Nearly all supply chain practitioners are familiar with, or have been trained on, the use of Lean/Six Sigma tools for reducing waste and improving processes. However, these tools are often thought of as techniques only for addressing manufacturing quality and efficiency. In recent years, Lean practitioners and educators have found the tool set to be just as effective for improving business processes. There are significant benefits to be gained by “leaning” a business process, but with that comes process challenges to overcome. The wastes that are built into many business processes are often not clearly evident, such as excess work queued in front of a bottleneck process, over processing of data, or even poor quality.
Edwards Lifesciences LLC began the formal S&OP journey five years ago. Yet, two years into the journey, there were still no company-wide accepted methods for calculating forecast accuracy, no formally published forecast accuracy metrics, and no universal understanding of the importance of forecast accuracy as a metric for driving change. It was within this environment that I was asked to lead an effort to improve forecast accuracy to 85%.
Fortunately, we recognized that a great deal of background work was still needed, and in just a few months we were able to establish standard forecast accuracy reporting calculations, improve the reporting tools, and gain acceptance on the required forecast accuracy. Our results demonstrated that we had some regions already nearing the 85% target, while other regions were far from ideal. The critical questions were; how to identify the root causes of low forecast accuracy; and how to fix the issues and sustain the changes.
The tools for addressing these questions came from the Edwards Business Excellence group. This group had recently been formed with a goal of implementing Lean principles into Edwards through training and Lean project assistance. A Green Belt project was created to improve forecast accuracy, working initially with the European region. Although Europe’s forecast accuracy was already near the 85% goal, the executive VP for Europe fully understood how improving forecast accuracy could improve the other operations metrics, such as inventory levels and customer service. A forecast process mapping workshop was conducted, with participants from the Business Excellence, Supply Chain, Sales, Marketing and Finance groups.
This process mapping workshop resulted in a focused and candid discussion of all the issues and potential solutions to which action items were identified, prioritized and assigned. Standard procedures were established, new tools were created, and modifications were made to the forecasting software. Most importantly, a clear statement was established within the company that forecast accuracy was highly important and anything interfering with achieving 85% accuracy was to be resolved immediately, not simply ignored.
Project Manager, Global Supply Chain Group
Terry Fearn will be presenting at the 2015 IBF Supply Chain Forecasting & Planning Conference in Scottsdale, Arizona from February 22nd – 24th. Terry Fearn currently holds the role of Project Manager in the Edwards Lifesciences Global Supply Chain group. He is responsible for supporting the Sales and Operations Planning business process and the JDA Demand modules. Terry has 15 years of experience providing consulting services and training as well as 15 years of experience in multiple medical device manufacturing related supply chain roles. Terry has a BS in Liberal Arts and an MBA and is an Edwards Certified Green Belt.