april 16 18, 2012 •talking stick resort •scottsdale, arizona · april 16‐18, 2012 •talking...

April 16‐18, 2012 • Talking Stick Resort • Scottsdale, ArizonaApril 16‐18, 2012 • Talking Stick Resort • Scottsdale, Arizona

Implementing Resilience for Manufacturing & Supply Chain


Why is this such a problem?

• Many stakeholders – including vendors

• Think catastrophe only – too complex

• Too difficult to get arms around the problem

• Staff doesn’t have time to devote to issue

• Plant automation is outside of data center


Our View of the Supply Chain

Employees Technology

Internal Risk Sources

OrganizationalCulture

BehavioralIncentives

Internal Risk Influencers

External Influencers

Labor Unions ConsumerAdvocacy Groups

External Risk Sources

NaturalEnvironment

GeopoliticalEnvironment

CompetitiveEnvironment

Black MarketEnvironment

Share‐holder/Customer

External Supply Risk Sources

Suppliers

Outsourced Partners

Logistics Providers

Product

Other Providers

Perform Demand Planning

Perform Sales & Operations Planning

Perform Production Planning

Perform Material Requirements Planning

Perform Distribution Requirements Planning

Schedule Production and Manage Material Availability

Manage Production

Manage Product Quality

Manage Maintenance

Manage Sanitation

Manage Engineering

Process Orders

Manage Warehousing

Manage Transportation

Process Returns / Recalls

Perform Strategic Sourcing

Perform Operational Procurement

Manage and Develop Suppliers

Enable Business Initiatives

Perform Inventory Planning

DELIVERSOURCE MAKEPLAN

Develop Procurement Strategy

Develop Inventory StrategyDevelop Manufacturing

StrategyDevelop Fulfillment and

Logistics Strategy

STRATEGY

PROCESS

Manage Contracts

Manage Commodities


Manufacturing is Vital to Economy

1. Manufacturing has been the path to development

2. Manufacturing is the foundation of global “Great Power”

3. Manufacturing is the most important cause of economic growth

4. Global trade is based on goods, not services

5. Services are dependent on manufactured goods

6. Manufacturing creates jobs


Manufacturing Surge = Greater Criticality

Factory production has recovered from the Great Recession faster than other parts of the economy. US manufacturers are now within reach of their 2000 value‐added peak.

$1.8T

1.6

1.4

1.2

1

$800B

Value Add

ed by U.S. M

anufacturing

(201

0 Dollars)

1950 1960 1970 1980 1990 2000 2010

Source: Bureau of Labor Statistics


Falling Employment = Less Knowledge

20M

18

16

14

12

10

0

U.S. M

anufacturin

g Em

ploymen

t (Millions)

1939 1950 1960 1970 1980 1990 2000 2011


US manufacturing employment peaked in 1979 and started to fall fast around 2000. As a percentage of all nonfarm employees, factory workers peaked in 1943 and 1953.


Greater Efficiency = More Dependence

350

300

250

200

150

100Manufacturin

g Outpu

t Per Hou

r (19

79 = 100

)

1979 1985 1990 1995 2000 2005 2009


Labor productivity has risen dramatically as manufacturers have de‐labored, emphasizing capital investment and technology. US gains in this respect are unparalleled in the industrialized world.

UNITED STATES

JAPAN

GERMANY

CANADA

April 16‐18, 2012 • Talking Stick Resort • Scottsdale, Arizona

Perspective…Primary Supply Chain RisksProduct Specifications Make Versus Buy Strategy

(Design Versus Buy) Supply Chain Structural

GuidelinesSourcing Process (Supplier

Selection)

Specifications that define an item, raw material, or service. Includes item selection, standardization, re-use, engineering change notices.

Component make versus buy decision process. Also includes procuring engineering and fabrication services to fit a specific envelope. Decision process includes intellectual property.

Decision guidelines and roles for determining sourcing decision – internal, external, global, regional, local, divisional and single versus sole source strategy.

Execution of the sourcing strategy focused on supplier selection including supplier assessment, validation and certification.

Total Cost of Ownership Supplier Quality Contracts – Strategic Agreements

Contracts – Purchase Agreements

Total cost of item including duties, fees, supplier management cost, cost of quality, transportation, extra inventory required, etc.

Focused on supplier quality performance and the policies, procedures, and specifications required to monitor supplier quality.

Contracting suppliers including customer dictated suppliers, assembly services, collaborative/ co-engineering, sole sources, purchased services

Long term agreements and contracts with suppliers for catalogue or make to print purchases

Supplier Performance Monitoring

Supplier Relationship management

Organization Structure Supply Chain Management

Supplier auditing process, scorecards, and ratings. Supplier compliance – ITAR, DFAR, FDA, etc.

Supplier development activities, preferred supplier programs, cross functional management teams. Collaborative planning and forecasting

Resource roles and responsibilities. Organization structure – corporate, division, region, site.

Management of demand, inbound materials, Kanban, JIT, and overall supply management.


