DBMExecutive - Past Issues

In this Issue:

The Inventory Diet: Managing Safety Stock at the Family Level
By: Duncan McLeod

Managing safety stock at the item level worked well before turbulence shook our economy and forecasting demand became risky business. This month, Duncan explains why managing safety stock at the family level is actually “safer” and how to do it right. “You math majors will argue that the results would be more accurate if the data was mapped to a normal distribution and we based safety stock coverage on ‘x’ standard deviations of demand variation. You would be theoretically correct and probably wrong.”

 

Project Matters: Part 2 - S&OP in the Project Environment
By: Doug Dedman

As a follow up to last month’s article, Doug digs deeper into managing the project based world. Doug thoroughly discusses the few key strategies unique to making S&OP work in such complex environments. For the sceptics, he explains how it improves resource planning, sales process management and cross-functional communication. “If the S&OP process is effective, it will help to identify the risks and forces the organization to address both sales and delivery concerns.”

 

The Inventory Diet: Lot Size Inventory and the EOQ Formula
By: Duncan McLeod

As a follow-up to Issue 2.02, Duncan digs into the Economic Order Quantity formula to help your organization prevent “obesity” and gain control of your lot size inventory. Learning from his own mistakes in purchasing and material planning over the past 40 years, he delivers seven important lessons about the EOQ formula and how you can make it work for you. “I found that many people were unhappy with their results by blindly applying the EOQ formula. Looking deeper, I found the problem was not the formula, but the variables.”

S&OP in the Project Environment
By: Doug Dedman

If you thought S&OP was only useful in the product sales environment, you’ll find Doug’s article this month interesting. Doug covers the challenges and the benefits of S&OP in a project environment. He also introduces key items that are unique in making S&OP work in a project environment, which he will discuss in more detail in the next issue. “Project planning is always about improvement…Improved resource planning, improved sales management, improved cross-functional communications and trust – these are all areas that S&OP can improve in the organization.”

The Inventory Diet: Taking the Fat out of your Supply Chain
By: Duncan McLeod

In this issue Duncan writes a 2-page comparison between body fat and inventory. What should your organization’s “body fat” percentage be? Duncan explains what he considers to be lean muscle, healthy fat and sludge in terms of inventory, how much you should have of each and how your organization should manage its “weight”. “We need inventory to operate the supply chain, like we need muscle and fat to be healthy.”

Calculating Supply Chain Forecast Error: A new approach to an old problem
By: Duncan McLeod

If you have difficulty effectively answering the question “How should I measure forecast error?” it may be because the standard answer is too vague and isn’t helpful. Duncan explains the need for measuring forecast error, why the classic approach isn’t always helpful and how his new approach is. If you’re unsure about Duncan’s new methods, let him know. He’s open to suggestions. “Rather than just look at the error for the last period, I look at this error plus the changes over the CSCLT. It may not be statistically correct, but it tells the story.”

Staying Afloat through Economic Uncertainty: A brief review of down-proofing
By: Doug Dedman

There’s no question that the troubling economic situation is impacting virtually every business in one way or another. Doug stresses the importance of planning and communication in your S&OP process in such circumstances. “A good S&OP process is about stopping and making sure you are going in the right direction. When the seas are rough, it is even more important that you do this, so that when you put your head down you know you’re on course.”

1-11

People who know what they are doing: Standardized education is what's right for the Supply Chain
By: Duncan McLeod

Doctors, lawyers, accountants, pilots – they all need extensive training and certification before they can establish themselves in their fields. Why not the participants in the Supply Chain? Duncan explains the importance of certification for those participants in a supply chain and he explains why the CPIM designation from APICS is a great place to get started. “I believe that the first step to eliminating my other six pet peeves, which are all supply chain issues that plague most organizations, is to make sure we have people who know what they are doing.”

Executive Involvement: S&OP Success need not be lonely at the top
By: Doug Dedman

In this issue, Doug makes clear the difference between being committed to S&OP and being involved in it. All too often, he is involved in projects in which senior management takes a back seat and watches the process happen. These projects don’t succeed. Doug explains the importance and the steps to get executives actively involved and in a leadership role with S&OP. “No matter how good your people, no matter how impressive your benefit list of S&OP achievements, your team will not get there if senior management is not involved.”

