What are the common points between process reengineering, reorganization, and investment decision for a strategic project?
It’s never easy to define a supply chain transformation project’s roadmap with quantified benefits, especially in a complex supply chain network. Moreover, we have many functions affected by the change; then the situation starts to get complicated to reach everybody’s agreement!
Unfortunately, these structuring projects are necessary but often blocked because decision-making is complex and poorly quantified.
Supply chain project teams must face the following situations:
- Presentation of the target organization to the teams, but the benefits are not quantified. People are not convinced of these changes’ validity.
- Some affected functions feel out of the scope, or the proposed solutions not no longer realistic due to this perimeter mistake. We must therefore review the roadmap.
- Some people have other improvement ideas and are sure about their benefits, so they will not be the driving force in the project’s progress.
Do you recognize any of these situations?
If so, why don’t you investigate the trail of a flow simulation project?
Indeed, flow simulation, and the use of a digital twin, are good candidates to address these issues.
How does simulation help break down silos in businesses? Presentation in 5 steps
The best way to explain it to you is to illustrate it with a concrete example.
An industrialist in the aeronautics sector whom we supported had to review a large part of his production site to meet several product families’ growing demands.
The company’s principal challenge was to meet future demand while controlling their Working Capital Requirements (WCR).
We explain below the five stages of the simulation project and the interest of each of them
1) Problem modeling
We built with the client the constraints and associated assumptions in the simulation tool. We integrated all the conditions and shared the structuring hypotheses in a first simulation exercise.
This exercise enabled all company functions to understand the organization’s requirements (why certain parts only pass through these workshops, why these logistical means are in place, etc.).
2) Arbitrate on the target scenario to be retained and the improvements needed,
We have defined the performance indicators (KPIs) to use and monitor together. Indeed, say that with this investment, the service rate will increase by 5%.
But suppose the queues will decrease by one week on average.
In that case, it’s much less representative for a financial director than to tell him that the working capital will reduce on average by one million euros and the return on investment is six months.
3) Start with a “what-if” scenario approach,
What could be better than collective intelligence to define the ideas for improvement to simulate?
The first benefit is being able to reflect on the team’s ideas.
The other simulation use is to test the hypotheses that some people have had without any risk!
4) Arbitrate on the solutions to be retained
Arbitrate with a quantified view of the results. This factual vision allows teams to prioritize investments.
In the other direction, it is also possible to clearly show that some solutions have benefits but that they are unfortunately too low compared to the human and material investments to do in return.
5) Share a vision between the different departments.
This communication exercise (the choices and their justifications) with the teams is simplified. The idea is to propose all the actions to be put in place to obtain the validated scenarios.
For example :
- Search for specific profiles for HR,
- Industrialization and qualification of “x” new machine or workload per semester,
- Flow management in the modified workshop (implementation of a pulled flow solution)
- Impact on the scheduler and planner tasks
- The search for a new subcontractor for capacity needs
This last step allows the investment plan’s validation with the financial manager about a defined and concrete working capital target.
Such an approach can represent an initial investment in time. But having a shared and clear vision of the target with quantified decisions will remove some obstacles to change and pay off quickly.
In this simulation project, our recommandations after the different simulation scenarios were the following:
- Management of the pull-flow workshop with a constrained outstandings (ConWIP),
- Subonctractors management project
- Increase in the Overall Equipment Effectiveness (OEE) on the bottleneck station
- Queues management for the control stations
The AGILEA team’s work made it possible to simulate and assess a gain of around 35% in working capital at 2 years while respecting the client’s industrial performance constraints.
Two years after the simulation and reorganization project that the team had proposed, they achieved the target!
If you want to start a transformation project that will involve multiple departments in your business or assess different scenarios to define a future target organization, a flow simulation project can help.
Do not hesitate to contact us for more information!