Material planning module

Inventory segmentation file & Stock reduction

26th of January 2017 (V6)

Agenda

 Inventory segmentation introduction --------------------------------------------------------------------------------------------- 8:20 – 8:50

 Inventory segmentation file overview --------------------------------------------------------------------------------------------- 8:50 – 9:50
 Fillling the file for the first time, update and tracking -----------------------------------------------------------9:50 – 10:50
 Getting familiar with the Inventory segmentation file --------------------------------------------------------10:50 – 11:20
 JNI in FCS functionality ---------------------------------------------------------------------------------------------------------------------11:20 – 11:50
 Stock reduction process ------------------------------------------------------------------------------------------------------------ 11:50 – 12:20 PM
 Practice Gap to JNI ----------------------------------------------------------------------------------------------------------------------- 12:20 – 12:50 PM
 Debriefing ----------------------------------------------------------------------------------------------------------------------------------------------12:50 – 1:00 PM

3
 Inventory segmentation introduction

How much stock (BOP / RM*) is needed in a plant?

But
Thatthere
wouldis be
noaperfect
world!
perfect world in PC&L! Production guys pick the components
directly from the warehouse
Suppliers & carriers are always on time &
orders are 100% fulfilled
deliveries Customer always produces in a leveledThese
way are the 4
needed stock
Stock
what was forecasted segments
level
The only stock really needed is the quantity of Operational
stock
pieces used between 2 deliveries

Coverage for customer variability Customer

+ during the order lead time
3 variability
stock

+ Coverage for supplier / carrier delivery risks 2

Safety
stock

time + Stock on Production lines 1

Internal
stock

Inventory segmentation file & Stock reduction V6 4 * BOP = Bought Out Part. RM = Raw Material
Inventory segmentation introduction

How much stock (BOP / RM) is needed in a plant?

But
Thatthere
wouldis be
noaperfect
world!
perfect world in PC&L! Production guys pick the components
directly from the warehouse
Suppliers & carriers are always on time &
manifests are 100% fulfilled
Customer always produces in a leveled way
what was forecasted

= Greater of : quantity consumed between deliveries OR Operational

stock
Minimum order lot
Customer
= 0 (for non JIT parts)
+ = Customer specific (for JIT parts)
3 variability
stock

= Lesser of: time between 2 deliveries x safety coeff. OR

+ reaction time + taxi lead time
2 Safety stock

+ = Greater of : 2 train loops OR 2 boxes (in Kanban mode) 1

Internal
stock
Inventory segmentation file & Stock reduction V6 5
Inventory segmentation introduction

How much stock (BOP / RM) is needed in a plant?

 The Faurecia Excel file “Inventory segmentation” calculates the amount of BOP/RM stock:
 necessary at a Plant Plant = warehouse, production line, small train (and external storage
warehouse if necessary)
 in standard conditions Standard = levelled LISA orders, levelled supplier delivery times,
levelled PDP, FG Pool stock for non-JIS plant in place, no scrap,
no more than 1 mistake in a row from supplier /carrier.
 with the current parameters of:  Packaging, Ex: packaging pack factor.
 Purchasing, Ex: minimum order quantity.
 Transports. Ex: inbound transport frequency.
 JNI graph and vocabulary
 JNI = average expected stock at the Plant,
 JNI Max = maximum expected stock at the Plant,

 JNI Min = minimum expected stock at the Plant,

 JNI Min represents the target Safety stock to set up in FCS

(MM03, MRP2 view, Safety stock in pieces field).

 Ultimate stock functionality

 Ultimate stock = average expected stock at the Plant,
considering the best Packaging / Purchasing / Transports
parameters (even if not achievable).
Inventory segmentation file & Stock reduction V6 6
Inventory segmentation introduction

Calculate JNI, JNI Min and JNI Max

Minimum Lot
Parts Supplier Daily Needs Price Box quantity
Size
A S1 150 60 $ 600 50

B S1 200 80 $ 600 50

C S2 50 100 $ 600 50

 Suppliers S1 and S2 deliver 1/week : Monday morning before 1st shift starts
 Suppliers safety coeff = 100%
 Production works 5 days a week, 2 shifts of 8 hours each (breaks removed)
 Small train loop = 30 min using kanban
 Taxi lead time = 3 hours , Reaction time = 5 hours
 Part C is supplied to a JIS assembly line => CV = 2.7 days

7
Inventory segmentation introduction

JNI, JNI Min, JNI Max calculation:

Parts Operational Internal Safety Cust. JNI JNI Min JNI Max
(in days) (in days) (in days) Varia. (in days) (in days) (in days)
(in days)

8
Inventory segmentation introduction
Op St = Operational stock - Int St = Internal stock
JNI, JNI Min, JNI Max calculation: Sfty St = Safety stock (to cover delivery risk) - CV = Customer variability stock

Parts Operational Internal Safety Cust. JNI JNI Min JNI Max
(in days) (in days) (in days) Varia. (in days) (in days) (in days)
(in days)
= CV + Sfty St = CV + Sfty St
=MAX(5*150;600)/ =MAX(150/16;2*Box = CV + Sfty St
A =MIN(5*1;(3+5)/16) 0 + Int St + (Op + Int St + Op
150 qty)/150 + Int St
St / 2) St

Parts Operational Internal Safety Cust. JNI JNI Min JNI Max
(in days) (in days) (in days) Varia. (in days) (in days) (in days)
(in days)

A 5 0.7 0.5 0.0 3.7 1.2 6.2

9
Inventory segmentation introduction

JNI, JNI Min, JNI Max calculation:

Parts Operational Internal Safety Cust. JNI JNI Min JNI Max
(in days) (in days) (in days) Varia. (in days) (in days) (in days)
(in days)

A 5 0.7 0.5 0.0 3.7 1.2 6.2

10
Inventory segmentation file overview

Structure and color coding

 Inventory segmentation file: [FAU-F-PSG-4600] - Inventory Segmentation V4-2014

 3 Input tabs: Parameters Components Suppliers

 6 Output tabs: Indicators Views (5)

 Color coding:

12
 Parameters
Inventory segmentation file overview

Data entry
 Calendars are the work hours of the
production lines using the BOP/RM listed
in Components tab
 Up to 3 different calendars can be set up.
 Only 1 value of Working days per week (‘Wdays’) can
be defined per plant.
 Weekly working hours = ‘Shifts’ x ‘Hours’ x ‘Wdays’
 A Calendar is assigned per Part number in column P of
‘Components’ tab.

