DEMAND DRIVEN SUPPLY NETWORK WITH SCOR FOR UZEL

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1 Fit4Future DEMAND DRIVEN SUPPLY NETWORK WITH SCOR FOR UZEL Istanbul Chamber of Industry 25.Mart.2008 Tolga Yıldırım Supply Chain Strategy Specialist

2 ABOUT SPEAKER Tolga Yıldırım Central Supply Chain Strategy Department, Specialist. Born in 1979 High School: Kadıköy Anadolu Lisesi Graduate: İstanbul University Mechanical Engineering 2001 Post Graduate: Boğaziçi University MBA :Koçtaş Yapı Marketleri Purchasing dept, Product Manager onwards: UZEL, Central Supply Chain Strategy dept. Specialist. Responsible for the execution of projects and other initiatives for increasing Supply Chain Effectiveness

3 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

4 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

5 About Uzel Uzel Group is a leading industrial Group, primarily engaged in the design, manufacturing and distribution of agricultural tractors, implements, harvesters, diesel engines and automotive components.

6 About Uzel Customers in more than 90 countries Suppliers in 20 countries Companies in 10 countries 633 Dealers in Turkey 205 Dealers & Distributors in Europe 8 Dealers in Canada 16 Dealers in USA 4 Business Units 18 Business Segments 14 Brands World s 7th biggest Tractor Park 2003 in Turkey: 1,000,000 units Uzel s Share : ~ 41 %

7 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

8 STARTING POINT: UZEL S CHALLENGING TARGETS FOR GROWTH In order to keep up with the aggressive growth targets, a boost for UZEL supply chains in terms of organisation, processes and methods was necessary. Size, Maturity organization processes methods To be developped according to growth targets! Maturity Target 2010 Fit 4 Future : Developing UZEL's Supply Chain - towards the required performance - without losing the existing success factors, such as flexibility, lean organization, high motivation of keyplayers, etc. Size 2006 As-Is 2010 Time

9 THE BASIS: PROCESS MANAGEMENT The scope and dimensions of this project required a very high process management capability. PROCESS MANAGEMENT Organisational structure Definition of End-To-End processes Business unit structure F4F Integration of acquired companies Multi- Brand strategy F4F Supply Chain Global physical supply network Detail definition of processes Performance IT landscape

10 UZEL S SCM LOGIC: VALUE FOR THE CUSTOMER Demand Driven Supply Network is the customer oriented logic behind UZELs SCM approach. AMR Research: Demand Driven Supply Network It simply means building all supply chain processes, infrastructure and information flows to serve the downstream source of demand - whether a consumer in the supermarket or the department of defense rather than the upstream supply constraints of factories and distribution systems. Raw Material Suppliers Suppliers Production Centers Distribution Centers Customer Type 1 Customer Type 2 Customer Type 3

11 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

12 PROJECT APPROACH: SCOR Analyze Basis of Competition P MK Business Segment Matrix Key Success Factor- Analysis Configure Supply Chain Supply Chains Supply Chain Strategy Align Performance Levels, Practices and Systems Process constraints Process definition Consolidation Implement SC Processes and Systems

13 RESULTS: KEY SUCCES FACTOR ANALYSIS A set of Key Performance Indicators (KPI s) were created based on the SCOR model and adopted to UZEL s requirements Top Level Level 2

14 RESULTS: CHANGES IN PROCESSES Within the To Be concept supply chain processes were significantly improved according to the identified Interference Factors and Key Success Factors.

15 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

16 Tübitak- Eureka Application Process Definition of project as a process R&D Project Consortium formation ( Uzel Makina, Holder GmbH, Uzel Otomotiv, Uzel Parça, Uzel Lojistik and Uzel Sistem) National Application Process to Tübitak ( December 2006-March 2007 application, audit, approval, contract) Eureka Application ( April 2007 ) National Approval by Germany ( May 2007 ) Eureka Project Approval by Eureka General Assembly ( June 2007)

