IBP Jan 2017 IBP Case Study –Weir Minerals - SAPassets.dm.ux.sap.com/ru/ibp-infoday-8feb17/pdfs/SAP_IBP_8.02.17... · IBP ©2017 Westernacher Consulting AG IBP Case Study –Weir

IBP

© 2017 Westernacher Consulting AG

IBP Case Study – Weir MineralsJan 6th 2017

Lars Sondergaard – Managing PartnerHead of Global Business Unit Planning at Westernacher

Jan 2017

Expected Benefit The process and tools Lessons learnedIntroduction of customer

Project approachWhy S&OP Q & A

1 © 2017 Westernacher Consulting AGAll rights reserved

The Weir Group overview § Leading global provider of engineering solutions to mining and minerals, oil and

gas, power and industrial markets§ Established in 1871 with a footprint in over 70 countries employing more than

14,000 people across three divisions§ FTSE 100 company§ Minerals - End-to-end solutions provider with original equipment and aftermarket

products, including high quality pumps, valves, wear resistant linings, cyclones, crushing & screening equipment, dewatering systems, hose and controls




Weir Minerals - company structure§ 20 production sites§ 55 service centers§ Sales & Distribution Centers worldwide

(not pictured)§ Over 6,300 employees§ Numerous sales offices

Major customers




Weir Minerals Manufactured Products

Cone CrushersSlurry Pumps

Hydrocyclones

Positive DisplacementPumps

Screens

Rubber Hoses

Rubber sheet and linings

Valves

Verticalturbine pumps




Minerals needs to improve its S&OP response to customer and market changes to optimize profitable outcomes, in close to real-time:

Why does Weir need a S&OP process?

§ S&OP approach was fragmented and not harmonized

§ S&OP process was a slow, elaborate and manual process

§ Little consistency in how demand is consolidated an translated into supply requirement and there is little system visibility of Regional or Global demand and capacity situation

§ Long lead times even though capacity would be available elsewhere in the network




Objective – The journey to ‘S&OP Excellence’– Gartner S&OP Maturity Model

Weir objective is to move from ~1 to >3 within 6 months of go-live date, with all entities at 3 by 2017, and improving up to and beyond 4



ReactingRCCPAsset UtilnInventory Levels

AnticipatingPlan manuf capacitiesForecast errorInventory turnsFunctional costs

CollaboratingNPIProfitabilityMarketing plansService LevelsWorking capital

OrchestratingDemand sensingDemand tradeoffsService strategiesProfitMarket share


Sales & Operations Planning – S&OP§ Sales & Operations Planning (S&OP) is a set of decision-making processes,

to balance demand and supply, to integrate financial planning and operational planning, to deploy strategy.

§ In narrow terms : S&OP is about CHANGE.

It provides a “window into the future”, so that companies can1) see potential problems ahead of time 2) take corrective action and 3) prevent potential problems from becoming a real ones.




Expected benefits



Benefits

Customer Service Improvement • Through planning and leveling of constrained

resources the avg. Sales order cycle time is reduced

• Uncover capacity restrictions within the network and shift production accordingly to solve bottlenecks before they occur; improve the “First Time Fill” & deliver on confirmed delivery date

• Higher forecast accuracy due to better demand visibility supported by sophisticated prognosis models facilitates network wide reduction of inventories and safety stocks.

• Balance inventory throughout network –shift over-inventories to short-handed locations

Inventory Reduction

• Prevent obsolete material by monitoring the “days of supply” across the entire network, alerting the planners early to potential issues using threshold values

• Recognize surplus material and balance it throughout the network

Surplus & Obsolescence Reduction

• By using an integrated planning solution with scenario capabilities, balancing of ordering, inventory, transportation and production costs can be achieved across the entire enterprise

Supply Chain Cost Reduction

Soft Benefits such as: • Enhanced Teamwork• Better Communications (in- and external)• Better Decisions in shorter time frames• Strategy Linkage• Improved Accountability & Control• Improved Foresight / Window to future

• Reducing risk of new product launches by balancing capacity between the existing and new product(lines).

• Creating visibility to all parties involved.