 Planners are used for filtering, indicators

and graphs
 A Planner is assigned per Supplier in column D of
‘Suppliers’ tab.

 Families are used for filtering, indicators

and graphs  define families in the way that
makes more sense to you
 Examples: ABC Classification, Project / Product type
 A Family Code is assigned per Part number in column O
of ‘Components’ tab.
13
 Parameters
Inventory segmentation file overview

Data entry
 Internal stock parameters:
 Enter the average train loop duration for Kanban mode
and Sequence mode (if any).

 Reaction time:
 Enter the average number of hours to detect a BOP/RM
shortage, react to it (cycle count, calculate run-out time
and check when next delivery is scheduled) and
organize an extra delivery if needed (contact supplier
and organize transportation) – transit time not included.

 Customer variability stock coefficients:

 Simple solution: only use the « Default » variability
group with 100%, 60% and 30% as shown.
 Customer variability stock is allowed (‘Y’ in column M
of ‘Components’ tab) for each Part number used by a
JIT line; not allowed (‘N’) otherwise.
 A Variability group is assigned per Part number in
Column N of ‘Components’ tab.

 Supplier ABC classification:

 Push the "Update" button: % in the Turnover column
should be very close to the % of the Target column.
If they are not, you can change manually the data with
dark grey color code.
14  Always ‘1’.
 Components
Inventory segmentation file overview

Data entry

for Obsoletes

Use the drop down lists to ensure the writing is exactly the same
between tabs.

15
 Suppliers
Inventory segmentation file overview

Data entry

 Supplier name & Material planner: very important to use the exact same writing than in ‘Components’ & ‘Parameters’ tabs.

 Delivery number per week: number of supplier deliveries per week.

Examples: 1 delivery per week => 1; 1 delivery per month => 0.25.

 Transportation LT (lead time) in hours: regular transit time, in hours.

 Except transport time in hours: expedite transit time, in hours (the expedite type must be the one that would be used in case
of mis-delivery from the supplier).

 Information LT (lead time) in days: number of work days between the transmission of a Manifest and its 1st pick up day.

 Supplier firm order LT (lead time) in days: number of work days inside the firm zone.

 Safety (misdelivery risk coverage): % of coverage. Example: Selecting 100% will consider safety stock to cover production
during a complete delivery.
16
Inventory segmentation file overview

Data coherence check

 Are all data filled?
 On bottom page of ‘Indicators’ tab, RED means
data are missing in indicated tab(s).

 Are results on the ‘Indicators’ tab consistent?

 Total Actual ERP stock: D7 cell must equal D59 Total JNI: D26 cell must equal D45 and D72.
 Is Actual ERP stock consistent with your last METIS level? Can the difference be explained?

 Are FCS data correct?

 Verify that data represent the reality (actual line feeding train loop duration, actual PC&L team reaction time, actual
transit time of the taxi mode that would be used in case of shortage situation, actual packaging density, etc.).
 Verify that Packaging Instructions, Rounding Value and Minimum Lot Size are correctly populated in FCS: ZPPPC08.
“Box Qty” shows the quantity of the Packaging Instruction at UC level (update with POP2), These are agreements with the
Supplier, and available on the
If no UC Packaging Instruction exists, it shows the Material Master Data Rounding Value Supplier Logistics Agreement
(MRP1 view, update with MM02 or ZMM_MASS). documents.
“Minimum Lot Size” shows the Material Master Data Minimum Lot Size (MRP1 view, update with MM02).
 Verify that Delivery days (update with MM02 “Planning calendar” field or ZMM_MASS) and Firm period (update with
ME32L “Firm zone” field or ZMM_MASS) are correctly populated in FCS.
17
 Components
Inventory segmentation file overview
Suppliers

Results analysis
Co mpo nents

Gap to JNI JNI * JNI segments Ultimate**

Filter o n A D, A J, A X co lumns to identify To p o ffenders.

- 1 0 0 0 P o ssibility to reduce invento ry. P o ssibility to click o n '+' o r '-' signs to sho w o r hide
200 Invento ry level co rrect (o r to o lo w). Ultimate sto ck data. *Just Needed Inventory
(JNI): Plant average needed
Suppliers
inventory to supply
Gap to JNI Ultimate production in standard
conditions (Transportation,
packaging, purchasing, plant
organization)

**Ultimate stock (Lower

Filter o n R and W co lumns to identify To p o ffenders. JNI): Optimized plant
- 1 0 0 0 P o ssibility to reduce invento ry. average needed inventory
200 Invento ry level co rrect (o r to o lo w). after modifying input
parameters.

