Volume Planning, Demand Planning, Capacity Planning
IBM Cognos TM1, Revelwood Lightspeed, Revelwood Performance Toolkit
One of the nation’s largest manufacturers of roofing materials, with nearly 30 plants and a large variety of products made from different materials, wanted a more sophisticated approach to planning. Essentially, what the company desired was a solution that would deliver comprehensive functionality for operational planning and analysis to support many departments, including sales, logistics, manufacturing, operations and finance. While this may sound straightforward, the system would actually need to be very complex in order to support allocations, capacity planning at the plant level, plant shift analysis and more.
The overall business driver was for the manufacturer to optimize and create efficiencies for the products it manufactures and the associated shipping costs and resources required to get the products to the customers. Roofing materials can be extremely large and heavy, resulting in very high shipping costs. If the manufacturer could analyze the right data, it could determine the possibilities of manufacturing specific products closer to high-demand sales regions.
Revelwood implemented IBM Cognos TM1 and built several models for the manufacturer including:
- A volume planning model that collects and analyzes data by product, by region and by customer to provide the visibility needed to make decisions on what to manufacture and where to manufacture it.
- An allocations model that tracks data related to the production rates by plant. These rates factor in the type of product and the model then allocates how the products are being produced at a specific plant.
- A capacity planning model that incorporates each plant, the multiple lines each plant runs, the products per line and per hour, and the shifts and length of those shifts. The TM1-based application then reallocates back in time if the data reports that a plant’s capacity has been exceeded. But just as important as it is to understand if a plant is exceeding capacity, the company needs to understand if a plant is performing under capacity. The capacity planning model provides red flags when it sees plants underperforming, enabling management to make decisions around whether they need to add additional shifts to those lines, or to move manufacturing of a specific product to a different plant.
The system is so comprehensive it even provides plant management significant insight into their operations. They can use the TM1 models to determine the materials needed for specific products, analyze the “recipes” for those products and then make intelligent purchasing decisions for core materials. This analysis enables the company to determine a standard cost for producing each and every product.
Across the company shift managers enter statistics about each shift, enabling plant management and corporate management to perform shift analysis and look at efficiencies by plant, by line and by shift—in real time, from a centralized location. They can even perform intraday analysis on specific shifts in individual plants.
All of these models and their associated data are then rolled up into the finance system, which includes the corporate overhead model. This comprehensive approach allows the company to perform profitability analysis in an almost limitless number of ways.
Now, as a result of the TM1-based solution, the company can ask questions such as:
- Which plants and shift are under-performing or over-performing?
- How much money could we save if we moved the manufacturing of some products to other plants?
- Based on our cost per product, should we continue with the current product mix, or retire less profitable products?
While these may seem very simple questions, it takes a complex and robust system to provide the right data. And now the company can answer these—and many more—critical business questions.