Effective Strategies in Bridging the Gap
Between PLM Practice and Needs Across
Demand-Driven Value Networks
Anil Shipley
Bajaj Electricals Ltd.
The Conflict
Increase
Sales
Decrease
Costs
Marketing
Quality
Production
Marketing
Reduce
Lead
Time
Improve
Quality
Increase
Production
Small lots,
Large
variety
Finance
Purchase
HR
Production
Reduce
Inventory
Reduce
Raw
Material
Cost
Reduce
Man
Power
Large lots,
Small
variety
2
Why is the company rendered “Directionless”?
•
Performance Targets are set for each function so as to get
desired behavior to control financial and operational
elements.
•
Often, an action which has positive impact on one element
creates negative impact on some other element.
For example:
•
Reducing inventory may result into unavailability of
materials for production thereby increasing lead times.
•
Trying to deliver on time may result in sacrificing quality
or increase in costs.
•
Management is continuously engaged in doing a tight rope
walk to achieve balance between these elements.
•
The strategy of the company based on its Vision and Mission is
lost in the process.
3
Why is the company rendered “Directionless”? (Cont..)
The Company is continuously struggling to
reach a balance between Sales and Cost…
Cost
Sales
We do not have a mechanism to know what is the
optimum balance among sales and cost related elements.
As a result it becomes impossible to get consensus of all
functional heads for the target levels of all the elements
together.
4
What is the conventional way of managing a company?
• Decide a Vision and derive the Mission for the company
• Prepare the Annual Business Plan based on goals and objectives it
strives to achieve
• Divide the goals and objectives and distribute it to the departments
• The departments set annual targets and distribute the same to there functions
• Each department/function initiates multiple improvement programmes to
achieve desired objective
What is the hidden assumption?
Overall improvement
in the system.
Sum of improvements in
each part of the system.
5
But we have a problem
Data in many situations does not reveal the truth !
• On Global Warming
Polar sea ice increased 50% over last year, growing
from 6,000 to 9,000 cubic kilometers when compared
to the same period in 2012. Moreover, this year’s
multi-year ice is 30 cm thicker than last year, and
scientists claim that thick, multi-year ice indicates
healthy Arctic sea-ice cover. CryoSat-2 measurements
demonstrate that the Earth’s climate might not be
warming, but it is changing”
Data
presented
against global
warming
“
Data presented in
support of global
warming
Since the early 20th century, the global air and sea
surface temperature has increased about 0.8 °C
(1.4 °F), with about two-thirds of the increase
occurring since 1980.Each of the last three decades
has been successively warmer at the Earth's
surface than any preceding decade since 1850”
6
But we have a problem
Data in many situations does not reveal the truth !
• On Gun Control in USA
In 1976, Washington D.C. adopted what was
to be considered one of the few extremely
restrictive gun control policies in the country.
The murder rate since the time of new gun
control policy rose 134%.
Data
presented
against gun
control
“In England and wales, rate of homicide is
Data presented in
support of gun
control
1 per 150 offences, while America has an
alarming rate of 1 homicide per 43
incidents of offences. Guns are far harder
to get in England and Wales”
7
Insight – Learning from evolution of quantum physics
In an interconnected system – a cause will always have
multiple effects ( spaced out in time and location).
EFFECT 2
EFFECT 1
CAUSE
• Agreed Approach of Scientists : If one of the effects is not seen, then
the existence of the cause is in doubt. The theory has to be modified
or rejected
• Predicted Effect thinking can be used to validate existence of cause –
even when we cannot observe the cause directly
8
Process of Elimination through Predicted Effect
I have High Fever
I have enlarged liver
I have rashes and
bleeding gums
Viral
Dengue
Typhoid
Dengue
Typhoid
Dengue
9
Process of Validation through Predicted Effect
I have Joint
Ache
I have Red
Rashes
I have High
Fever
I have
Dengue
I have
enlarged
liver
I have
appetite loss
I am bleeding
through nose
and gums
10
Case Study
Highest Aggregation – least variation in Demand
CWH
Aggregation – lower variation in Demand
RDCs
RDC 1
CWH
RDC 2
Huge Variation in Demand
Branches
Basis of Norms
 Norm = Per Day Sale (Peak) x Lead-time
 Lead-time = OLT (Buffer Generation) + TLT + 1 day buffer (Batching)
5 days lead time for branch = 1 + 3 + 1 = 5 days

Branch Norm :- <Demand spikes during month-end>
Assuming Sales Plan for Branch is 100 AND also assuming 40% Sales happen in the last 5 days,
Branch Norm = Per Day Sale x Lead-time (RDC to Branch)
Other Branch Norm = (40 / 5) * 5 = 40 (40% of Sales Plan)
Buffer Management
• A stock Buffer is divided into following zones:
White
100%
Buffer level
Penetration
66%
Consumption
33%
0 units
Receipt
Black 0 stock = 100% penetration
“Buffer Penetration Report - CWH/RDC”
• Buffer Penetration Report or ‘BPR’ for CWH-to-RDCs-to-Branches
Bajaj Leap Ahead -> “Buffer Penetration Report - CWH/RDC”
• ‘Rationing’ in BPR:
RDC Stock = 19
Economic Stock
100%
0%
Economic Stocks Level
8
80%
70%
6
60%
5
50%
40%
30%
2
20%
Buffer Penetration Level
90%
10%
0
0%
100%
Branch 1
Branch 2
Branch 3
Branch 4
Branch 5
NORM = 10
NORM = 10
NORM = 10
NORM = 10
NORM = 10
Economic Stock
Bajaj Leap Ahead -> “Buffer Penetration Report - CWH/RDC”
• ‘Rationing’ in BPR:
0%
100%
Economic Stocks Level
0
80%
70%
2
80%
3
60%
6
50%
8
40%
30%
8
6
5
20%
10%
Buffer Penetration Level
90%
2
0%
0
100%
Branch 1
Branch 2
Branch 3
Branch 4
Branch 5
NORM = 10
NORM = 10
NORM = 10
NORM = 10
NORM = 10
Economic Stock
Suggested Despatch
Bajaj Leap Ahead -> “Buffer Penetration Report - CWH/RDC”
• ‘Rationing’ in BPR:
0%
100%
Economic Stocks Level
20%
20%
20%
20%
20%
80%
80%
70%
60%
50%
40%
30%
20%
Buffer Penetration Level
90%
10%
100%
0%
Branch 1
Branch 2
Branch 3
Branch 4
Branch 5
NORM = 10
NORM = 10
NORM = 10
NORM = 10
NORM = 10
Economic Stock
Suggested Despatch
Bajaj Leap Ahead -> “Analytical Reports” -> “BPR Trend Report-Source : Internal”
For Branches and RDCs:
Thank You