UTC Fire & Security: Planning & Forecasting

18-11-2015

Content

• Introduction UTC• Introduction Supply Chain planning• Current set up of planning process• Project Forecast efficiency• Learnings

UTC Fire & Security – Proprietary and confidential Slide 3

AerospaceBuilding & Industrial Systems

UTC BusinessesFi

re &

Sec

urity

UTC Fire & Security – Proprietary and confidential Slide 4

NET SALES$30 billion (2014)

PRESENCE 74 Factories

49 R&D Centers

EMPLOYMENT118,000 employees (2014)

Building & Industrial SystemsFi

re &

Sec

urity

UTC Fire & Security: Product groups

EMEA FOOTPRINT UTC F&S

EMEA Distribution Centre (EDC)Weert, the Netherlands

Local WarehousesMilton Keynes, UKMilan, ItalyGdansk, PolandJohannesburg, SAFOslo, NorwayHelsinki, Finland

20 Pro express shops

EMEA factoriesRopczyce, Poland

Supply base

% o

f Sal

es o

rder

line

s%

of C

OG

S sa

les

valu

e

A B CSKU’s / ABC class

80%

15%

5%

123 4 5SKU’s / Service class

25%

25%

25%

20%

5%

Product portfolio and segmentation

% Supply value Column LabelsRow Labels X Y Z Grand TotalA 28% 11% 36% 75%B 2% 2% 10% 14%C 0% 0% 10% 6%Grand Total 30% 14% 56% 100%

% SKUPhase in 15%Mature 65%Phase out 19%

Count of Item Nbr Column Row Labels X Y Z Grand TotalA 225 130 401 756B 148 207 885 1240C 92 211 4096 4399Grand Total 465 548 5382 6395

Count of Item NbrRow Labels 1 2 3 4 5 Grand TotalA 1% 2% 4% 3% 1% 12%B 0% 1% 4% 9% 5% 19%C 0% 0% 3% 15% 51% 69%Grand Total 1% 3% 11% 27% 57% 100%

Supply chain planning

CUSTOMERSUPPLIERS

NPILife cycle mgt.

EDC

Local WH &Pro Express

ForecastingInventory mgt.Supply mgt.

Document control

Planning processes

Current

• Quarterly manual excel• Enrichment for projects• Weekly review on over

consumption

• Quarterly manual excel• Define stocking policy• Define Safety stock & EOQ

• MRP • Excel is the ‘second best

friend’

‘To be’

• Weekly new baseline FC• Exception based review• Focused enrichment• Plan alignment with sales,

marketing & Product mgt.

• Quarterly manual excel• Define stocking policy• Define Safety stock & EOQ• Investigate support tools

• MRP• Efficiency by automation of

order creation and scheduling

Forecasting

Planning processes & Bias

Current

• Quarterly manual excel• Enrichment for projects• Weekly review on over

consumption

• Quarterly manual excel• Define stocking policy• Define Safety stock & EOQ

• MRP • Excel is the ‘second best

friend’

‘To be’

• Weekly new baseline FC• Exception based review• Focused enrichment• Plan alignment with sales,

marketing & Product mgt.

• Quarterly manual excel• Define stocking policy• Define Safety stock & EOQ• Investigate support tools

• MRP• Efficiency by automation of

order creation and scheduling

Forecasting

Planning processes - Improvement

Demand planning ‘Forecast efficiency’• Implement demand planning process supported by IT

Plan alignment ‘One team, one plan’• Implement S&OP process for plan alignment• Decision making

Supply planning MRP optimization

12

Future stateDemantra

Oracle Forecast solution

User friendlyIndustry leader

Objective

Increase forecast accuracy

&Reduce cycletime

Current forecast

All manual - ExcelVery basic

Labor intensiveLimited qualityLong cycletimeWith high risks

Cost

Demantra tool & implementation

200K$

Benefits

700 K$ E&O reductionFrom 2 weeks to 2 hours

Low risk

Project ‘Forecast efficiency’

Milestone TargetOpportunity & Vendor Selection Nov 2013Requirements & Design Feb 2014Development & Test Sep 2014Go Live Dec 2014Post Go Live Q1/2 20152nd Go life Q1/2 2016

Demantra – Main features

• Forecast is derived from time series analysis

• Two engine phases: Learning & generate forecast

• Bayesian Estimator, Library of models is executed Based on goodness of fit models combined into single result set Nuances of models maintained

• Variable Forecast Level Forecast generated at most applicable aggregation level Aggregation levels defined in the ‘forecast tree’

• Fully integrated in Oracle

Demantra – design choices

• Time bucket definition• Forecast tree data structure• Statistical engine tuning• Chaining Using predecessor sales data• Review process exception reporting• Outlier detection History cleaning• Data interfaces• Accuracy definition and reporting

Forecast Tree

High level demand planning process

Import dataGenerate Base line forecast

Forecast review & Validation

Forecast Approval

Final forecast Export

Standard work – Baseline enrichmentForecast abilityHigh Medium Low

Enrich Enrich

EnrichEnrichHigh runners

Medium runners

Slow movers

Follow baseline

Follow baseline

Baseline & Projects

Baseline & Projects

Follow baseline

Count of Item Nbr Column Row Labels X Y Z Grand TotalA 225 130 401 756B 148 207 885 1240C 92 211 4096 4399Grand Total 465 548 5382 6395

Forecast review and validation

Frequency Demand Planner PSI Leader System AdminDaily - Review Forecast

Consumption Report- Upload BOQ files

- Review Authorization report

- Check Interface Errors

Weekly - Review high runner forecast exception

- Review other product forecast exception

- Review Authorization report

Monthly - Review Forecast Accuracy High Runners

- Review Forecast results in team meetings

- Create Forecast Management Reporting

Quarterly - Review Forecast Accuracy other products

- Review Exception Thresholds

- Review Exception Thresholds

- Review spike quantity calculation

Learnings

• Configuration Weekly data interfacing require stable and high quality data interface and

high quality master data. Forecast tree: did not bring significant improvement on the accuracy: Why? Statistical engine tuning needs more attention in order to realize better and

stable results. Different statistical profiles matching the different channels.

• System complexity Trusting the results …….? System stability – what is the actual effect of ‘’Based on goodness of fit

models are combined into a single result set’’ Fool prove ? How to safeguard knowledge and expertise ?

20

Learnings

• Impact on total planning process Change in forecasting process will require changes in the inventory

management process. The ability to aggregate the forecast to any level in the forecast tree opens

major opportunities to improve on plan integration.

• Impact on the function of Supply chain planner New demand planning process and tool will require additional capabilities

and experience New demand planning process and tool will require more focus on demand

planning function

21

From …..

To …..

Risk …..

Leading provider of building controls and automation

and fire and security solutions

FIRE & SECURITY