Obstacles to Strategic Supply Chain Performance

Most companies that implement a supply chain view of their operations struggle to find an optimum balance between responsiveness to customers - and cost efficiency. Wasn't it Henry Ford that said his customers can "... have any color they want, as long as it is black." The responsiveness/efficiency balance can depend on a number of factors. Some of the obstacles that supply chain managers must consider as they develop strategy include:

- Increasing Product Variety; product proliferation is rampant in today's markets.

- Shorter Product Life Cycles; many product life cycles now are measured in months, not years, as has been common is earlier days. This is true for not just niche products - commodities too.

- Increasingly Demanding Customers; delivery lead times, costs, product performance, inability to pass through cost increases. Customers today (who evaluate their own supply chains) are demanding faster fulfillment, better quality, and better performing products for the same price.

- Fragmentation of Supply Chain Ownership; many firms are less vertically integrated than they were in previous decades, and many have outsourced "non-core" functions and activities.

- Globalization; supply chains are increasingly global which can have cost benefits, but coordination across distant elements and time zones can make management more complex.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Plant Maintenance: the Cost/Risk Confusion

In the process industry, our manufacturing plants are often capital intensive. Maintenance of these physical assets can be a significant part of the operating budget leading to the inevitable question of "how much do we really need to spend on maintenance?" There is a widespread belief that there is an optimum level of maintenance spending that balances cost and a company's risk. We believe there is no such thing as a generic cost/risk trade off for all industries. The level of maintenance spending is more a function of the level of consequences of failure.

Industries, or even individual manufacturing sites, with an extremely high consequence of failure need to manage risk to the lowest practicable level - maintenance costs may not even be a subject for discussion - ie nuclear power, etc. In the chemical industry the consequences of failure can be extreme when plants are close to highly populated areas. In the general process industry the risk of failure can be managed by plant design initiatives such as redundancy, and surge capacity.

There is not always a direct link between the cost of plant maintenance and the level of risk. There is almost always an opportunity to reduce maintenance costs while increasing the level of risk management. This effort depends on the sophistication of the maintenance effort when this initiative commences.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

A Strategic View of Plant Maintenance

Winston Churchill once observed that "However beautiful the strategy, you should occasionally look at the results." Developing strategy is good, but it the implementation of strategy that separates successful organizations from average or failing organizations. The process industry, which is frequently capital intensive, can achieve strategic advantages through effective management of their physical asset base. The core process to managing that asset base is plant maintenance. Done well, maintenance is a reliability effort, not a repair focused effort. Maintenance performance can, and should be measured, and appropriate metrics should be used to benchmark the organization and develop improvement objectives.

A good structure for deploying metrics is to focus on metrics at three levels:

- The Corporate Level - Safety, maintenance costs/replacement asset value, etc
- The Strategic Level - Percent planned work, downtime due to maintenance, etc
- The Functional Level - Length of time to perform a routine task, rework, etc

We are comfortable with managing a business via a balanced score card. We should approach our maintenance and reliability efforts with the same perspective.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Working Together - Sales & Operational Planning (S&OP)

Implementing sales and operational planning (S&OP) will help your organization function well as an overall whole. It may not directly benefit any specific function, or guarantee a profit increase, but as we always say - we assure you that an overall supply chain perspective, and a disciplined effort to do a regular sales and operational planning process will absolutely help sales, and the top line.

- The general manager needs to get everybody working together and exercise leadership.
- S&OP deals with families of products, and requires a planning horizon, and monthly reviews.
- S&OP links the business plan with the operations of each department.
- The Sales & Operational Planning process yields realistic plans.
- Sales and Operational Planning eliminates surprises, and hidden decisions...

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Logistics Planning vs. Logistics Strategy

Many firms in the process industry consider logistics as part of their overall supply chain, but fail to differentiate between logistics strategy and logistics planning. Firms that explicitly distinguish between these activities benefit in at least three ways:

-Opportunities for differentiation based on operational, logistics, or customer service excellence are more likely to be exploited.

- Logistics tends to have a more visible and important role in the company.

- Investments in the logistics function or infrastructure are more likely to be approved.

