Manage uncertainty in chemicals via inventory optimization

wispxylopolistInternet and Web Development

Aug 7, 2012 (5 years and 15 days ago)

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JILL MIKROS

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ASUG INSTALLATION MEMBER

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MARCDERE LOUIS

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ASUG INSTALLATION MEMBER

MEMBER SINCE: 2009

RAJEEV KAPUR

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ASUG INSTALLATION MEMBER

MEMBER SINCE: 2008

This presentation is copyrighted: 2010 E.I. DuPont de Nemours & Company, All rights reserved

Manage Uncertainty in Chemicals via Inventory
Optimization

Ray Adams

SAP, IBU Chemicals


David Giacomini

Anand Sundar

DuPont Company


Chris Potts

Eastman Chemical






Real Experience. Real Advantage.

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Spot Oil Prices


Department of Energy

$25
$45
$65
$85
$105
$125
$145
Dollars per Barrel

Spot Oil Prices

Real Experience. Real Advantage.

[

Relationship to Inventories and Price Indices

50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
1
1.05
1.1
1.15
1.2
1.25
1.3
1.35
1.4
1.45
1.5
Invy/Sales Ratio
IPEX Price Index
Source: US Bureau of Census Inventory to
Shipments Ratio, ICIS Pricing

Real Experience. Real Advantage.

[

Powerful Trends Are Re
-
Shaping Chemicals Business
Worldwide

Globalization


New opportunities and
competitors


Consolidation / M&A


IP Management

Innovation & Portfolio

Management


Innovation networks and
Hybrid Development


Portfolio optimization


Alternative Feedstocks


Compliance


Environmental compliance


Global trade compliance


Risk Management


Price volatility


Cost pressures


Proximity to raw
material sources

Energy & Raw

Materials Management

Operational Excellence & Business
Network Innovation



Tightening up of Working
Capital


Cash is King, Increased Focus
on Cash
-
to
-
Cash cycle


Prepare for the Unexpected:
Strive for Transparency


Sustainability becomes a Board
Room Topic


Challenging
Prices and
Reducing Margins

Cost

Reduction

Focused

Investment

?

Real Experience. Real Advantage.

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Canada
3%
Latin America
12%
Developed
Asia
9%
Emerging
Asia
11%
Developed
EMEA
20%
U.S.
38%
Emerging
EMEA
7%
Company Profile

$26.1B

2009 Company Sales



DuPont is the world’s most dynamic science company



Creating sustainable solutions essential to a better,
safer, healthier life for people everywhere



Founded in 1802



Operating in more than 70 countries



Total 2009 Sales $26.1B

Real Experience. Real Advantage.

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DuPont IDS: Headed in the Wrong Direction

Real Experience. Real Advantage.

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DuPont’s SmartOps
®

Journey

Laying the

groundwork


SmartOps
®

Forum


Initial business
discussions


Agreement to
move ahead with
POVs

Proofs of

Value


SmartOps
®

led
proofs of value for
2 businesses


Identified
business value for
MIPO


Made decision to
license SmartOps®

Manual

Implementations


4 businesses


Developed data
management
processes


Demonstrated
SmartOps
®

value

Automation &

Integration


Automate the
data extract,
transform, and load
processes


Address
requirements for
scenario
management


Standardized
support model

Real Experience. Real Advantage.

[

DuPont Business Requirement

Business Unit F


SAP R/3

Business Unit S


SAP R/2

“How do we provide a scalable

architecture that can integrate

supply chain data from several

heterogeneous IT systems

Business Unit A


SAP APO 4.1

Business Unit E


Legacy application

Business Unit N MIMI

Business Unit C


SAP APO 3.0

Business Unit P
-

Legacy

Real Experience. Real Advantage.

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9

SAP R3

MIMI

SmartOps
®

MIPO

LTT

SAP
-
APO




INFORMATICA
Staging Area


Time Phased SS
Levels

BW

1a

6

5

4

3

2

Excel /

other

1b

Validate and
Update SS in APO

Manu

Non


SAP Systems

5

6

Error Handling
and Resolution

Architecture for SmartOps
®

Integration


Real Experience. Real Advantage.

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All SmartOps
®

BUs begin using
integrated functionality

First BU begins using fully
integrated functionality

The Journey Continues

Who we are


A global manufacturer of chemicals,
plastics and fibers headquartered in
Kingsport, Tennessee



A company dedicated to economic
success, environmental stewardship and
social responsibility



A leading producer of coatings, adhesives,
specialty plastics and cellulose acetate
fibers



A manufacturer of PET polymers for
packaging



The first company to commercialize a
gasification facility in the U.S., in 1983,
which is operating at industry
-
leading
performance




What We’ll Cover …

12


Achieving the Right Balance


Why Eastman chose

SAP Enterprise Inventory Optimization by
SmartOps
®

(SAP EIO)


Project Tools and Processes: A Six Sigma Journey


Reporting


Measures and Dashboards


Results and Future


Wrap
-
up

13

Achieve the Balance

Determine
optimal
inventory
strategy

Execute the
optimal
strategy

Check
results and
act to
reoptimize
the strategy


Some key
stakeholders:



Customers



S&OP



Supply chain



Procurement



Logistics



Manufacturing



Business

Manufacturing cost

Inventory Cost

Customer service level

Started with a Pilot/Proof of Concept


14


Work began: July 2008


Pilot area: 90 items, 15 plants/warehouses


Manual models of pilot area: Oct 2008


Decided upon major parameters and settings


Automated pilot area: Feb 2009


Concluded pilot project: May 2009


Company wide rollout: June 2009


SharePoint reporting: Oct 2009


SharePoint dashboard: Dec 2009


15

Parallel Project Efforts


Business Process Design
using Six Sigma


S&OP


Business process design
team


Supply chain management


Supply planning


Manufacturing


Procurement


Software implementation
team



Software Tool
Implementation &
Configuration


Technical team


Business process design
team


Supply chain management


Business Process Design Using Six Sigma

16


Define


Stakeholder matrix


Interview guide and plan


The Affinity Diagram (KJ Analysis)


key

process needs to meet


Conceptualize


Process concept generation to meet key needs


Design of the business process


Optimize


Testing and improving the process


Control


Establishing the control plan for the process


17

Business Process Summary Slide

Inventory Measures

18


1. Inventory level status


Current Inventory against limits


2. Percent in control


% of KGs in control


weighted


3. Percent touched safety stock


Percent of items that touched
safety stock in last 90 days



Project Benefits

19


Initial results are consistent with our expectations


Demonstrating relationship of forecast accuracy, customer service,
master data, and inventory investment


Identifying the right number, and identifying levers to improve the
summation of the variables


Accelerating the rollout to other groups within our company using
black belts


7 Key Points

20


Master data is critical and expect to spend significant amounts of
time to correct


Accurate forecasts are foundational to optimizing inventories


Technical changes have been easier to overcome than business
process redesign


Measures and dashboards helpful to speed adoption


SAP EIO by SmartOps while a good tool, is NOT a silver bullet


SAP connectivity is not a simple out
-
of
-
the
-
box connection


Expect continual iterations and loops; MANY small steps and
changes are needed to complete the journey

Real Experience. Real Advantage.

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Thank you for participating.



David Giacomini

David.Giacomini@usa.dupont.com


Anand Sundar

aksundar@linearlogics.com


Chris Potts

wpotts@eastman.com