Mrp Project Update

1. Mrp Project Update DateMarch , 2007

2. Who is Bway ? • Bway is the largest supplier of general line paint cans in North America with over 80 % market share. • Bway also has two Aerosol can manufacturing sites that have grown 500 % in the last 5 years. • Bway also manufactures steel pails , plastic pails and plastic cans and some specialty metal containers. • Bway has revenues in excess of $900 Million and before this project began had no plants utilizing Mrp.

3. Project Team • Tom Hopkins – project leader. • Pat Brush – Consultant / Programer. • Amy Johnson – Demand Manager – Lead on installing forecasting software – user trainer suport.

4. Project Goals • Consolidate communication of customer demand into MFG Pro and eliminate paper/manual order & demand communication process. Create visibility of available to promise,allocated and aged inventory. • Improve forecast accuracy. • Eliminate manual reactive scheduling, by enabling work order planning within MFG Pro. Transition to proactive scheduling addressing near term shortages before the “ truck shows up and we don’t have cans”. • Create visibilty to Capacity for all operations. • Improve inventory accuracy and turns by leveraging MFG Pro capabilities.

5. Consolidate communication of customer demand into MFG Pro and eliminate paper/manual order & demand communication process. Create visibility of available to promise,allocated and aged inventory. • Past practice: • Sales order due dates all placed for 12/31 of current year. Impact was shipment requirements were not communicated to mrp. • Customer demand requirements were communicated via forecast updates and email. • Customer order review process was recorded and reviewed on paper and circulated between Sales and Planning. Visibility of backlog was an issue as well as turnaround and tracking. • Impact was no system visibility to supply vs. demand, resulting in routine expedites as “ we have trucks at the door” waiting on inventory. In addition monthly forecasted volume could not be calculate from system information, causing sales projections to be manual estimations and inaccurate. • No online reporting of customer aged inventory was available. Result was inability to follow up on inventory past purchase order terms.

6. Consolidate communication of customer demand into MFG Pro and eliminate paper/manual order & demand communication process. Create visibility of available to promise,allocated and aged inventory. • Current Status: • Sales order shortages reviewed daily for the next two weeks and potential service issues communicated proactively for follow up. See attached 23.8 report. • Truck release shortages reviewed daily for next five days. See attached daily email. • Service policy for finished goods defined in the system and status of supply vs. demand monitored weekly and published. See attached. • Order communication and review of Make to Order finished goods now integrated with the quote process. Result is status and changes are visible by all users on-line. See attached 6.20.2 • System was enabled to track inventory age by customer and item type. See attached 3.6.4

7. Supply vs. Demand Reporting • 23.8 displays all supplies ( inventory and scheduled production ) vs. demands ( safety stock, forecast and shipments) for each item.

8. Truck release shortage tracking. • Truck release shortages are reviewed daily in the production meeting. Goal is to proactively address potential service issues. See example. From: Bill Kennedy Sent: Friday, September 22, 2006 7:42 AMTo: Scott VestCc: Jack Holmes; Tom Hopkins; Steve Palmer; Tracy Koehnke; Mike Flask; Dan Keefe; Lloyd Acres; Jim Schmidt; Kris ChanceSubject: SHORTAGES CINCINNATI SHORTAGES: 303803—AEROSOL SPECIALTIES—REL#036176—9/25@6AM--18M. MUST LEAVE BY 4PM ON 9/24.  Run 09/23 late, L7 304396—AEROSOL SPECIALTIES—REL#036176—9/25@6AM---9M. MUST LEAVE BY 4PM ON 9/24.  39,000 in stock.  We ran the reduced qty by sales to get into the c/o for the 306706. 306706—ALBERTO—KIK—CUMBERLAND,RI—REL#036133—9/25@8AM—18M. MUST LEAVE BY 6PM ON 9/23.  Running 09/23 early 303803—CUSTOM AEROSOL—REL#036104—9/25—5M. WILL BE PICKED-UP ON 9/25 BY R&L TRUCKING FOR DELIVERY 9/26.  Running 09/23 late. BILL KENNEDY R&S

9. Inventory availability tracking on Make to Stock ( MTS) and Make to Order ( MTO) cans. • Proactive tracking of supply vs. demand now possible looking at balance of month, or greater periods of time. See attached.

10. Order review and promise. • Purchase orders for MTO items are recorded on quotes, then production is scheduled and promised via quote review process. See attached example of 6.20.2 screen.

11. Aged Inventory Reporting • This report can be requested on demand with current days update by sales for customer follow up, and tracking to avoid items becoming slow moving.