18
 Inventory segmentation file overview Indicators

Results analysis (Actual Vs JNI)

ACTUAL INVENTORY versus JUST NEEDED INVENTORY
Plant : Alpha

ACTUAL ERP STOCK Inventory analysis per part fam ily

Actual ERP stock by family

Family Family Co de A ctual Sto ck ($ ) Gap to JNI ($ ) Gap (%) Days supply Gap vs JNI
TOTAL
Fabric
Plant
FA B
728 584
16 8 8 2 5
-286 302
-50 014
-39%
-30%
10,0
9 ,8
3,9
2,9
12,0

P lastic PL 251 450 -80 070 -32% 10 ,1 3,2
M etal M ET 12 3 3 0 0 -43 547 -35% 7 ,5 2,7 Actual Just Needed
M o no lith M ONO 12 7 3 5 5 -55 018 -43% 8 ,8 3,8
Obso lete OB S 57 653 -57 653 -100% - - 10,0
0 0 - - -
0 0 - - -

Target stock (JNI) by family

0 0 - - -
0
0
0
0
0
0
-
-
-
-
-
-
-
-
- 8,0

0 0 - - -
0 0 - - -
0 0 - - -
0 0 - - -

6,0
TARGET STOCK : JUST NEEDED INVENTORY
Family

TOTAL
Family Co de Supplier daily
turno ver
73 151
Sto ck ($ )

442 282 100%

% Days supply

6,0
 Inventory graph by family
Fabric FA B 17 287 118 8 12 27% 6 ,9
4,0
P lastic PL 24 921 17 1 3 8 0 39% 6 ,9
M etal M ET 16 412 79 753 18% 4 ,9
M o no lith M ONO 14 531 72 337 16% 5 ,0
Obso lete OB S 0 0 0% -

Details of the JNI stock segments per

0 0 0% -
0
0
0
0
0
0
0%
0%
0%
-
-
-
2,0

family + graph
0 0 0% -
0 0 0% -
0 0 0% -
0 0 0% - 0,0
0 0 0% - Plan t FAB PL MET MONO OBS
0 0 0% -

TARGET STOCK : JUST NEEDED INVENTORY Just Needed Inventory com position
Family Family Co de Supplier daily To tal sto ck target Operatio nal sto ck Internal sto ck Safety sto ck Custo mer

Actual ERP stock by planner

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100 %


turno ver variatio n sto ck
TOTAL in days
TOTAL in Euros Plant 73 151 442 282 88 371 49 745 34 126 270 040
Fabric
TOTAL in days Plant 6,0 1,2 0,7 0,5 3,7
Plastic
Fabric FA B 17 287 6,9 1,3 1,0 0,5 4,1
Metal
P lastic PL 24 921 6,9 1,4 0,7 0,4 4,4
M etal M ET 16 412 4,9 1,0 0,6 0,4 2,9 Monoli th
M o no lith M ONO 14 531 5,0 1,0 0,4 0,6 2,9 Obsole te
Obso lete OB S 0 - - - - -

Target stock (JNI) by planner

0 - - - - -


0 - - - - -
0 - - - - -
0 - - - - -
0 - - - - -

ACTUAL ERP STOCK Inventory analysis per m aterial planner

TOTAL 728 584 -286 302 -65% 10,0 3,9
Bob 247 064 -23 338 -10% 7 ,9 0,7

Actual Vs JNI graph by planner

0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0


Geo rges 344 354 -254 061 -281% 12 ,2 9,0
B ill 5 377 9 040 63% 1,7 -2,9 Bob
Ringo 7 13 6 20 416 74% 3 ,2 -9,1
P aulo 75 035 -19 249 -35% 16 ,3 4,2
Geo rges
A sago han 46 684 -19 628 -73% 17 ,9 7,5
M ichael 2 935 518 15% 2 ,5 -0,4
Bill
0 0 - - -
0 0 - - -
Ringo
0 0 - - -

Pau lo
TARGET STOCK : JUST NEEDED INVENTORY
Asagoh an
TOTAL 73 151 442 282 100% 6,0
Bob 31186 223 726 51% 7 ,2
Michael
Geo rges 28 217 90 292 20% 3 ,2
B ill 3 113 14 4 17 3% 4 ,6
Ringo 2 239 27 551 6% 12 ,3
P aulo 4 596 55 786 13% 12 ,1
A sago han 2 604 27 056 6% 10 ,4
M ichael 1197 3 453 1% 2 ,9
0 0 0% -
0 0 0% -
0 0 0% -

19
 Inventory segmentation file overview Indicators

Results analysis (Ultimate)

INVENTORY REDUCTION POTENTIAL

Plant : Alpha

Family A ctual
invento ry
ULTIMATE INVENTORY REDUCTION
Just needed
Invento ry
Ultimate invento ry Lo t size reductio n
po tential
Increase
frequency
P ackaging
reductio n
Co mbined
effect
800 00 0
Ultim ate Inventory reduction potential

Reduction potential
 JNI Vs Ultimate stock per stock segment
and savings linked to Lot size reduction,
po tential po tential Inventory
TOTAL in Euros 728 584 442 282 312 672 700 00 0
TOTAL in days 10,0 6,0 4,3

delivery frequency increase and

P o tential in Euro s 286 302 129 610 7 007 42 986 42 874 36 743
600 00 0
286 302
Reduction potential -39% -18%

ULTIMATE INVENTORY IMPACT ON STOCK SEGMENTATION

500 00 0
A ctual Just needed Just needed
invento ry Invento ry
286 302
Invento ry
Lo t size

7 007
levers
7 007
Frequency
levers
42 986
42 986
P ackaging
levers
42 874
Co mbined
effect
36 743
Ultimate
invento ry packaging reduction
400 00 0

Related graph
segment Just needed Ultimate Lo t size reductio n Increase frequency P ackaging Co mbined Gap to Ultimate


42 874
Invento ry invento ry po tential po tential reductio n effect
po tential 728 584 0 442 282 36 743 312 672
88 371 15 082 6 982 35 002 0 31 306 73 289 300 00 0 0 442 282 0 435 275 392 289 349 415 312 672 0
Operational
1,21 0,21
49 745 6 871 0 0 42 874 0 42 874 200 00 0
Internal
0,68 0,09
34 126 20 679 25 7 984 0 5 437 13 447
Safety
0,47 0,28 100 00 0
Custom er 270 040 270 040 0 0 0 0 0
Variability 3,69 3,69
0
Actu al Just neede d Just neede d Lot size Freque ncy Packaging Combined Ultimate
inventory Inve nto ry Inve nto ry levers levers levers effe ct inventory
potential

