Turn Service Supply Chain into Profits with Value Chain Planning Moshin Lee, Sr. Director, Oracle Value Chain Planning Product Management Graham Reid,

Turn Service Supply Chain into Profits with Value Chain PlanningMoshin Lee, Sr. Director, Oracle Value Chain Planning Product Management

Graham Reid, Oracle Global Process Owner, Spares Planning

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.2

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Program Agenda

Evolving to best in class service parts and MRO planning with

Oracle VCP

Development Roadmap

Case Study: Oracle’s use of VCP for service parts planning


Oracle Value Chain Planning Solution

Common foundation Single source of truth Centralized services Start anywhere, redo nothing

Planning and

Optimization

ScenarioPlanning & Analytics

EngineeredSystems &Solutions

Planning Data

Management


ASSET INTENSIVE

Service and Maintenance Planning solutionThe Oracle difference: The right solution for the right problem

Maintain, repair, and overhaul complex equipment and installations

Repair work order hierarchies

Rotables and serialization

Long range and operational planning – Balance material, resources and budgets

Plan new buys, internal and external contractor repairs; plan maintenance repair schedules

CMRO and EAM based execution

ASCP/DM/IO/PS/GOP – CMRO/EAM integration: Korean Air

DISTRIBUTION CENTRIC

• Multi-echelon distribution with rebalancing and fair share allocation

• Standard catalog driven parts, no part condition; standard bills

• Standard work orders for assembly, new buy orders

• Forecasting and replenishment, with optionally inventory optimization

• ASCP/IO/DM: CARQUEST, Orbotech

REPAIR CENTRIC

• Use part condition (“usable”, “defective”)• Internal and external repair• Part criticality matrix linked to forecasting

rules• Optimize redistribution and replenishment• Account for supersession (repair to) in

forecasting and replenishment• Unified forecasting and replenishment UI• Release recommendations to Depot

Repair and Spares Management

• SPP/DM/IO: Oracle, Virgin Media, Virgin Mobile, Huawei, Teradata


Support intermittent demand patterns

Leverage highly accurate Bayesian engine

Population and failure rate based forecasting

Forecasting based on supersession

Analyze and fix exceptions

Supersession-based planning

Plan reallocation and transfer of parts

Plan internal and external repair before new buy

Release planning recommendations to Execution

Single UI for forecasting and replenishment

Part and supersession chain centric analysis

Zone and enterprise views

Planner work lists

Personal and public queries

Auto-release rules

Parts Forecasting Replenishment Analysis

Improve spare parts planning


Global parts inventory visibility across all service organizations

Out-of-the-box integration with Oracle Spares Management and Oracle Depot Repair

Release depot repair orders, reschedules, and transfers

Release spares management new buy purchase orders, repair orders, and transfers

Improve planner productivity through automation of release

Execute internal and external repairs

Execute to plan

Integrated planning and executionReduce cost via pre-built integration


Work list driven actions

Supersession

Integrated demand and supply planning

Pegging view

Service planner workbench


Forecast new service level agreements at customer and customer site level

Forecast new parts based on part characteristics

Centralized demand management for service and manufacturing

Enable simultaneous forecasting of end items and spare parts

Consider causal factors

Analyze impact of new service level agreements on safety stock policies

Simulate the impact of inventory budget reductions

Simulate trade offs between service levels and cost

Manage postponement decisions across all service facilities

Monitor service level agreement adherence

Monitor repair versus new buy trend patterns

Review service parts inventory performance

Compare plans and trends over time

Involve key managers

Advanced Forecasting Multi-echelon postponement Plan analytics

Evolve to best in class spare parts planning


Account for detailed service level and fulfillment lead time targets

Deploy inventory to meet entire SLA portfolio

Account for repair, lead time, space, budget constraints

Simulate SLA scenarios

Evolve – optimize spares stocking

Minimize SLA portfolio cost

99%, 2 hours

97%, 4 hours

92%, 24 hours


Monitor service level agreement adherence

Monitor effective use of repairable parts before buying new

Compare changes between plans and analyze trends

Analyze spare parts inventory performance

360 degree visibility

Evolve – Monitor parts planning performance


Integrated maintenance scenario to support total cost of fleet operation – CMRO Unit Maintenance Plan, EAM Budget Forecast, Demantra non-Maintenance Forecast, ASCP Planned Repair Orders

