LSI Case Study
Opcenter (Preactor) APS
Lean Scheduling International (LSI) implements Opcenter APS (Preactor) alongside SYSPRO to provide visibility to reduce inventory
Founded in 1855, Samuel, Son & Co. is a family-owned and operated network of metal manufacturing, processing and distribution divisions. The Samuel Packaging Systems Division is a leading manufacturer and supplier of a broad range of steel and plastic strapping, hand tools, edge protection, stretch film equipment and consumables, as well as standard and custom engineered unitizing equipment. Samuel PSG supplies products to virtually every industry from its 3 manufacturing facilities and 6 distribution centers.
Need to balance planning and scheduling to cover both small and large orders without disrupting the current manufacturing workflow. The current spreadsheet driven production process was both manual and unreliable.
Samuel PSG’s manufacturing facility at Heath, Ohio operates on a 90% Make to Stock basis and supplies hundreds of products at an SKU level including a small amount of custom work. Products range from very lightweight strapping used in hand tools all the way up to 3,000 lb. coils of steel strapping used in heavy industry and in logging. Customers can be as diverse as small manufacturers that order perhaps 5,000 lbs. per month to state and national distributors and large-scale operations such as Nucor Steel. Lead times vary from 3 days if a product is in stock to 3 weeks for custom work to 6 months and over for custom strapping equipment.
In terms of scale, the Heath facility currently processes 85,000 tons of steel. From a business process perspective, the actual manufacturing is relatively straightforward with the appropriate grade of steel being bought and stored before being cut, treated and then wound into coils ranging from 50 lbs. finished product. This takes place over 6 production lines/work centers – 3 of which are dedicated finishing lines -that operate on varied shift patterns of between 5 – 7 days a week.
Given the company’s Make to Stock business model, there is a heavy reliance on accurate medium to long term forecasting currently being done at an SKU and warehouse level. When orders are received, they are picked up by the forecasting tool which then assesses whether sales orders are exceeding the forecast or not. If this is the case, the production plan needs to be changed and if 10% of orders are outside the forecast in terms of anticipated product, this also impacts the medium-term plan.
“The company’s planning and scheduling challenges are anything but straightforward. Inventory management and smoothness of production flow lie at the heart of what we do.” States Patrick Hoffmann, Director of Inventory and Operational Analysis. “The plant is not necessarily focused on individual orders – it is more concerned with whether peak demand exceeds our capacity, whether we run out of inventory or whether we are left with surplus inventory. Our planning and scheduling therefore targets inventory levels, modulates production and seeks to achieve a smoothness of flow to optimize our physical and human resources.”
Per Mike Shirilla, Production Scheduler, “The demands of the plan in terms of inventory management may be at variance with the demands of the schedule in terms of actually achieving the plan – especially when it comes to managing capacity. For example, each of the finishing lines can have set up times of approximately one hour, plus or minus 30 minutes. It is therefore clearly advantageous to have a degree of product batching to minimize changeover times and optimize plant and human resources, but this may not be ideal from a smooth planning perspective.”
Hoffmann adds, “It’s a matter of balance. A lot of our processes are interdependent. So, if demand for one SKU slows down, this can affect others, so we need to be able to tweak the rules that determine the sequencing balance of maintaining production and inventory efficiency.”
This tension also exists at a general business level as Shirilla explains. “A good example would be the scenario where we have lots of smaller orders coming through while also having a lot of long-term larger production required from our forecast. We can either manufacture these smaller orders and potentially disrupt the smoothness of flow, or we could even outsource some of the smaller orders and maintain this flow.”
Prior to the company’s investment in Siemens Preactor for Advanced Planning and Scheduling (APS), the process was handled by two separate spreadsheets without utilizing the company’s existing Enterprise Resource Planning (ERP) system.
The first spreadsheet was a weekly report showing what was available on the shop floor as well as the current demand forecast. Data would then be entered, by hand, into another spreadsheet which essentially looked to set out demand by product grouping by mix. The company had a dedicated model for each month and, working in monthly time buckets, attempted to keep a 3-4-month planning sequence horizon along with a long-term plan of 1 plus years.