 Other actions than the ones identified by the Excel file exist to reduce the JNI:
 Reduction of Reaction time
 Reduction of Train loop cycle
 Change of internal Line feeding mode (from
Kanban mode to sequence)
 Reduction of Customer variability (if internal
Customer: usage of LISA)
 Change of Supplier for a more local one

20
Inventory segmentation file overview Views (5)

‘Views’ tab analysis

 5 graph tabs exist:
 Actual Vs JNI per family, per component, per supplier and per planner. (separate tab for each of them)

 Actual Vs JNI Vs Ultimate per family, per component, per supplier and per planner. (combined tab)

 You can filter on ‘Components’ and / or ‘Suppliers’ tab: only selected items will be displayed on graphs.
Example of view showing Actual Vs JNI Vs Ultimate:
180000

Gap between Actual and Ultimate per planner Inventory Reduction potential
160000

140000 Detect saving

opportunities, linked to
reduction of Lot size,
120000

100000
100331
increase of delivery frequency
and reduction of packaging
80000 density
60000

40000 27724

0
20000 20254

5300
0
Actual inventory Just needed Inventory Just needed Inventory Lot size levers Frequency levers Packaging levers Combined effect Ultimate inventory
potential

21
Get familiar with the Inventory segmentation file
 Open the Inventory segmentation file of the welcoming plant and answer to the following questions

Data coherence
 Do you notice missing data or incoherences? Indicators
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________

Gap to JNI: Find the biggest improvement opportunities

 Filter column AJ “Gap to JNI maxi in PARTS” to only display the Top 10 smallest numbers. Components
 What does an Actual stock higher than its JNI maxi mean? ________________________________________________
___________________________________________________________________________________________________
 The biggest gap to JNI maxi is: __________________ The corresponding « ERP part number » is: ________________
 Can you find the reason(s) for this gap? (also check ZPP_MATMM reports) ___________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
 If NO, which tool can you use to find out the root cause of this gap? _________________________________________

22
Get familiar with the Inventory segmentation file

Gap to JNI: Find the biggest improvement opportunities

 Clear previous filter. Components
 Select a top offender for which the resolution will certainly be applicable to many other parts:
 The gap to JNI of the top offender family is (‘Indicators’ tab): ____________________ Family is: __________________
 The gap to JNI of the top offender supplier is (‘Suppliers’ tab): ___________________ Supplier is: _________________
 Circle the biggest gap to JNI between these 2 selections.
 The biggest gap to JNI of part numbers belonging to this circled selection is: __________ Part number is: ___________
How to do?
If the biggest gap to JNI is a family, filter column O « Part family » with the selected family,
OR If the biggest gap to JNI is a suplier, filter column F « Supplier » with the selected supplier,
Then sort column AD “Gap to JNI in $” from smallest to largest. Pick the smallest number (= biggest gap to JNI).
 Can you find the reason(s) for this gap? (also check ZPP_MATMM reports) ___________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
 Check if the issues you found out are the same for other part numbers of this family / supplier:
___________________________________________________________________________________________________
___________________________________________________________________________________________________

23
 Components
Get familiar with the Inventory segmentation file

Gap to Ultimate: Find the biggest savings opportunities

 Clear previous filter.

 Expand file by clicking on . This will display the columns related to Ultimate stock.

 Filter column AX «Gap to ULTIMATE in $» to only display the Top 5 smallest numbers.

 Lot size: the file considers the optimum is Lot size = 1 box.
 Out of these 5, which « ERP part number » would benefit the most from a lot size reduction only (column AZ) ? ________
If Lot size = 1 box is not reachable, could you propose another Lot size option and calculate the gain?
_________________________________________________________________________________________________
_________________________________________________________________________________________________

 Box Qty.
 Out of these 5, which « ERP part number » would benefit the most from a Packaging Unit reduction only (column BE)?
__________________ What is the proposed packaging density (column BC)? __________________
If this density is not reachable, could you propose another Box Qty option and calculate the gain?
_________________________________________________________________________________________________
_________________________________________________________________________________________________

24
 Suppliers
Get familiar with the Inventory segmentation file

Gap to Ultimate: Find the biggest savings opportunities

 Expand file by clicking on . This will display the columns related to Ultimate stock.

 Column W « Ultimate reduction potential in $ » gives the cumulative gain if all parameters are combined (Box
Qty = proposed by file, Lot size = 1 box, frequency = optimal according to Supplier class).

 Filter column AB « Freq increase impact » to only display the Top 5 smallest numbers.
 Out of these 5, which supplier would benefit the most from a frequency increase only? ____________________
If this frequency is not reachable, could you propose another option and calculate the gain?
________________________________________________________________________________________________
________________________________________________________________________________________________

25
Filling the file for the first time, update and tracking

 Filling the file for the 1st time

 Calculate Daily average needs of next month for all purchased materials: transaction ZJP02,
 Extract results: transaction ZPPPC08, copy results on columns A to C and F to J of a blank Inventory segmentation file,
 Correct FCS MRP 1 view parameters and Packaging instructions if needed, then re-extract data,
 Complete the file with MIFD and SLA data: ‘Parameters’ tab, columns K to P of ‘Components’ tab and ‘Suppliers’ tab,
 Correct FCS MRP 2 view « Planning calendar » and Scheduling agreement « Firm zone » if needed,
 Save the Part # + ‘Components’ tab columns K to P on a separate tab. Add a vlookup on ‘Components’ tab columns K to
P to call for these data,
 JNI, JNI mini, JNI maxi, Ultimate stock and gaps are calculated automatically,
 Verify the accuracy & consistency of the file,
 The JNI mini is the target Safety stock (in pieces). Define the Safety stock needed for each BOP/RM (it can be different
from the JNI mini if your plant is not yet at the expected level). Possible reasons: bad Supplier performance, LISA not
used, PDP not used, no FG pool stock, etc. Upload in mass Safety stocks: transaction ZJMSS.

