Introduction
The coaching staff of a winning college football team works relentlessly during the summer to prepare for the first game of the upcoming season, thoroughly recording extensive data on its players’ skills, speed, strength, and performance. This diligence assembling and analyzing data to carefully craft player depth charts and play-calling strategies is a key factor for producing wins on Saturdays.
Outstanding companies who produce superior products and services, resulting in long-term profitability, echo this passion for data by investing time up front to carefully document and track the commercial information needed to achieve product launch success. However, this data is often stored in many different places, despite supply chain teams needing timely access to efficiently execute complex commercialization and continuous improvement initiatives.
Fortunately, there is a system for effectively organizing commercial information into a single place of reference – Plan for Every Part (PFEP), and when implemented as part of a company’s lean blueprint, will accelerate program timelines by 33% and reduce launch risk by 25%.
Challenges
Companies store commercial information in several different places and many try to defer outlining their purchased parts information until all parts are “finalized” downstream in the product development life cycle, only to later try and manage this data in their Material Requirements Planning (MRP) systems.
A drawback to this approach is that delaying the documentation of critical-path commercial information, such as directional piece prices, early lead times, or lead suppliers, adds unnecessary cost, timing, and quality risks to short-term prototype builds and future production.
Further, MRP often fails to provide data about the size or weight of the standard pack containing the part, forcing professionals to analyze data offline, in Microsoft Excel for example, to optimize pull signals, inventory levels, and cycle times.
What is Plan for Every Part?
Derived from lean supply chain best practices, the definitions and requirements of a PFEP vary depending on specific needs and industry, but in general, a PFEP fosters the accurate and controlled management of commercial information.
PFEP is an essential lean tool, and when combined with quality, delivery, true cost sourcing, value stream mapping, and supplier development initiatives, can transform average supply chain operations into world class just-in-time lean enterprises.
Prior to launching a product, a PFEP enables organizations to plan more effectively for prototype build completion dates, part true costs, and production launch risks. Then, once the product is launched, the PFEP is used to proactively maintain high-functioning supply chain operations by managing and optimizing maximum inventory costs, inbound logistics costs, and part supply change costs.
3-Step Game Plan for PFEP Success
Step 1. Design & Develop PFEP Template
Establish a dedicated, cross-functional team to expedite the PFEP initiative and spark the culture change needed to adopt the system, ensuring these team members understand how it will improve operations and enable the company to succeed.
Outline the necessary data to be included in the PFEP. A basic one may only have 35 columns, whereas a more complex one may have 120. Develop a strategy, timeline, and leads to gather the data. The key is to start small, even if the PFEP will only track 15 data inputs, because it may take time to build out the first iteration. Common part data tracked includes, but is not limited to:
- Supplier
- Usage
- Storage
- Inventory
- Buffer
- Cost
- Lead
- Packaging
- Order
Then, map the source of each data point to allow the team to improve the accuracy, maintenance, and future optimization of the PFEP.
Step 2. Gather & Populate Data
Gathering commercial data, often from different systems, is a time-consuming activity, so it may be a struggle staying motivated when starting out. To counter this, celebrate team success by tracking the identification of accurate data sources, along with tracking the overall percentage of total data inputs acquired.
Share team PFEP results with other organizations to benchmark and improve industry-wide PFEP applications. For example, established companies with existing products in production should expect a 50% reduction in inventory on average.
Reduce team member error when adding data by leveraging proven formulas for calculating pull signals and planned maximum inventory level, costs, and days. The goal at this stage is to understand your purchased parts better by populating the PFEP database, not to plan anything or act on the data.
Identify operational improvement areas. Total piece cost, inventory costs, lead times, and supplier ratings are common. Prioritize initiatives by cost-saving potential and attainment risk.
Step 3. Maintain & Optimize Data to Make Better Decisions
Dashboards are fundamental to synthesizing part data into information to make better decisions. Advanced dashboards with clear KPIs could be created using Excel, but leading companies are turning to web-based PFEP applications that reduce time and risk by improving visibility and collaboration.
One common KPI dashboard to reference during launch would be Sourcing Statuses, which highlights the number of parts by priority level and the associated parts in each bucket status.Another, to use post-launch, would be Supplier Ratings, where the focus is on developing suppliers – which ones are not meeting ideal planned delivery, lead time, and standard pack metrics – to optimize their inventory costs.
PFEP is extremely helpful for reducing product launch risk and time, but is arguably just as valuable to drive lean continuous improvement activities throughout the product life cycle. Maintaining PFEP post-launch also facilitates smoother information flow for training, transitions, or tasks between team members and departments.
Conclusion
Football teams watch game film to study what they do well and to identify what needs improvement. Likewise, companies must actively refine their PFEPs in the face of both market opportunities and headwinds to consistently realize the best financial outcomes. For instance, as organizations optimize their plans and supplier delivery performance, the need for buffer stock should decrease, which could reduce inventory costs.
Having a PFEP is invaluable for maintaining a healthy supply chain because it serves as the foundation for short-term launch and long-term operations. It also provides a platform for communication with team members and for fine-tuning operations throughout a product’s life cycle.
Just like a coaching staff prepares its players to perform to the best of their abilities, companies need to both create and execute their PFEP game plans to position themselves for continued success.
-William
