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2015 TOCICO International Conference

Transforming Industries Track


Duncan Patrick
DUNCAN PATRICK
Executive Vice President
CMS Montera, Inc.


 
Transforming Manufacturing by Combining Replenishment, Complex BOMs and Seasonality
September 8, 2015

The TOC Distribution Solution has a wide application to many different situations. Not only does it provide the direction to better manage the ‘downstream’ supply chain (from the plant down through the retail chain) it also has tremendous application in the ‘upstream’ supply chain (within the plant and from supplier to supplier). The TOC Distribution Solution also has a variety of ways to refer to it: from continuous replenishment, to pull replenishment, to consumption driven replenishment, to demand driven replenishment. What is common about these ways to refer to the solution is that they are all demand or pull based – the signal to replenishment is based on usage. Furthermore, embedded in the solution is the process to size inventory targets and then adjust these targets as actual consumption or re-supply times occur differently than expected. At the highest level, when the on hand inventory spends too much time in the red or green zone of the inventory buffer, a signal to adjust the buffer target is created.

Within the TOC community, many different approaches to translating the Distribution Solution into practical mechanisms have emerged. There are a variety of approaches to both (1) buffer target sizing – which factors to consider and how to size and use the three zones; and to (2) buffer target resizing – when and by how much to change the buffer target. The original concept of sizing a buffer target with three zones of equal size and adjusting by one third have been replaced with much more ‘applicable’ approaches.

A particularly challenging environment to implement Demand Driven Replenishment (our preferred name) is manufacturing environments where there is a high degree of demand seasonality coupled with complex Bill of Material (BOM) structures (typically A plants). Seasonal environments require adjustments to the buffer targets in advance of actual consumption. Complex BOM structure environments require the ability to link the expected seasonal change in the finished good demand through the BOM to the expected seasonal change in the raw material and component demand. This is often complicated further as the number of seasons per year increase (3+) and the number of part #s increase (2,000 active finished goods made from 20,000 raw materials and components).

This presentation will briefly describe the environment and the problem and then lead the participants through the thought processes we went through in designing and implementing the solution. From realizing that a finished good part requires multiple buffer targets with Effectivity Dates (EDs) to solving the problem where one raw material is in the BOM of well over 100 finished goods, where the FG seasonal adjustment and dates all differ.


DUNCAN PATRICK is an Executive Vice President of CMS Montera Inc. CMS Montera provides management solutions and software to accelerate projects and optimize operations. Prior to CMS Montera, Duncan was a member of the senior leadership team of an industrial distributor, Ernst & Young management consultant, and Landman for Husky Energy.

Duncan’s business consulting career is focused on working with clients to assist them design and implement TOC solutions focused on accelerating project execution, optimizing production execution and synchronizing inventory replenishment.

Duncan holds an MBA degree from the Richard Ivey School of Business, Western University and a Bachelor of Commerce degree (with distinction) from The University of Calgary. Duncan is certified by the Theory of Constraints International Certification Organization in all aspects of TOC.

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