 Track Stock status on a weekly basis

 Extract Actual stock: transaction MB52, copy results on ‘Components’ tab, J column,
 Print ‘Indicators’ tab for Plant PC&L gap board KPI.

 At each month end, update the file with next month Daily average needs
 Calculate Daily average needs of next month: transaction ZJP02,
 Extract results: transaction ZPPPC08, copy results on columns A to C and F to J of Inventory segmentation file,
 The vlookup formula you added will complete the required MIFD data,
 Re-calculate the Safety stock needed for each BOP/RM and upload in mass: transaction ZJMSS.
 Work instruction: FCS-PC09-WI-SAP-Tools_for_Inventory_Segmentation.pdf
26
JNI in FCS functionality

R1 - Report gap to
1 - Batch analysis JNI

0 – Perform Initial 3 - Enter additional 2 - Calculate R3 – Alert gap JNI

setup safety stock JNI Maxi

+ R2 - Extract
calculation details
4 - Update
safety stock
Simulate
improvements

Manual action Automated Out of FCS

27
Stock reduction process

2 actions
 Reduce gap to JNI

 Reduce gap to Ultimate stock (= Reduce JNI)

30
 Stock reduction process

Reduce gap to JNI

Actual stock Value Reduction levers

Operati  Supplier delivery performance.

JNI = Max (quantity received per delivery ;
onal
stock
order lot size)  LISA usage.

Internal
= Max (2 train loops ; 2 packaging units) Implement Kanban cards (or e-kanban).
stock
Average

Safety = Min (time between 2 deliveries x safety  Supplier delivery performance.

stock coeff. ; reaction time + taxi lead time) Implement Alert system in flat warehouse.

Cust. = 0 (for non JIT parts)

Var. Deploy PDP and pool stock.
stock = Customer specific (for JIT parts)

31
31
 Stock reduction process

Reduce gap to JNI

 Every 3 months: identify 10 top offenders and use QRCI to solve root causes:
 Select top offenders for which the resolution will certainly be applicable to many other parts (refer to page 23)

 Open 1 QRCI per part number to identify & solve the root causes (or several QRCI if multiple causes are found).

 Track their inventory reduction progress - [FAU-I-PSG-4600] - Inventory Reduction Process (BOP and RM) V1-2013
Single list follow up: top 10 - 2013 quarter 2

QRCI Dates initial Initial + 1 month Initial + 2 months Initial + 3 months Improvement
Part QRCI Actual Actual Actual Actual %
Number counter D3 D3 D6 D6 D8 inventory JNI inventory JNI inventory JNI inventory JNI Saving improveme
Open Due date Done Due date Done Due date D8 Done value value JNI ratio Gap to JNI Total gap %non JNI value value JNI ratio Gap to JNI Total gap %non JNI value value JNI ratio Gap to JNI Total gap %non JNI value value JNI ratio Gap to JNI Total gap %non JNI Initial Gap Last Gap with QRCI nt
E KA UC 7 0 0 0 9 J N I- 1 25-Apr-13 26-Apr-13 27-Apr-13 9-May-13 14-May-13 25-Jul-13 130 857 36 202 3,61 94 655 638171 21% 100 723 36 202 2,78 64 521 638171 10% 74 966 36 202 2,07 38 764 1075563 4% 64 605 36 202 1,78 28 403 1075563 3% 94 655 28 403 66 252 70,0%
E KA LD 18 15 19 J N I- 2 30-Apr-13 1-May-13 8-May-13 14-May-13 16-May-13 30-Jul-13 90 248 21 939 4,11 68 309 638171 14% 52 300 21 939 2,38 30 361 638171 5% 37 940 21 939 1,73 16 001 1075563 1% 24 686 21 939 1,13 2 747 1075563 0% 68 309 2747 65 562 96,0%
E KA LA 2 J N I- 3 2-May-13 3-May-13 3-May-13 16-May-13 16-May-13 1-Aug-13 72 406 22 797 3,18 49 609 638171 11% 64 970 22 797 2,85 42 173 638171 7% 57 413 22 797 2,52 34 616 1075563 3% 37 171 22 797 1,63 14 374 1075563 1% 49 609 14374 35 235 71,0%
E KV B 9 9 8 110 J N I- 4 no QRCI : stock too big and no ordering in 2013 (last order from 2012) 45 487 862 52,75 44 625 638171 7% 63 907 862 74,11 63 045 638171 10% 62 941 862 72,99 62 079 1075563 6% 61 658 862 71,51 60 796 1075563 6% 44 625 60796 -16 171 -36,2%
E KD A X 2 0 4 M 0 0 2 J N I- 5 15-May-13 16-May-13 16-May-13 29-May-13 27.05.2013 14-Aug-13 44 080 3 167 13,92 40 913 638171 7% 32 510 3 167 10,27 29 343 638171 5% 30 942 3 167 9,77 27 775 1075563 3% 3 167 3 167 1,00 0 1075563 0% 40 913 0 40 913 100,0%
E KD C 19 3 0 0 0 0 J N I- 6 15-May-13 16-May-13 16-May-13 29-May-13 27.05.2013 14-Aug-13 36 411 687 53,00 35 724 638171 6% 29 468 687 42,90 28 781 638171 5% 22 086 687 32,15 21 399 1075563 2% 35 339 687 51,44 34 652 1075563 3% 35 724 34652 1 072 3,0%
E KA LA 6 3 4 J N I- 7 48 526 14 058 3,45 34 468 638171 8% 30 069 14 058 2,14 16 011 638171 3% 37 282 14 058 2,65 23 224 1075563 2% 44 905 14 058 3,19 30 847 1075563 3% 34 468 30847 3 621 10,5%
E KA LD 10 0 J N I- 8 8-May-13 9-May-13 9-May-13 22-May-13 18-May-13 7-Aug-13 43 001 12 629 3,41 30 373 638171 7% 38 431 12 629 3,04 25 802 638171 4% 24 664 12 629 1,95 12 035 1075563 1% 16 087 12 629 1,27 3 458 1075563 0% 30 373 3458 26 915 88,6%
E KA LA 5 10 J N I- 9 40 363 11 396 3,54 28 966 638171 6% 64 812 11 396 5,69 53 416 638171 8% 47 769 11 396 4,19 36 373 1075563 3% 54 315 11 396 4,77 42 919 1075563 4% 28 966 42919 -13 953 -48,2%
E KV WB 7 C C 0 0 2 J N I- 10 see QRCI 5 26 036 1 001 26,01 25 035 638171 4% 27 174 1 001 27,14 26 173 638171 4% 21 734 1 001 21,71 20 733 1075563 2% 14 495 1 001 14,48 13 494 1075563 1% 25 035 13494 11 541 46,1%

