OPERATIONAL EXCELLENCE
1 ERP (Enterprise Resource Planning) ............................................................................ 4
1.1 Department Structure ..................................................................................................................... 5
2 Sales & Operations Planning .................................................................................... 17
2.1 Phase 1 of the S&OP: Forecasting ................................................................................................. 17
2.1.1 Forecasting … accurate? ................................................................................................................. 18
2.1.2 Forecasting in ERP / SAP ................................................................................................................. 18
2.1.3 Forecasting = Roll up process ......................................................................................................... 19
2.2 Phase 2 of S&OP: Demand planning .............................................................................................. 20
2.3 Phase 3 of S&OP: Supply planning ................................................................................................ 21
2.3.1 Supply planning in S&OP................................................................................................................. 21
2.3.2 Q1: Enough raw materials? ............................................................................................................. 22
2.3.3 Q2: Enough Machine Capacity? ...................................................................................................... 23
2.3.4 Q3: Enough People Capacity? ......................................................................................................... 24
3 Production Planning: most complicated ................................................................... 26
3.1 Forecast Consumption .................................................................................................................. 26
3.2 Netting .......................................................................................................................................... 28
3.2.1 Master Production Schedule .......................................................................................................... 29
3.2.2 Independent versus dependent ...................................................................................................... 29
3.2.3 Production Planning........................................................................................................................ 30
3.2.4 Netting explained at SKU level ........................................................................................................ 30
3.2.5 Replenishing the stock at SKU level ................................................................................................ 31
3.2.6 Replenishment ................................................................................................................................ 31
3.3 From SKU level to raw material level: MRP ................................................................................... 32
4 Sales........................................................................................................................ 34
4.1 The Process ................................................................................................................................... 34
4.1.1 Sales Order Process ........................................................................................................................ 34
4.1.2 The pre-sales activities = Selection process… ................................................................................. 34
4.1.3 Transaction Process ........................................................................................................................ 38
4.2 Master Data .................................................................................................................................. 47
4.2.1 Definition ........................................................................................................................................ 47
1
, 4.2.2 Master data in sales ........................................................................................................................ 47
4.3 In SAP (GBI – Case SD) ................................................................................................................... 52
4.3.1 Global Bike Inc. ............................................................................................................................... 52
4.3.2 Process Integration – Case SD (same as the circles) ....................................................................... 57
4.3.3 Process Integration – Case MM (same as the circles) .................................................................... 58
4.3.4 Document Flow ............................................................................................................................... 58
5 Purchase.................................................................................................................. 60
The Process ............................................................................................................................................... 60
5.1.1 Purchase Process (page 148) .......................................................................................................... 60
5.1.2 Special situations ............................................................................................................................ 73
5.2 Master Data .................................................................................................................................. 74
5.2.1 Vendor Master Data ....................................................................................................................... 74
5.2.2 Material Master Data...................................................................................................................... 75
5.3 In SAP: GBI – Case MM .................................................................................................................. 77
5.3.1 MM Organizational Structure (Materials Mgmt.) ........................................................................... 77
5.3.2 GBI 2.0 Structure for Materials Management ................................................................................ 78
6 The Production Process ............................................................................................ 79
6.1 Overview....................................................................................................................................... 79
6.1.1 Release production order – 3 ways ................................................................................................ 79
6.1.2 Preparation ..................................................................................................................................... 80
6.1.3 Stage and Setup .............................................................................................................................. 82
6.1.4 Produce ........................................................................................................................................... 83
6.1.5 Complete ........................................................................................................................................ 84
6.2 Master Data .................................................................................................................................. 86
6.2.1 PP Master Data ............................................................................................................................... 86
6.2.2 Material Master Views .................................................................................................................... 86
6.2.3 Bill of Materials (BOM) ................................................................................................................... 87
6.2.4 Routing............................................................................................................................................ 88
6.3 In SAP: GBI – Case PP (not to be known for the exam) .................................................................. 90
6.3.1 PP Organizational Structure ............................................................................................................ 90
6.3.2 GBI 2.0 Structure for Production Planning...................................................................................... 91
6.3.3 GBI 2.0 Enterprise Structure in SAP ERP (Logistics) ........................................................................ 91
7 Total Quality Management 1: General Principles of Quality ..................................... 92
7.1 Quality in tme …............................................................................................................................ 93
2
, 7.2 What is quality? ............................................................................................................................ 93
7.3 Quality versus Reliability ............................................................................................................... 94
7.4 Three phases… striving for quality in organizations ...................................................................... 95
7.4.1 Aspects of TQC, ‘Total quality control’ ........................................................................................... 96
