How to avoid inventory damage with lean six sigma tools | Marcia D Williams posted on the topic | LinkedIn (2024)

What are the secrets for a successful S&OP? (Sales and Operations Planning)This infographics contains 15 atomic 💥 actions to improve S&OP as follows:💥1️⃣ Engage stakeholders💥2️⃣ Gain executive sponsorship💥3️⃣ Master communication and escalation💥4️⃣ Hold decision meetings💥5️⃣ Build RACI matrix💥6️⃣ Create a balanced scorecard💥7️⃣ Adopt a KPI single source approach💥8️⃣ Use visuals like dashboards💥9️⃣ Financialize/ dollarize everything💥1️⃣0️⃣ Have different data aggregation levels💥1️⃣1️⃣ Show the data in multiple units of measure💥1️⃣2️⃣ Analyze variances to take action💥1️⃣3️⃣ Identify root causes💥1️⃣4️⃣ Pursue continuous improvement💥1️⃣5️⃣ Enjoy the process and the learningAny others to add to the list?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

190

30 Comments

Isn't it enough with KPIs? 😕 Amazon, Google, LinkedIn are also using OKRs.This infographics compares OKRs vs KPIs as follows:✅ Stands for 👉 OKRs: Objectives and Key Results 👉 KPIs: Key Performance Indicators ✅ Focus👉 OKRs: on tracking progress 👉 KPIs: on measuring performance ✅ Based on 👉 OKRs: outcome and effort 👉 KPIs: outcome ✅ Function👉 OKRs: improve agility and execution 👉 KPIs: improve alignment with strategy ✅ Used👉 OKRs: to address an issue 👉 KPIs: to detect an issue ✅ Benchmarking👉 OKRs: not used for benchmarking 👉 KPIs: yes, KPIs are used for benchmarking ✅ Context👉 OKRs: as a focused initiative that implies major changes 👉 KPIs: as part of business as usual ✅ Users 👉 OKRs: non-budget owners 👉 KPIs: budget owners Source: McKinsey, 2020✅ Relationship👉 OKRs: KPIs can be part of the OKRs 👉 KPIs: teams can create OKRs when KPIs show issues ✅ Supply Chain Example👉 OKRs: 🎯 Objective: Improve the company service to customers (non-quantifiable)🔑 Key Results: 1. Achieve 98% on-time delivery with strategic customers2. Improve lead time by 10%👉 KPIs:🔑 1. Achieve 98% on-time delivery with strategic customers🔑 2. Improve lead time by 10%Note: these KPIs also include target levelsWhat are your thoughts? Are OKRs worth trying?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

127

18 Comments

Because time is money and we know this too well in supply chain...This infographics contains the top 10 ⏰ time supply chain metrics as follows:✅ Metric #1 On Time Delivery👉 Meaning: shows how many orders are delivered on time 🧮 Calculation: (Number of On Time Deliveries/ Total Number of Deliveries) X 100 ✅ Metric #2 Lead Time👉 Meaning: measures the average time from order placement to order delivery 🧮 Calculation: Delivery Date – Order Date ✅ Metric #3 Cycle Time👉 Meaning: measures the average time that it takes to complete a product 🧮 Calculation: Net Production Time/ Number of Units Produced ✅ Metric #4 Takt Time👉 Meaning: measures the rate by which a manufacturer must complete a product to meet customer demand 🧮 Calculation: Potential Production Hours/ Units Required (Customer Demand) ✅ Metric #5 Throughput Time 👉 Meaning: shows the time that it takes a product to move through processes 🧮 Calculation: (Processing time + Move time + Queue time)/ Number of Units Produced ✅ Metric #6 Warehouse Receiving Time 👉 Meaning: measures how efficient the goods receipt process is 🧮 Calculation: (Number of Items Received and Inspected)/ Total Time Taken ✅ Metric #7 Put-Away Time 👉 Meaning: shows how long it takes between an item’s arrival and its storage 🧮 Calculation: Total Time from Receiving to Storage/ Number of Items ✅ Metric #8 Pick Rate 👉 Meaning: measures how efficient the picking process is 🧮 Calculation: Number of Items Picked/ Total Number of Hours in Picking ✅ Metric #9 Machine Uptime👉 Meaning: measures the time that a machine is available and operational 🧮 Calculation: (Time the Machine is Operational/ Time Observed) X 100 ✅ Metric #10 Unplanned Downtime👉 Meaning: shows the time that the asset is down due to an unexpected disruption or failure or process 🧮 Calculation: (Time Asset is Down due to Unexpected Event/ Total Time) X 100 What other metrics would you add?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