Total 452 677 € 638 171 € 70,9% 379 626 € 638 171 € 59,5% 292 999 € 1 075 563 € 27,2% 231 690 € 1 075 563 € 21,5% 452 677 € 231 690 € 220 987 € 48,8%

2013 quarter 2 - Gap to JNI

100000
90000
80000
70000
60000
50000 Initial gap to JNI
40000 Month +1 gap to JNI
30000
Month +2 gap to JNI
20000
Month +3 gap to JNI
10000
0

32
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 What is the problem?
Inventory data

Actual stock Budget

12000

11000
10821 10669
10241
9730 9939
10000 9461 9610
8894
9000

8000

7000
K$

6000

5000

4000

3000

2000

1000

0
Jan Feb Mar Apr May Jun Jul Aug

33
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 What is the problem?

It is even better to
select a part number
from the top offender
IP upper skin vinyl family / supplier
15R1004 is the top
1 gap to JNI part
number

Start working on gap to JNI with

the top offenders

NOK

34
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 What is the problem?

PCL-FOU-09282015

HOUDAYER G.
MAQUILON E., VILHENA S., PRIN M., THIBAULT
J., McGEE B., DUHAMEL D., TEPLIK Y.
09/28/2015

Vinyl part 15R1004 overstock: GAP to JNI = 172 K$, 14.3 days
Act inv. value= 256 K$, 21.3 days

JNI inv. value = 84 K$, 7.0 days

35
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 Containment C1

Cycle count part # and compare Actual 09/29

Actual stock: 9,496.16 m Containment
Suzana N
stock with SAP 09/29
SAP stock: 24,176.50 m
Difference: 14,680.34 m
actions C1
must result
09/29
Check if all receipts are booked in SAP Edwin N All receipts are in SAP in cutting
09/29
releases to
09/29 supplier after
Adjust SAP inventory Edwin Done
09/29
N verifying
09/29 MRP data
Check that actual inventory covers until
Edwin N OK, delivery planned on 10/02
next delivery 09/29

09/29 Daily needs modified to include scrap.

Review Inventory segmentation file data Jerome N
09/29 Actual stock is still above JNI max.

Adjust releases to supplier to cut extra 09/29 Stock will come back to JNI value
Edwin N
stock 09/29 in 3 weeks

36
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 Bridge analysis from Customer view to Faurecia view
Cause hypothesis
“ERP daily needs”, “min order lot size”, “line feeding” and
Incorrect JNI parameters “supplier” data are all verified as correct by PC&L Manager
Customer
view Standard delivery frequency once per week and last
Delivery from suppliers just
delivery was 09/26/15, 2 days prior to JNI calculation
arrived
(09/28/15)
15R1004 above JNI
IP skin vinyl P/N

by 14.3 days

PIC/PDP reduction PDP is leveled

Supplier delivered more than Deliveries matched what has been ordered
manifested

ERP inventory is incorrect (ERP inventory = 24176.50m vs

SAP inventory accuracy
actual inventory = 9446.16, -60% adjustment)

Bridge analysis must list all cause hypothesis and

check which ones explain the problem raised here

37
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 Bridge analysis from Customer view to Faurecia view
Cause hypothesis

SAP backflush errors No record found

Receiving in SAP incorrect BOLs and Invoices match SAP receptions

accuracy is incorrect

Previous cycle count Previous cycle count performed on 6/29/2015 showed a

SAP inventory

adjustment incorrect loss of 7107m

Loss due to the joining of roll or splice in the roll (worst

SAP BOM incorrect
case 6%) including in the BOM

Quantity booked in SAP > Each pallet matches the delivery note and each roll length
Quantity physically received match the label quantity

Scrap declaration incorrect

or not recorded in SAP

Bridge analysis must drill down to the root cause(s)

38
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 Bridge analysis from Customer view to Faurecia view

Cause hypothesis
Scrap declaration incorrect or not recorded in SAP

Vinyl Rolls NOK

NOK skins not scrapped in SAP QRCI N°1

Vinyl waste not booked as scrap in SAP QRCI N°2

If 2 root causes explain the problem raised: open 2 QRCI

39
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 D1 – Problem definition

What is the problem ? Vinyl waste not booked as scrap in SAP (QRCI #2)

Why is it a problem? SAP inventory is not correct. Potential run out of material

When was the problem created? Between end of 06/29/2015 and 09/28/2015

Who found the problem? Edwin Maquilon

Where was the problem found? On the kiefel 6 machine

How was the problem found ? Waste trailer

How many? (HSE: Accident, Environment,

14680.34 m
Fire, others)

Re-occurrence □Yes □No Need to inform other plants/R&D centers? □Yes □No

40
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 D2 – Similar risks

FIS ref Description Where used?

