Best Practices in Manufacturing

AX / D365 User Group - Portland

www.arbelatech.com 1
Agenda

Introduction and Overview 5 Minutes

Industry Thought Leaders 10 Minutes
Production Environments 15 Minutes
Leveraging the Tools 20 Minutes
Questions and Discussion 10 Minutes

www.arbelatech.com 2
Introduction and
Overview
Presenter
Arbela Technologies
“Best Practices”

www.arbelatech.com 3
Presenter – Kurt Beers, Manufacturing Solutions Architect

HIGHLIGHTS
•Manufacturing Solutions Architect
•20 years of ERP implementation experience.
•10 years implementing Dynamics AX
•APICS Certified Professional (CPIM, CSCP)
SPECIALTIES
•Supply Chain and Inventory Management
•Master Planning and Production Scheduling
•Regulated Industries (FDA, FAA)
•Project Management
•Solution Design
•Integration Design
Contact: [email protected]

www.arbelatech.com 4
 Arbela Technologies

• Founded in 2002 by ERP & Supply Chain Veterans.

• Leading Microsoft Gold Certified Partner Since 2004.
• Headquartered in California with Offices in Georgia,
United Kingdom, & Denmark.
• Specialize in Large, Complex, Multi-company Implementations
(Multi-currency, Multi-site, Multi-language, & Shared Services).
• Extensive Industry Knowledge in Manufacturing, Distribution, Retail
& Global Financial Management.
• Offer Full Dynamics AX & CRM Implementations, Upgrades, Audits
& Development.
• Dynamics 365 competency – Add-on development
• Security, Compliance, & Auditing Solution for Dynamics AX 2009,
2012, D365.
• Centralized Master Data Capability & Consolidation Solution for
Dynamics AX 2009 & 2012, D365. 98% 95%
100+
Customer Customer
• Extensive Manufacturing add-ons for Dynamics AX 2012 and D365. Retention Satisfaction
Customers

www.arbelatech.com 5
Best Practices - Definitions

APICS
A method or technique that consistently shows results superior to those achieved
through other means, often used as a benchmark. Best Practices can be defined
within an organization, within an industry , or across industries.
• Current (not emerging, not obsolete)
• Structured (goals, scope, process and procedure)
• Proven (demonstrated in a working environment with metrics)
• Repeatable (demonstrated in multiple organizations or industries)
Gartner
A group of tasks that optimizes the efficiency (cost and risk) or effectiveness
(service level) of the business discipline or process to which it contributes. It must
be implementable, replicable, transferable and adaptable across industries.

www.arbelatech.com 6
Best Practices – Objectives for Manufacturers

Business Perspective
• Adhere to proven concepts and processes
• Focus on value added activities and eliminate waste
• Standardize where possible
• Innovate where there are opportunities to differentiate or add value

IT Perspective
• Follow proven implementation methodologies
• Align to the business objectives to be supported
• Leverage the application tools as designed to the greatest extent possible
• Look for opportunities to enhance, extend or integrate in order to gain efficiency or
support key business initiatives

www.arbelatech.com 7
Leading Industry
Thoughts
Just In Time – Zero Inventories
Lean - Toyota Production System
Theory of Constraints
Six Sigma Process Improvement
Planning and Control Systems

www.arbelatech.com 8
Zero Inventories - Robert Hall

“Stockless Production” – Make only what is needed, when it is needed.

Characterized by:
• Reduced Setup Times
• Small Lot Sizes
• “Pull” systems
• Quality at the source
• Product Design for Manufacturing
• Supplier Integration

www.arbelatech.com 9
Lean Thinking – Robert Womack

Focus on Value Creation and the elimination of waste.