12. Improve Forecast Accuracy • Past practice: • After the finalization of the Budget the Budget numbers were copied over into the live forecast field in MFGPro for every item for every week • Inside sales would update the forecast in MFGPro as time permitted on the close in weeks. They would update with their best guess estimate which was based on institutional knowledge or direct input from the customer • The forecasts could change daily and was never locked for reporting purposes • Planning often had to research whether or not a forecast was “real” and whether production should really be made to meet those forecasted numbers • Impact was instability in the demand. Planning was trying to plan to an ever moving number • Without systematically locking the forecasts at any point in time there was no way to report on accuracy

13. Improve Forecast Accuracy • Current Status: • Implementation of Futurcast forecasting software • Formalization of a forecasting process • Item segmentation was developed • Impact of the software implementation was that it put more science behind the estimates. The software looks at the history stream by item, by customer and estimates future demand • The forecast that planning works with is only updated once a week – providing more stability and forcing communications between sales and planning on near term changes. Planning no longer needs to look for the “needle in the haystack”. Reports and processes are in place so that we have visibility to potential issues • Segmenting items as either Make to Stock or Make to Order allows us to manage the business more efficiently. MTS items can be planned to demand. A process to manage MTO items has also been formalized and implemented. We are in a position now to be proactive rather than reactive which ultimately will provide better service to our customers. • We now lock the forecast at the beginning of each month which allows us to report on our forecast accuracy at the close of each period

14. Improve Forecast Accuracy • Current Status: • On those item designated as MTS we have seen marked improvement on accuracy: • We continue to look for items that are candidates for being managed as MTS. We have just added 19 items to ATI’s program • As more items are managed as MTS and we allow a higher level of deference to the modeled forecast we should see better accuracy, lower inventory and higher service

15. Eliminate Manual Scheduling • Past Practice : • MRP was reviewed once a week, repetitive schedules were updated. Any changes in demand , or scheduled production were not compensated for until next weekly review. • Material shortages were not visible except for a manual look-up, resulting in un-planned material shorts due to schedule attainment and inventory variances. • Work order lot sizes were established based on schedulers judgment. The impact was variances in wip and length of run that weren’t visible until after the fact. • Production was posted based on bill of material back flushing, not actual usage.

16. Eliminate Manual Scheduling • Production is scheduled ( Coil and Can ) by “firming” planned orders that are system calculated. Calculation is based on “Period Supply Quantity” based on ABC code. For instance – A items ( high movers) are run 2 x per month, resulting in an average lot size i.e.. Length of run. B’s are run 1 x per month etc. See attached Dispatch report as example ( 16.18 ) • Actions needed to adjust firmed work orders are reviewed daily to compensate for changes made in demand, or schedule attainment. See attached action message report. (23.7) • Material shortages, and projected availability are displayed daily on an automated report. See attached (16.3.10) • Material and labor used in production are “issued” to the job displaying variances at the job level.

17. Dispatch List ( production schedule ) • Report displays scheduled production, components required and labor required by machine.

18. Action Messages • Action messages are mrp recommendations to the scheduler for firmed work orders. This process eliminates the manual review of actions needed for scheduled work. Future work orders ( planned ) are re-planned nightly and require no follow up.

19. Shortage Report • Shortage report can be run for a defined period of time, and it displays requirements and when next production is due. Twice a week review by planning is conducted for corrective action.

20. Work Order Labor and Material Tracking • With actual labor and material usage being posted to the work order, visibility of material and labor variances will be created. This will allow for review of largest opportunities for improvement. By department , process and item. • By posting actual material usage, rather than backflushing bill of material qty, inventory will be more accurate. • Planned work order lot sizes are calculated by period order quantity ie – work order lot size will include X weeks demand. This function allows for control of length of run , and average inventory to reside with the planning and operations manager, rather than the individual scheduler. Since it is system generated it will be more consistent than manual.

21. Capacity Planning • Past Practice: • Calculating capacity varied by process and scheduler. A portion was done in Exel, another portion from system reports. • Revised Process: • Capacity calculations are consistently delivered from MFG Pro capacity module. Speeds are input by the scheduler as well as available production hours. Based on those two inputs capacity is displayed either in total , by day, or by week. See attached examples.

22. Lessons Learned • Get Executive support and involve them in removing barriers . • Set clear business objectives. • Get users together to communicate problems and discuss solutions. • Use data to frame discussions and diffuse “ folklore “.

23. Questions ?