Frequently Stated Obstacles

• Redundancy has been eliminated – idle capacity and buffer stocks – in favor of lean and “just‐in‐time”supply chains.

• Movement offshore to low cost countries, creating vulnerabilities to transport disruption and business ethics violations.

• New approaches in manufacturing ‘have led to the introduction of new single points of failure, whether through supplier consolidation strategies or moving towards “centers of excellence”.


Manufacturers Calling on Logistics Partners

• Resilience must focus on “key products and services”.• Not about “how do I rebuild my plant”, rather – “how do I

continue to service my customers until I rebuild my plant”.• Collaborate with logistics companies on strategies• Look at the network through our central solutions team and

determine what’s best for the potential customer:– Inventory management– Fulfillment

• With the highly‐skilled older generations retiring in ever‐increasing numbers, many manufacturers would find a great deal of value in a freight company that has that knowledge built in.


In one recent study, 58% of manufacturing sector respondents had experienced increased disruption and 73% were concerned about disruptions in the coming year…

University of ManchesterJuly, 2011


Executive Awareness


Make the Problem Manageable


Supply Chain Risk Management

For in‐scope product areas, identify the highest risk end‐products to the company

• Associate high‐risk parts with their respective suppliers

• Include parts criticality as a component of supplier risk classification

• Identify parts pertaining to high‐risk end products identified in Phase One

• Evaluate risk factors pertaining to these parts

• Classify parts according to a risk classification scheme

Step Two:Risk‐Rank Parts/ Components

Step Three:Evaluate Supplier Risk

Step One:Identify High‐Risk

Products

• Products most impacting company’s reputation

• Products most critical to customers and the public

• Products with higher volume• Product maintenance history

• Parts with the greatest impactto company’s customers

• Parts with the greatest degreeof vulnerability

• Parts needs with the greatest speed of onset

• Suppliers critical to managing OEM replacement parts


End Product Risk Ranking CriteriaReputation

Impact Customer Impact Financial Volume Maintenance History

HighMajor negative national/ international customer and/or media attention

Product is critical to customers’

operations

End Product in production and

sales are above X units / year; Financially significant

Product requires significant

replacement parts / components to support (metric)

Medium

Minimal negative media or customer attention

and any damage is short lived

Product is moderately critical

to customers’operations

End Product in production and

sales are between X and X units /

year; Moderately significant

Product requires moderate

replacement parts / components to support (metric)

Low Minimal or no damage to public image.

End product is not critical to the customers’operations

End Product no longer in

production or sales are below X

units / year; Minimally significant

Product requires minimal replacement parts / components to support (metric)


Basic Framework for Resilience

Connectivity

ExternalPressures

EnvironmentalConcerns

Dispersion

Flexibilityin Sourcing

Lead Times

DistributedProductionAssets


Include the Stakeholders


SIPOC Planning Exercise

Physical

Local Supply Chain ‐Paris:o Product Inventory o Labels o Ink o Glue o Carton

Data

IBM ‐ XYZ System

Systecho Advisoryo ABC System

IFIXIT ‐ Package line management system

Physical

Filled Boxes

Printed Materials

Box

Shipping Case

Leaflet

Instructions for the process

Data

Work ordero Quantity to produce

o Lot o Exp. Dateo Product Code

Serial Number from (XYZ System)

See Next Slide Physical

Serialized Product /Carton (Product Liquid Product S/D Two)

Serialized Shipping Case

Serialized Pallets

Data

Confirmed Serial Number:

o Product / Cartono Shipping Caseo Pallets

Physical

Chicago Distribution Center

Houston MDI Distribution Center

Data

IBM – XYZ System

The SIPOC will help the team better understand the process, scope and key roles involved

Suppliers Inputs Outputs CustomersProcess


Breaking Down the Process

IBM EPCIS Sends ORDER to TIP Product STP Server

TIP Product STP Server Sends ORDER to TIPS Advisor SPT ISX

TIP Product STP Server Sends ORDER to TIPS Advisor SPT ISX

Print Carton Label Camera Checks Carton Label

Scan Cartons in Bundle (associates cartons with shipping case)

Print Shipping Case Label

Scan Shipping Case Label (associates shipping case with pallet)

Print Pallet Label

Apply Pallet LabelReconfigure Pallet and Print New Label(s) as needed

Enter Shipment Data into Advisor

Verify and Confirm Pallet (i.e., trigger to send data from Product to XYZ)

Scan Pallet Label

Systems

Line 1 & 3

Distribution

1 2 3

10

87

64

9

5

11 12 13 14


Disruption to

Serialized Supply of Products

MEASURES

MAN MACHINE

Advisor Server Outage

Product Server Outage

Sabatoge of Process

Loss or Key Staff Member

H1N1 Pandemic

Lack of Visbility of Supply Chain

Prioritzation of Alerts

MOTHER NATURE

Cost of Materials

RegionalPower Outage

METHOD

Incorrect Serial# Issued

Improper Material Handling

iFix Server Outage

Lost XYZ Connection

Fishbone Diagram to Determine Risks

Incorrect Serial# Printing

Facility Fire


Reduce Complexity


Conduct a Deep Dive Strategy Session

Focus of today’s

DeepDive session


Rapid Immersion Approach to Solving IssueDefine the Design Challenge and Assemble a Diverse Team

