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July 16-19, 2017
Melia Hotel in Berlin, Germany.


  Peter Milroy - VP Consulting of CMS Montera Inc. 
   
 

CMS Montera provides consulting and software to helps client solve problems in operations and the supply chain. Our clients are typically in manufacturing, distribution, engineering and project management. By having greater visibility and synchronization of their business, clients are able to solve problems related to lead times, the forecast, inventory, capacity, on-time delivery, speed of product development and market focus.

In 2004, CMS Montera began the development of its Manufacturing and Project Management software called CMS RoadRunner. What was once a small “DBR Software” whose first schedule was displayed in a DOS Screen and survived the rigorous testing challenges of Eli Schragenheim, has evolved into an all-encompassing enterprise-wide TOC solution software with four primary modules:

  • Mx – Production Planning and Execution based on Drum Buffer Rope and Buffer Management
  • Rx – Inventory and Supply Management based on Demand Driven Replenishment
  • Px – Project Execution based on Critical Chain
  • Bx – Business Performance analysis combining a TOC-based Operations Scorecard with Throughput Accounting.

CMS RoadRunner is currently implemented in many locations across North and South America, Europe and the Middle East.

The Concept of the Technological solution that this presentation will address is in work order prioritization. In 2005 during consultations with Eli Schragenheim, we agreed that all work orders should be prioritized by a common measure, % Buffer Remaining. In the case of replenished items - Make-to-Stock (MTS) or Make-to Availability (MTA), this meant % Stock Buffer Remaining; in the case of non-replenished orders (Make-to-Order), it meant % Time Buffer Remaining. This approach works very well when a manufacturer has capacity in excess of demand, However, we all know that circumstances can arise where demand outstrips supply for replenished manufactured items; in this case, % Buffer Remaining priority measure does not deliver a clear priority signal (in fact if can even send a wrong priority signal), as the demand may be imminent or it may be in the future.

1 – What is the Power of the new technology?

The power of the technology is to quickly analyze upcoming demand and supply to recognize an upcoming shortage facing an MTS item, and switch the priority of the work order to Make-to-Order - % Time Buffer Remaining so that a manufacturer can meet the due date of the demand causing the shortage.

2 – What current limitation does the new technology eliminate or vastly reduce?

Make-to-Stock environments can face prioritization challenges when demand in the near term exceeds supply. When faced with choices around which order to process next, it can be a challenge to gain agreement that an order that is -25% Stock Buffer Remaining (because of an upcoming sales surge) may be less urgent than a Make-to-Order order that is due in three days, perhaps with 30% Buffer Remaining. The common % Buffer Remaining does not sufficiently clarify the priority.

3 – What policies, norms, measurements and behaviors are used to bypass the above limitation.

Many users will favor MTO regardless of the MTS % Buffer Remaining. Their (often mistaken) belief is that an order with a due date is more “real” and urgent than a replenishment order. Others will examine the upcoming demand for each MTS item in order to see when the demand is required, and make a priority judgement based on that. The result is any of the following:

  • Too much work trying to determine the priority
  • MTS buffers being sacrificed in order to satisfy MTO orders that have enough buffer
  • They remove all items from replenishment because the priority measures require further interpretation

4 - What policies, norms and behaviors should be used once the new technology is in place?

Use the % Buffer Remaining Priority for MTS items, whether it is % Stock Buffer Remaining when there is adequate supply, or % Time Buffer Remaining when a shortage exists, to determine order priority. Stop investigating each order to question whether it is truly required.

5 – Do the new rules require any change in the way we use the technology?

In 2008, in response to customer feedback, CMS RoadRunner began to “net demand” against supply levels on MTS work orders to identify supply shortages. While in general customers were happier as they felt confident that they were ‘covered’, it did not resolve the prioritization challenge.

In 2015, again in response to customer feedback, CMS RoadRunner greatly improved the processes to identify upcoming shortages with the selective use of demand netting. Demand netting only results in extra inventory and stealing capacity from MTO orders, as buffers are designed to accommodate ongoing normal sales. Simply following the % Buffer Remaining that results from either the % Stock or Time Buffer Remaining is adequate to determine priority.

6 – How to cause the change?


Training, education, and examples of how the new approach works. Ideally the change is seamless to the user, as they will continue to use % Buffer Remaining to decide on priorities, and the algorithm will determine for them whether the priority is due date driven, or stock driven.

The presentation will also cover some of the design choices that we faced during implementation, including:

  • Which demand to consider – all demand or a limited time window?
  • Reconciling time buffers and part number Supply Lead Times
  • Dependent (Assembly) Demand vs. Independent (Customer) Demand
Peter helps organizations improve their performance by: developing and implementing Lean Manufacturing and Theory of Constraints based operating strategies, materials management and supply chain solutions, and measurement frameworks.
Peter has nearly 20 years of combined industry, consulting, and academic experience. Some of the industry sectors Peter has experience working with include Food, Industrial Products, Automotive, High Tech and Consumer Goods.
Peter is certified by the TOCICO in Supply Chain Logistics, Finance & Measurement, and CCPM, and is a Chartered Professional Accountant.