Hoffmann stated, “It was important to keep the data as accurate as possible because you can’t work on averages when you never know what the actual possible scheduling mix will be.” This approach was very manual and therefore very time consuming and prone to error. “It was cumbersome”, continued Hoffmann, “there was a lack of responsiveness and agility in not just in collating and changing the data, but also in communicating it in a timely manner because again, all this was done manually, in person, across the plant.”
Perhaps an even greater problem lay in the huge over reliance this approach placed on one key resource. “All the expert knowledge relating to the ideal sequencing of products, optimizing of times etc. was tied up in Mike’s head”, continues Hoffmann, “This always left the permanent worry of what happens if Mike goes away?”
Samuel PSG was aware that there must be a more efficient way of balancing the company’s planning and scheduling needs. When the 2008 financial upheaval caused what Hoffmann describes as “all hell breaking loose” in terms of accuracy of future demand planning, the company quickly made the decision to move towards a data driven, quicker, and more visible, decision making system allowing them to react in a more agile and responsive manner.
The problem that both Hoffmann and Shirilla realized, is this would involve much more than simply putting in an IT system. “Nothing was going to be able to do what I was currently doing in my head” explained Shirilla. This included the company’s existing ERP system and added to the concerns they had the wrong system and it would become a constraint on the way the company already worked
Both Hoffmann and Shrilla spent a considerable amount of time understanding the company’s planning and inventory management requirements based on the vast knowledge Shrilla possessed. Armed with this knowledge, Hoffmann quickly found Siemens Preactor and under the guidance of Mike Liddell from Lean Scheduling International, they were shown how Preactor worked, using test data, quickly concluded that Preactor could do the job they required.
With LSI working in conjunction with a handpicked team from Samuel PSG and Syspro ERP to assist in facilitating the integration of Preactor with the existing Syspro ERP solution, they started the implementation.
Beginning from a system flow perspective, the goal was to use Preactor to handle the company’s planning requirements, Syspro to drive MRP, and Preactor to do the localized scheduling. The schedule would be fed back into the plan which would give Samuel PSG a synchronized, closed loop system that ties together capacity and material constrains.
Mike Liddell from LSI, comments on the implementation. “We were the first company to use the Preactor Link developed with Missing Link Technologies to quickly and seamlessly integrate with Syspro ERP. We built a Preactor test environment within Syspro allowing us to identify which data from Syspro needed cleaning before pushing to Preactor while fine tuning some of the specific scheduling rules Samuel PSG required.”
A successful “go-live” was achieved and aside from the immediate increase in visibility across medium and long-term plans, as well as the short-term schedule, the system didn’t have long to comprehensively prove its value.
This decentralization of expert knowledge from one person to a system that can be used by others has also massively helped not just in generating plant wide visibility but also in enabling accurate, timely information to be communicated effectively and efficiently, something previously impossible. Mike was finally able to take a vacation!
As Patrick Hoffmann explains, “In the first 2 months, demand outstripped capacity by two thousand tons but we were still able to meet demand while running on much leaner inventory levels than we ever have had in the past.” He continues, “In the past, our approach was one of necessity which said, “if in doubt, buy‟, but now because of the visibility and control Preactor brings us, we can be much leaner and more responsive which helps us meet both our inventory management objectives while maintaining smoothness of flow.”
TIME SAVINGS AND ACCURATE DATA
With Preactor, Samuel PSG saw considerable time savings with Hoffmann estimating the equivalent of removing 1.5 employees purely in terms of collating and entering information. This allowed Samuel PSG to deploy valuable resources elsewhere within the company adding extra value for the same level of staffing. It’s not just in the day-to-day time savings where Preactor has proven itself of value, but also in the accuracy and trust of the data provided for strategic business decision making. Hoffmann states, “We made the decision in June not to buy any more finished goods for the rest of the year because we could accurately see our future capacity commitments, thanks to Preactor.”
Samuel PSG has considerable plans for Preactor beginning with rolling out the system to the other 2 manufacturing facilities in North America. Strategic planning will be handled centrally in Chicago with scheduling being handled at each plant with a continual exchange of data across the entire system.
In terms of what Preactor currently means to Samuel Strapping, the last word however belongs to both Hoffmann and Shirilla. “We like it!” “Every day we discover something new about Preactor that helps us.” “Without a tool like Preactor” adds Hoffmann, “I simply wouldn’t be able to function in my role as Director of Inventory. And inventory is the single biggest investment our company makes – it really is that invaluable.”