17 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

18 Supply Chain Planning Supplier Material Planning Production Planning Inventory Planning Demand Planning Customer Yearly Monthly Weekly Daily Strategic Planning Demand Planning Mid Term Planning Production Planning Detailed Scheduling Promise to Customer In the mid-term, should I invest on productive plants? To define reliable demand forecast, statistics, promotions, product lifecycles, over the different time horizons Advanced statistical methods,graphical views, Alert monitoring Delivery, Production and Purchase Planning,Approximate finite capacity, manage inventory planning and stock policies. Determine finite feasible production plans by taking into account the constraints of production (capacity, resources, critical availability). To determine the optimal sequence, considering all relevant constraints and schedule the production To perform availability check for Customer Orders against production plan

19 IMPLEMENTATION ROAD MAP Analytic SCM Demand Planning Operational Excellence Supply Planning Supplier Management FIT FOR FUTURE PROJECT SCOPE KPI Implementation Material & Product Classification Demand Planning & Forecasting Reduced Number of End Items (Products) Order Management (Back order processing with Promise to Customer) Master Data Maintenance Barcode Supported Movements Rework Processes Kanban Stock Policy Determination according to classifications Production Planning with detailed scheduling and mid term planning Online Feedback after Production Supplier Management

20 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

21 PHASE II-PROJECT TEAM STRUCTURE The Project Team consisted of 52 Uzel team members and 10 external consultants in addition to project management office.

22 UZEL Supply Chain Management Implementation UZEL SUPPLY CHAIN MANAGEMENT DEMAND Driven Supply Network With SCOR for UZEL BUSINESS PROCESS MANAGEMENT PERFORMANCE MANAGEMENT FUNCTIONAL PROCESS IMPLEMENTATION IT TOOL IMPLEMENTATION SUPPORT PROJECTS KPI IMPLEMENTATION NEW PROCESS INTRODUCTIONS (BLUE PRINT) NEW ANALYSIS INTRODUCTIONS MATERIAL CLASSIFICATION ; PRODUCT CLASSIFICATION SUPPLIER MANAGEMENT APS Implementation WORKFLOW KANBAN BARCODE PHANTOM MATERIALS KPI SETTING BW INTEGRATION

23 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management Results

24 DP Features & Capabilities: Overview Demand Planning is the process of generating, collecting and aggregating data to create the most accurate forecast of customer demand, based upon products historical sales pattern and future market intelligence

25 DP Planning Process Overview The demand planning process will leverage on the following sub-processes that will provide to the Company the required information in order to manage the Sales and Operation Planning process at the different levels. Order History MKT Key Figures Mgmt Guidelines Annual Forecast Agreement between the different functions on sales targets Completed. In In Use Use Sales Targets Sign Off Order History Sales Targets Orders on Hand Customer FCST Rolling Forecast Input for Order Chasing Definition of DP for the medium term Adherence to targets monitoring countermeasures FCST accuracy monitoring Released Demand Plan Sales Order Management Adjustments and ATP Missing order collection Adjustment in the short term FCST consumption monitoring Material Constraints Capacity Constraints Supply Planning Constrained Supply Plan

26 Accomplishments Forecasting Process A forecasting process consolidating both bottom-up and top-bottom approaches is desgined as a process. Top down Total Market P.G Segment Total market MLR Segments Disaggreagtion Forecast at model level UZEL Demand 4 P.G Segment Model Bottom Up Statistical Forecast To have a better forecasting process following tools are used. Advanced Statistical Tools; for an accurate forecasting Enhancements; to increase the awareness and control of users on the system Different planning areas; for management of the different processses Life Cycle Planning Tools; to have a better control on phase-in & phase-out parts Promotion Planning Tools; to put the effects of promotions Macros; for complicated calculations, different alerts for users, online data transfers Notes management; to have an enterprise intelligence

27 Global Availability To Promise (ATP) ATP Request Sales Rules-based, multi-level ATP Alternative locations Alternative products Integrated with Production Planning Checks against actual production plan Considering capacity constraints Integration with demand planning/forecasting Product Allocation Confirmation

28 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

29 About Production Planning Assembly and Workshop Planning Optimizes the Production Sequence following restrictions (line capacity order date, other constraints) to maximize the output on a given line-capacity to smoothen the production flow to be able to give timely information about requirement-dates for components