• Overproduction ahead of demand
• Material waiting for next process
• Unnecessary movement or transport of material
• Additional processing due to rework
• Excess Inventory beyond the required quantities
• Unnecessary time spent looking for parts or tools
• Defective Material

www.arbelatech.com 10
The Goal - Eliyahu Goldratt

Throughput analysis with a focus on those activities that limit delivery of

customer orders.
• Theory of Constraints and Critical Chain
• Find your “Herbie”
• Eliminate “Sub-optimal” processes and metrics
• Drum-Buffer-Rope
• Operate at the pace of the constraining resource
• Buffer inventory ahead of the constraining resource
• Pull at each stage in the production flow

www.arbelatech.com 11
Six Sigma Process Improvement – Richard Schonberger

Focus on process discipline and consistency with a data driven approach to

process improvement

Are your initiatives really resulting in increased creation of value?

• Eliminate waste in operations
• But still must adapt to customer and market factors

Example
• Increasing inventories would generally be considered “waste”
• But what of that Inventory leads to new Markets?
• Dell Example

www.arbelatech.com 12
Manufacturing Planning and Control Systems 13

Business Planning

Resource Requirements
Sales and Operations Planning
Planning

Demand Rough Cut Capacity

Master Production Scheduling
Management Planning

Final Assembly Capacity Requirements

Material Requirements Planning
Schedule Planning

Manufacturing Execution Processes

Adapted from Vollman, Berry and Whybark

www.arbelatech.com 13
Thought Leading Organizations

Several professional associations that serve to define, establish and

promote “Best Practices” within their disciplines:
• APICS (now the Association for Supply Chain Management)
• Supply Chain Council
• Theory of Constraints International Certification Organization
(TOCICO)
• Institute for Supply Management (ISM)
• Council of Supply Chain Management Professionals (CSCMP)
• American Society for Quality (ASQ)

www.arbelatech.com 14
Operations and Market
Variables
Order and Production Strategies
The Shape of Material Flow
Lead Time Expectations
Variety and Options

www.arbelatech.com 15
Manufacturing Strategies – What Kind of Plant Are You?

Make To Stock – Produce before receipt of a customer order.

Production to replenish inventories.
Assemble to Order – Final assembly performed upon receipt of a
customer order. The Assumption is that all components and major
subassemblies are produced and stocked in advance of order receipt.
Make to Order – Produce upon receipt of a customer order. Final
product may be composed of standard components, or components
produced specifically to meet the order requirements.
Engineer to Order – Customer order initiates a design process where
new Products are defined, BOMs specified and ultimately produced.

www.arbelatech.com 16
Lead Time Considerations - Manufacturing Strategies

Variety

ETO Delivery Lead Time Engineer-to-

Order
Design Purchase Manufacture Assemble Ship

MTO Delivery Lead Time

Make-to-Order
Inventory Manufacture Assemble Ship

ATO Delivery Lead Time Assemble-to-

Order
Manufacture Inventory Assemble Ship
MTS Delivery
Lead Time Make-to-Stock
Inventory Manufacture Assemble Inventory Ship

Volume
Source: Arnold et al., Introduction to Materials Management, 6th ed.

www.arbelatech.com 17
Product Options and the Demand for “Customization”

From Henry Ford in 1909- “A person can buy a car in any color they choose,
so long as it is black.”

…To standard base models with a multitude of colors and optional features
(Air Conditioning, Stereo System Selection, Transmission type, power vs
manual features, etc.)

… To Dell computers – Pick your features and components and design your
computer from scratch.

… To Converse and Vans shoes – Choose your color, your fabric, other
materials, eyelets, soles, etc… And, they deliver it in a few days.

www.arbelatech.com 18
 Plant Type Analysis - VATI
Plant types describe how materials flow through a factory. In Theory of Constraints, this is called the VATI analysis, and
can help with scheduling problems. Draw the diagram from the bottom of your page to the top of your page. 

www.arbelatech.com 20
Plant Type Analysis – What Kind of Plant Are You?

