World class integrated planning - Provide reliable delivery information to customers

MAN Diesel From fire fighting to world class integrated planning For a long time MAN Diesel struggled with order backlog problems and not being able to provide reliable delivery information to customers. Implementing To overcome these problems global integrated planning was implemented. S&OP and the new global The company MAN Diesel Supply Chain MAN Diesel is a subsidiary of MAN AG and is the world’s leading provider of large function secure bore diesel engines for marine and power plant applications. MAN Diesel employs around 8,000 people worldwide with main locations in Germany, Denmark and France. an anchor point They design two-stroke and four-stroke engines, generating sets, turbochargers, CP for balancing propellers and complete propulsion packages manufactured both by MAN Diesel and supply and demand its licensees. Furthermore MAN Diesel has a world-wide sales and service organisation. as well as providing visibility and A welter of processes and IT solutions decision support. Formed by a number of M&As over the past 25 years, MAN Diesel was a cluster of independent companies with individual business models, different business processes Matthias Berchtenbreiter and unique IT landscapes. This structure prevented efficient information sharing and Head of Global Group cooperation between the units. Supply Chain – MAN Diesel To achieve operational efficiency and exploit synergies between the business units the MAN Diesel Executive Board decided on a new approach: Local to Global, including common business principles, processes and IT platforms. The name of the transformation programme became ‘OneDiesel’. PA Consulting Group (PA) supported MAN Diesel with the integration activities becoming ‘one company’ – on both the IT and the business process side. This provided a simplified and scalable business approach, supporting sustainable efficiency and growth targets. One of the initiatives within the OneDiesel programme was Integrated Planning. This key workstream had the aim of establishing a global overview of the supply chain Case study The new S&OP processes and easy-to-use tool will save time and secure one-point-of-truth. Michael Madsen Group Purchasing – MAN Diesel Local silo planning resulting in From local silo planning to global integrated planning It was decided to implement Integrated Planning insufficient global overview of across the company. In cooperation with PA, MAN the supply chain Diesel undertook the successful eight months journey For several years MAN Diesel struggled with their overall from concept definition through to the complete delivery performance, year-long backlogs and unreliable implementation of Sales and Operations Planning information to customers. Planning was done individually (S&OP). The main elements of S&OP consist of: at each location – and each location defined its own planning horizon, inventory policies and forecasting • A planning hierarchy linking strategy, finance and principles. As a result a total overview of the demand volume planning to execution for parts and capacities was lacking: • Global S&OP processes securing forecasts from all • No cross-company agreement on what to forecast units within a five year time-horizon thereby providing and at what level – less than 50% of the parts were a valuable input to sizing the right capacities at the forecasted; this created a ‘Mission Impossible’ for right point in time the supply side trying to secure the right capacities • Clear definition of roles and responsibilities throughout • Different systems to forecast and plan and the S&OP processes no suitable global system to secure a complete • Implementing a central supply chain function as the demand and supply overview focal point for the S&OP processes; ie the ‘one point • No department responsible for securing of contact’ for a shared view on the supply chain demand and supply. • The implementation of a common standard IT platform – SAP APO With increased competition and a volatile market outlook, the need for more flexibility and responsiveness • Establishment of global users and super users in the supply chain – as well as being able to adapt to throughout the company. market changes – became crucial. 2 Close cooperation between business process design • A more aligned and flexible supply chain offers a and development and IT implementation was a key better foundation for decision-making compared to success factor for establishing S&OP. Based on the high the current ways of planning, selling and operating level concept model the IT requirements were agreed – • As a result of the consolidated overview of both and the IT realisation and detailed process development anticipated future demand and available supply took place simultaneously capacities, the Executive Board now has a solid foundation to make investment planning decisions Integrated planning – a milestone and adjust to the correct capacities across all units. enabling flexibility Clear benefits were achieved through a streamlined MAN Diesel is now well on their way to having project where PA supported MAN Diesel from the first a supply chain able to respond quickly to the analysis phase through to the implementation: changing market environment. • A reduction in time and resources spent on fire fighting of up to 80-90% – releasing resources for other tasks • Customers will be provided with reliable delivery dates based on correct information from production.