The procurement and logistics manager Barbara Nesta and the procurement specialist Francesco Conti talk about the ambitious path undertaken by Valmex to evolve the planning processes with the introduction of new methodologies and tools.
The innovative project, among the first in Italy, was completed within the ambitious set deadlines and led to the implementation of Demand Driven MRP (DDMRP) and Demand Driven Sales and Operations Planning (DDS&OP), two tools that use the Demand Driven methodology to manage the strong variability that characterizes the sector of Valmex: production of heat exchangers for domestic boilers. All within a single solution.
Managing critical issues with the theory of constraints
Barbara Nesta says that variability has always been a rather difficult aspect to manage in the manufacturing process and that the use of the MRP supplied with the ERP (Infor LN) was not sufficient to manage obsolete and slow moving materials, precisely because of the variability of the demand. Therefore, in 2011 Valmex decided to solve these problems, as a consequence the company studied and evalued the adoption of the theory of constraints. Also, thanks to the support of expert consultants and the training of the personnel, Valmex started a process which led to the analysis of dynamic buffers, decoupling of stocks and the management of demand variability.
By applying the Theory Of Constraints (TOC), Valmex first divided inventory management into two large macro-families: those with low turnover managed with the MRP and all the rest of the inventory managed using dynamic buffers. However, the TOC had quite important constraints by then: being based on data from the past it wasn’t aligned with the precise needs of the company which therefore had to correct the forecasts.
Furthermore, the waiting time expected by some customer started to be of one week, something quite challenging in a context with a fast internal production process but with a supply of stock that sometimes is international and that required longer lead times. Also, new products (and thus without historical data) required forward-looking data.
Valmex's desire was therefore to maintain dynamic inventory management and the use of buffers, aspects that had allowed it to focus on the decoupling of stock into the various levels and on having materials available based on production requests. The classic MRP was no longer sufficient and the new needs prompted Valmex to seek an evolution of the theory of constraints.
The selection and implementation of Demand Driven solutions
Valmex decided to begin this process starting with the training of operators, who obtained the Demand Driven Planner Professional (DDPP) certification, and then continue with the selection of the best tool for Demand Driven planning. In fact, Valmex decided to select software solutions for the planning of the stock that were different from the classic MRP. After a long and careful software selection, the company chose Cybertec's DDMRP, an advanced solution which, thanks to the use of logics very similar to those of the TOC, made it possible to satisfy all the following needs and objectives:
- development of forecasts,
- use of KPIs,
- analysis of dynamic stocks,
- parameterization of data (to understand whether to use the historical or the forecasts).
The preparation of the project through expert consultants was essential to clarify the needs and perimeter of the activities, as well as to define the Gantt of the implementation, all aspects that contributed to respecting the short deadlines set.
"It broadened our view on materials management." Barbara Nesta - Procurement and logistics manager - VALMEX
Inventory and production planning, now demand-driven
With CyberPlan DDMRP Valmex takes advantage of inventory and production planning, but not through the classic APS, it is done with the Demand Driven methodology.
"It allows us to have inventory planning and management (both raw materials and semi-finished products and therefore also the production side) much more accurate than what we had before." Francesco Conti - Procurement Specialist - VALMEX
The adoption of CyberPlan has been rapid thanks to the intuitiveness of the system, the support of the consultants and the expertise of the IT department of Valmex in entering the data into the frontier tables. Indeed, it is important to feed the instrument with the correct data on a daily basis, an aspect that has led Valmex to carry out analysis and proposals relating to the buffers to improve its planning.
"In terms of operations, it doesn't change much compared to what we did before but the output is totally different. Today I work aware that I'm also working for tomorrow. Yesterday I worked and I knew that what I was doing perhaps didn't take into account tomorrow. This, In my opinion, that's the biggest difference the system has brought. The software is also very intuitive and I think this is an added value." Francesco Conti - Procurement Specialist - VALMEX
Not only DDMRP: Valmex also worked simultaneously on the implementation of the DDS&OP solution. This second tool is currently used as a simulation environment for forecasting supply and trends for the following months. Forecasts are therefore processed which are then promptly sent to the suppliers. The DDS&OP is a tool mainly used by the Procurement department but it is also often used by the Purchasing department to check contracts, with residual quantities and with future plans to be made with suppliers.
The multiple benefits of Demand Driven solutions
The first benefit noted by users is the responsiveness of the system, followed by the ability to understand, comprehend and intercept what will happen in the production department in the near future, something that was not possible before because only the history was analysed, while with the analysis of the demand the vision is totally different.
The implementation of the KPIs has also had multiple positive implications: it makes it possible to verify the progress of production, to carry out self-assessments, to improve communication. In fact, internal communication has improved in terms of information sharing, what the supplier or production experiences are not just sensations but, through the implementation of KPIs (which give evidence of how the various activities are going), all the collaborators are now aligned on the production planning.
"With CyberPlan our work has changed, it gives us more information, better KPIs and parameters thanks to which we can analyze and improve ourselves." Francesco Conti - Procurement Specialist - VALMEX
The DDS&OP has speeded up the sending of forecasts and future consumption updates both from the single supplier and from the items side. Today Valmex can communicate clearer information to suppliers thanks to the division between order and forecast carried out in the forecasts; therefore the items already ordered are separate. The data extrapolation frequency can be done on a weekly, monthly or quarterly basis and therefore Valmex can meet the supplier's needs and extract the data as the latter prefers, because everyone has different needs. Also, in this case CyberPlan has given added value compared to the previous situation made up of monthly forecasts only and without division of orders between those already sent and those pending which generated some uncertainty in sending data to suppliers.
Valmex, growth and innovation for the Marche company
Based in Lucrezia di Cartoceto, in the province of Pesaro and Urbino, Valmex S.p.A. is today one of the world's leading manufacturers of heat exchangers for domestic wall-mounted gas boilers; the company also supplies microchannel condensers for various applications in the refrigeration industry. The products and services offered by Valmex to its customers have increased over the years so much that today the customer can receive the product starting from an idea, which reaches production and delivery after passing through the processes of design, prototyping, certification, assembly and testing. Also through this project, Valmex has demonstrated that it is an innovative, capable company with a great desire for growth and improvement. The constant attention to processes and technologies has led it to become one of the companies at the forefront regarding the profitable use of an innovative methodology such as that of the Demand Driven MRP.
DDMRP and DDS&OP, innovation based on the experience
With the MRP and S&OP, available in a single solution and based on the demand you can align your plans to the real demand of the market. This modern tools allow you to act on time where it is really necessary. Find out the planning tools that are officially certified by the Demand Driven Institute and discower how to empower the planning process of your company optimizing the stock and reducing the wastes.