• V Plant (One to Many): One (or few) raw material converted into many
different end items. Examples – Wood and Metal Products.
• A Plant (Many to One): Typically complex assemblies where many
components and subassemblies are combined to produce a (relatively)
small number of end items. Examples – Aircraft, Ships, Some Electronic
goods. 
• T Plant (Multiple Lines or Many to Many): One (or a small number) of
general material flows can split to make many different products. Examples -
Computers or any other product with configuration, size or color options. 
• I Plant (One to One): Small number of inputs flow in a sequence to produce
a small number of outputs. Few points of divergence in the material flow.

www.arbelatech.com 21
Postponement – Delayed Differentiation

What is the point of divergence in your product structures or material

flows?
Delay the final differentiation (production, assembly, packaging, etc.)
until the latest possible time without impacting customer lead time
expectations.
• Reduced Risk associated with anticipation
• Reduced Finished Goods Inventory Cost

Focus is on the point of divergence in the material flow as the

inventorying level.

www.arbelatech.com 22
Postponement – Company Examples

Kitchen Cabinet Maker

• Modular Design
• Wood and Hardware options available for all standard modules
• Configured to fit Kitchen space
• Make to Order (Configure to Order)
• “V” type plant

www.arbelatech.com 23
Postponement – Company Examples

Office Furniture Manufacturer

• 20 – 30 base models
• Numerous options with in each model (including thousands of textile
options)
• Quick turnaround (2 – 3 days from customer order)
• Assemble to Order (Configure to Order)
• “T” Type Plant

www.arbelatech.com 24
Postponement – Company Examples

Brewery
• Relatively small number of branded beer, each with numerous
package options for Finished Goods
• Three week fermenting cycle
• Moderate Customer lead time expectation (3 – 4 weeks)
• Long Lead times on many Raw Ingredients
• Make to Order Plant
• “T” Type Plant – Some properties of an “I” Plant

www.arbelatech.com 25
Postponement – Company Examples

Aerospace Composites Manufacturer

• Fairly small number of critical Raw Material
• Produce an Intermediate Stage Raw Material
• Material may be cut and formed into a wide variety of end items
• Hybrid – Make to Order / Assemble to Order
• “V” Type Plant

www.arbelatech.com 26
 Plant Type Analysis - VATI
Plant types describe how materials flow through a factory. In Theory of Constraints, this is called the VATI analysis, and
can help with scheduling problems. Draw the diagram from the bottom of your page to the top of your page. 

www.arbelatech.com 27
Leveraging the Tools

Configuration Technologies
Forecast Models
Master Plans
Coverage Settings
Order Settings
Planning BOMs
WMS Replenishment
Power BI

www.arbelatech.com 28
Mandatory Setups

• ‘Product subtype’ must be set

to “Product master”
• ‘Configuration technology’
decision
• Choice of ‘Configuration
technology’ affects options in
‘Product dimension group’

www.arbelatech.com 29 29
Selecting a Configuration Technology 30

• First question – Do you really need a configuration technology?

• Exploring the Options
• Predefined variant
• Do you have products with more than four options in them?
• Dimension-based configuration
• How many more than four options do your products have?
• How do configuration choices affect Production BOMs?
• How often do you add new products?
• How does your engineering/product development department function?
• Constraint-based configuration
• Accommodates greatest complexity of options
• Allows attribute-based pricing

www.arbelatech.com 30
Why Use Configurations? 31

• Control – If sales is allowed to make parts at will, we can have

engineering issues.
• Pricing - Attribute-based pricing supported through a configurator
only.
• Discrete Part - Despite all of the variability, it's still really the same
fixture. Whether it’s black or brown, has a full shield or half shield, or
an 8' power cord or a 12' cord, it's still really the same thing to us.

www.arbelatech.com 31
Summary of the Various Contexts for Planning 32

• Within functional areas (Purchasing, Production, Distribution)

• Across functional areas within organizations
• Across trading partner organizations
• At strategic, tactical and execution levels
• Over long, medium and short time horizons
• Based on volume (S&OP) and mix (MPS)
• At aggregated (Family) and component (BOM) levels

www.arbelatech.com 32
AX Planning Fundamentals – Static and Dynamic Plans 33

• Static Plan - The master scheduling calculation uses the current data to
generate a net requirements plan. This plan remains unchanged until
the next time you run master scheduling. It is an operating plan that
various company personnel, such as a purchaser or production planner,
can use to base their decisions on and carry out their daily tasks and
activities.
• Dynamic Plan -This plan starts out with the same net requirements plan
that was generated by master scheduling. However, you can update the
dynamic plan each time the master data changes. This could be when
you create a new sales order, for example. This enables you to monitor
the changing order network and item availability without disturbing the
static plan that others are using for their work processes

