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1 © The Delos Partnership 2003
Global Strategic Operations Global Strategic Operations PlanningPlanning
One set of numbers at all times
2 © The Delos Partnership 2003
Opening discussionOpening discussion
1. Consider three cases where a customer has got what they wanted, but with unnecessary cost to the business, and review how this happened.
2. Consider three cases where you know that a customer has not got what they want and review why you think this happened.
3. Review existing performance measures and see how these help add value to the customer’s experience with MD-I.
3 © The Delos Partnership 2003
Objectives for Global Strategic and Objectives for Global Strategic and Operations PlanningOperations Planning
• One set of numbers at all times
• Integrated Plans
• Teamwork
• Decisions made in timely fashion
• Consistent performance measures
4 © The Delos Partnership 2003
Conflicting Objectives ?Conflicting Objectives ?
Inventory/Capacity
Customer Service
ManufacturingCosts
ManufacturingFlexibility
5 © The Delos Partnership 2003
Conflicting ObjectivesConflicting Objectives
Finance
Marketing
Manufacturing Sales
6 © The Delos Partnership 2003
Vertical Functional OrganisationVertical Functional Organisation
MDMD
SalesSales MarketingMarketing TechnicalTechnical OperationsOperations FinanceFinance HRHR
R& D
R& D
MKTG
MKTG
SALES
SALES
OPS
OPS
ACCTS
ACCTS
HR
HR
Directors
Managers
Supervisors/Team Leaders
7 © The Delos Partnership 2003
Disintegrated Business PlanningDisintegrated Business Planning
Long termplan
Short termPlan
Medium TermPlan
8 © The Delos Partnership 2003
Lack of VisibilityLack of Visibility
05
10152025
303540
4550
Sales Cont'n Net Profit
Last YrBudgetYTD
Year to date is below budget and last year, and therefore there is an urgent need to cut costs, and reduce inventory, in order to improve cash flow…
9 © The Delos Partnership 2003
Disintegrated Business PlanningDisintegrated Business Planning
Annual operatingPlan
Master ProductionSchedule
SupplierSchedule
FactorySchedule
£’s/Euros/$
18 months
1/ year
SKU’s
12 weeks
1/week
10 © The Delos Partnership 2003
Strategy vs ExecutionStrategy vs Execution
““It is not so much the strategy that causes It is not so much the strategy that causes the failure. 80 % of companies fail to the failure. 80 % of companies fail to execute their strategy”execute their strategy”
- Kaplan and Norton : “Strategy Focussed - Kaplan and Norton : “Strategy Focussed
Organisation”Organisation”
““It is not so much the strategy that causes It is not so much the strategy that causes the failure. 80 % of companies fail to the failure. 80 % of companies fail to execute their strategy”execute their strategy”
- Kaplan and Norton : “Strategy Focussed - Kaplan and Norton : “Strategy Focussed
Organisation”Organisation”
11 © The Delos Partnership 2003
Vision and StrategyVision and Strategy
• Vision– Clear statement of direction– Understood by all
• Strategy– Means of getting there– Requires clear focus
• Operational Excellence• Customer Intimacy• Product Leadership
12 © The Delos Partnership 2003
Setting the VisionSetting the Vision
•Simple•Owned by the Managing Director•Understood by everyone•Visible•e.g. Simply the best
13 © The Delos Partnership 2003
Vision – Messier-DowtyVision – Messier-Dowty
To be the world leader in Landing Gear Systems
as viewed by our
Customers, Employees, Shareholders,Suppliers
14 © The Delos Partnership 2003
StrategyStrategy
Clear Focus on overall strategy– Strengths/Weaknesses/Opportunities/
Threats– Market Position– Competitive Position– Technological Position
15 © The Delos Partnership 2003
TeamworkTeamwork
With a common vision and a strategy there is a chance to develop common
•Objectives
•Commitment
•Team direction
16 © The Delos Partnership 2003
Supporting ProcessesSupporting Processes
There are three key supporting processes– Innovation
• New products• New processes
– Customer Relationship management• Sales linkage• Marketing linkage
– Supply Management• Internal Factories• External suppliers
17 © The Delos Partnership 2003
Delos Business ModelDelos Business Model
Strategy
PrioritisationPrioritisation
Changes
Vision
Demand Supply
Support
18 © The Delos Partnership 2003
Management of InnovationManagement of InnovationNeeds Management across all the projects
19 © The Delos Partnership 2003
Demand Planning Needs a Simple Demand Planning Needs a Simple ProcessProcess
FilterDemand
Execute Forecast
CaptureActual
C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T
Review Commercial Plans
Review ExceptionalDemand
Hold Demand Review
Assumptions written down and agreed
20 © The Delos Partnership 2003
Master SchedulerMaster Scheduler
Strategy
Master Scheduler
Sales Forecasts
CustomerOrders
ManufacturingPlan
PurchasingPlan
ERPSystem
Balanced PlanBalanced Plan
21 © The Delos Partnership 2003
In Balance ?In Balance ?
