Towards an Analysis Methodology for Identifying Root Causes of Poor Delivery Performance

Abstract

This paper presents an analysis methodology for establishing the demand stability of the planning environment faced by a company and the impact on the stability from changes to sales order. The methodology focuses on three critical planning parameters derived from customer orders: product mix, volume, and order sizes. Furthermore, the methodology links the delivery performance of a company to the changes made to sales orders. Based on a test case application of the methodology, it is concluded that by accepting changes, the demand faced by the case company has become more unstable on product mix, volume, and the number of order lines per period, while some added stability has been achieved with regards to the order size distributions. Ultimately, by applying the methodology to the case company, it is found that by changing the sales orders, the company does not improve the delivery performance.Key words: Business Intelligence, diagnostics, Decision Support Systems, Performance Improvement Systems. IntroductionThe main challenge in today's businesses is not getting enough information to make qualified decisions, but rather structuring the information already available in a manner that facilitates pro-and reactive actions to improve the performance of the business. Nowadays, manufacturers compete not only on the prices of supplied products but also on the services supported to the customers. On-time delivery is one of the most important services that a manufacturer has to provide and thus on-time delivery becomes a critical performance measure. The importance of this increases if the manufacturer is placed early in a supply chain. The lateness of the delivery of an upstream supplier chain affects the plans of all downstream companies and the total cost of supply chain increases.In manufacturing planning and control literature, much attention is given to the terms volume and product mix [4,25]. These are often seen as the critical parameters (together with the competitive priorities; quality, flexibility, reliability, and speed) when designing and evaluating supply chain or manufacturing planning and control systems. Furthermore, it is known that many companies focus in some manner on On-Timein-Full (OTIF) delivery of customer orders as their main performance goal [16]. Despite extensive literature on this topic, very little attention has been given to the connection between delivery performance and the stability of the planning environment in the form of the demand faced by the manufacturer. In order to establish this connection, this research investigates the impact of changes to sales order lines on the stability of the planning environment and links these changes to the delivery performance of a company.It is known that the delivery performance is much affected by the frequency and type of changes to the production schedule, especially so in Make-To-Order (MTO) manufacturers, where each customer order is directly linked to the production schedule and it is difficult to get high delivery reliability [4...

Order Quantity Distributions: Estimating an Adequate Aggregation Horizon

“…So systems addressing orders in a First-Come-FirstServe manner will potentially be highly sensitive to this assumption. A typical manifestation of this will be if an order contains order lines for more than one product from the same product family leading to systematic short term amplification of demand rates [7,29]. This is critical if the order lines are for products within the same product family or related in a manner that means that their demand will be aggregated within the planning environment on one of the traditional dimensions [23].…”