Projection of resource utilization – Global, organization, department

Projection of total material requirements – Calculate retention levels and justify disposal actions

Projection of maintenance cost

Calculate planning factors

Scenario planning: select specific CMRO product classification (simulations) and EAM budget forecasts as basis for planning

Match defective demands with defective supplies

Plan repairs of complex subassemblies and components

Plan purchases, internal maintenance, and contractor maintenance

Consider repair capacity and material availability

Consider CMRO and EAM repair BOMs and routings

Consider resource (equipment) downtime due to preventive maintenance

Maintenance scenario planning and S&OP Balance supply and determine repair

Asset Intensive Planning with VCPPrebuilt integration with EBS CMRO and EAM


What is the non-routine material and resources associated with a Maintenance Requirement (MR)?

What is the total material and resources associated with a components item’s repair?

What is the difference between Engineering failure rates and actual failure rates?

What are the material and resources associated with flight operations?

Calculate planning factors based on non-routine resource and material requirements and incorporate into CMRO MR definition

Supports routine historical analysis contrasted to CMRO Engineering definition

Forecast non-UMP visit forecast and leverage to build flight schedules in CMRO (pre-flight, post-flight and transit visits are not contained in Unit Maintenance Plan)

Planning Factors – Business needs Solution



Which visits are early, on-time or late and why? What tasks are on the critical path? What is the total machine, crew, and tool utilization across visits,

or for a specific visit? How much of the utilization is associated with routine versus non-

routine work? What is the impact of taking down production equipment for

maintenance? What is impact of rescheduling the EAM maintenance?

What is the average visit duration by visit type (PDM, Engine Overhaul)?

How can Visit throughput be maximized?

Schedule CMRO Visits taking into account visit dates, milestones, task hierarchies, and prec. constraints

View CMRO work breakdown structure and critical path Schedule Visits while considering EAM preventative maintenance Override EAM preventative maintenance Model key constraints on the shop floor (crew, machine, tool –

capacity and calendars) Manually re-sequence visits Respect inventory reservations Constrain dates based on outside processing schedule Create multiple simulations and compare (on time, now late, KPIs)

Maintenance Scheduling – Business needs Solution



Asset Intensive Planning with VCPProcess flow

Complex Maintenance Repair and Overhaul

EnterpriseAsset

Management

VCP Demand Management and

S&OP

VCP Production Scheduling

VCP Advanced Supply Chain Planning

VCP Inventory Optimization

OrderManagement

Detailed maintenance schedule

Visits and Visit WBS

Adjusted WO dates

WorkOrders

Planned maintenance requirements & Planned UMP and Production Visit Work Orders

Planned repair orders

Rebuildable activities, WOs, and Forecasted WOs

Historical and projected fleet sizeHistorical and projected fleet utilization

Historical visits and usage

Planning factors

Historical EAM usage

Resource utilizationTotal costNon-UMP visit forecast

History for non-maintenance products

ASCP plan results (material and

resource requirements)

Total material requirements Demand variability

Service levelsBudgetsTarget SS

Time phased SS

Forecast for non-maintenance products

Planned orders


Schedule around preventative maintenance

Analyze key performance indicators

Analyze maintenance schedule exceptions

Analyze critical path

Maintenance scheduler workbench


Development Roadmap


Recent Updates and Future PlansService and Maintenance Planning

2012 2013 2014

Asset Intensive Planning Material planning for complex maintenance Asset material planning for equip maintenance Maintenance detailed scheduling (critical path) Long term maint forecasting tied to fleet fcstInventory Optimization Warehouse capacity

Service Parts Planning Sourcing priorities for inventory

rebalancingService Planning Analytics (APCC) Performance enh (archive plan)Inventory Optimization Category level service level targets Unified planning and analytics Extreme intermittency enh

In-Memory applications R2Front port of 12.1.3.9Front port of Dem 7.3.1.5Technology upgrades