0
20
40
60
80
100
120
140
1 3 5 7 9 11
Demo Cap
Req Cap
22 © The Delos Partnership 2003
PrioritisationPrioritisation
• Which customer gets preference
• Spares or Original Equipment
• New product versus existing product
• Which market gets supply
Must be balanced
23 © The Delos Partnership 2003
GS&OP Gap AnalysisGS&OP Gap Analysis
Strategic planStrategic plan
Time Now
SOP ForecastSOP Forecast
Actual statusActual status
years
profitprofit
outputoutput
revenuerevenue
profitprofit
outputoutput
revenuerevenue
What is the GAP and what are the action plans to close it?What is the GAP and what are the action plans to close it?
24 © The Delos Partnership 2003
Strategic Operations PlanningStrategic Operations Planning
Annual OperatingPlan
Monthly Review
Master ProductionSchedule
SupplierSchedule
FactorySchedule
Volume [Family]Value42 months horizon
Volume [Family]Value30 months horizon
Volume SKUValue18 months horizon
Volume [Part number]Value18 months horizon
25 © The Delos Partnership 2003
MeasurementMeasurement
What gets measured is whatGets done
What gets measured is whatGets done
Actual versus Budget
Actual versus target
Actual versus Budget
Actual versus target
Traditional Measures
26 © The Delos Partnership 2003
On track …On track …“From looking at the wake behind the ship, I cansee we are still on course…”
27 © The Delos Partnership 2003
Delos Business ModelDelos Business Model
Strategy
PrioritisationPrioritisation
Changes
Vision
Demand Supply
Support
28 © The Delos Partnership 2003
Velocity MeasureVelocity Measure
STORE
STORE
INSPECT
INSPECT
RECEIVE
RECEIVE
PICK
PICK
RUN
RUN
INSPECT
INSPECT
STORE
STORE
RUN
RUN
INSPECT
INSPECT
STORE
STORE
Elapsed Time
VAVA VAVA
Velocity % = sum of Value Added Time [VA]-------------------------------------
Total Elapsed Time
29 © The Delos Partnership 2003
Global Strategic Operations Global Strategic Operations PlanningPlanningIs not
• A meeting for the Production scheduler and Customer Services Manager
• Operations Scheduling
• Detailed Capacity Planning meeting
• Sorting out next week’s plan
30 © The Delos Partnership 2003
Global Strategic and Operations Global Strategic and Operations PlanningPlanningIs :• A formal process for communicating
requirements [Demand] and capabilities [Supply]
• A means for resolution of medium term to longer term issues
• The way of delivering the strategy by developing plans to close the gaps
31 © The Delos Partnership 2003
GlobalisationGlobalisation
In a global business
• Customers do not mind where the product comes from
• Customers expect same level of performance wherever it comes from
• Customers expect same level of quality and speed of response
32 © The Delos Partnership 2003
GlobalisationGlobalisation
Global companies need• Common processes• Common levels of quality• Common policies and procedures• Common measures of performance
• To deliver the common standards that the customers come to “take for granted”
33 © The Delos Partnership 2003
Integrated BusinessIntegrated Business
VisionAnd Strategy
Processes
People
Improvement
Measures
CustomerService
ShareholderPerformance
Innovation
Suppliers
34 © The Delos Partnership 2003
Global Strategic Operations Global Strategic Operations PlanningPlanning• Needs a vision and strategy• Requires integration of the key processes• All-embracing performance measures
– Measuring processes and not people
• Needs a formal process to support it• In a global organisation needs global and
local integration