New Product Launch Risk Reduction

• Cross-plant recognition of over- and under-utilization giving options of optimization across the network or potential for contract manufacturing

• Intra-plant recognition of over-and under-utilization enabling plant utilization optimization measures (e.g. labor planning)

• Early recognition of production bottlenecks, allows for resolution measures to be taken well in advance

Plant Productivity Improvement

Working Capital improvement: • Quote to cash time is shortened due to

better planning capabilities.

Based of our past experience, the following benefits can be realized.


Expected benefitsWhat problems will S&OP solve and HOW will it help solve them?

§ The primary objectives of S&OP are: § Improved Customer Service (On Time Delivery, Lead Time, Service Levels)§ Improved Operational Efficiency (cost management, asset utilization,

inventory, plant & equipment deployment)

§ S&OP can help improve performance through:§ Better forecast accuracy and dialogue§ Faster planning and execution response times§ Better visibility of demand and supply mismatches




§ Service level: 5-10%

§ SKU Rationalization: 10-15 %

§ Order Fulfillment Lead Time: 10%

§ Inventory Cost Reduction: 5%



Expected benefits in numbers


• Input from Sales, Marketing, Finance and Operations, including quantity, price, revenue, and margin

• Consensus Demand Planning and New Products

• Based on updated demand plan, understand capacity and material impacts, including contract manufacturing

• Understand long-term gaps in supply and demand

• Review and resolve outstanding supply issues• Compare constrained plan with finance plan • Define and compare scenarios

• Escalate resolution plans with scenarios, if applicable• Review key changes since last meeting

Demand

Supply

Balance

Executive Review

Sales & Operational Planning




Years

Months

Weeks

Days

Sales & Operations Planning

Product Design &Development

Budget & Finance Planning

Demand Planning

Master Planning

Customer Demand Management

Replenishment Planning and

Execution

Production Planning

Production Planning

Strategic Business Planning

Differentiating Planning Processes by timescales

Procurement Planning




Sales and Operations Planning



Tasks

Outputs

• Collect unconstrained demand, from multiple sources:- Firm, anticipated

orders- Product families- Assumptions

• Align to revenue and margin targets

• Approved Consensus Demand plan (Forecast Demand)

• Propagated to Demand/ Supply Alignment

• Collect supply data, from multiple sources- Inventory balance,

targets- Production plan- Procurement plan- Production costs- Lead times- Shift levels- Materials review

• Approved Consensus Supply plan (Available Capacity)

• Propagated to Demand/ Supply Alignment

• Bring together Consensus Demand and Supply plans

• Review with stakeholders to identify gaps

• Develop alternative scenarios to address gaps

• Identify scenario that best meets customer, operational and financial goals

• Unresolved gaps escalated to Executive Review

• Review proposed sales and operations plan

• Review unresolved gaps• Agree final plan that

meets KPIs

• Approved upside scenarios

• Published final plan for all stakeholders

• Balanced plan for execution

• Input to financial forecasts

DemandReview Balancing Executive

ReviewSupplyReview


ECC IBP - S&OP C4C

Finance PlanCO/PA Finance Plan

Statistical Forecast

Sales OrdersSales Orders

Consensus Demand

Constrained Demand

Supply Plan

Inventory TargetInventory

Opportunities

Sales Forecast

Sales Forecast

Inventory

Constrained Demand

Supply Proposal

S&OP Document flow

Opportunities



Dem

and

Supp

ly


Working with Dashboards and Planning Views

T1_OE_Overview

T1_OE_Detail

T1_Spares_Overview

T1_Spares_Details

T2_OE_Detail

T2_Spares_Overview

T2_Spares_Details

DP_Input_Opps Consensus Demand

Forecast vs. Financial Budget

Forecast vs. Demand History

Changes in the Forecast since previous month

Deviations between current

and future Forecast

Planning Views

Reports

Supply Plan Overview

Capacity Overview

Capacity Details

Supply Plan Details

Inventory Performance

UncoveredRevenue +

Margin

Constrained vs.