In firms that do not differentiate between logistics strategy and logistics planning, logistics tends to become just a budgeting exercise, and seen as a "cost" rather than value added activity.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Best Practices: Condition Monitoring of Belt Conveyors

I am sure my friends and colleagues in an unnamed agricultural chemical manufacturing, formulation, and packaging company will indulge me in an observation of best practices for belt conveyors - just like the ones we use to package bottles, 4X2.5 packages etc for our products. If you agree or disagree, please add your comments to this posting - but we do not accept anonymous comments, please give us your direct feedback...

Belt conveyors are very reliable. When performing preventive maintenance on belt conveyors we highly suggest condition monitoring and maintenance versus interval maintenance. Best practice includes:

- Lock out / tag out before maintenance begins.
- Check overall condition of the belt.
- Check that rollers are rotating freely, if not repair or replace.
- Check belt cleaning device for proper operation, adjust if necessary.
- Check belt tension, tighten or adjust to repair for sagging, jerky, or slipping movements.
- Check frame solidity, check for cracks, physical damage, and loose bolts.
- Belt Guide, check belt guides for loose fasteners, and proper function.
- Hatches and Doors, check for leakage, condition of sealing rings, and inspect locking devices.

During plant shutdowns there are a number of other activities that are required to properly maintain belt conveyors. Lubricate bearings, inspect and adjust alignment, check for vibration induced changes - loose nuts and bolts, bearing play, fittings, zero speed switches, etc.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Operational Excellence - Safety Performance

There are many priorities in manufacturing plants in the process industry. Our fundamental priority is safety management - with a focus on preventing all injuries. The key elements of an excellent safety system are:

- Management commitment - at the highest levels.
- First line, and progressive ownership of safety performance.
- Universal involvement in safety activities and training.
- Comprehensive corporate safety procedures, standards, and practices.
- Fully staffed, trained, and professional safety specialists with a supporting organization.

All of these elements are important, if not critical to an organizations safety performance. If we had to pick the most critical, important, or fundamental - it would be management commitment. Executive leadership must understand safety, believe in it, and have a passion for it.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Process Excellence: Information Management

Everyone tells us that we live in the "information age." For those of us in the process industry, our operational and supply chain excellence efforts depend heavily on managers making decisions over a very broad scope that crosses many functions - and frequently across companies. We need good information on which to base those decisions. We also try to optimize decisions across the entire supply chain, not by individual function.

When looking at the overall scope of the supply chain, there are some basic "buckets" that we can categorize the information that is necessary to make good operational and supply chain decisions:

- Supplier information: where can we get materials and services, at what price, with what lead time? Implementing e-business requires information on order status, delivery, and payment.
- Manufacturing information: What do we make, how much, where, in which facilities, with what lead time, at what costs, and at what other trade offs?
- Distribution information: what do we need to move, to where, what quantities, what mode will we use, where do we want intermediate storage, and what lead time do we need?
- Demand information: (I know, here we go again...) who is buying what, at what price, where, what quantity, and where is it to be delivered?

OK, we know what type of information we need - what characteristics of this information do we need to make good decisions?

- Information must be accurate: Information will never be totally accurate, but we cant make good decisions unless the information is accurate enough to be directionally correct.
- Information must be timely: We cant wait until the numbers are 100% accurate - we argue that they never will be. Information must be timely - even at the limited expense of accuracy.
- Information must be appropriate: More data is not always better - data has be be appropriate for managers to make correct decisions. Don't waste resources collecting irrelevant information.

Information is critical to an effort to implement operational excellence strategies, and doubly so for supply chain optimization.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Demand Uncertainty in a Supply Chain

We talk about demand forecasting - a lot. Demand forecasts are always wrong - but any serious effort to carefully forecast demand results in commensurate savings in inventory levels, carrying costs, and customer service performance. The range of demand uncertainty depends on the maturity of the market and the level of competition. We see four typical levels of demand uncertainty:

- Low demand uncertainty - purely functional products: milk, gasoline
- Somewhat certain demand - established goods: Gillette shaving razors, Huggies diapers
- Somewhat uncertain demand - new models of existing goods: colored Razer cell phones
- High demand uncertainty - entirely new products: the Apple iPhone