Asset Intensive Planning Aggregate work order support

Service Parts Planning Reserve safety stock

Service Parts Planning (candidates) Maximize repair vs. demand

lateness tradeoff Replenish before rebalancing… and more

12.1.3.7 and Demantra 7.3.1.3

12.1.3.8 and Demantra 7.3.1.4 VCP 12.2.4

12.1.3.9 and Demantra 7.3.1.5 VCP 12.2.2.3.1


Case Study


Oracle Internal Implementation

Oracle Hardware Support Overview Implementation footprint Service Supply Planning Process Benefits Achieved Lessons Learned Looking Forward

Deploying Value Chain Planning for Hardware Spares


Oracle Systems Support Overview

167 product lines– 17K unique spares

– 376 spares Inventory Organizations

– 2.6M item-org combinations

285 physical warehouses 4600 employees in Systems Support $2.4B systems Support Revenue


LockbourneLeipzig

Singapore

Miami

Oracle Spares Warehouse Distribution

T2 - 7T3 - 76

T1

T1

T1

T1

T2 - 11T3 - 15

T2 - 83T3 - 58

T2 - 17T3 - 54


Inventory Organization Structure

Tier Description Planned

Tier 1 Distribution Center SPP in VCP

Tier 2 Country Warehouse SPP in VCP

Tier 3 Local Warehouse SPP in VCP

Tier 4 Unmanned Warehouse Min-Max

Tier 5 Managed On -Sites Min-Max

Tier 6 Field Technicians Spares Management

Tier 7 Repair Vendors

Tier 8 Scrap Agents


Disparate, local planning, procurement, stocking and repair processes

Disjointed view of inventory levels, purchasing activity and delivered level of service

Focus on Service as a profit center

Implement a single, global VCP solutionSingle source of truthUtilize intelligent forecasting, optimized

stocking strategies to drive lowest cost of operations while increasing level of service

Business Challenges Solution

Oracle Spares Planning with VCPRight Part, Right Place, Right Time at the Right Cost


Value Chain Planning

Oracle Hardware Spares Supply ChainVCP Footprint

Advanced Planning

Command Center

CollectionsItems/BOMs

Sourcing RulesPurchase Orders

Repair OrdersShipmentsSuppliers

CustomersOrder Types

Demand ClassOrganizations

InventoryLocationsContracts

Supersessions

E-Business Suite - Global Single Instance

Service Parts Planning

OrdersBuy

RepairTransfer

DemantraDemand

Management

Inventory Optimization


Planning Calendar

Monthly

• Statistical Forecast

• Leading Indicator Forecast

Weekly

• Rebalancing• Inventory

Optimization• Weekly Sub-Set

Daily• Collections• Regional Plans• APCC Refresh


Key Success Factors

Shared vision and cross-functional executive sponsorship Invest in process governance Define global, standard process Align business process with application technology Data validation & migration Change management


Reverse Supply Chain Transformation

Spare parts inventory $800 million to $400 million MAPE improved by 20% , BIAS down to single digits Backorders reduced by 50% , Service level @ 90+% Risk pooling used in Inventory Optimization

– $20M reduction in spare parts safety stock

Improved collaboration across Support organization Better decisions based on a single source of truth

Results


Looking Forward

Differentiated Stocking Strategies– Rationalize placement of non-critical spares to maximize risk pooling

– Focus on high value, critical spares close to point of use



Oracle Value Chain Summit

February 3-5, 2014 – San Jose McEnery Convention Center Hands-on workshops, solutions demonstrations & more than 200

sessions on topics in 6 complementary solution areas: Product Value Chain, Manufacturing, Enterprise Asset Management, Logistics, Planning & Procurement

Early bird registration opens soon – www.oracle.com/goto/VCS14

Empowering the Modern Value Chain

Explore How New Solutions Within Social, Mobile, Analytics & the Cloud are Helping Companies Transform Supply Chains into Modern Value Chains

http://eventreg.oracle.com/profile/web/index.cfm?PKwebID=0x177286ec5&source=on-1-mw

http://eventreg.oracle.com/profile/web/index.cfm?PKwebID=0x177286ec5&source=on-1-mw


Documents

Turn Service Supply Chain into Profits with Value Chain Planning Moshin Lee, Sr. Director, Oracle Value Chain Planning Product Management Graham Reid,