Finance Plan

Forecast AccuracyBill of Material

Where Used List

Dashboards

Demand Planning

Local Demand/ Supply Balancing

Regional Demand / Supply

Balancing

Executive Review




Working with scenarios



BaselineScenario

ConstrainedScenario 1

ConstrainedScenario 2

UnconstrainedScenario with Alerts

been triggered

ConstrainedScenarios dealing

with the Alerts

What If

XY

Z

What If

AB

C

NewBaselineScenario

Copy Compare & Decide Copy

Baseline Scenario without

unaddressed Alerts


Working with meetings

Forecasting & Demand history analysis

Load conversion and analysis

Demand meeting

Supply meeting

Balancing Meeting

Executive Meeting




Demand exceeds capacityIncrease Capacity Decrease DemandWork overtime Challenge demand (reductions possible?)Increase shifts Postpone orders

Build stock ahead Reduce promotionRe-allocate production to other plants Order freeze

Outsource Cut back inventoryCAPEX, Tooling, Business Acquisition

Capacity exceeds DemandDecrease Capacity Increase DemandReduce shifts Expedite orders

Schedule absence Schedule promotions

Reschedule maintenance Introduce new products

Insource

Resolving imbalances:




Data model§ IBP is not a reporting tool – it has a complete data model to depicture:

§ Master Data *§ Transactional Data§ Planning Functionality§ Simulations

CURRENCYCURRID

CURRENCYTOCURRTOID

CUSTOMERCUSTID

CUSTOMERPRODUCTCUSTID; PRDID

EVENTEVENTID

EXCHANGERATECURRID, CURRTOID

LOCATIONLOCID

LOCATIONFRLOCFR

LOCATIONPRODUCTLOCID; PRDID

PRODUCTPRDID

PRODUCTIONRESOURCERESID; SOURCEID

PRODUCTIONSOURCEITMPRDID; SOURCEID

RESOURCERESID

RESOURCELOCATIONLOCID; RESID

RESOURCELOCATIONPRODUCT

LOCID; PRDID; RESID

SOURCECUSTOMERCUSTID; LOCID; PRDID

SOURCELOCATIONLOCFR; LOCID; PRDID

SOURCEPRODUCTIONLOCID; PRDID; SOURCEID

SPRODUCTSPRDID

UOMCONVERSIONPRDID; UOMTOID

UOMTOUOMTOID

COMPONENTPRDFR

Currency

Pricing Customer

Material MasterVendor

Info Record BOM Workcenter

Routing

*picture not complete




Dashboards and Charts




Dashboards and Charts




Planning Views




Collaboration using SAP JAM




Challenges so far…Do not underestimate the following factors:

§ New Software> IBP S&OP is completely flexible> Software and Implementation knowledge is key

§ Integration of system through HANA Cloud Integration

§ Process and Data> Product hierarchy development> Connection to C4C

§ Organizational Change Management - Harmonization Effort> Across Regions and Companies> Across Departments (Sales, Production, Finance)> Aligning Planning Level -> Rules for disaggregation




Challenges so far…



TECHNICAL PROCESS AND DATA HARMONIZATION EFFORT

• IBP S&OP is completely flexible

• Software and implementation knowledge is key

• Product hierarchy development

• Connection to C4C*

• Across regions and companies

• Across departments (Sales, Production, Finance)

• Aligning planning level à Rules for disaggregation

Please do not underestimate the following factors





1 : Technical

Debugging is not possible

Standard SAP IBP in the Cloud

Debugging is possible

Standard Process Process Design





2 : Finding the right Planning Level

Company

Business UnitMarket Segment

Product Family

Product Sub Family

Brand / ModelPackaging Size

Stock-keeping Unit

Stock-keeping Unit by Customer

Stock-keeping Unit by Customer by Location





Consolidation of hierarchies between:Countries and regionsSystemsSales, Production, Finance (Engineer to Order)

è Level 1 – OEM

è Level 2 – CYCLONES, VALVES, PUMPS, SCREENS , etc.

è Level 3 – SLURRY PUMPS, POSITIVE DISPLACEMENT PUMPS, DEWATERING, etc.

