class a check list

8/12/2019 Class a Check List

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Last revised: 12/12/97

Rohm and Haas Supply Chain Management ProcessClass A Assessment Checklist

Version: January 1998

AssessmentThe Class A checklist is used within Rohm and Haas to guide you in assessing whether the Supply Chain processes in your

business are at recognized Class A standards. The checklist is organized in 8 major sections. Within each section aregeneral statements in bold type that are high-level descriptions of Class A processes. Detailed descriptors follow each of thegeneral statements and supplement your understanding of Class A by listing some observable characteristics of the sub-

proces ses .

In the Class A assessment, a rating is developed for each of the general statements by reviewing the detailed statements.Class A certification requires an average score of 3.5 or better for the 24 sub-headings contained in sections A through F.Expected Class A performance levels are detailed in the Data Quality and the Performance Measurement sections. At least 3months sustained performance at these levels are required prior to certification. Annual recertification following Class Arecognition is encouraged.

Resource AssistanceIf you have questions about this checklist or needassistance with Class A consultation and certification,contact the Supply Chain Center (SCC) in Home Office.Process templates are available from the SCC to help youget started. The templates describe Class A processes insufficient detail to enable you to apply them directly toyour business.

ABCD ChecklistThe majority of the Rohm and Haas checklist is takendirectly from the ABCD Checklist 3 rd ed. by Oliver Wight . Editorial changes were made to some of the

statements to improve the clarity and applicability toRohm and Haas; however the original intent remainsunchanged. Sections on Transportation and WarehousePlanning, Internal Supply and Delivery Management wereadded since these reflect important elements in our Supply Chain.

The major changes in this revision vs. the one publishedin May of 1997 are primarily in format and composition.Additional detail is provided on the information that iscontained in LogsPlus, Mimi, and Prism and reflects our continued learning of the processes. There is anenhanced emphasis throughout the checklist on

performance measurements and accountability. Achange log located at the end of this document providesmore detail.

Revisions to this checklist will be made only withconcurrence of the Supply Chain Council, and areexpected no more frequently than semi-annually. A copyof the current checklist is available on the Intranet athttp://web.ho.rohmhaas.com/supplychain.

MRP II Rating Definitions

Rating DefinitionA All processes implemented,

business-wide All metrics at Class A levels.

All functions involved Substantial improvements in

business resultsB All processes implemented

Some metrics at Class A - not all Measurable improvements in

business results

C Some processes implemented Few metrics at Class A, some not

implemented Some improvements in business

resultsD Few processes implemented, still

some parallel processes in place Few measurements implemented Software installed

< D Processes not implemented

ClassesClass A an average of 3.5 or higher Class B an average of 2.5 - 3.5Class C an average of 1.5 - 2.5Class D an average below 1.5


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Rohm and Haas Supply Chain Management ProcessClass A Assessment Scorecard (Summary Level)

Business Unit: __________________________ Site: _________________________ A. General Management Processes A1. Corporate Direction A2. Management - Active Leadership A3. Linkage to Strategic/Business Planning A4. Linkage to Demand Creation Process A5. Linkage to Development Process

A6. Employee Education and Involvement A7. TQL Process - Continuous Improvement

B. Planning Processes Sales & Operations Planning B1. Sales & Operations Planning Process Demand Management B2. Forecasting and Demand Planning B3. Network Design & Analysis B4. Distribution Planning & Replenishment B5. Turbo Replenishment Planning Supply Management B6. Master Production Scheduling

B7. Capacity Analysis

C. Materials & Services Supply Processes C1. Planning of External Supply C2. Planning of Internal Supply C3. Transportation & Warehouse Planning

D. Order Management Processes D1. Order Entry Processing D2. Billing & Collecting

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E. Production Processes E1. Plant Scheduling E2. MRP, Procurement and Paying E3. Conversion E4. Production and Quality Reporting

F. Delivery Processes F1. Shipping/Delivery Management

G. Data Quality G1. Single Set of Numbers G2. Inventory Record Accuracy G3. Bill of Material Accuracy G4. Capacity Planning Parameter Accuracy G5. Product Change Control Process

H. Performance Measurements H1. Customer Service A) External Customer - On Time Delivery

B) Distribution - On Time Delivery C) Internal Auto Replenishment-On Time Delivery H2. Sales Forecast Accuracy - Family Level H3. Sales Forecast Accuracy - SKU Level H4. Performance to Production Plan (Family) H5. Performance to Master Production Schedule (SKU) H6. Supplier Delivery to Scheduled Receipt H7. Cycle Time Performance H8. Quality Performance H9. Financial Performance

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----->95%>98%>95%-----

>95%

>95%>95%MeasuredMeasured98%-102%>95%>95%MeasuredMeasuredMeasured

ck any BOLD text below to goectly to that section of the document.