Of course, forecasting demand is more accurate with mature products with low uncertainty. On the flip side, new products tend to have less competition and higher profit margins. Increased demand uncertainty leads to difficulty matching supply and demand - resulting in stock outs, or oversupply situations forcing price markdowns that can be very unpleasant.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Operator Performed Maintenance

Yesterday we wrote about the importance of operator basic care or "operator performed maintenance" (OPM). Today we hope to provide some insight into how to begin to implement a world-class effort. Any implementation will be shaped by the plants history, culture, union work rules, etc. Communication with everyone involved about the goals, and getting by-in from operators, mechanics, union leaders will lay a good foundation. The OPM effort must ensure that no safety hazards are created, training should be provided for any new skills required, should not have a negative impact on existing job requirements, should resolve any union work rule issues, and should be a team effort by all employees. With this backdrop what sort of maintenance can be assigned to operators? A starting point can be:

- Lubricating equipment; checking levels, frequency, types.
- Minor adjustments; checking and tightening parts, belts, conveyors, etc.
- Cleaning equipment.
- Minor preventive maintenance; changing filters, tightening packing, etc.
- Minor instrument calibrations.
- Preparatory work for maintenance on the following shift; draining, inerting, disassembly.
- Log sheets for unusual noises, pressures, temperatures, steam/air leaks.
- Activities that the joint maintenance-operator team develops.

The goal of an OPM program should not be a reduction in maintenance staffing. The focus should be on transitioning the operators to owner-operators, and the maintainers to maintainer-improvers.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Basic Care/Maintenance by Operators

Operator performed maintenance (OPM) is one of the simplest, most powerful, but vastly underused tools in most process industry manufacturing plants. If we operated our manufacturing plants with the same care that we operate our cars, the benefits in reliability, uptime, operating costs, etc would be tremendous.

What sane car driver would ignore basic maintenance - fuel, lubrication, water, routine preventive maintenance, listening for odd noises, observing changes in performance, etc -until they experience a catastrophic failure? We approach operator performed maintenance from the perspective of "This is the place where you make your living. If you don't take care of the place where you make your living, it may not be here to take care of you."

Establishing a solid operator performed maintenance program can start small and grow over time. As with anything, the approach must be based on the culture and history of the individual plant. We never preach a "one size fits all" approach. More on implementation suggestions tomorrow.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Transportation Modes in a Supply Chain

We always couch operational excellence in the context of overall supply chain design. Why suboptimize on transportation, manufacturing, purchasing or any other elements of the supply chain? Lets look at the entire supply chain - across the enterprise and look at optimization. Operational excellence is not limited to just the manufacturing area. Lets take a look at the transportation or logistics function, which applies to both in-bound raw materials and out-bound finished products. There are essentially only six modes of transportation:

* Air- fast, but very expensive.
* Truck - quick, inexpensive, but very flexible.
* Railroad - inexpensive but slow, best used for large quantities of materials.
* Ship - the least expensive, very slow, often the only choice for transcontinental shipments.
* Pipeline - very cheap and reliable, primarily used for oil and gas, and chemical products.
* Electronic - the latest mode that delivers "content" like music, books, etc via the Internet.

Another major decision that supply chain managers must confront is the route and network by which finished products are shipped. A route is the specific path along which a product is shipped. A network is the collection of locations and routes along which products can be shipped. Decisions like "do we ship direct or do we use distribution" have a significant effect on supply chain costs, and customer service metrics.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Process Industry - "E-Business"?

E-Business is the execution of business transactions over the Internet - sorry, it is no more complicated than that. Supply chain transactions that involve e-business include the flow of information, product, and of course - funds. Companies that conduct e-business can perform some or all of these functions on-line:

- Provide all information across the supply chain - MSDS's or labels anyone?
- Contract bidding, reverse auctions, negotiating prices and contracts with both customers and suppliers. Procurement and accounts receivable.
- Accepting customer orders directly into our ERP systems.
- Allowing customers to track order progress.
- Filling and delivering orders to customers - not great for the process industry, but pretty effective when the "product" can be delivered via the Internet (books, music, etc)
- Receiving payment from customers - faster is always better.