www.arbelatech.com 33
AX Planning Fundamentals – Forecast Models and Plans

Forecast Plan - Gross Requirements plan in AX

• Long Range Material Requirements
• Long Range Capacity Requirements

Forecast Model - Identification of a specific Forecast in AX

• May be used to correlate with various versions or arrays from Demand
Management System
• May be applied to Finished Good, Subassembly, Raw Material, or any
combination of the three.
• Multiple Models and Sub-models may be used in Master or Forecast
Plans

www.arbelatech.com 34
Master Planning Parameters – Default Plans 35

www.arbelatech.com 35
Master Plan example in AX – Specify your Forecast Model 36

www.arbelatech.com 36
AX Planning Fundamentals – Which Plans are you using?

Cabinet Maker –
• Static for Daily Requirements
• Dynamic for short term changes to Plan
• Forecast at Raw Material Level

Furniture Manufacturer
• Gross Requirements for long range Supplier Capacity
• Static Plan for Daily Procurement
• Dynamic Plan for short term changes (multiple times daily)
• Specific Plan for Production Scheduling – Orders Only
• Forecast at Component Part Level

www.arbelatech.com 37
AX Planning Fundamentals – Which Plans are you using?

Brewery
• Static for Raw Materials based on long range forecasts
• Dynamic for Make To Order Production – No Forecasts
• Static Plan uses forecast at Finished Good Level

Composites Manufacturer
• Gross Requirements Plan for Inter Company Supplier Capacity
• Static Plan for Daily Procurement and Production Scheduling
• Dynamic Plan for short term changes
• “Hybrid” Plan with forecasts directly on key Raw Materials

www.arbelatech.com 38
Material Planning – Managing Demand and Buffers

Assuming that we are not operating in ETO or true MTO environments,

there will be some need to maintain inventory.
• Buffer vs Safety Stock
• Primary vs Contingent
• Demand Driven vs Variation Driven

www.arbelatech.com 39
Material Planning – Managing Demand and Buffers

Tools for driving component and subassembly inventory in advance of

Finished Goods demand:

Planning
• Planning BOM
• Forecast for Subassemblies and Raw Materials (Consider Reduction Principle)
• Minimum Stock Levels per planning dimension (Site or Warehouse typically)

Execution
• Visual replenishment of production line locations
• OR – WMS Replenishment work for production lines

www.arbelatech.com 40
Planning BOM Example in AX 41

www.arbelatech.com 41
Planning Route / Bill of Resources example in AX 42

www.arbelatech.com 42
Other Considerations for Planning

Material Control
Backflushing
Batch Tracking
Serial Tracking
Expiration Dates

www.arbelatech.com 43
S&OP Master Plan example in AX 44

www.arbelatech.com 44
The Power of Power BI

Improved Data Visibility is top reason for implementing ERP system.

ERP systems are optimized for transactions – not for Reporting and
Analysis
Power BI provides a flexible and easy to use framework for building rich
data visualizations and detailed analytics

www.arbelatech.com 45
 C-level: See Your Sales Data in a Whole New Way 46

Manage sales performance and identify opportunities and trends

Get immediate insights

across all your data through
self-service analytics

Give sales managers the

ability to get data needed for
self-service BI like forecasts,
performance, and market
trends

• Stay connected with access

from almost anywhere, any
Click to see video
device

www.arbelatech.com 46
YTD Sales – Customer Sales Trend 47

www.arbelatech.com 47
Product Analysis – Which Configuration is Selling Most? 48

www.arbelatech.com 48
Weekly and Monthly - Customer Sales Trends 49

www.arbelatech.com 49
How we support the
Microsoft Enterprise
ERP
CRM
BI & Analytics
IoT
Field Service
Productivity Applications
Mobility
Azure

www.arbelatech.com 50
Microsoft Ecosystem

Productivity Dynamics 365 Business Apps Azure, Data & Analytics 3rd Party Apps Purpose Built Apps

