Explain A Day in life scenarios with IRP

Explain A Day in life scenarios with IRP.

1. Marketing

A day in life scenario before IRP - Marketing Campaign were organised by the Marketing Manager on regular basis and recorded on paper or word documents.

Problem - Orders were being booked but no analysis was available that which campaign brought more orders and which was most effective. So investing in future campaigns or media was only based on the past experience and gut reactions.

Solution after IRP - Well defined territories, partners & salesmen with targets attached to well defined campaigns and call plan result into total performance analysis of each campaign, call, territories, partners and salesmen. Plus newer web-based, marketing script based call center will record your correspondence with the customer and will also produce sales reports. With this you will be able to make correct investments into campaigns, partners, promotion schemes and sales channel. The control over the entire marketing channel will give control over your entire marketing function which is missing in most organisations. COPC based Six Sigma targets and helps you monitor the performance.

2. Forecasting

A day in life scenario before IRP - Forecast when not prepared at all and was done on gut reaction based on past experience.

Problem - There is no dedicated person doing accurate forecasting of sales, purchase orders and cash flow. There is no statistical methods used in preparing accurate forecast. So most forecasts were prepared on past experience or gut reactions. Forecast were also not communicated to other departments.

Solution after IRP - IRP allows you to produce accurate forecasts based on:

a) Past Orders

b) Statistical Techniques

1) Moving Average

2) Exponential Smoothing

3) Linear Trend

4) Non - Linear Growth

c) Customer satisfaction surveys

d) Industry Growth Forecast

With the above features, now the supplier auto buyer forecast so that they can plan inventories well. Marketing gets sales targets and guidelines for setting territory wise, partner wise, salesmen wise targets. Finance gets cash flow forecast and they easily get data for loan or cash credit financial planning. Production gets data to do capacity planning and machine maintenance planning. HR gets data to manage recruitment planning.

3. Inquiry Processing

A day in life scenario before IRP - Inquiry from a customer is recorded by different people on their personal media like digital diaries, notebook, emails, address contact books etc. The inquiry is verbally communicated to the Sales Manager for preparing the quotation. Sales clerks prepares quotations based on guidance from the Sales Manager and delivers the same.

Problem - Nobody knows how many inquiry the Company received in a day, week or month. Nobody knows when it was responded with quote and who entertained that customer upto the closing of order. How much time was taken to close the order is the major problem and follow-up is totally messed-up as control is not possible because of scattered information in emails, PDAs etc and individual machines and minds.

Solution after IRP - All inquiries are recorded into one central place received at each customer touch points like email, salesmen, partners or via the website. All inquiries are routed for approval of price & terms to the designated person. The system allows the person to quote price based on the following 7 criteria.

1. Purchase Price from the supplier

2. Standard Price from Pricelist

3. Manufacturing cost = BOM Cost + Process cost

4. Service cost based on Pert / CPM

5. Competitors prices

6. Past orders from the same customer.

7. Auction based pricing.

8. Retail selling price.

9. Customer specific Pricelist.

The above will give the sales manager a complete exposure to what it costs the company and what are the company's standard prices & profit margin. Hence an accurate quotation can be prepared and sent to the customer well in time. If quotation is not sent to the customer in the specified time limit as per the COPC standards it will be escalated as an non-conformity issue to the concerned higher authority. This will affect the performance of the sales manager as well as the company's Six Sigma initiative for CTQ Parameters like Inquiry response time, Cost inquiry, Success inquiry etc. Inquiry Analysis helps to track success ratios and conditions of orders getting closed based on various conditions.

4. Order Processing

A day in life scenario before IRP - Orders are received through phone, fax or email and are recorded onto order acceptance sheet and directly sent to production for knowing Available to Promise Date and are sent to the Finance Dept for Credit Check.

Problem - The delay in reporting customer about PO acknowledgement with ATP date is crucial factor in deciding customer satisfaction.

Solution after IRP - As soon as the order is entered into IRP credit check, the delivery schedule can be checked directly by the Sales Manager and / or Customer and the delays in generating and sending PO acknowledgement can be reduced to almost nil. Also, IRP supports new innovative order tracking online via the internet. IRP supports 9 different ways of Sales Order entry as follows:

1.Entry based on Quotation
2.Direct entry of Sales Order
3.e-Commerce Shopping Cart
4.Selected Bid from Auction
5.Recurring Order
6.Manual Order Entry
7.Upload e-PO XML/XLS
8.Stock Transfer Order
9.Retail Order via bar code

A Six Sigma baseline can be used to track order processing response time and failure to report customer releases NCR. The various order analysis reports intimate us how many orders were closed.