D2 – Similar Risks
15R1004 IP UP SKIN TPO2 VYL 750MM BLK BENECKE IP Uppers
15R1005 IP LWR+GB TPO1 VYL 565mm BLK HARTZ IP Lw r + GB Lid outer
15R1006 IP LWR+GB TPO1 VYL 565mm CANBGE HARTZ IP Lw r + GB Lid outer
15R1007 IP LWR+GB TPO1 VYL 565mm IVOWHT HARTZ IP Lw r + GB Lid outer
15R1008 IP LWR+GB TPO1 VYL 565mm MOCHA HARTZ IP Lw r + GB Lid outer
15R3002 DP SUBST TPO1 VYL 810mm BLK HAARTZ DP Substrate
15R3003 DP SUBST TPO1 VYL 810mm CANBGE HAARTZ DP Substrate
12 references of vinyl used in 15R3004 DP SUBST TPO1 VYL 810mm IVOWHT HAARTZ DP Substrate
lamination
15R5003 BP SUBST PVC VYL 830mm BLK TMG SBC
15R5004 BP SUBST PVC VYL 830mm CANBGE TMG SBC
15R5005 BP SUBST PVC VYL 830mm IVOWHT TMG SBC
15R9001 TOP S + ADDON TPO1 VYL 457mm BLK BENECKE DP TopS, Add-on covers
16R1001 IP VYL F16 Cognac IP Lw r + GB Lid outer

1 root cause often affects multiple part numbers

41
Stock reduction process

Reduce gap to JNI – Fountain Inn QRCI example

 D3 - Immediate actions to protect Faurecia: Containment actions C2

Cycle count and adjust 09/30

SAP inventory on all 12 Edwin Y N Done
vinyl references 09/30

09/30
Implement a weekly
Edwin Y Y 5 references with losses > 1k$
cycle count on all vinyl
references 09/30

Containment actions C2 must implement checks that will stop problem

from re-occurring (detection)

…
42
Practice: Build the gap to JNI block diagram

 Use your knowledge from JNI calculation to list all potential reasons why the Actual stock on a
BOP/RM would be different from its JNI value.

 Remember that reasons can be from different sources:

 Method (JNI file calculation),
 Measurement (Actual stock extraction time),
 Material (inaccurate stock, etc.),
 Men (training, discipline, etc.),
 Mother nature (snow, supplier/carrier performance, etc.),
 …

 Example: gap to JNI

incorrect JNI
... ... ...
calculation

MIFD data do not

represent the reality
(ie. small train loop)

JNI calculation does

not take into account
kit ordering constraint

...
43
 Stock reduction process

Reduce gap to Ultimate stock

Value Reduction levers

 Delivery frequency (=  Ex-works, 

Operati freight consolidation).
Old JNI = Max (quantity received per delivery ;
onal
order lot size)  Order lot size.
stock
Cancel set ordering.

 Sequence mode usage.

Internal
stock
= Max (2 train loops ; 2 packaging units)  Train frequency.
 Packaging size.
 Delivery frequency.
Safety = Min (time between 2 deliveries x safety  Safety coeff. (=  Supplier/Carrier perf.)
stock coeff. ; reaction time + taxi lead time)  Transit time (= resourcing).
 Time to react in case of misdelivery.

Cust. = 0 (for non JIT parts)  Stagnation time (JIT).

Var.
stock = Customer specific (for JIT parts)  Transit time (JIT).

44
Stock reduction process

Reduce gap to Ultimate stock

 Every 6 months: implement savings:
 On “Components” tab:
Components
 Expand file by clicking on:

 Filter column AX «Gap to ULTIMATE » to only display the Top 5 smallest numbers.

 Note which « ERP part numbers » would benefit the most from a lot size reduction (column AZ). Recommended Lot size
= Box quantity.
Check with Purchasing if the lot size agreements can be changed, showing your savings analysis.

 Note which « ERP part numbers » would benefit the most from a Packaging Unit reduction (column BE). Optimum
Packaging quantity is shown in column BC.
Check with your BG correspondent if packagings of these kinds are available or check if you can buy new packagings.
When changing a packaging, validate it with Quality, FES and HSE.

Sometimes it is not possible to get the exact number of parts per box or lot size
recommended by the Inventory segmentation file
but you can find a compromise that would still make savings

45
Stock reduction process

Reduce gap to Ultimate stock

 On “Suppliers” tab:
Suppliers
 Expand file by clicking on:

 Filter column AB «Freq increase impact » to only display the Top 5 smallest numbers.

 Note which suppliers would benefit the most from a frequency increase: a negative number means a stock value
reduction). Proposed frequency is shown in column AA.
Think about possible ways to increase frequency to this level without increasing too much Transport costs (milk run,
usage of Cross Dock, etc.).
You will need to build a trade-off table showing Transport costs Vs Inventory value, space, handling costs to support
your analysis.