324

38 Comments

Because we cannot talk supply chain without talking inventory...This infographics contains the top 10 🔑 metrics for inventory management as follows:✅ Metric #1 Inventory Turnover👉 Meaning: shows how fast or slow inventory is moving🧮 Calculation: (Cost of Goods Sold / Average Inventory) X 100 ✅ Metric #2 Inventory Days of Supply👉 Meaning: shows how many days of sales we are keeping in inventory 🧮 Calculation: (Units in Inventory / Units sold per day) ✅ Metric #3 Inventory Carrying Cost👉 Meaning: includes all expenses related to holding and storing unsold goods🧮 Calculation: (Total Inventory Carrying Cost / Inventory) X 100✅ Metric #4 Obsolescence Inventory Rate👉 Meaning: measures the obsolete inventory over inventory value. 🧮 Calculation: (Obsolete Inventory Value / Total Inventory Value) X 100✅ Metric #5 Runout Date for items to be Discontinued 👉 Meaning: for items to be discontinued, it’s important to track by when the inventory will deplete. 🧮 Calculation: On-hand Inventory + Projected receipts – Projected Demand The runout date is when this calculation equals 0. ✅ Metric #6 Backorder Rate 👉 Meaning: shows % of orders that cannot be delivered by the requested original date 🧮 Calculation: (Total Number of Backorder Units/ Total Number of Units Ordered) X 100 ✅ Metric #7 Stockout Value 👉 Meaning: measures the value of lost sales by lack of product🧮 Calculation: Average Daily Sales Revenue X Number of Days that Product is Out of Stock ✅ Metric #8 Inventory Accuracy👉 Meaning: in cycle counts, teams compare the results of the physical counts against the information in the system(s); those that match are accurate. 🧮 Calculation: (Number of Units Counted/ Number of Units on Record) X 100 ✅ Metric #9 Order Lead Time 👉 Meaning: measures the average time from order placement to order delivery🧮 Calculation: Delivery Date – Order Date ✅ Metric #10 Cash to Cash Conversion Cycle 👉 Meaning: measures the number of days from the investment in raw materials until the company makes money from that investment, getting cash back into the business. 🧮 Calculation: Days of Inventory Outstanding (DIO) + Days of Sales Outstanding (DSO) – Days of Payables Outstanding (DPO) What other metrics would you add?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

754

79 Comments

Mistakes happen in S&OP but some shouldn't happen.This infographics shows 12 common 🔴 mistakes that everyone can easily avoid:⚠️ Mistake # 1: present inaccurate data ✅ How to avoid: double-check with other team members before presenting ⚠️ Mistake # 2: provide a wrong answer in the review meetings ✅ How to avoid: if uncertain, state so, and then get the data to provide the answer ⚠️ Mistake # 3: showcase a complex spreadsheet with 15 what-if scenarios ✅ How to avoid: less is more. Have 3-5 likely scenarios.⚠️ Mistake # 4: assume that everyone knows and loves S&OP ✅ How to avoid: listen and get to know each team member ⚠️ Mistake # 5: spend hours updating actuals and calculating variances ✅ How to avoid: have a standard process in place, as this happens every month. ⚠️ Mistake # 6: spend hours checking old threads to understand the context ✅ How to avoid: keep a log of changes and document key points in one central place ⚠️ Mistake # 7: do all the planning based on a different dataset ✅ How to avoid: get agreement on the sources to use ⚠️ Mistake # 8: show incorrect levels for your team’s KPIs ✅ How to avoid: get agreement on the sources and calculations of KPIs ⚠️ Mistake # 9: keep innovating with the slide-deck for the review meetings ✅ How to avoid: define a standard template that works and stick to it ⚠️ Mistake # 10: speak in supply chain lingo ✅ How to avoid: speak in the language of the business, showing the impact on the financials ⚠️ Mistake # 11: adopt a “give me, give me” approach with your stakeholders ✅ How to avoid: show your work to your stakeholders first. Then ask questions. ⚠️ Mistake # 12: expect a smooth and happy ride with S&OP ✅ How to avoid: prepare for challenges along the journey Any other mistakes to add to the list?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

212

21 Comments

Because supply chain is all about the customer...This infographics contains the top 10 🔑 metrics for customer supply chain as follows:✅ Metric #1 OTIF (On Time In Full) 👉 Meaning: shows how many orders are delivered on time in full🧮 Calculation: (Number of On Time In Full Deliveries / Total Number of Deliveries) X 100 ✅ Metric #2 Net Promoter Score 👉 Meaning: measures customer satisfaction and loyalty 🧮 Calculation: (Number of Promoter Scores/Total Number of Respondents) - (Number of Detractor Scores/Total Number of Respondents) ✅ Metric #3 Perfect Order👉 Meaning: to be perfect, a customer order needs to meet the 7 R's criteria (APICS)🧮 Calculation: (Total Number of Perfect Orders/ Total Number of Orders) X 100 ✅ Metric #4 Order Fill Rate👉 Meaning: measures the ability of a company to meet customer orders with available stock, without backorders or delays. 🧮 Calculation: (Number of Orders Fulfilled Immediately/ Total Number of Orders) X 100 ✅ Metric #5 Line Fill Rate 👉 Meaning: shows the % of lines the company can fulfill immediately with the on-hand inventory 🧮 Calculation: (Number of Lines Fulfilled Immediately/ Total Number of Order Lines) X 100 ✅ Metric #6 SKU Fill Rate👉 Meaning: shows the % of SKUs the company can fulfill immediately with the stock on hand 🧮 Calculation: (Number of SKUs Fulfilled Immediately/ Total Number of SKUs) X 100 ✅ Metric #7 Available To Promise (ATP) 👉 Meaning: shows the quantity of a product that is available and can be promised to customers for delivery on specific dates, without causing backorders or disruptions 🧮 Calculation: Inventory on Hand + Planned Receipts – Sales Orders ✅ Metric #8 Order Accuracy👉 Meaning: shows the % of orders shipped free of errors🧮 Calculation: (Error Free Orders/ Total Orders Shipped) X 100 ✅ Metric #9 Line Order Accuracy👉 Meaning: shows the % of line orders shipped free of errors 🧮 Calculation: (Error Free Line Orders/Total Lines Shipped) X 100 ✅ Metric #10 Customer Order Fulfillment Time 👉 Meaning: It measures order, source, transform, fulfill and return cycles🧮 Calculation: Sum of Actual Cycle Times For All Orders Delivered/ Total Number of Orders Delivered What other metrics would you add?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