5. Planning

A day in life scenario before IRP - Planning like forecasting is done based on past experience and gut reactions.

Problem - Planning of production and materials does not follow standard MRP or PERT/CPM techniques which results into error prone plans and orders. Due to errors in plans, finance planning is also into problems. So suppliers get late payments as finance department is never intimated the amount of purchases made & the Marketing Department also suffers as they do not get accurate ATP Dates. Production Department does not produce upto maximum capacity due to lack in planning. Employee shifts are also not planned & overtime planning is into problems.

Solution after IRP - Correct production planning & scheduling in IRP creates accurate purchase orders and helps you to JIT Inventory (Just-in-Time). Planning of Finance for those orders can also be made well in advance. Production plant can prepare capacity via man and machine. Accordingly production can generate Machine maintenance plans, shift plans and OT (Overtime) plans.

6. Production Order / Work Order / Lot Traveller / Job Card

A day in life scenario before IRP - Accepted Sales orders are directly converted into production orders via printed work order / lot traveller / route sheet or job card.

Problem - Sales or Planning department continuously sends production orders to the shopfloor without considering the capacity of the shopfloor or materials in stock, as a result the production order gets piled up waiting for resource or materials to arrive. This delays the entire production activity. The delay results into cost , delayed deliveries and missed orders. this creates a bad impression i the minds of the customer. Lot of production time is equal to wastage of the shopfloor capacity and it results in high cost of production.

Solution after IRP - In IRP production order is only created if material is available in stock and resources are free on shopfloor. Based on the process route sheet - job cards are prepared & tracked - once you change process - Automatically the job card changes. Various production & MRP reports gives us analysis on how things frame with different conditions. If material is in stock it will issue a Material Issue Note to stores which is reserved for that Job card as per BOM. Once a Job Card or route sheet is on the shopfloor it is tracked by time, to find the process time for each job card. Any job card taking more than the Baseline stipulated time will generate a NC (Non - Conformity) report as per the Six Sigma standards. Accurate real-time WIP (Work in Progress) is generated and communicated to the particular customer about the status of his production order in progress. Estimated completion time can be predicted and delays if any due to any reasons can be easily communicated to the customer. You can also give direct access of your shopfloor activity to the customer. Online line QA (Quality Analysis) and rejects or rework under specific reject codes makes sure that all rejects and its reasons are noted down during the movement of lots. Later on rejection and root cause analysis tells us why rejection or defects occur and informs design / engineering departments to improve the production process and the material quality. Percent (%) defects and its reduction goals as per baseline takes our company to Six Sigma capability in product quality.

7. Shipment, Packing, Picking & Dispatch

A day in life scenario before IRP - Packing, picking and delivery via courier / transporters is done whenever goods arrive from the shopfloor and are ready for shipment. Proforma Invoice / DO / Invoice / Gate Pass / Packing Slip / Packing Stickers are prepared via MS Office or a separate invoicing software and sent to the customer.

Problem - The Company does not have Delivery or shipment or dispatch plans as per priority decided by the marketing department. Due to this the most important customers might have to be on a long wait for their goods and will be un-happy. Documentation and Inventory from various software also creates a problem many a time. Missing Barcode Capability creates uniform identification problems. Excise department has to be intimated to create Excise related documents and this causes major delay in delivery. Transporters and Road permit plan is not created.

Solution after IRP - With IRP you know the importance whom to supply on priority basis. So your esteemed customers are well served. IRP will allow you to supply goods from warehouses and racks only if its in stock and approved by the QC department. This makes sure that all goods going out passes through QC and do not bypass that process. Barcode enabled packing stickers are prepared. Excise documents and gate pass makes sure that nothing misses at the Delivery time. Accurate plan for transporters / couriers makes sure that they are ready to deliver goods on date and time specified with documents like road permit form. Accurate warehouse inventory is managed that reduces missing stocks or stolen stock from the warehouse.

8. Accounts Receivables , Receipts & Payments

A day in life scenario before IRP - Sales invoice are prepared using Ms Office / Tally tools and payment follow-up plan is prepared in excel as per payment schedule mentioned at the time of taxing sales order.

Problem - Individual Invoice files prepared in Ms office not linked to payment schedule or accounts as per order terms creates payments tracking problems.

Solution after IRP - All closed Sales Order / Invoice auto-creates Sales Voucher with tax structure. Every Invoice or closed sales order automatically issues a notice to the Accounts Department for payment corrections and follow-up as per the collection plan. Aging Analysis mentioned the credit limits and credit plan based payment schedule for follow-up. Auto payment reminder letters created makes the payment reminder process easy. As soon as the payment B is collected, Voucher B is posted and receipt B is generated. Debtors reports gives us customer wise Analysis.