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Overall Score: ______ Class:________ Class A = 3.5 4.0 Class B = 2.5 3.5 Class C = 1.5 2.5 Class D


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Last revised: 12/12/97 Page i

Rohm and Haas Supply Chain Management ProcessClass A Assessment Scorecard - Detail Level

General Management Processes....................................................................................1A1. Corporate Direction....................................................... ....................................................... .................1A2. Management - Active Leadership .................................................... ...................................................... 1A3. Linkage to Strategic/Business Planning...................................................................................................1A4. Linkage to Demand Creation Process........................................................................... .......................... 2A5. Linkage to Development Process ..................................................... ...................................................... 3A6. Employee Education and Involvement.....................................................................................................3A7. TQL Process for Continuous Improvement....................................... ...................................................... 4

Sales and Operations Planning Process........................................................................5B1. Sales and Operations Planning Process................................................................ ................................... 5

Demand Planning Process ...............................................................................................8B2. Forecasting and Demand Planning....................................................................... ................................... 8B3. Network Design & Analysis ................................................... ........................................................ .......9B4. Distribution Planning & Replenishing ..... ...... ...... ..... ...... ..... ...... ...... ..... ...... ..... ...... ...... ..... ...... ..... ...... ...... .9B5. Turbo Replenishment Planning ................................................ ........................................................ ..... 10

Supply Management Process ........................................................................................11B6. Master Production Scheduling ................................................. ........................................................ ..... 11B7. Capacity Analysis................................................................... ........................................................ ..... 12

Materials and Services Planning Process ...................................................................13C1. Planning of External Supply.............................................................. .................................................... 13C2. Planning of Internal Supply............................................................... .................................................... 15C3. Transportation and Warehouse Planning ..................................................... .......................................... 16

Order Management Process..........................................................................................17D1. Order Entry / Processing................... ........................................................ .......................................... 17D2. Billing and Collecting......................... ........................................................ .......................................... 17

Production Processes ....................................................................................................18E1. Plant Scheduling .................................................. ........................................................ ........................ 18E2. MRP, Procurement and Paying ............................................... ........................................................ ..... 18E3. Conversion............................................................................. ........................................................ ..... 20

Delivery Processes.........................................................................................................22

F1. Shipping/Delivery Management....... ..... ...... ..... ...... ...... ..... ...... ..... ...... ...... ..... ...... ..... ...... ...... ..... ...... ..... .. 22Data Quality ......................................................................................................................23

G1. Single Set of Numbers................................................... ....................................................... ............... 23G2. Inventory Record Accuracy.................................................................................................. ............... 23G3. Bill of Material Accuracy........................................................ ........................................................ ..... 23G4. Capacity Parameter Accuracy................................................ ........................................................ ..... 24G5. Product Change Control Process.......................... ........................................................ ........................ 24


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Performance Measurements..........................................................................................25H1. Customer Service - On Time Delivery............................................................................................. ..... 25H2. Sales Forecast Accuracy (Family)........................................... ........................................................ ..... 25H3. Sales Forecast Accuracy (SKU).................................... ....................................................... ............... 25H4. Production Performance to Plan (Family) ................................................... .......................................... 26H5. Performance to Master Production Schedule ....................................................... ................................. 26H6. Supplier Delivery Performance ............................................... ........................................................ ..... 26

H7. Cycle Time Performance...................................................................................................... ............... 26H8. Quality Performance..................................................... ....................................................... ............... 26H9. Financial Performance........................................................................................ ................................. 26

Appendix A Additional Metrics to be Considered ....................................................27

Appendix B Class A Auditing Process .......................................................................29

Change Log ......................................................................................................................37


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General Management Processes

A1. Corporate Direction 4 3 2 1 0o o o o o

A ) Corporate leadership sets approp riate strategy/direction (e.g., portfolio plan,acrylic chain strategy/capacity, commo n m etrics/systems) to enable optimal business unit supp ly chain management.