7.5 Positioning TQM in an organization .............................................................................................. 97
7.5.1 Processes ........................................................................................................................................ 97
7.5.2 Driving / mastering ......................................................................................................................... 98
7.5.3 Primary Processes > aim for quality.............................................................................................. 100
7.6 Founders of TQM ........................................................................................................................ 103
7.6.1 When can we talk about quality management? ........................................................................... 105
8 Total Quality Management 2: Quality Improvement Techniques ............................ 107
8.1 First way: End-inspection ............................................................................................................ 107
8.2 Better: Process thinking / process Control … ............................................................................... 108
8.2.1 Supply Chain Management ........................................................................................................... 109
8.2.2 How process-control? ................................................................................................................... 109
8.3 Certification ................................................................................................................................ 114
8.3.1 Types of certification .................................................................................................................... 115
8.3.2 ISO ................................................................................................................................................. 116
9 Total Quality Management 3: Continuous Improvement ........................................ 120
9.1 Balanced Scorecard ..................................................................................................................... 120
9.1.1 From Critical success factor to (CSF) Key performance Indicator (KPI’s) (KPI has to be measurable)
122
9.2 Theory of Constraints .................................................................................................................. 123
9.2.1 A constraint................................................................................................................................... 123
9.2.2 Goldratt ......................................................................................................................................... 124
9.3 Lean… Based on Toyota Production System ................................................................................ 124
9.3.1 Six sigma ....................................................................................................................................... 126
9.3.2 EFQM ............................................................................................................................................ 128
9.4 Quality in service industry… ........................................................................................................ 129
9.4.1 Servqual ........................................................................................................................................ 130
9.4.2 Customer Service Assessment scale ............................................................................................. 132
9.5 Customer Service ........................................................................................................................ 132
9.5.1 Elements of customer service? 3 Phases ...................................................................................... 132
9.5.2 Complaints .................................................................................................................................... 133
9.6 From improvement management to innovation management ................................................... 133
3
, 1 ERP (ENTERPRISE RESOURCE PLANNING)
▪ If we want to maximize profits (objective), we should use the resources in the most efficient way → costs
will be lower
▪ Plan the usage of the resources in the most efficient way
▪ Can be anything: procedure, plan on paper, mostly a software
Book: page 1 to 35
Full operational cycle of a company
▪ Three main cycles of a company to bring added value to the company:
o production,
o sales,
o purchase (important!),
o but also production planning (has nothing to do with the SAP terminology) → ERP
▪ SAP: software to do erp, uses other terminology like sales and distribution, production is
production planning
4
1 ERP (Enterprise Resource Planning) ............................................................................ 4
1.1 Department Structure ..................................................................................................................... 5
2 Sales & Operations Planning .................................................................................... 17
2.1 Phase 1 of the S&OP: Forecasting ................................................................................................. 17
2.1.1 Forecasting … accurate? ................................................................................................................. 18
2.1.2 Forecasting in ERP / SAP ................................................................................................................. 18
2.1.3 Forecasting = Roll up process ......................................................................................................... 19
2.2 Phase 2 of S&OP: Demand planning .............................................................................................. 20
2.3 Phase 3 of S&OP: Supply planning ................................................................................................ 21
2.3.1 Supply planning in S&OP................................................................................................................. 21
2.3.2 Q1: Enough raw materials? ............................................................................................................. 22
2.3.3 Q2: Enough Machine Capacity? ...................................................................................................... 23
2.3.4 Q3: Enough People Capacity? ......................................................................................................... 24
3 Production Planning: most complicated ................................................................... 26
3.1 Forecast Consumption .................................................................................................................. 26
3.2 Netting .......................................................................................................................................... 28
3.2.1 Master Production Schedule .......................................................................................................... 29
3.2.2 Independent versus dependent ...................................................................................................... 29
3.2.3 Production Planning........................................................................................................................ 30
3.2.4 Netting explained at SKU level ........................................................................................................ 30
3.2.5 Replenishing the stock at SKU level ................................................................................................ 31
3.2.6 Replenishment ................................................................................................................................ 31
3.3 From SKU level to raw material level: MRP ................................................................................... 32
4 Sales........................................................................................................................ 34
4.1 The Process ................................................................................................................................... 34
4.1.1 Sales Order Process ........................................................................................................................ 34
4.1.2 The pre-sales activities = Selection process… ................................................................................. 34
4.1.3 Transaction Process ........................................................................................................................ 38
4.2 Master Data .................................................................................................................................. 47
4.2.1 Definition ........................................................................................................................................ 47
1
, 4.2.2 Master data in sales ........................................................................................................................ 47
4.3 In SAP (GBI – Case SD) ................................................................................................................... 52
4.3.1 Global Bike Inc. ............................................................................................................................... 52
4.3.2 Process Integration – Case SD (same as the circles) ....................................................................... 57