1-10

How to be a Project Sponsor: For project management, it's all about one thing - People
By: Marg Pearson

The Project Sponsor is a topic not yet covered in the DBMExecutive, but because its importance ranks high, Marg felt the need to cover it this month. Every successful project has a Project Sponsor, and any project without one is hopeless. Marg covers the Project Sponsor Credo and the top ten list of support responsibilities. “Some of the early projects I managed had no senior executive as a sponsor. Some had only tacit approval. These projects were doomed from the start because no executive was willing to assign himself the role.”

Your Personal Trainer for S&OP: How to turn your S&OP implementation around with the S&OP Accelerator
By: Doug Dedman

Successful S&OP requires time, teamwork, commitment and patience. It’s easy to get discouraged or go off track if you don’t see the results you want right away. Doug compares this scenario to dieting and getting fit. His recommendation: hire a personal trainer. Doug introduces DBM’s S&OP Accelerator in this article. Think of it as a personal trainer for S&OP. “So, why do companies fail at S&OP? They fail for many of the same reasons that dieters fail. They don’t have clear goals. They don’t have a step-by-step plan. They don’t show progress early enough to keep the momentum.”

1-09

Primera Plastics: A Case Study in Inventory Accuracy
By: Marg Pearson

If you’ve read about our theories on inventory accuracy you may be wondering if they actually work. This month, we bring you a 2-page case study on a business that was near extinction before DBM came in to help. Marg Pearson, DBM’s Task Master of the Inventory Accuracy Project at Primera Plastics takes us on her 8-month journey in Zeeland, Michigan. Read on and find out what happened! “Everyone did what they needed to do for the day. Each night, I’d lay away, worrying if I’m making the right stuff.” – John Wiechertjes, Materials Manager

1-08

As the World Turns - Nothing has changed, or has it?
By: Duncan McLeod

For most of us, the thought of change has us tossing and turning in our sleep - but why? Think of how far we’ve come in the last 40 years – globalization, advanced technology, higher standards in safety and quality – and these improvements all required change. Duncan tells the manufacturing industry’s progressive story up until today and what changes still need to occur to keep progressing after tomorrow. “Sometimes you need to look back and see where you have come from, in order to get the energy to keep pushing forward.”

Everything I know about S&OP I learned on the farm - Plowing your way to S&OP stability
By: Doug Dedman

It’s one hurdle to set your S&OP targets, and it’s another to stay on course as you’re approaching them. But just because you see a bump in the road ahead, doesn’t mean you need to panic. Doug uses a farming analogy to help us prepare for and react to any unexpected changes in the S&OP plan. “The reality is that no plan is perfect. Changes will happen. How we react to those changes is what separates the straight lines from the crooked ones.”

1-07

Crack that WIP! Best Practice for Maintaining Accurate Inventory in a Work Cell
By: Louise Beauchamp

Louise Beachamp is one of DBM’s inventory control experts. In her first DBMExecutive article, she takes us through three common inventory scenarios (focusing on WIP) and the pros and cons of each. She then explains DBM’s Best Practice Solution and how it will improve your inventory accuracy, “These are issues everyone faces. Finding the right balance is a continuous task for inventory control.

You Need to Push Before you Pull - Sales & Operations Planning and Kanban
By: Doug Dedman

Mistakes were made but not by me - Accountability Mapping in the Supply Chain
By: Duncan McLeod

You may have been around long enough to remember inventory control before the computer age. All transactions went through the inventory clerk and if something didn’t seem right, the clerk would go to the source and figure it out. Unfortunately, computers can’t do everything and responsibilities can get so ambiguous, no one knows where to start. Duncan lays out an accountability mapping strategy that takes inventory accuracy out of the Dark Ages. “I believe that accountability should be based on geography or the plant layout. Not a single person in the materials department.”

It's only words - S&OP and the role of Sales & Marketing
By: Doug Dedman

Because so many organizations view S&OP as starting from Operations, Doug explains the importance of representation from the Sales and Marketing departments. These departments can more easily forecast the future for other departments. For the mechanics of the organization to function, all the pieces need to be in place, working together. “Most of the variability that is introduced into our planning process comes from our customers.”

Let me count the ways - Inventory Accuracy in the Supply Chain
By: Duncan McLeod

Duncan’s second article in his Supply Chain Effectiveness series covers the definition, importance and the necessary active steps for inventory accuracy. The notion that inventory accuracy is a financial measurement is far from reality and Duncan proves it in this article. “To solve accuracy issues we need to know what inventory we have for each specific part number – the financial formula would only apply if all of the parts were interchangeable and this is rarely the case.”