30 Core Planning Model The production planning process will leverage on the following sub-processes that will provide to the company the required information in order to manage the production planning and detail scheduling on different time horizons. Demand Plan released from DP will trigger the plan Mid Term Planning Rough cut capacity plan and purchasing plan will be performed Completed. In In Use Use Mid term Planning Release Rough cut plan previously will be re-planned according to latest version of demand (Sales Orders and Demand Plan). Production & Scheduling Definition of sustainable production plan according to main constrains of assembly line (product mix, complexity of products, cabin, engine). Input for Planned Order Chasing Release of plan To ECC for component Planning Order Release Availability Check and Staging of components - Stocks and Purchase Orders good receipts - Planned Order Closure MRP Planning Planned Order Management External Procurement Planned Order Management Requirement Reduced

31 Short Term Planning Planning Sequence Short term production planning is composed of following main steps: - Total working days and calendar maintenance: Step 1 Capacity strategy for the new month is defined - Lean Block Planning Engine Step 2 Based on capacity strategy and demand, Block Intervals are calculated - Planning Heuristic Step 3 Planned orders are created with infinite capacity - Scheduling Heuristic Step 4 Step 5 Step 6 Planned orders are scheduled taking the capacity constraints (tractor, engine, cabin assembly) into account - Bottom Up Heuristic Schedule is improved based on the supply plan -Rescheduling after Bottom Up Heuristic Since Bottom Up heuristic works in infinite scheduling mode, this step corrects the plan based on the capacity constraints

32 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

33 Supplier Management Workpackage Deliverables Completed. In In Use Use IT infrastructure for Detailed monitoring of supplier performance On-line alert creation for defined events Workpackage Content Design prototype test the IT tools for collecting and reporting supplier performance data. Deliver necessary trainings

34 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

35 Analytical Supply Chain Management Workpackage Deliverables In In Progress IT tool for supply chain performance monitoring of consortium partners Workpackage Content IT tools for supply chain performance management Design Prototype Test Implement

36 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results TUBITAK-EUREKA Application Implementation Roadmap Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

37 Material Classification and Inventory Management Workpackage Deliverables In In Progress IT tool for Classification of materials/ products Effective management of inventory for after market spare parts Workpackage Content IT tools for material classification and inventory management Design Prototype Test Implement

38 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results Implementation Roadmap TUBITAK-EUREKA Application Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

39 Master Data and Engineering Change Management Workpackage Deliverables In In Progress IT system for On-line Monitoring of all master data and engineering change management processes Creation of on-line workflow triggering systems Workpackage Content Design of master data and engineering change management processes Creation of workflow and monitoring prototypes Integrating the system to ERP system Conducting necessary tests and go-live of the system

40 AGENDA About UZEL Why F4F? Introducing Project F4F phase I Results Implementation Roadmap TUBITAK-EUREKA Application Introducing Project F4F phase II Benefits Demand Planning & Order Processing with Available to Promise Production Planning Supplier Management Analytical SCM Material Classification & Stock Policies Master data & Engineering Change Management

41 Project Benefits Finite mid and long term planning (Rough Cut Capacity Planning) Finite short term production scheduling/sequencing using special heuristics developed by the partners Integration between / consideration of Forecast, Procurement, Production execution Availability Check of planning results before release to execution On-line production execution information delivered to internal parties. Define triggering events of workflow and make system monitoring possible for all master data and change management processes Application of sophisticated mathematical tools for forecasting processes Delivery confirmation sent to customer in one day Create order processing infra-strucuture to serve customers from all over the world Systematic approach to define a supply strategy depending on characteristics of suppliers and supplied materials Continuous Monitoring of supplier performance in order to react to weaknesses quickly Introduction of SQA team as organizational unit that support assessing suppliers and definition of necessary activities to improve suppliers Advanced stock management tools for after market and warranty purposes

42 Things We ve Learned Although all group companies, Working with six different companies with different mindset is not an easy task ( Uzel Makina, Holder GmbH, Uzel Otomotiv, Uzel Parça, Uzel Lojistik and Uzel Sistem) Defining roles & responsibilities of different companies are very important. Participation of international Partner in project application process is significantly important. Program Management and full time project office functionality that manages all project teams is crucial

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