4.3.3 Process Integration – Case MM (same as the circles) .................................................................... 58
4.3.4 Document Flow ............................................................................................................................... 58
5 Purchase.................................................................................................................. 60
The Process ............................................................................................................................................... 60
5.1.1 Purchase Process (page 148) .......................................................................................................... 60
5.1.2 Special situations ............................................................................................................................ 73
5.2 Master Data .................................................................................................................................. 74
5.2.1 Vendor Master Data ....................................................................................................................... 74
5.2.2 Material Master Data...................................................................................................................... 75
5.3 In SAP: GBI – Case MM .................................................................................................................. 77
5.3.1 MM Organizational Structure (Materials Mgmt.) ........................................................................... 77
5.3.2 GBI 2.0 Structure for Materials Management ................................................................................ 78
6 The Production Process ............................................................................................ 79
6.1 Overview....................................................................................................................................... 79
6.1.1 Release production order – 3 ways ................................................................................................ 79
6.1.2 Preparation ..................................................................................................................................... 80
6.1.3 Stage and Setup .............................................................................................................................. 82
6.1.4 Produce ........................................................................................................................................... 83
6.1.5 Complete ........................................................................................................................................ 84
6.2 Master Data .................................................................................................................................. 86
6.2.1 PP Master Data ............................................................................................................................... 86
6.2.2 Material Master Views .................................................................................................................... 86
6.2.3 Bill of Materials (BOM) ................................................................................................................... 87
6.2.4 Routing............................................................................................................................................ 88
6.3 In SAP: GBI – Case PP (not to be known for the exam) .................................................................. 90
6.3.1 PP Organizational Structure ............................................................................................................ 90
6.3.2 GBI 2.0 Structure for Production Planning...................................................................................... 91
6.3.3 GBI 2.0 Enterprise Structure in SAP ERP (Logistics) ........................................................................ 91
7 Total Quality Management 1: General Principles of Quality ..................................... 92
7.1 Quality in tme …............................................................................................................................ 93
2
, 7.2 What is quality? ............................................................................................................................ 93
7.3 Quality versus Reliability ............................................................................................................... 94
7.4 Three phases… striving for quality in organizations ...................................................................... 95
7.4.1 Aspects of TQC, ‘Total quality control’ ........................................................................................... 96
7.5 Positioning TQM in an organization .............................................................................................. 97
7.5.1 Processes ........................................................................................................................................ 97
7.5.2 Driving / mastering ......................................................................................................................... 98
7.5.3 Primary Processes > aim for quality.............................................................................................. 100
7.6 Founders of TQM ........................................................................................................................ 103
7.6.1 When can we talk about quality management? ........................................................................... 105
8 Total Quality Management 2: Quality Improvement Techniques ............................ 107
8.1 First way: End-inspection ............................................................................................................ 107
8.2 Better: Process thinking / process Control … ............................................................................... 108
8.2.1 Supply Chain Management ........................................................................................................... 109
8.2.2 How process-control? ................................................................................................................... 109
8.3 Certification ................................................................................................................................ 114
8.3.1 Types of certification .................................................................................................................... 115
8.3.2 ISO ................................................................................................................................................. 116
9 Total Quality Management 3: Continuous Improvement ........................................ 120
9.1 Balanced Scorecard ..................................................................................................................... 120
9.1.1 From Critical success factor to (CSF) Key performance Indicator (KPI’s) (KPI has to be measurable)
122
9.2 Theory of Constraints .................................................................................................................. 123
9.2.1 A constraint................................................................................................................................... 123
9.2.2 Goldratt ......................................................................................................................................... 124
9.3 Lean… Based on Toyota Production System ................................................................................ 124
9.3.1 Six sigma ....................................................................................................................................... 126
9.3.2 EFQM ............................................................................................................................................ 128
9.4 Quality in service industry… ........................................................................................................ 129
9.4.1 Servqual ........................................................................................................................................ 130
9.4.2 Customer Service Assessment scale ............................................................................................. 132
9.5 Customer Service ........................................................................................................................ 132
9.5.1 Elements of customer service? 3 Phases ...................................................................................... 132
9.5.2 Complaints .................................................................................................................................... 133
9.6 From improvement management to innovation management ................................................... 133
3
, 1 ERP (ENTERPRISE RESOURCE PLANNING)
▪ If we want to maximize profits (objective), we should use the resources in the most efficient way → costs
will be lower
▪ Plan the usage of the resources in the most efficient way
▪ Can be anything: procedure, plan on paper, mostly a software
Book: page 1 to 35
Full operational cycle of a company
▪ Three main cycles of a company to bring added value to the company:
o production,
o sales,
o purchase (important!),
o but also production planning (has nothing to do with the SAP terminology) → ERP
▪ SAP: software to do erp, uses other terminology like sales and distribution, production is
production planning
4