All of these types of transactions have been completed in the past via different "channels" real world speak - brochures, customer service calls, electronic data interchange (EDI) etc. The Internet has allowed the transfer of this information quickly and very broadly - to anyone who has an Internet connection. E-business is working in both of the main supply channels B2B (business to business) and B2C (business to consumer). Amazon.com transformed multiple industries when they went live and then expanded their product lines.

How can the process industry expand their markets, and implement operational excellence through e-business? The possibilities are as endless as the Internet itself!

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Operational Excellence: Process Reliability

We like first-pass quality as a measure of process reliability (as opposed to equipment reliability). Any loss from 100% first-pass quality obviously involves rework, adjustments, or other costly countermeasures. There are some excellent statistical tools that QC departments can use to analyze first-pass quality on a run of the mill desktop PC in real time, right on the shop floor. These tools easily determine CpK, control limits, trend analysis, out of control results, and various other methods to determine statistical process capability vs specifications.

To drive improvement in process capability, engineers must understand the critical process variables, their upper and lower control limits, the plants performance of operating within these limits, and have regular and frequent reviews of conformance to these operating limits. A straightforward method to address critical process variables that are not in conformance is to categorize exceptions in four broad categories:

- Standard operating procedures - did we do the right things?
- Quality methods, and properly calibrated instrumentation.
- Incoming raw material quality.
- Equipment reliability.

Non-conformances should be rated as to magnitude and duration, but these four categories can give a plant a quick start on the path to operational excellence via process conformance.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Best Practice: Information Exchange at Shift Change

The exchange of information between incoming and outgoing shifts is crucial to effective and safe plant operation. Unfortunately, information exchange at shift change is frequently poorly done. Shift change or turnover should not be a hello/goodbye exchange, nor should it be done in the hallway, change room, or parking lot. In pursuit of operational excellence, significant attention should be placed on making sue that shift changes include an effective transfer of information relating to plant and equipment performance. A good shift change process should:

- It must be conducted face-to-face.
- It must follow specific procedures, based on an analysis of needs. The need for a specific procedure is especially important when there is a big difference in experience between shifts, when personnel have had an extended absence ie vacation, and after significant capital projects or plant turnarounds.
- It must allow as much time as necessary for communication, especially when there have been problems during the departing shift.
- Both shifts must be responsible for communication, teamwork, and joint ownership.
- Discussions should include equipment and process conditions, maintenance activity, equipment that has been locked out, personnel issues, and any new product or process.

We always advocate that any work permit - safe work, hot work, confined space, elevated work, etc automatically expire at the end of each shift with the incoming shift being responsible for reissuing the permit as they take over.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Operational Excellence - Rotating Equipment

In process plants we typically have a significant investment in rotating equipment - pumps, compressors, fans, machine tools, and motors of every description. Synchronous principals always talk about maintenance as a reliability function rather than a repair function, so we are always interested in best practices for rotating equipment. To keep a rotating equipment reliability program manageable we recommend it include all equipment larger than 10 horsepower, unless a smaller motor is on your tier 1 critical equipment list. Best practices to base your reliability program include:

Vibration Standards:
- General Motors Specification V1.0-1993 sets maximum vibration standards for particular types of equipment at specific rotational frequencies.
- Hewlett Packard Application Note 243-1 "Effective Machinery Measurements Using Dynamic Signal Analyzers" specifies acceptable vibration levels for rotating equipment.
More references and materials are available from the Vibration Institute at www.vibinst.org .

Balancing Specifications:
- ISO DR1940 Grades 1.0, 2.5, 6.3, and 16 are the gold standards. Grade 6.3 is the industry standard; best practice for critical equipment is Grade 2.5; and Grade 6.3 is appropriate for non-critical equipment.

Resonance Standards:
- Motor manufacturers have reduced the mass of their equipment in an effort to reduce costs. This, of course, leads to an increase in resonance problems - especially in high efficiency motors. Best practice dictates that when purchasing a motor or other rotating equipment, the resonance frequency of any component or frame be at least 30% higher than the maximum attainable speed of the machine.