1. Acrylic monomer/polymer supply/demand is managed in a corporate S&OPprocess.

2. Corporate IT systems enable efficient global management of supply chains withinbusiness and across businesses.

3. Corporate goals and metrics guide and support supply chain performanceimprovement efforts in the businesses.

A2. Management - Active Leadership 4 3 2 1 0o o o o o

A) Management at a ll levels of the bus iness i s com mit ted to and ac t ive ly involved in the use of in tegra ted p lanning and c ont ro l and con t inuous impro vement processes, consid ers the effective use of these processes essential for grow th and profi tabil i ty, and uses the comm on sup ply chain tools to run the business.

1. The Rohm and Haas Supply Chain Management Process improvement effort isan integral part of "running the business."

2. The Rohm and Haas Supply Chain Management Process is viewed asstrategically important, a source of competitive advantage.

3. Commitment is demonstrated through consistent messages and decisions onresource allocations (money and time).

4. Management demonstrates commitment through hands-on involvement.

A3. Linkage to Strategic/Business Planning 4 3 2 1 0

o o o o oA ) Strategic Planning - an effective strategic planning process is used in the

Business.

1. A strategic planning process is used by the business team. This process: establishes the organizational purpose and mission, provides direction for future generations of products and services, develops a competitive strategy that provides clear direction, integrates all functional areas of the business, includes a manufacturing strategy statement, includes assumptions about internal factors (controllable!) and external

factors (uncontrollable) that significantly affect the business, occurs annually, clearly identifies critical operating action plans with clear accountability.

2. The strategic plan: covers the time required (typically three to five years) to implement major

changes in strategy and in the market, is reconciled with the Business Plan and the Sales & Operations plans.


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B) Business Planning - the annual Business Plan process is owned by the business team. It aligns with the strategic plan, and generates the annual financ ial performance comm itment for the Busin ess Team.

1. The annual business plan: provides specific direction regarding market share, financial performance,

marketing and manufacturing strategies, new product development,customer service levels, external supply plans and desired inventory levels,

is based on the sales and operations plan, representing one set of numberslinked directly to the detailed demand and production plans contained inLogsPlus.

documents underlying assumptions, is reviewed quarterly and updated to reflect significant business changes, serves as the target for monthly reviews of financial performance for all

functions, is supported with critical operating action plans (or AIPs by function).

A4. Linkage to Demand Creation Process 4 3 2 1 0(See also Section B2.) o o o o o

A) A formal sales planning proc ess is in place with the sales force responsible and accountable for developing and executing the result ing sales plan (accou nt strategies, new produc t/market strategies, etc.). Sales plans and forecasts are al igned; differences are reconciled.

B) The sales force understands the impact of sales planning and forecasting on the businesss ability to satisfy its custom ers.

C) Actu al sales are measured against sales forecasts. Measurements are broken dow n into sales respon sibility areas.

1. The assumptions underlying the sales plan and forecast are documented.Changes to the forecast are supported with updated assumptions and updatedsales plans.

2. Sales areas are provided with useful feedback regarding their performancecompared to plan at least monthly. Sales plans are stated so that they aremeaningful to the sales force yet translate into the sales and operations planningprocess.

3. The sales planning process does not impose an administrative burden on thesales force.

4. The sales compensation system does not inject bias (e.g., sandbagging) into theforecast.

5. The sales force is actively pursuing customer linking (e.g., Turbo).


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A5. Linkage to Development Process 4 3 2 1 0o o o o o

1. All phases of new product development are integrated with the MRPII planningand control system.

2. A stage-gate process specifies project reviews with manufacturing, marketing,purchasing and quality assurance at each critical step of each new developmentproject. A detailed development schedule with authorization and fundingsupports each new product development project. The schedule is reviewed at the

S&OP meeting, and a formal system is used to communicate changes.3. The product development staff encourages commonality of formulation

ingredients in new products with those in existing products, generic productdescriptions are used rather than Trade Marked materials.

