We put together a proposal for a leading global gas company which involved reviewing their planning and logistics operations in order to identify and implement immediate quick hits as well as long term process improvements. At the same time, we outlined responsibilities for the Logistics Director position within this organization.
The goal was to set up a consistent planning and logistics framework both domestically and globally to ensure that all manufacturing plants operated to a similar procedure (as far as safety stocks, inventory DOS, planning horizons, etc). One of the challenges was setting up storage locations so that finished goods were delivered directly to the customer as opposed to sitting in the manufacturing plant and accumulating inventory carrying costs. Each manufacturing plant had to have an associated storage location which shipped product directly to the customer. We looked for opportunities to reduce working capital by standardizing finished good stocking levels and developed an ABC inventory classification among the plants. In addition, we outlined how the forecasting and long term inventory planning process had to be consistent across the plants.
Finally we took a look at the current organizational structure of the logistics department and recommended some restructuring to take into account the plants in Asia and Europe. We outlined the monthly planning process that each of the managers would be responsible for as far as day to day and long term. Such recommendations involved:
- Performing monthly reviews with manufacturing to analyze the impact of new routines. Implement revised production cycles into planning and scheduling routines.
- Perform weekly reviews with manufacturing to understand any variations to the production plan. Review the current production schedule for any “oversold” items and adjust for production.
- Resegment into ABC class by sales volume.
- Monthly review of safety stock targets vs actual month end inventories. Revise safety stock amounts on an as needed basis. Change safety stock targets to reflect the sku’s demonstrated replenishment leadtimes, expected demand and demand variance. The decision to move forward with revised safety stock targets will be made in the monthly S&OP meeting (which is led by the Supply/Demand manager and all logistics managers must attend).
- Perform monthly MTD sales/orders vs forecast to determine if future forecast adjustments need to occur. Managers will also determine and propose if additional inventory needs to be built. This information will also be presented in the monthly S&OP meetings.
By following these process improvements there would be reductions in inventory as well as a defined process which the department lacked, especially with more and more business being done in Asia and Europe.