A solid reliability plan for rotating equipment should also consider specifications for bearing installation, machinery alignment, and motors. More on these subjects to come.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

The Role of "Safety Stock" in a Supply Chain

Safety stock is inventory carried for the purpose of satisfying demand that exceeds forecasted demand for any given planning period. Firms carry safety stock because demand forecasts are always uncertain (read - wrong) and shortage or stockouts can occur if demand exceeds forecast demand. The balance that a supply chain manager must consider is the actual quantity of safety stock - a higher level increases product availability and revenues from sales, but increases inventory holding costs in the supply chain. Holding costs of safety stock are increased significantly when product obsolescence, or product shelf life factors are involved.

When determining levels of safety stock, consideration should be given to not only the level of safety inventory- by SKU, to carry but what actions can we take to improve product availability while minimizing safety stock. Levels of safety stock are typically determined by the uncertainty of demand - or supply, and the desired level of product availability to hit customer service targets. We find that every and all efforts to improve demand forecasting are typically worthwhile financially.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

On Line Research Tools - All Free!

A great operational excellence effort inevitably involves conducting some research. Be it benchmarking, best practices, or specific inquiries on general subjects like lean manufacturing – good general research can yield a surprising amount of information. There are a number of fee-based research tools, but we feel that there are a number of excellent research tools available – free to disciplined researchers. These include:

- Search Engines, the well known majors such as www.Google.com or www.Yahoo.com
- Meta Search engines, sites that send your information request to multiple search engines simultaneously – like www.Dogpile.com or www.Science.gov
- Public Databases, such as Reference USA and Business Source Premier can be accessed via public libraries, and typically from the comfort of your own home if you have a library card.
- Government Databases, good sites for research include the US Department of Labor Bureau of Labor Statistics, US Census Bureau, and SEC Filings & Forms (EDGAR). The US government is a prolific data collector and best of all it is free – your tax dollars at work.
- Company Research Websites: www.Hoovers.com and www.annualreports.com are good for finding information on specific companies, or www.thomasnet.com to find goods and service providers.
- Research on specific people or contacts (scary, no?) www.zoominfo.com or www.LinkedIn.com. We feel every professional should join and post a profile on LinkedIn.
- Information Portals like www.ceoexpress.com consolidate content from multiple sources and many can be user customized.

These are only a few, but we feel are good sources to start a research project. Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Best Practices - Pump Reliability

Synchronous is all about operational excellence for the process industry. In the process industry, we tend to have a large investment in pumps of all sizes, shapes and types. Pumps are a big component of our maintenance budget as well. Are there best practices to help us protect our capital investment in pumps, and to optimize our pump maintenance cost? You bet, and we would propose the following as a starting point:

- Establish operator tours on each shift to inspect and log pressure gauges, leaks, lubrication levels, unusual noises (ie cavitation) and report this information.

- Develop a detailed pump start up and operation procedure. Operators need to have an understanding of pump operating principles to help maintenance keep them in service.

- Develop an in-line spare pump policy. Critical pumps need to have installed, in-line spares. Considerations include effect on production downtime, ease of changeover, ease of of access and detecting operating problems, local environmental conditions, and historical records of pump reliability. When in-line spare pumps are used, consideration should be given to ensure their reliability when needed - preventive maintenance servicing, etc.

- Maintenance and the pump repair shop has a big role to play as well. Work flows and tools should be highly organized, and clean. Instill better repair standards, craftsmanship, and dedicate a "clean" room for precision repairs.

- Establish precision standards for balancing, lubrication, seals, vibration isolators, foundations, installation and start-up, shaft precision, and alignment. Have a written checklist for each pump and keep excellent records.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

The Role of Forecasting in a Supply Chain

The role of forecasting in a supply chain cannot be underestimated. Forecasting (and demand planning in general) is tough to do; and yes - forecasting is always wrong. If you take a push-pull view of a firms supply chain, all push processes are performed in anticipation of customer demand, and all pull processes are performed in response to customer demand. For all push processes, a manager must plan the level of production. For all pull processes, a manager needs to plan the amount of capacity to make available. In either case, a supply chain manager must start with a forecast of what future customer demand will be.

