Chemical Processing - January 2008 - (Page 26) mercial, finance and supply-chain management. At the same time, however, there’s clearly room for improvement. In looking at the “frozen period” used for S&OP, 45% of respondents cited one month and 24% said they use a shorter period — but 28% indicated that they had no frozen period in effect. Not surprisingly, given these varying approaches, the volume variance experienced by respondents covered the full range from 0% to 100%. Meanwhile, the execution of the S&OP process is not uniformly strong among respondents. More than three-quarters reported having reliable accurate data feeding frequent responsive S&OP processes, but 17% said they were working with unreliable inconsistent data. In addition, less than half the respondents reported having optimization capabilities or frequent audits to improve their processes. Production scheduling. Production scheduling appears to be an area where there’s relatively little opportunity for major improvements. Many respondents said that their companies have integrated scheduling technology, that they have been using those tools for five or more years, and that they are at least moderately satisfied with those tools. Many noted that they are able to re-plan on a weekly basis and the process takes less than a day. For both unplanned transitions and schedule variance, companies appear to be hitting their targets. Across the study population, unplanned transitions — that is, changes to products or campaigns that were not in the plan one month earlier — were targeted and realized at about 20%. For schedule variations — that is, times when operations deviate from the production plan — targets averaged 20% for make-to-stock and 24% for make-to-order. Actual results were 25% and 28%, respectively. For many companies, production data or triggers are available during the production run and there’re near-real-time links to the order-promising function. Here again, the 2007 findings show improvement from 2005, when it was more common for companies to have to wait until the end of a shift or even the next day to see what was going on in manufacturing. Inventory target setting and deployment. When it comes to managing inventory, 50% of respondents said that their supply chains are predominately demanddriven, while 46% said their supply chains are a balance of production- and demand-driven. Only 4% of the participants’ supply chains are predominately driven by production constraints. It’s encouraging to see that 57% of respondents used statistical techniques to determine inventory levels while another 36% target a predetermined number of days. Meanwhile, 36% of participants have a process for regularly monitoring and correcting inventory levels. Forty-six percent indicated that, although they regularly monitor inventory levels, resolving imbalances is a challenge because of demand or supply variability. Eighteen percent said that they only conduct periodic initiatives to correct inventory levels. The critical commercial connection A number of issues around the impact of front-end commercial decision-making on the supply chain were uncovered by the 2005 Accenture supply chain study. As a result, this year’s study included a separate section that explored the commercial end of the supply chain and practices such as customer segmentation, SKU (Stock Keeping Unit) management and pricing. The activities of the commercial functions — such as sales and marketing — may seem somewhat beside the point for those involved in manufacturing but, in fact, they are highly relevant. The decisions made in sales and marketing affect the entire supply chain — and they are, unfortunately, often made without input from manufacturing. Indeed, in the 2005 study, it was clear that at many chemical companies commercial decisions are made by the sales and marketing functions and largely “inflicted” on manufacturing and supply chain operations. The 2007 study looked at a number of commercialfunction activities that have an impact on manufacturing operations, including: Policies. The research showed that policies that directly affect chemical companies’ manufacturing operations often aren’t clearly documented or enforced (see Table 1). This makes it difficult to optimize manufacturing. Customer segmentation. Many respondents reported www.chemicalprocessing.com >> Improvement opportunity Best practices are documented and proactively shared through meetings and training. 22% Best practices are documented in a single information repository that is accessible to interested managers. 4% Best practices are documented, translated into required standard operating procdures and measured. 11% There is no formal process for identification and sharing of best practices. 63% Figure 1. Almost two-thirds of companies admit to not having any formal process for identifying and sharing best practices. 26 • January 2008 http://www.chemicalprocessing.com
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