Planning and Scheduling Optimization in Specialty
Challenge: The Specialty Chemicals Company partnered with our team to conduct a wall to wall review of one of their North American plants that were becoming vulnerable to lower cost Asian manufacturing entities. The Leadership Team wanted us to reduce operating costs as well as working capital in a sustainable manner in order to handle this growing threat.
OUR ANALYSIS FOUND
Lack of meaningful metrics allowing us to monitor RM and FG velocity, days inventories, attainment to plan and customer service metrics
Minimal RM were on consignment
There was no science and discipline in scheduling. The scheduling wheel was ad hoc and sequencing did not follow production recommendation. The schedule was broken into daily
Demand pattern analysis by SKU had not been reviewed since corporate had completed the exercise 5 years ago
Critical finished good inventories were either at or below minimum targets while C items were at 3X annual demand
Inventory classified as Not Immediately Usable (NIU) was 15% of FG inventory and had been increasing year on year
Internal Logistics was poorly managed with as much as 30% contractor logistics costs was for “exceptional” trips invoice at 10X normal trips
Developed and implemented KPIs in conjunction with sister plants we were able to monitor the evolution of key inventory and service metrics and take coordinated action at daily and weekly intervals
Working with Corporate sourcing, we were able to add three key suppliers to a consignment
Developed a scheduling wheel based on change over costs and updated demand. Implemented a weekly frozen schedule with escalation protocols.
Reviewed demand pattern analysis and included new information in the corporate planning model.
Local planner became responsible for monitoring FG inventory status as well as CS metrics. Planner updates weekly schedule based on fortnightly “slush” schedule
Implemented NIU process and KPIs. Reduced 300% more of NIU inventory than previous year
Reduced internal logistics costs by 30% through truck scheduling
Results of our engagement include:
3 points of added OAU (Overall Asset Utilization) based on scheduling wheel usage
2 points of added CS level for Platinum clients (96% to 98%)
30% reduction of Not Immediately Usable inventories
“I can see a material change in the way our supervisors handle problems. We are more rigorous and we drive our projects to conclusion”