4. Once a new product has been authorized, it is included in the S&OP, demandplanning, and master scheduling process.

5. Capacity needed for new products is evaluated systematically (e.g., by rough-cutcapacity planning or capacity requirements planning).

A6. Employee Education and Involvement 4 3 2 1 0o o o o o

A) The bus iness i s comm it ted to provide educat ion and t rain ing to a ll employees ,enabling the effective operation of the bus iness and m anagement of change.

1. Employees clearly understand the relationship of Supply Chain Management tothe success of the business and the corporation. Each employee understandsthe inter-relatedness of the Rohm and Haas Supply Chain Management Processand where they, as an individual contribute to the overall execution. Eachemployee understands how their work relates to the service of an externalcustomer.

2. A continuing education and training program for R&H Supply Chain ManagementProcesses is available to enable employees to continually meet the performancerequirements of their job. Newly hired employees as well as employeesassuming different/new responsibilities have formal educational plans to ensurecompetency. Cross-training is in place.

3. Management is committed to providing sufficient training resources and providesadequate time for employee education and training. Education and training areviewed as necessary and worthwhile.

4. Education is designed to be participative, and is targeted at refining andimproving an employees contribution to the business.

5. The education program communicates business objectives. All training,including software training, is provided in the context of the business process.Training is focused on behavioral changes rather than the mere transfer of facts .

6. A development review plan exists to improve employees skills and to expandtheir capabilities within and outside their current role. Participation in relevantprofessional organizations is encouraged and supported. APICS CPM (CertifiedPurchasing Manager ) CPIM and CIRM certification are encouraged.


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B) An ac t ive employee involvement program exis ts to improve bus iness operations us ing teamwork and the kno wledge and experience of al l employees.

1. People working in the Supply Chain and business processes are empowered totake direct action, make decisions and initiate changes within clearly definedboundaries.

2. A culture exists in which work practices that are counter-productive or non-value

added are continually identified and removed using effective team processesinvolving all stakeholders of the process.3. Continuous improvement teams (e.g. quality teams, barrier removal teams,

redesign teams) are a regular part of the work. Important lessons/learnings fromthese teams are documented and integrated into future operations. Improvementefforts are formally celebrated.

4. An annual Class A assessment (audit) is conducted by employees to evaluatethe specific strengths and weaknesses within their own supply chain processes.This assessment is used to develop an improvement program to focus on theareas that will provide the most benefit to the business.

A7. TQL Process for Continuous Improvement 4 3 2 1 0o o o o o

A) Busin ess-wide com mitment to continuo us impro vement st imulates the el imin ation of non -value-adding activit ies by surfacing , priori t izing, and resolving problems.

B) Management uses performance measurements to drive continuous impro vement. The performance measurements provid e cross-functional a l ignment , suppor t c omm on objec t ives , and teamwork.

C) The TQL process ensures that the business contribution of each functional area includ ing suppliers, meets or exceeds custom er requirements and minim izes process and produ ct variat ion.

1. MRP II principles are understood to be the backbone of operational processes,with TQL as the mechanism for continuously improving the process performance.

2. The Business Team uses time as a key metric to drive continuous improvement.


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Sales and Operations Planning Process

B1. Sales and Operations Planning Process 4 3 2 1 0Corporate tools: LogsPlus, CustServ o o o o o

A ) Sales and Operations Planning (S&OP) is the management process that ensures that the operating plan is realistic and suppor ts the Bus iness Plan. The process

is ongo ing, run by the business un it leader and uti l izes a formal monthly meeting of al l senior function al managers to ensure that necessary decisions are made in a disciplined m anner. The S&OP plan cov ers a t ime horizon o f at least 18 months ( longer as required for decision s on capacity, development,etc.)

1. S&OP is truly a process and not just a meeting. A sequence of steps is laid outand followed and a participant is assigned as a resource to facilitate the meeting.

2. There is a concise written sales and operations planning policy that covers thepurpose, process, accountability and participants in the process.

3. The meeting dates are set well ahead to avoid schedule conflicts. Membersunable to attend the meetings are represented by someone empowered tocommit for that function.

4. A formal agenda is published before the meeting, and minutes of the meeting arecirculated afterwards.

5. While the agenda includes a review of past performance, the primary focus is onfuture plans for at least finance, sales, production, inventory, backlogs,shipments, new products and company performance measurements.

