Impacts to Supply Chain: Maintenance Planning/Scheduling Processes and Inputs Denise Powell Vesta Partners SESSION CODE: EM1675

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2 Impacts to Supply Chain: Maintenance Planning/Scheduling Processes and Inputs Denise Powell Vesta Partners SESSION CODE: EM1675

3 LEARNING POINTS Critical Success Factors to achieve a smooth EAM Supply Chain: 1. Dates!! Understanding the impacts of dates to the Supply Chain 2. Importance of Cleansed and Accurate Master Data 3. Business Process Repeatable and enforced works for all end users involved 4. Training! Initial as well as On-going 5. Simplify! Take advantage of new technology available Ease of Use

4 MRO Process - ROI Refining the process for Supply Chain and Maintenance Planning Reduce costs Reduce unplanned failures Increased productivity The primary functions in Supply Chain consists of: Production Materials MRO/Inventory Sourcing/Procurement

5 Challenges within the MRO Process: Fragmentation and Vertical Thinking Obstacles to Supply Chain transformation Silo vs. Horizontal thinking Many companies focus on business processes for each of these areas but fail to integrate these processes end-to-end Lack of integration of these processes, highlighting/training users on the impact areas, can result in high procurement costs and affect asset availability.

6 MRO Process and Reliability Optimization: Combined effect It is often easy to directly focus on improving the use of the information system to support maintenance and MRO work processes, this can be a mistake. A study was conducted by Professor Brynjolfsson in the MIT Sloan School of Management where he looked at the impact on profitability as IT processes and supply chain business processes, such as maintenance, inventory management, and procurement were improved. By focusing on the improvement of the maintenance and MRO business processes there was a 27% improvement in profitability. However, by focusing on just the improvement of the IT systems, as companies often do, there was not in improvement in profitability, in fact, there was a 7% reduction in profitability, certainly not the desired end state. When a company focused on both improving the business processes and improving the IT systems there was a 75% improvement in profitability. It is for this reason that it s recommended to focus on improvement on both maintenance and MRO work processes, as well as the use of the system.

7 MIT Study Findings It is not solely an IT system function Understanding all of the processes Defining processes Moving from thinking vertically to horizontally Improve your processes with the partnership of SAP functionality Changing culture Moving from Independent Functions To an Interdependent culture

8 Critical Areas for a Successful PM and Supply Chain Relationship Accurate Planned Dates on the Work Order Required Materials and Resources Accurate Master Data Processes E-Procurement Training and Established Processes

9 Maintenance Planning Work Order Planning Properly planned work includes: The right materials & services at the right time utilizing the right resources Benefits of properly planned work are: Increased wrench time efficiencies Work is completed quickly and efficiently Lowering overall costs to business

10 Pointing at it won t help, the computer says we don t have any!!

11 Learning Point #1 - Maintenance Planning Dates Directly Impacts Procurement Maintenance Planning/Scheduling When does the job need to be executed? Are materials and/or services required? Work Order Scheduling dates directly impacts the procurement requirements Resulting Improvement Reduction of storeroom inventory Reduces the need for expediting procurement (cost) Work Order/Op Start Date Material Master Planned Delivery Required Date for Materials

12 MRP Logic 1. Net Requirements Calculation Forecast/Demand Based Net Requirement = Supply Demand Consumption Based Net Requirement (Reorderpoint) = Supply Consumption 2. Lot-Sizing Calculation Requirement Lot-Size = Net Requirement * Lot-Size Method 3. Lead-Time Scheduling (Time Phasing) Scheduled Requirement = Lot-Sized Requirement Date + Lead-Time Elements 4. Bill of Material Explosion Dependent Item Demand = Parent Item Requirement * Dependent Item Usage in BOM

13 Lead-Time Scheduling 3. Lead-Time Scheduling (Time Phasing) Scheduled Requirement = Lot-Sized Requirement Date + Lead-Time Elements Backward Scheduling Backward Scheduling is used when planning using MRP or Forecast Based Planning because the requirement date is in the future and known. The system starts with the requirement date then schedules backward to determine the release date of the requisition. Forward Scheduling Forward Scheduling is used when planning using Reorder Point Planning, because Reorder Point Planning is event driven. The material shortage date is the date that the shortage was detected by the planning run. If the stock level falls below the reorder level, procurement must be executed immediately. Forward Scheduling is used when planning using MRP or Forecast Based Planning if the start date calculated in backward scheduling is in the past.

14 Lead-Time Scheduling - Backward Lead-Time Scheduling (Time Phasing) Scheduled Requirement = Lot-Sized Requirement Date + Lead-Time Elements Opening Date Release Date PO Issue Date Goods Receipt Date Availability Date Total Replenishment Lead-Time Opening Period Purchasing Processing Time Planned Delivery Time Goods Receipt Processing Time

15 Lead-Time Scheduling - Forward Lead-Time Scheduling (Time Phasing) Scheduled Requirement = Lot-Sized Requirement Date + Lead-Time Elements Today PO Issue Date Goods Receipt Date Availability Date Total Replenishment Lead-Time Purchasing Processing Time Planned Delivery Time Good Receipt Processing Time

16 Work Order Dates Understanding how work order dates in SAP is very critical so that everyone involved understands what date defaults where and why I don t I have my part yet. The Basic Start Date/Finish Date (or Operation Dates) needs to reflect when the job is to be performed. Ensure work order start dates reflect when job to be performed. Manually adjust material requirement dates as needed. If dates aren t updated, many things are impacted such as material requirements demand (explained below) as well as metrics such as MTTR/MTBF If materials and/or services are added to a work order with a current date or date in the past, the material requirements date transfers to MRP/Procurement which will trigger a red light in MRP review. A red light signifies demand and action required immediately. Without any further communication, the dates provided by the system displays immediate action required. Accurate Requirements date is needed so to better manage delivery date of parts. With dates in the past, this can lead to an increase in shipping charges to the plant to rush parts to the facility. Not just MRP/Inventory is affected but non-stock & service requisitions are impacted as well. The work order dates transfer to the requisitions seen in the Buyer queue or in some cases the process is automated to PO. Date Management on work orders is critical to the parts procurement process.