9. Purchase & Procurement

A day in life scenario before IRP - Raw Material purchases are planned as per excel sheet or old foxpro based software which do not follow APICS based MRP rules. All other purchases are done via paper based purchase requisition or verbally spoken requirements to the Manager. Purchase Control is totally missing.

Problem - Purchase Requisition and standardization is a major problem. Routing of PR to the authorised manager as per the purchase control is missing. An authority at top has no way to cross check that the comparisons were made in a fair and impartial way and the purchasing decision was made correctly and in the interest of the organisation. Searching new suppliers and its presence via price comparisons and to find the best supplier over the internet is missing.

Solution after IRP - For direct materials IRP uses MRP based PO (Purchase Order) generation which is totally based on the APICS standards. POs can be generated automatically for selected suppliers as per the assigned quota. For Indirect Materials a ROP (Re-order Point) based PO generation is preferred. For consumables purchase, any employee can post a PR (Purchase Requisition) into the system which will go to the designated Manager for approval. RFQ (Request for Quote) and Quote Comparisons via buyer will control generate a PO for those consumables. Hence the procurement process will be well in control, impartial and transparent to the entire Company and will work in the interest of the Company which can avoid margin money or in process corruption. A unique suppliers rating system will evaluate each and every supplier as per the Balance Score Card techniques. Supplier Self Service directly allows suppliers to see their RFQs, post their quotes, see POs and commit delivery dates, Inform Company of their forecast and stock position. This reduces delays in correspondence to suppliers & manage supply change efficiency and Six Sigma supplier performance finds the best supplier.

10. Stores

A day in life scenario before IRP - Stores receive material with DO (Delivery Order) / PI (Purchase Invoice). IQC (Incoming Quality Control) checks the goods and prepares GRN (Goods Receipt Note) on paper for approved Goods. QC rejected goods are sent back to the supplier with Debit Note from accounts.

Problem - It becomes increasingly difficult for stores to first enter the original PO and then accordingly accept the goods. Tracing the PO takes time, similar problems are faced by the IQC Department. Storage locations are not well defined and tracking goods for issue in case a new recruit is difficult. Duplicate POs not generated by the buyer cannot be traced easily.

Solution after IRP - All incoming DOs are only accepted under a valid PO. This solves the issue of fake POs. All materials accepted against a PO are stored at specific stores & rack and notification of the same is compulsory. All DOs will route to IQC for Quality Checking. Approved DO will be converted to GRN (Goods Receipt Note) & will update stock. Rejected DO will generate DR (Discrepancy Report) & Debit Notes. A Six Sigma based Supplier Rejection analysis on DR will help you track specific supplier's goods quality. A Six Sigma based DO to GRN analysis will help you define IQC department's productivity. Many a time slow QC Department is a cause of production, cost & delivery problems in the entire organisation. A Six Sigma based inventory level analysis ensures that your inventory is managed at a particular defined level and will trigger at the same. A higher inventory level means higher working Capital cost. This means more loans and cash credit requirements which ultimately results into higher interest payments to banks. IRP makes sure that order is given for exactly the same item which was required for production. On that particular Order issues are auto reserved so it manages dates timeline and JIT inventory.

11. Accounts Payable & Payments

A day in life scenario before IRP - All closed POs are submitted to the accounts department to attach the same with Purchase Invoice for payments. Updated Purchase Invoice is then filed in the Purchase file. Payments are made against this approved Purchase Invoices. The Payment Voucher is then entered into the accounting software. The Supplier then keeps on reminding for payment collections. Based on the supplier generated follow-ups payments are made.

Problem - Matching PO with the Invoice is a major problem and there are all chances that payments might be made for undeliverable or rejected goods by the accounts department and hence payment control is a major problem as multiple payments to the same supplier is also possible. Due to such lethargic company policies suppliers ultimately lose interest.

Solution after IRP - IRP makes sure that only closed POs who have a fully delivered product & approved by the IQC come to accounts for Purchase Invoice entry. All invoices entered into the system automatically create a Purchase Voucher. All Purchase Vouchers automatically create payment reminders. All payments made automatically generate a payment advice. A Six Sigma based payment performance based on the company standard baseline ensures that accounts department send the payments to suppliers in time. If it fails a NC (Non-Conformity) is generated. Supplier based aging analysis creates warning messages for the accounts department. This ensures that the accounts staff attend to the supplier needs and clear their bills regularly. In this way the bureaucratic problems of corruption or margin money at the time of making payments can be kept well in control.