The procurement and logistics manager Barbara Nesta and the procurement specialist Francesco Conti describe the ambitious path undertaken by Valmex for the transformation of processes with the inclusion of new methodologies and tools.
The innovative project, among the first in Italy, was completed within the ambitious deadlines set and led to the implementation of the 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 production of heat exchangers for domestic boilers. All within a single solution.
Managing Critical Issues with Constraint Theory
Barbara Nesta says that variability has always been a rather difficult production feature to manage and that the use of the MRP supplied with the ERP (Infor LN) was not enough to solve the presence of obsolete and poorly handled materials, precisely because of the variability of demand. In 2011 Valmex therefore wanted to solve these problems thanks to different techniques. He thus studied and analysed the theory of constraints. Also thanks to the support of expert consultants and staff training, a process was carried out that led to the analysis of dynamic buffers, decoupling of stocks and management of demand variability.
Applying the Theory Of Constraints (TOC) Valmex first divided inventory management into two large macro-families: those with low movement managed with the MRP and all the rest of the inventory managed by dynamic buffers. However, the TOC now had quite important constraints: based on past data, it was not in fact aligned with the precise needs of the company, which therefore had to correct the forecasts.
In addition, in some cases the expected waiting time for the customer was about a week and this became a challenge in a context where the internal production process was fast but the supply of inventory, sometimes international, required higher lead times. In addition, new products without a history required forecast data.
Valmex’s desire was therefore to maintain dynamic stock management and the use of buffers, aspects that had allowed it to focus on decoupling stocks at various levels and having materials available according to production demands. 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 has decided to start this process starting with the training of operators, who have 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 solutions for inventory planning that were different from the classic MRP. After a long and careful software selection, the company chose Cybertec’s DDMRP, an advanced solution that, thanks to the use of logic very similar to that of TOC, allowed it to meet all the following needs and objectives:
- the development of forecasts,
- the use of KPIs,
- the analysis of dynamic stocks,
- parameterization of data (to understand whether to use history or forecasts).
The preparation of the project through expert consultants was fundamental to clarify needs and scope of activities, as well as to define the Gantt of implementation, all aspects that helped to comply with the short deadlines set.
“It broadened our view of materials management.”
Barbara Nesta – Procurement and Logistics Manager – VALMEX
Inventory and production planning, now driven by demand
With CyberPlan DDMRP Valmex takes advantage of inventory and production planning, but not through the classic APS, but with the Demand Driven methodology.
“It allows us to have a much more accurate planning and management of inventories (both materials and semi-finished products and therefore also the productive side) than we had before.”
Francesco Conti – Procurement Specialist – VALMEX
The adoption of the CyberPlan tool was rapid thanks to the intuitiveness of the system and the fact that the preparation of Valmex’s IT department was complemented by the support of consultants in entering data within the border tables. In fact, it is important to feed the tool with the correct data on a daily basis, an aspect that has led Valmex to also be able to perform analyses and proposals related to buffers to improve its planning.
“In terms of operations, it does not change much compared to what we did before, but the output is totally different. Today I work aware that I am also working for tomorrow. Yesterday I was working and I knew that what I was doing might not take into account tomorrow. This, in my opinion, is the biggest difference that the system has made. The software is also very intuitive and I think that’s 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 supply forecasts and trends for the following months. Forecasts are therefore drawn up and then sent to suppliers on time. The DDS&OP is a tool used mainly by the Procurement department but is often also used by the Purchasing department to check contracts, residual quantities and future plans to be taken with suppliers.
The multiple benefits of Demand Driven solutions
The first benefit detected by users is the reactivity of the system, which is added to the ability to understand, comprehend and intercept what will then happen in the production department, something that was not possible before because only the history was analyzed, while with the analysis of the demand the vision is totally different.
The implementation of the KPIs has also had multiple positive effects: it allows you 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, in the sense that what the supplier or production lives are not just feelings but, through the implementation of KPIs that give evidence of how the various activities are going, all employees are now aligned with the way they are working.
“With CyberPlan our work has changed, it gives us more information, KPIs and better parameters thanks to which we can analyse and improve ourselves.”
Francesco Conti – Procurement Specialist – VALMEX
The DDS&OP has speeded up the sending of forecasts and updates on future consumption on both the individual supplier and item side. Today Valmex can communicate clearer information to suppliers thanks to the division between order and forecast made in the forecasts; therefore the items already ordered are distinct. The frequency of data extrapolation can be done on a weekly, monthly or quarterly basis and therefore Valmex can meet the needs of the supplier and extract the data as the latter prefers, because everyone has different needs. Also in this case CyberPlan added value compared to the previous situation made of monthly forecasts only and without dividing orders between those already sent and those pending that generated some uncertainty in sending data to suppliers.
Valmex, growth and innovation for the Marche company
Headquartered in Lucrezia di Cartoceto, in the province of Pesaro and Urbino, Valmex S.p.A. is today one of the world’s leading producers of exchangers for domestic gas wall 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 arrives at production and delivery after having gone through the design, prototyping, certification, assembly and testing processes. Also through this project, Valmex has proven to be 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 pioneering companies in Italy and worldwide regarding the profitable use of an innovative methodology such as DDMRP.
DDMRP and DDS&OP, innovation based on experience
With MRP and S&OP tools, available in a single solution and based on demand, you can align your plans to real demand. These modern tools allow you to act in time where it is really necessary, discover the tools officially certified by the Demand Driven Institute and how to improve your company’s planning by optimizing inventory and reducing waste.