Build a Rapid Prototype

Conduct a “Frenzy”

Brainstorm and Vote

Present Final Prototype

Develop FinalPrototype

Vote


The “Frenzy” is Important

1

2

3

1

3

Normal state ‘Frenzy’ state

2

Feedbackprovider

Feedbackprovider

Feedbackprovider

Feedbackprovider

Presenter

Note Taker


What a Prototype looks like


This is interesting but it needs more specifics to understand how we

would do it.

Great idea!(I will “STEAL” it for

my team…)I think that this is impractical – it would take more than two years to

get started.

Feedback given during the Frenzy


What makes a DeepDive successful?

• Candor

• Focus

• Participation

• Interaction

• Share your ideas– No holds barred approach

– Your initial idea may not be a solution–but it will grow

• Engage and enhance– Engage and be engaged

– Find ways to enhance an idea

• Please do not use laptops and mobile devices

• Your participation is key!


Reasonable Effort and Duration


Suggestions to Developing Capability

• Start with creating a “base level” foundation of Resilience

• Major goal to train and educate the staff on BCM• Assist the facility in:

– Risk Assessment understanding the risks– prioritize processes and applications (~BIA)– Developing a basic set of actions (~plan)

• Integrate with current Occupational Safety or Emergency Management

• Maybe a brief tabletop exercise


Addressing Plant Automation


Creating Manual ProcessesThe Pick & Ship process is defined as beginning at the moment an order is waved at a PPI shipping location and ending once all the products against that order is shipped out and paperwork is filed for system update.


Typical Manual Process Assumptions

• Other facilities are assumed to be fully operational and standard days of inventory for critical SKU

• Manual process will be followed for only our critical products

• Necessary manpower will be authorized by leadership

• All shipping warehouses will have dedicated finished goods zones within their finished goods warehouse

• Details of individual open orders as well as finished goods inventory will be available in backup process

• Cust Svc keeps a rolling hard copy of all rush orders entered inlast 72 hours

• Rolling hard copy of 7 days of carrier schedules for all orders

• Necessary forms needed for the manual process kept in stock


Process Assumptions – Action Steps

System/Location

Extract/ Query

Criteria Destination Access

BPCS(Pittsburgh)

WMS(Mason)

Company’s Customer Orders

Company’s Finished Goods

inventory

Data Warehouse at Pittsburgh\.....\Company’s Orders\daily files

Data Warehouse at Pittsburgh\.....\Company’s Orders\daily files

Jacksonville Email Server\.....\Company’s Finished Goods\daily files

Jacksonville Email Server\.....\Company’s Finished Goods\daily files

• Select Company’s orders with “Ship to”date in range from a prior day to one week ahead• Provide ability to select/print individual orders

• Facility shipping manager / alternate will have ability to log in to the folder using dial up connection and print reports using local printer

• Facility shipping manager / alternate will have ability to log in to the folder using dial up connection and print reports using local printer

Status

To be developed by PPI IT

To be developed by PPI IT

• Select Company’s Finished Good Inventory detail• Auto run every evening at 11PM EST • Create rolling extract of daily files• Provide ability to select/print inventory detail like lot number, location, quantity, item, etc,.

Item Description Facilities Responsibility Status

1 Customer service will keep a rolling hard copy of all rush orders for 72 hours

Chatsworth J. Smith To be implemented

2 Shipping department will keep a rolling hard copy of 7 days of carrier schedule

Mason, Jacksonville M. Jordan To be implemented

3 Capability to store 2 days of peak production level at an offsite location within 12 hour notice

Chatsworth, Mason S. Walsh Need to identify availability of free space


34

Event Triggers


Sample Process

2.1.14 Hand down necessary paperwork for loading process along with Bill of Lading

Who: Shipping ClerkWhen: Each orderHow: In addition to following normal

process, generate a manual bill of lading for the shipment (template is shown in appendix). Update “Company’s Master Shipping Schedule” with detail

Tool: Appendix 4.8 – Manual Bill of Lading

C2.1 Process Flow: BPCS Running & WM Down

2.1.3 Complete necessary paperwork to

generate ship documents

2.1.14 Hand down necessary paperwork for loading process

along with Bill of Lading

2.1.15 Load the trailer and hand down

paperwork to shipping department

2.1.16 Update paperwork and file it for system update

End


Conclusion

• Must get executive management attention, but make it manageable

• Use collaboration techniques to simplify the complex problem

• Evolution not revolution – can’t rebuild the plants

• Leverage the resources and vendors


37

april 16 18, 2012 •talking stick resort •scottsdale, arizona · april 16‐18, 2012 •talking...

Documents