S&OP Case Study—
Creating Value at O’Neal
Manufacturing Services
Anthony Zampello, CPIM, CIRM, CSCP
Prepared by:
Jamie Cochran, Strategic Business Applications
Manager,
O’Neal Manufacturing Services
Daniel Marino, CPIM, Senior Partner, Marino
Associates
Anthony Zampello, CPIM, CIRM, CSCP, Zampello &
Agenda
Setting the stage
Tour of S&OP at O’Neal Manufacturing Services
O’Neal Manufacturing Services,
a division of O’Neal Industries
Setting the Stage
Business issue:
Operations isn’t getting enough visibility into the future to plan capacity
Initial step:
Form an internal team to resolve the issue
Team’s conclusion:
Implement formal Sales & Operations Planning
Setting the Stage
Steps taken to implement formal S&OP: 1. Hire successful consultants
2. Consultants’ in-depth review 3. Top management buy in
4. Form an internal design / implementation team 5. Create customized S&OP
Setting the Stage
Creating Customized S&OP:
1. Understand the business
2. Understand generic “5 Step S&OP” 3. Review each step and customize
a. consider skill sets of company b. consider tools available
Setting the Stage
Refresher of “5 Step S&OP”
1. Gather data
2. Prepare demand forecast using families
3. Prepare supply plan to support demand plan 4. Hold pre-S&OP meeting
5. Finalize single company game plan at executive S&OP meeting
Agenda
Setting the stage
Tour of S&OP at O’Neal Manufacturing Services
O’Neal Manufacturing Services
• O’Neal Manufacturing Services (OMS) is a division of O’Neal Industries, the largest
family-owned metals company in the U.S. • OMS is a supplier of fabricated metal
components and welded assemblies
• Our customers build equipment that shape the world we live in. Our product portfolio supports manufacturing of locomotives, forklifts, bulldozers, power equipment and more
S&OP at O’Neal:
The
Customized
Process
Step 1:Data Gathering Sales Actual, Statistical Forecasts Step 2: Sales Forecast for New Products Game Plan
Demand for existing product, Demand for Prospective Product, Existing Product Ramp down Step 4: Demand Review Step 5: Plant Ops Review Consensus Forecast by Product Family by Plant
Step 6:
Consolidated
Ops Review
Plant Level Supply Plan, Capacity Constraints Step 7: Preliminary SOP Reconciliation Step 8: Executive SOP Meeting
Consolidated Supply Plan, Capacity Constraints
Conflict Resolution, Recommendations & Agenda for Exec. Mtg.
S&OP at O’Neal:
STEP 1 – Data Gathering
Basic data housed in ERP system implemented over 10
years ago for Distribution Business
Pulled pertinent data IN DETAIL via Access and Excel
• Based on SQL structure with Excel front-end • Built prototype for agile startup
S&OP at O’Neal:
STEP 2 – Sales Forecast for New
Product
O’Neal manufactures parts designed by customers and awarded through quote process
Process set up to review all open quotes % of confidence used
S&OP at O’Neal:
STEP 3 – Sales Forecast for
Existing Customers / Existing Parts
Communication with major customers occurs monthly in order to obtain
up-to-date forecast data over the next 18 months Part forecast data is obtained for a
sampling of high volume parts then combined with customer feedback to develop an 18 month demand plan
S&OP at O’Neal:
STEP 4 – Demand Review
Combined new and existing parts to one consolidated 18 rolling month demand plan Major trends discussed
Discussed and approved by top executive in charge of sales
S&OP at O’Neal:
Demand Planning Process
• History and forecast are broken down by demand stream
Let’s Build Things®
Sales Hist and Forecast ($m)
F E
D C
B A
Total PriorCycle
(13-24) Total (1-12) Total 1-12 Total 13-18 Total
S&OP at O’Neal:
STEP 5 – Individual Plant Operations
Review
Critical manufacturing resources identified for all factories
Critical materials identified for all lines Each factory reviews updated demand
plan
Each factory reviews resource loads to determine adjustments to manufacturing schedule with eye on critical materials
needed
S&OP at O’Neal:
STEP 6 – Consolidated Plant
Operations Review
All 8 factories combined into one supply plan
Reviewed, discussed and approved by senior manufacturing executive
S&OP at O’Neal:
Supply Planning Process
• Individual plant and consolidated load profile view for one critical resource group
Let’s Build Things®
Eff: 107.6% Util: 66.7% # of Machines: X # Shifts: Y BL 12mo Ld: 38% Scn 12mo Ld: 38% Eff: 117.4% Util: 71.1% # of Machines: 3 # Shifts: 6 BL 12mo Ld: 79% Scn 12mo Ld: 83% La se r 3 0 0 0 /4 0 0 0 W a tt @ 1 3 5 La se r 3 0 0 0 /4 0 0 0 W a tt @ A B C U o M : HR U o M : HR 0
5,000 Load New Product Load ReserveCapLoad Max Capacity Demonstrated Capacity
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15
Load New Product Load ReserveCapLoad Max Capacity Demonstrated Capacity SenarioCap
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15
S&OP at O’Neal:
STEP 7 – Preliminary S&OP
Consolidated 8 plant review by sales and operations to build aligned plans
Final discussion at detail level of constraints and resolution proposed
S&OP at O’Neal:
STEP 8 – Final S&OP
Executive S&OP meeting with
Top executives of O’Neal Manufacturing Services Appropriate executives of O’Neal Steel
Sourcing / purchasing Finance
Agenda
Setting the stage
Tour of S&OP at O’Neal Manufacturing Services
Lessons Learned Next Step
• Accomplishments:
S&OP Stabilization:
Sales and Operations Planning in place
Mid to long-term planning decisions and strategy
being made with monthly reviews
Continuous S&OP improvements being
implemented
Full-time S&OP facilitator in place
Improving alignment between sales, manufacturing
Lessons Learned Next Step
Path Forward
Establish a formal master production
schedule process:
Aggregate MPS to match with the S&OP plan Form the link between S&OP and production
planning
Become a contract between sales, manufacturing and the supply chain
Improve supply chain efficiency (steel mill planning)
Master Scheduling
Driven by S&OP
Owned by each plant master scheduler Horizon “3 months” into the future
Appropriate BOM level
Performed weekly at each plant
Capacity review of medium range resources, critical / bottleneck operations
Feeds material requirements planning process
Lessons Learned Next Step
Path Forward
Establish team and project plan
Establish a schedule for a 8 plant roll-out
Review and optimize existing ERP system
Educate and train all plants
Lessons Learned Next Step
Path Forward
Project plan and scope established
Master production schedulingSales order process
Lessons Learned Next Step
Path Forward
Project plan (Continued)
ERP optimization a complete review of JDE
Review functions and features and determine if the systems “AS IS” supports new processes
Review detail information: Order policies
Lead times Lot sizes
Lessons Learned Next Step
Path Forward Implementation
Develop daily MPS and MRP schedule for each week
Determine source of MPS demand
Determine how MPS process will handle new production introduction process
O’Neal Mfg. Svcs. Excellence
Implemented Sales and Operations
Planning
Implementing formal master production scheduling
On going ERP optimization
On going formal education and training Will be improving lead times
Will be improving materials management