Sales Machine Learning

Power BI
Custom Mobile Apps
Customer
with PowerApps
Service Cognitive Services Microsoft
Outlook AppSource
Field
Marketplace
Service
+ + Internet of Things + +
Skype Project Service Compose Workflows &
Automation Integrations with
Bot Framework Flow
SharePoint Marketing

Finance & Cortana Other Data

Operations Sources Business Processes
Teams

LinkedIn Recruiter
SQL Data Warehouse Common Data
OneDrive & Sales Navigator
Model

Application Platform - Common Data Service

www.arbelatech.com 51
Adding Intelligence to your Dynamics Investments

Information Big Data Stores Machine Learning Intelligence

Management and Analytics
Data
People
Sources
Machine Cognitive
Data Factory Data Lake Store
Learning Services

SQL Data Data Lake Bot Web

Data Catalog Warehouse Analytics Framework
Apps

Mobile
HDInsight
Event Hubs (Hadoop and Cortana Apps
Spark)
Bots

Sensors
Stream Dashboards &
and devices
Analytics Visualizations Automated
Systems
Power BI
Data

Data Intelligence Action

www.arbelatech.com 52
Build applications that understand people

Intelligence
Vision Speech Language Knowledge Search

Cognitive Services Computer Vision Speaker Recognition Text Analytics Academic Knowledge Bing Search API

Bot
Framework Face Speech Bing Speller Entity Linking Service Bing Image Search API

Cortana Custom Recognition Knowledge Exploration

Emotion Web Language Model Bing Video Search API
Intelligence Service-CRIS Service

Video Linguistic Analysis Recommendations Bing News Search API

Language
Understanding Bing Auto Suggest API
Intelligent Service

• Faces, images, emotion recognition and video intelligence • Complex tasks processing, knowledge exploration, intelligent
• Spoken language processing, speaker recognition, custom speech recognition recommendations
• Bing engine capabilities for Web, Autosuggest, Image, Video
• Natural language processing, sentiment and topics analysis, spelling errors
and News

www.arbelatech.com 53
The Microsoft Graph

www.arbelatech.com 54
Agile Methodology

Arbela Agile Methodology

www.arbelatech.com 55
Arbela Agile Methodology

Analyze Design & Develop Deploy Optimize

Design

Conference Room Pilot (CRP)

Kick-off Training On-Site Support
Workshops

Setup Fit/Gap
Education, Scoping Feedback Repeat UAT Optimization
Workshops
& BPM & Updated

#1
Scope
Unit Testing Production Transition to Support
Fit/Gap List Design Environment

Conference Room Pilot (CRP)

Data Workshops
Migration Final Data
Environment Setup Migration Come back for first month end
Setup Workshops Assist with re-training
Optimize environment and
Foundation, Standard CRM Readiness

#X
processes
No Customizations Development Assessment
Set Project Scope at
High Level Process
Level & Kick-off Unit Testing Go-Live
Project. Compare
functionality
Data
between versions
Migration Readiness for Go-Live & Final
and eliminate
customizations Cutover
Standard CRM, Security, ISV, Customizations
for Reports, Interfaces, Extensions, Forms &
Workflows

Arbela Transition of Ownership Client

www.arbelatech.com 56
 Project Management & Governance

Project Management Change Request Change Management

Created
Process
Issue Management
Project Plan
Resource & Budget Management
Risk Assessment & Management Reviewed by
Communication & Training Plan
Project Status Meetings & Reporting PM’s

Approved
Governance No Change Order
for
Analysis? Closed. No

Development Best Practices Yes

Change Management Procedures Deliverable Responsibility Matrix
Organizational Change Management CR Analyzed &
Estimated

Sent to Steering
Steering Committee Submit to PM’s
Committee

No

Milestone or Monthly Steering Committee meetings With-in

Resolution of Escalations & Approvals PM
Overall Guidance of Client Resources, Budget & Approach
Approval
Approved? CR Executed
Yes Yes
Limit?

www.arbelatech.com 57
 THANK
YOU
www.arbelatech.com

www.arbelatech.com 58