Making it work takes a little time - Team Dynamics for S&OP and Beyond
By: Morgan Minor

The strength of a team is dependant on the strengths of the individuals and their ability to work together. Morgan Minor discusses the importance of team dynamics in S&OP. He also explains how the Kolbeä A Index is a useful tool in realizing individual strengths and how they should be integrated into the team. “Building a strong team takes time and patience but the result is worth it.”

Making nice with production - Master Schedule Attainment in the Supply Chain
By: Duncan McLeod

Here is the first article in Duncan’s Supply Chain Effectiveness Series. Duncan covers what Master Schedule Attainment is, why it’s important and the problems that it typically uncovers. How well does your plant perform against its master schedule? “The MSA should drive corrective actions. If less than 95% of the items are in tolerance, there is a problem. And any problem must be solved. Measurement just for the sake of measurement adds no value.”

He Shoots! He Scores! S&OP and the Hockey Stick and the Dynamic of Change
By: Doug Dedman

Change is good, right? In the follow up to his article about the S&OP Self-Assessment, Doug explains that implementing change often has a hockey stick effect: it gets worse before it gets better. But don’t worry, it does get better! To make this successful change you need to know your starting point, know where you want to go and put the steps in place to get there.  “Because S&OP is a cross-functional process, having a good plan is essential to move you through the early pain to the benefits of S&OP.”

Nobody knows the trouble I've seen - Becoming an effective node in the supply chain
By: Duncan McLeod

What happens if you don’t understand the rules and procedures of the supply chain? You’re often putting out fires! Duncan offers a simplified explanation of how any node in a supply chain can be an effective team member (and avoid firefighting!). This article outlines the specific measurements necessary to knowing where you are, where you’re going and how you’re going to get there. “When running a factory with no visible reference to key measurements, a manager must fly by instinct. Evidence shows that the manager has 45 seconds before lack of information fatigue sets in.”

The S&OP Self-Assessment - Finding opportunities before they find you
By: Doug Dedman

Do you know where you stand? Do you know where everyone else in the company thinks you stand? The Self-Assessment is the first tool needed to start and manage an effective S&OP process. Doug explains the five key areas covered in the assessment, why the results are important and what you can expect to discover. “The Self-Assessment is about finding where to focus in your organization so that you will get the results you expect from a formal S&OP.”

Risky Business at 30,000 feet and on the ground. How is Inventory like Aviation Gas?
By: Duncan McLeod

Duncan once again draws from his aviation experience and manufacturing expertise to help you avoid a crash landing due to fuel loss. If there is no good reason to run out of fuel, there is no good reason to run out of inventory. Duncan takes you through the basic steps to ensuring your ability to manage unexpected demands and to keeping your customers happy. “If you do not run out of finished goods, you will not have disappointed customers. Happy customers remain loyal customers.”

Dangers, Opportunities and Strengths - For S&OP, it's about finding your reason to do it.
By: Doug Dedman

If you’re not sure what’s in S&OP for you, follow Doug’s DOS guide – dangers you need to overcome, opportunities you want to capture and strengths you have to build on to eliminate those dangers and capture the opportunities. Creating this list, inclusive of the whole organization, is what will force you into action toward achieving your goals. “…we are good at what we’re doing today, but not what we need to do tomorrow.”

The North American Aviation System Runs at Seven Sigma. Why Don't You?
By: Duncan McLeod

Duncan’s first article offers a clear comparison between the North American aviation industry and the North American manufacturing industry. Both are improving, but why does one operate better than the other? Duncan explains that like pilots in the air, each node in a supply chain must understand its role in the big picture, not just as itself. “In most cases, the value of the system working outweighs the minimal savings in the node. How do I know this? I am a pilot. I see seven sigma work every day. Is manufacturing ready to do the same?”

Not Sure if Your Team is Pulling Together? S&OP is the Way to Line Up your Organization
By: Doug Dedman

Like each node in the supply chain must work together to achieve success, so must each department within those nodes. Senior executives need to grab the reins and implement a monthly S&OP process. Doug tells you how to get the ball rolling with monthly meetings, how to execute them and what to expect from them. “ It’s a fundamental change in the way you manage your business…S&OP is the feedback process that you need to see where you steer.”