815

106 Comments

Where does S&OP fit 🧩 in the planning hierarchy?And the other acronyms? This infographics answers these questions:✅ Strategic⏳ 3-10 years 👉 corporate strategy👉 business unit strategy👉 functional strategy ✅ Link to the strategic plans ⏳ 4 - 36 months👉 S&OP 🟰 Sales and Operations Planning👉 SIOP 🟰 Sales, Inventory, and Operations Planning👉 IBP 🟰 Integrated Business Planning👉 FP&A 🟰 Financial Planning and Analysis👉 XP&A 🟰 Extended Planning and Analysis ✅ Operational ⏳ 1 – 3 months👉 S&OE 🟰 Sales and Operations Execution👉 ITP 🟰 Integrated Tactical Planning👉 MPS 🟰 Master Production Schedule 👉 RCCP 🟰 Rough Cut Capacity Planning ✅ Executional👉 DRP 🟰 Distribution Requirements Planning 👉 MRP 🟰 Material Requirements Planning👉 CRP 🟰 Capacity Requirements Planning Any other acronym to add?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

258

30 Comments

Because a planner is not the same as a buyer/ procurement... This infographics contains a comparison as follows:✅ Focus👉 Planner: define demand plan and secure and optimize resources to meet the plan 👉 Buyer: identify, qualify, and select the best suppliers at the lowest total cost of ownership (TCO) ✅ Role in S&OP/ IBP 👉 Planner: demand and supply planning 👉 Buyer: In product portfolio review, new product introductions ✅ Supplier Selection👉 Planner: No👉 Buyer: Yes✅ Supplier Management👉 Planner: more transactional, less strategic supplier management 👉 Buyer: formal supplier performance reviews ✅ Contracts👉 Planner: does not negotiate contracts 👉 Buyer: negotiates contracts ✅ Pricing👉 Planner: ensures that the actual pricing is per agreed terms 👉 Buyer: negotiates pricing ✅ Supplier Issue Resolution👉 Planner: day-to-day supplier performance issues 👉 Buyer: complex supplier performance issues; inability to deliver against contract ✅ Capacity Management👉 Planner: yes, for supply planners 👉 Buyer: no ✅ Inventory Management👉 Planner: does perform inventory management 👉 Buyer: doesn’t perform inventory management ✅ Metrics👉 Planner: days of coverage, inventory turnover, material shortages %, aged inventory %, obsolescence %👉 Buyer: cost savings, spend % under contract, supplier diversity and sustainability✅ Impact on Cash Conversion Cycle 👉 Planner: on days of inventory outstanding (DIO) 👉 Buyer: on days of payables outstanding (DPO) ✅ Reports to👉 Planner: Supply Chain or Operations 👉 Buyer: Supply Chain or Finance Any other aspects to add?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

158

15 Comments

Who is winning: Lean or Agile Supply Chains?This infographics compares lean vs agile supply chain strategies:✅ Focus👉 Lean: efficiency by eliminating waste and the continuous improvement 👉 Agile: speed, flexibility, and adaptability to changing conditions ✅ Demand👉 Lean: stable 👉 Agile: volatile✅ Supply👉 Lean: stable👉 Agile: unstable✅ Demand Forecasting 👉 Lean: less challenging 👉 Agile: more challenging ✅ Product Lifecycle 👉 Lean: longer product lifecycle 👉 Agile: shorter product lifecycle ✅ Profit Margin 👉 Lean: lower profit margin 👉 agile: higher profit margin ✅ Innovation 👉 Lean: low👉 Agile: high✅ Lead time👉 Lean: known, low variability 👉 Agile: unknown, high variability ✅ Inventory👉 Lean: higher inventory turns, lower inventory levels 👉 Agile: lower inventory turns, higher inventory levels ✅ Inventory Stockout Cost 👉 Lean: low👉 Agile: high✅ Industry Examples 👉 Lean: automotive👉 Agile: fashionAny other aspects to add? Can a supply chain be both agile and lean?#supplychain #salesandoperationsplanning #integratedbusinessplanning #procurement

160

34 Comments