6. All company performance measurements are reviewed. All root causes for deviations are identified with corrective actions and accountability.

7. Strategies for controlling inventory and/or delivery lead times (backlog) arereviewed.

8. A mechanism is in place to ensure that aggregate plans agree with detailedplans. There is consensus from sales, marketing, and operations.

9. Time zones are established as guides for managing changes In the near term,an effort is made to minimize large, expensive changes to gain the benefits of stability. In the mid term, priority changes are expected and valid schedules aremaintained. In the long term, less precision is expected, but direction isestablished.

10. A computer-based modeling process, which permits evaluation of various levelsof demand, supply, production, and inventory, supports S&OP.

11. All participants are prepared. Large or unanticipated changes are communicatedto all functions prior to the meeting to eliminate surprises.

12. Assumptions are reviewed and documented (internal & external). This enhancesunderstanding of the business and is the rationale for future planning.

13. S&OP is a decision-making process. Conflicts are resolved. Decisions aremade, documented, communicated, and implemented.

14. Marketing strategies that result in demand shifts (price increases, early takeprograms, return programs) are reviewed to obtain alignment and support.


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15. Metrics and goals are established for S&OP. They are kept current. Accountability is clear . Critique of the S&OP process and metrics for improvement is ongoing.

16. New product introduction plans are agreed to and schedules approved at everymeeting.

17. Volume projections developed in the S&OP process are the basis of thebusinesss annual profit plan and latest profit projections. When S&OP profitprojections differ from those contained in the profit plan, the differences are either

reconciled or the sales and operations plan and resultant profit projection isupdated.18. Capital deployment and maintenance initiatives are aligned with the S&OP plans.19. S&OP includes a periodic review of the market offering (e.g., customer priority,

SKU rationalization, channel assignments). All customers and products are placed in clearly prioritized classifications.

Service levels for each category are defined, and performance is measured. SKUs channel designation has been established and committed to based

on quadrant analysis, competition, customers requirements, etc.

B) Cross-functional Pre-S&OP processes ensure adequate preparation for the formal S&OP meeting. The process wo rks at the product family level ,developed directly from detailed demand and su pply plans at the SKU level in

LogsPlus.

1. The pre-S&OP process includes all functions affected by the decisions made atS&OP.

2. In pre-S&OP, the plans are reviewed at the SKU level as necessary, withinfamilies, in the units of measure that communicate most effectively. LogsPluscontains linked data for both the sales/marketing and theoperational/manufacturing views of the S&OP plan.

C) Where appropr ia te, the scope i s g lobal , and in tegra ted wi th regional S&OP proc esses. A global S&OP meeting is held month ly to reconcile regional plans and decide global issues.

1. A formal procedure exists that links local and regional sales and operationsplanning processes into a global network to permit planning of inter-regionalproduct movement, resource allocation, etc.

2. A single set of definitions, conventions, and practices (e.g., family definitions,units) is used by all regions as the basis for global planning within a business.

D) Financial /opera t ional in tegra tiona s ingle set of numbers i s used by a l l functio ns, with the operating system s providing the sou rce data used for f inancial planning, reporting and measurement. All f inancial sys tems (bil l ing,accts. payable, cost acctg. , purchasing , receiving, etc.) are fully integrated with all transaction sys tems.

1. The finance function uses the same data on sales, shipments, etc., to measureperformance as other functions use.2. The finance function recognizes limits of traditional performance measurements,

particularly those related to overhead allocation, and understands why thosemethods may produce misleading results.

3. Financial practices that impede improvements that would result from sound just-in-time practices have been identified and are being eliminatedparticularlythose practices related to overhead allocation.


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Demand Planning Process

B2. Forecasting and Demand Planning 4 3 2 1 0(See also Section A4.) Corporate tool: LogsPlus o o o o o

A) A process exis t s for forecas t ing a l l an t ic ipated demands , wi th suff ic ient de tai l and adequate planning horizons to suppo rt Sales & Operations Planning and Master Product ion Schedul ing .

1. Accountability for developing and maintaining the forecast clearly rests with theSales organization. The Demand Planner is formally linked to the Salesorganization. The importance of the demand planning function is evident by itsposition in the organization.

