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In total5 phases of gradual increase in the number of S

KU

s from

20 during the first phase to300 during the last phase.

47

SK

U2

0S

KU

10

5S

KU

20

2S

KU

30

0S

KU

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Accomplished• MTA file was developed.

• All required procedures were developed.

• 20 SKUs were selected by expert review.

Result• Availability did not increase despite significant decrease in

critical (red) SKUs and total increase in pilot SKUs inventory.

• We still were doing something wrong. We worked based on our habit, based on the plan, it was our excuse not to use the MTA file.

• Even capacity utilization was much more important than MTA priorities.

Phase 1: beginning, 20 SKUs

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Accomplished• MTA SKUs sales statistics was reviewed. Most stored items

were added (sold every 2 days).

• Interaction between the production and internal logistics was revised (daily meetings).

Result• Availability started to grow slowly, but then it went back to the

same level. Old habits + component parts shortages (Arctcrings).

• A ‘walloping’ by Elena and Oded really helped! We were well brain-washed. Mental model was broken. Availability level never was below 95%!

2nd phase: 47 SKUs

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Accomplished• SKUs selling at least once a week were added.

Result• The share of ‘black’ items as usual increased, then fell gradually

(availability increased with time).

• Instead of general meetings we started to hold internal meetings(Internal Logistics – production). Routine work is settling.

3rd phase: 105 SKUs

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Accomplished

• We added SKUs that se;; at least every two, and then every three weeks.

Result

• The project included around half of all MTA-items in quantity terms and 85% in monetary, or 45% of total sales.

• Availability did not significantly change staying around 80-85%. To reduce further, planning and supply procedures need to be improved.

4th and 5th phases: 200 and 300

SKUs

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• It is more and more difficult to differentiate between MTA and MTO items (some MTAs are very similar to MTOs).

• Issues with component parts supply (purchasing). Purchasing have their issues (batch size, lead-time of delivery), which neetto be managed in accordance with the MTA needs.

• More responsive production planning is acutely required.

• It is more difficult to process in large batches.

• Seasonality. In a low season we have to produce to the warehouse to be prepared for the high season. This needs to be managed too.

Core issues of the transition

period

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

• Transition to shorter planning horizons for production with a rolling ‘window’.

• Transition to purchasing on the basis of PTA algorithm.

• Building the MTA buffers for a number of semi-finished products (plastic, aluminum casting).

• Dealers’ inventory management using MTA buffers.

Current tasks and project

future

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Natalya Promyslova

Head of Product Dispatching

Kept the MTA Excel file combining the pilot project with her core duties before a dedicated employee was appointed.

Project heroes

8 Международная Конференция Ассоциации Практиков ТОС – TOCPA

Thank you for attention !