17 Learning Point #2 - Importance of Cleansed and Accurate Master Data Accurate master data aides in the Maintenance Planning and Supply Chain processes. It s the beginning/the base for everything that follows! Master Data includes: Material Master records Procurement Records Info Records and Source Lists Equipment Master records Task Lists/Maintenance Plans Bills of Materials The Perfect Formula!

18 Accurate Master Data Material Master Cleansing of the current material masters should be a focus area, particularly for those materials used by critical equipment, due to the critical nature of material masters and their direct impact on other master data requirements. Material master data key planning elements: Accurate Planned Delivery Time Material Descriptions with proper taxonomy Manufacturer Part Numbers Global material numbers (searching based on all locations that store the material) Proper stocking levels Material criticality PIR s/source Lists/Vendor Master

19 Accurate Master Data Material Master Having accurate Planned Delivery Times in the Material Master is critical to the work order planning process Transaction WPDTC

20 Accurate Master Data Material Master Institute a process for a regular review of Planned Delivery Times. Transaction WPDTC is a tool in SAP to assist with the review of PDT in all these master records. Can be executed in "Test" mode to perform the review as well as can perform the actual PDT change in mass.

21 Learning Point #3 Business Process Business Processes: Must be Global Must be Repeatable Must be Followed Consider Safety in your organization, Safety is #1 There are Safety Processes/Procedures that must be followed or the possibility of injury. Similar is true with good Maintenance Business Processes.must be followed or there is confusion/ inconsistent or undesirable results!

22 Bad Example of a Business Flowchart

23 Learning Point #4 - Training On-Going Training is Key to Success There is a natural evolution after implementation of the system, training is no longer a priority. People only learn the bare minimum to perform the role. 1. Initial training occurs and I learn to do what I need to do to perform my job. Don t really understand the impacts or integration to other teams 2. I now understand more of what SAP can do but am I using the system correctly? I need more in-depth training for understanding 3. On-going training - Changes to people and roles occur, ability to have a more formalized super user approach that allows for a better understanding of the system or new enhancements/system changes

24 Learning Point #5 Technology Improvements Take advantage of SAP enhancement packages & business functions for SAP ERP that includes functional enhancements, industry-specific enhancements and simplifications. Tools Corded scanners Mobile devices Barcoding the process Work orders Bins/Parts/Pick List Implementing system enhancements for intuitiveness Apply KISS Fiori Apps Personas Incorporate the use of E-catalogues (internal & external/oci)

25 Enhancements PM Mass Change Orders Operations Functional Location Equipment

26 Enhancements Change Requirement Date (EHP4)

27 E-Catalogues: The Power of the Web Age of internet suppliers distributors Open access to material searches and ordering Shopping carts Ease of use Automated procurement processes Ariba/SRM, etc. Downside of direct Web purchases Loss of history at work order and asset level Duplication of purchase details as reference point D

28 OCI: Bring it into your system What is OCI? SAP Interface: Open Catalog Interface Benefits Remain within SAP environment Access to internal / external vendor catalogs Procurement process from within SAP work order Utilizes superior online catalog functionality Maximizes the benefits of both SAP PM as well as Procurement solutions Improved business process D

29 OCI Benefits SAP Plant Maintenance Supplier Catalogs Compatible directly within SAP work orders Streamlines and improves procurement processes Internal or external catalogs Reduce non-critical storeroom stock Other SAP Catalog interface functionality touch points D

30 E-Procurement Tools: OCI Benefits Ties supply chain directly to the work order planning process E-procurement processes meet the work order History at the work order / asset level maintained Multiple e-procurement options available SRM, Ariba, etc. Full functionality of these tools still utilized further maximized! E-procurement is flexible Collaboration with vendors Moves to a vertical partnership solution Incorporate your material masters D

31 SAP UI Solutions Fiori & Personas SAP Presentation

32 SAP UI Solutions Fiori Apps

33 Mobility/Barcoding Barcoded Work Orders Maximize Efficiencies Parts disbursal Time confirmations Advantages/Value Efficient data entry method Eliminates data entry errors Increases efficiency of work order/work management process

34 SAP Mobility Solutions

35 KEY LEARNINGS 1. Dates!! Understanding the impacts of dates to the Supply Chain 2. Master Data - Importance of Cleansed and Accurate Master Data 3. Business Process Repeatable and enforced works for all end users involved 4. Training! Initial as well as On-going 5. Simplify! Take advantage of new technology available Ease of Use

36 THANK YOU FOR PARTICIPATING Please provide feedback on this session by completing a short survey via the event mobile application. SESSION CODE: EM1675 Denise Powell Manager, Global Business Development, Supply Chain-Procurement dpowell@vestapartners.com For ongoing education on this area of focus, visit

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