Sometimes it is not possible to get the exact frequency recommended by the

Inventory segmentation file
but you can find a compromise that would still make savings

46
Stock reduction process

Reduce gap to Ultimate stock

 Other actions can reduce the JNI:

 Reduction of Reaction time of alert management
 Reduction of Train loop cycle
 Change of internal Line feeding mode (from Kanban mode to sequence)
 Reduction of Customer variability (if internal Customer: usage of LISA)
 Change of Supplier for a local one

47
Stock reduction process
PLANT NAME
12-month CONVERGENCE PLAN
Update Resp. :

Last updated :
 Gather your yearly results on 1 page
Inventory reduction Inventory data

Actual stock JNI

Ultimate Budget
Planned Actual stock trend Planned JNI trend 2014
2000

Track monthly your Actual

Unit : K€ Jan Feb March April May June July Aug Sept Oct Nov Dec

1800
Budget 1500 1500 1500 1450 1450 1450 1400 1400 1350 1350 1300 1300

VS JNI VS Budget
1600 Planned Actual
1800 1750 1700 1650 1600 1550 1500 1450 1400 1350 1300 1250
stock trend
1400
Planned JNI trend 1400 1400 1400 1200 1200 1200 1000 1000 1000 900 900 900

1200
Actual stock 1800 1750 1600 1550
K€

1000
JNI 1400 1400 1300 1300

800 Ultimate 1000 1000 1000 950

600 Gap to JNI -400 -350 -300 -250

80% Gap to JNI

400 -320 -200 ?
reduction value

200 Gap to Ultimate -400 -400 -300 -350

15% Gap to
0 Ultimate reduction -60 ?
Jan Feb March April May June July Aug Sept Oct Nov Dec value
400 350 300 250

Achieve 2014

List actions identified

Planned Responsi
N° Actions Deadline Comments ment
gains ble
date Jan Feb March April May June July Aug Sept Oct Nov Dec

Decrease Gap to JNI (every 12 months)

through QRCI

REDUCE GAP TO
1 Correct MRP Safety stock parameter Jan-14 -20 Planner 1 -20 done Feb-14
2 Reduce supplier MPM Sep-14 -100 Planners -50 done in Mar-14 (Ford Ccline)
3 Implement Pool stock March-14 -80 Planner 1
4 Reduce Inventory inaccuracy Sep-14 -400 Planners
5
Decrease Gap to JNI - detailed actions (every 3 months)
1 Update SAP parameters 'ERP safety stock' due to volume drop. Jan-14 -20 Planner 1 Feb-14 -20
2 Include customer scrap in ERP daily needs. Jan-14 -30 Planner 2 Jan-14 -30
3 Work on stock accuracy on all chimical parts. Mar-14 -250 Planner 3 Feb-14 -250
4 Implement FG pool stock on Ford CC line to avoid SS on BOP. Mar-14 -80 Planner 1 FG Pool stock couldn't cover all Customer variability on BOP Mar-14 -50

JNI
5 Implement KB cards on DP production flow racks. June-14 -20 FES
6 Work w ith Valeo to reduce MPM. June-14 -80 Planner 3
7 Respect Reaction time to misdelievry and exceptional transport mode. May-14 -100 PC&L Mng
8
9
10
11
12
13
14
15
16
17
18

Quantify the impact on

19
20
Total achieved -30 -270 -50 0 0 0 0 0 0 0 0 0

Cumulated achieved (over 3 months) -30 -300 -350 0 0 0 0 0 0 0 0 0

Decrease Gap to Ultimate (every 12 months)

1
2
3
Increase supplier delivery frequency
Reduce order lot
Sequence Armrests to prod. line
Dec-14
Dec-14
Dec-14
-300
-100
-10
Planners
Planners
Planner 2
Summit : -30 done
-5 done
Novem : -2 done
your inventory
4 Reduce packaging Dec-14 -50 Planners -10 done
5 Reduce firm order Dec-14 -75 Planners Benecke : -15 done

REDUCE JNI
Decrease Gap to Ultimate - detailed actions (every 6 months)
1 Increase delivery frequency of Summit to 1 / day. Mar-14 -30 JR April 2014 -30
2 Reduce packaging size to 20 pcs/box for part # 7153620. Mar-14 -10 MP Feb 2014 -10
3 Change Novem DP parts line feeding to sequence. Feb-14 -3 MI Feb 2014 -2
4 Reduce order lot to 500 pcs for part # 9134815. Mar-14 -5 BJ March 2014 -5
5 Reduce firm days w ith Benecke to 2 w eeks. Apr-14 -20 MP Reduced only to 3 w eeks April 2014 -15
6 Reduce train loop duration on CC line to 30 min. Apr-14 -10 BJ
7 Implement Milk run Michigan > Puebla June-14 -30 JO
8
9
10
11
12
13
14
15
16
17
18
19
20
Total achieved 0 -12 -5 -45 0 0 0 0 0 0 0 0
Cumulated achieved (over 6 months) 0 -12 -17 -62 -62 -62 0 0 0 0 0 0

48
Conclusion

Stock
Segmentation
File

Reduce gap to
QRCI
Ultimate

Reduce gap to Convergence

JNI Plan

49
Conclusion

 Plant FES objectives

 Maintain Actual stock to current JNI (low Supplier MPM, good plant discipline, etc.)
 Reduce current JNI towards Ultimate stock (increase delivery frequency, reduce Min lot size, reduce Packaging size, etc.)
J N I pro c e s s t im ing
 Agenda and tracking
Every 12 mo nths Define co nvergence plan to :
- achieve JNI within 12 mo nths (gap to JNI),
- plan o bjectives fo r JNI reductio n (gap to Ultimate).

Every 6 mo nths Use JNI file to simulate and then define mo nthly invento ry budgets.
Validate Ultimate invento ry with divisio n P C&L manager.

Every 3 mo nths Run JNI file and freeze to p o ffender items (gap to JNI) to create single list o f JNI.
Launch QRCI fo r so me o f the to p o ffender items (1QRCI per part number).

Every mo nth Update JNI file with new mo nth Daily needs to calculate new JNI value.
Uplo ad 'M RP Safety sto ck parameter' in ERP fro m the new targeted 'JNI mini' value.

Every week Track A ctual sto ck versus JNI (= track gap to JNI, same day same time every week)

 Group / BG / Division objectives

 Reach Inventory budget
 Reach Freights costs budget
 Reach Customer delivery rate target
50