è Level 4 – Type – Genesis Hydrocyclone, Separator

è Level 5 – Size – 300, 350, 400, 450

è Level 6 – Material – Metal, Rubber, FM120

è Level 7 – Build – Bareshaft Pump, Pumpset, Bareshaft Froth Pump

StandardProduct Hierarchy

Extended Product Hierarchy(Material Classification)

2 : Process and Data


Regional Balancing



3 : Harmonization Effort

IntegratedPlan

Sales

OperationsFinance


Regional Balancing

APAC Region

Default manufacturing facility

Customer location

Alternative manufacturing facility

Global BalancingDefault manufacturing facility

Customer location

Alternative manufacturing facility

APAC Region

Europe Region



3 : Harmonization Effort


Roll-out Strategy1st stage : Foundation S&OP (AS-IS)

§ VOLUME BALANCING§ in-house production resource requirement / capacity requirement plan § load levelling / tactical outsourcing-insourcing

2nd stage: Capable S&OP (TO-BE Phase 1)§ SINGLE SET OF NUMBERS

§ Integrated sales, supply, and financial plan

3rd stage: Integrated Business Management (TO-BE Phase 2)§ STRATEGY DEPLOYMENT

§ Integrated sales, supply and financial plan§ new markets, product launches , acquisitions , supply chain developments




Q & A




Webinar describing the Weir Minerals IBP process: http://www.westernacher.com/en/webinar/sap-ibp-use-case

Sales and Operations Planning Maturity Modelhttps://www.gartner.com/doc/1460715/sales-operations-planning-maturity-does

Sales and Operations Planning – How-To HandbookThomas F. Wallace and Robert A. Stahl, 3rd Edition 2008



Additional Information

© 2015 Westernacher AG. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of Westernacher AG.The information contained herein may be changed without prior notice.

Some software products marketed by Westernacher AG and its distributors contain proprietary software components of other software vendors.National product specifications may vary.

These materials are provided by Westernacher AG and its affiliated companies (“Westernacher Group”) for informational purposes only, withoutrepresentation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warrantiesfor Westernacher Group products and services are those that are set forth in the express warranty statements accompanying such products andservices, if any. Nothing herein should be construed as constituting an additional warranty.

Westernacher and other Westernacher services mentioned herein as well as their respective logos are trademarks or registered trademarks ofWesternacher AG in Germany and other countries.


Westernacher has a long history of optimizing Integrated Business Planning Processes solutions with Best Fit SAP Solutions

Multiple S&OP/IBP POCs to date

SAP “IBP” PioneerWesternacher’s been building custom ‘IBP-like’ solutions with the SAP toolset and add-ons since the late 90’s.

Leading IBP Process and SAP implementer in Discrete manufacturingusing best practice data models and our own system and methodology

Early deployment of SAP IBPSAP S&OP/IBP experience from the beginning, first hand experience and solution input as SAP partner

One of first to implement a Full Cycle SAP S&OP in the Discrete Industry. Strategy, approach, design to ensuring successful global rollout

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Why Westernacher




Westernacher brings over 10 years of experience in optimizing Planning Processes. We will bring this experience to a no obligation half / fully day on site workshop to discuss a potential engagement.

Workshop objectives

• Identification of specific organizational challenges in your company

• Provide SAP IBP solution overviews

• Establish potential solution approach, based on selected live SAP IBP demo scenarios

Offer for a half / full day (free of charge) workshop at your premises

Suggested participants from your side

• Managing Director / Board Member• Head of Corporate IT• Process owner Planning • Finance

Proposed agenda

Potential participants from Westernacher

• Lars Sondergaard, Managing Partner and Head of Global Planning Practice

• Dr. Steffen Blunck, Managing Partner Senior Consulting and Solution Architect

• Christian Schmaus, Managing Partner, Senior Management Consultant

• Meet & Greet, short introduction of participants and companies • Presentation and discussion of IBP-Processes • Discussion of challenges in your organisation

• Overview of SAP IBP solution • Potential solution approach, based on selected SAP IBP scenarios • Summary and next steps

The content for this workshop is only a proposal and we will be happy to incorporate any individual requirements. We recommend a short teleconference before the workshop to finalize the agenda.



Documents

IBP Jan 2017 IBP Case Study –Weir Minerals - SAPassets.dm.ux.sap.com/ru/ibp-infoday-8feb17/pdfs/SAP_IBP_8.02.17... · IBP ©2017 Westernacher Consulting AG IBP Case Study –Weir