In addition to production and distribution decisions, firms also use forecasts of future demand as the basis for other critical decisions in an overall supply chain including:

- Production: scheduling, inventory control, aggregate planning
- Marketing: sales force allocation, promotions, new product introduction
- Finance: plant and equipment investment, budgetary planning
- Personnel: workforce planning, hiring, layoffs

Ideally, decisions throughout the supply chain should not be taken in isolation by function, as they all have an influence on each other, and are best made jointly - with an overall supply chain perspective. All of these decisions are ultimately based on a future forecast of customer demand. Just because forecasting is tough to do does not diminish its importance, nor should it detract from a firms commitment to developing and maintaining the best possible forecasting methodology. The role of forecasting in a supply chain cannot be underestimated.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence and best practices for the process manufacturing industry. To pose a question, contribute a best practice, or otherwise add to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Supply Chain Decisions - The Financial Impact

Designing a supply chain for a manufacturing company involves making decisions like how many plants will we have and how large should they be? How should we handle logistics - in house, use common carriers, or 3PL providers? Do we build warehouses, should we own them or should we lease space? Any many, many more...

When decisions are made in the areas of supply chain design, they have a long term impact as they cannot be easily changed in the short term. This has a significant impact on defining the limits within which a company's supply chain can be competitive. So we feel that supply chain design needs to take the long term view. Factors like supply and demand uncertainty, financial factors, and customer service metrics must be taken into account for a successful supply chain design. Synchronous LLC has extensive experience in supply chain design in the context of strategic business planning, manufacturing planning, and financial optimization - on the bottom line.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices for the process manufacturing industry. To pose a question, post a best practice, or otherwise contribute to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.65

Importance and Impact of Product Availability

The level of product availability is usually measured using the cycle service level or the order fill rate, and measures the fraction of customer demand that is satisfied from available inventory. Some firms refer to this as "customer service level" but we don't like that terminology - there are many, many metrics beyond product availability that can measure customer service (on time delivery, perfect order, etc). A supply chain can use a high level of product availability to improve responsiveness and attract or please customers, but that could require large inventories and the corresponding carrying costs. We believe an optimum level of product availability is one that maximizes a firms profitability.

The optimum level of product availability depends on the type of business, and where a particular company believes it can maximize profits. A grocery store will only have a few days of supply of any given product, and stock-outs occur frequently. Some high-end retailers focus on a very high level of product availability to focus on responsiveness - but they charge higher prices than competing retailers. In the e-commerce channel a customer can search the web and instantly switch to a different supplier if products are out of stock - which provides a huge incentive to maximize product availability; but competitive pricing is fierce on web channels.

Firms in different industries, and even firms within the same industry have different strategies and levels of product availability. Great firms must identify the factors that influence the optimal level of product availability. Once identified, this information can be used to determine the optimal level of product availability to optimize financial results.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices for the process manufacturing industry. To pose a question, post a best practice, or otherwise contribute to the dialogue, send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Marketing - Strategic Fit...

What does a company need to do to achieve a strategic fit between the supply chain and competitive strategies? A competitive strategy will specify either one or more customer segments that a company hopes to satisfy. To achieve a strategic fit, an established firm must ensure that its supply chain capabilities support its abilities to satisfy the targeted customer segments. The three basic steps to achieving this strategic fit are:

- Understanding the customer.
- Understanding the Supply Chain
- Achieving Strategic Fit.

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.

Aggregate Planning

We like to talk frequently about demand forecasting - especially because that is the subject that most clients say "can't be done." In our view, demand forecasting can not only be "done" successfully, but the financial impact on a manufacturing firms supply chain can be huge...

Thinking through a great demand planning process inevitably goes to consideration of aggregate planning. Aggregate planning is a process by which a company determines levels of capacity, production, subcontracting, inventory, stock outs, and even pricing decisions over a specified time horizon. Aggregate planning, as the name designates - solves problems involving aggregate decisions, rather than at the SKU level decision.

Aggregate planning will typically determine the total level of production in a plant for a given month, but it will do so without determining the quantity of each individual SKU. This level of detail makes aggregate planning a useful tool for thinking about decisions with an intermediate time frame of roughly between 3 and 18 months. This time frame is much too short to determine SKU level production, but is generally (as always) too late to build new production manufacturing facilities.

Aggregate planning is best served by answering the question - "How can we best utilize our current facilities."

Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.