Preparing a high-level project plan

Preparing a high-level project plan for a US-bases manufacturer.

Assignment

In order to improve its S&OP planning capability, a US-based manufacturer of precision dispensing industrial systems wanted to:

  • Assess the current planning process, organization, KPIs and overall S&OP maturity
  • Quantify the size of the opportunity to improve the current S&OP approach (based on benchmarking)
  • Recommend key next steps to improve the current process (planning model, processes and organization)

Prepare a high level project plan for next phases (including budget and timeline).

Project summary

The company realized that it's supply chain planning processes were basic and there was no joint planning between the operations and commercial team, with overall lack of communication between the functions. As a result, inventory levels were high, with significant scrap, yet on-time deliveries were poor.

The company knew a properly implemented S&OP process would be the next step forward, but was unclear about the exact way forward and what the cost-benefits would be. The company was interested to do a quick value identification first, before committing to the design of a new S&OP process and subsequent implementation in the company.

Our approach

In order to quickly identify the opportunity and value of improving S&OP, the BCI approach consisted of the following steps:

  • Mapping and full understanding of the current situation by creating a high level picture of the planning model, processes, KPIs and organization
  • Flowchart of the current S&OP processes, make to stock/order,  typical lead times, related documents
  • High level view on network; demand levels per country, production sites / sourcing areas,  warehouses
  • KPI performance (company internal, and customer facing)
  • S&OP organizational set-up; roles, responsibilities
  • Perform S&OP maturity assessment using BCI S&OP Maturity Framework
  • Quantify the size of the opportunity to improve the current S&OP approach (based on benchmarking) by identifying key value pockets and quantifying the expected improvement (such as lower inventory, less scrap etc.)
  • Prepare recommendations to improve
  • Develop high level project plan for next phases

Result

Results of the project were:

  • S&OP process maturity assessment showed the organization to be at level 1 "Reacting" (out of a 5 level maturity model), confirming the lack of integrated planning process and need for improvement
  • Identification of key building blocks for the next phase, such as required planning structure, planning capabilities, planning process flows, KPIs, changes to IT system etc.
  • Quantification of expected benefits in three major areas of:
    • sales growth (through higher OTD)
    • cost reduction (through less scrap and improved manufacturing productivity)
    • working capital reduction (through less FG inventory)
  • Overall benefits were determined to be 3-4 times the implementation cost, based on 5% reduction in FG inventory, 20% reduction in scrap and 1-2% incremental sales increase through higher customer satisfaction.