2. The accountable demand planner is highly experienced and understands thebusiness (product, customer base, marketplace, the SKU channels,manufacturing system, etc.). The demand planner is adequately linked to theproduct management and product development processes.

3. Sales and Marketing are responsible for communicating significant demandchanges and market intelligence promptly . There is a well documented process

for providing necessary sales input to the Forecasting Process.4. Responsibility for evaluating and using market intelligence is clearly defined.5. All demands are included in the forecast (e.g., internal use, interplant, inter-

regional).6. Statistical forecasting capabilities in LogsPlus are used where applicable.7. Forecasts are available in Logs Plus at the product/package/customer ship-to-

level. They are reconciled with aggregate forecasts and communicated to thesales force. Forecast SKUs are correctly mapped to operational SKUs for use bythe production planner.

8. Forecast consumption and proration rules are set-up and managed in LogsPlus.9. Assumptions underlying the forecasts are documented, reviewed, and updated

as conditions change.10. Aggregate and detailed forecast measurements support continuousimprovement.

11. A process for continuously monitoring and managing abnormal one-time demandis in place.

B) The forecas t ing process i s des igned to suppor t the mul t i -channel bus iness mode l f r amework .

1. Mass market SKUs are forecast by major customer ship-tos individually, theremainder are forecast aggregate.

2. Smaller, less predictable Special Order SKUs are grouped and forecast in

aggregate.3. Turbo SKU demand is linked directly to the customers planning (mrp) systems.

C) Sales /Market ing unders tands the impact of sa les p lanning and forecas t ing on service levels to custo mers and RONA for the Business. Sales areas are provid ed with feedback on sales forecast accuracy at least monthly follo wing a well-defined process. Sales areas have objectiv es for impro ving forecast accuracy for SKU/customer ship-to combin ations which have a direct impact o n Operations abil i ty to rel iably meet demand.


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B3. Network Design & Analysis 4 3 2 1 0Corporate tool: LogsPlus DRP o o o o o

A) The order f il l ne twork (e.g . , sourc ing , warehouses , order f il l poin ts ) i s reanalyzed periodically. This occur s when there are significant changes in custom er demand, transportation costs, etc. The analysis balances custom er service with the total delivered cost ( including c osts of prod uction co mplexity,and inventor y, as well as direct costs su ch as freight, warehousing , and taxes).

The forecasting proc ess is al igned with the current network design.

1. Mimi models are available for all major product supply networks, and they areupdated regularly (e.g., annually).

2. All applicable costs are available for the models.3. LogsPlus always reflects the current order fill network (production and

distribution).

B4. Distribution Planning & Replenishing 4 3 2 1 0Corporate tool: LogsPlus DRP o o o o o

A ) Distribution Resource Planning (DRP) is used where applicable to manage and automate the replenishment of warehouses or other nodes in the sup ply

ne twork to m inimize to ta l cos t .

1. A concise, written DRP policy defines purpose, process, participants,responsibilities, rules, assumptions, goals, and metrics.

2. A well defined and documented decision and allocation process to handleshortage situations is established and followed.

3. Where a distribution warehouse network is used, LogsPlus is used to handleimplementation of a businesss distribution policies. Approved replenishmentorders are sent automatically from LogsPlus to the appropriate order entrysystem for execution. Lead times reflect actual performance .

4. Distribution requirements are considered and reconciled through S&OP andmaster scheduling processes, and again between the distribution plan and theproduction plan.

5. The distribution network includes all SKUs at each warehouse.6. Forecasts are available and maintained for each SKU in each warehouse.7. Time periods for distribution requirements planning are weeks or shorter.8. DRP is run weekly or more frequently.9. The distribution plan represents what actually is being shipped from all of the

supply sources.10. DRP shipments are scheduled to meet due dates while minimizing costs and

balancing loading and shipping capacity.11. Replenishment plans are shared with carriers in advance to reduce shipping

costs.12. Mode and ship quantities are selected to minimize overall delivered cost.13. The system provides information for transportation planning that meets the needs

of the sites and reduces transportation costs.14. LogsPlus DRP lead times are matched to actuals and reviewed regularly toidentify opportunities for reduction.


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B5. Turbo Replenishment Planning 4 3 2 1 0Corporate tool: LogsPlus DRP o o o o o

A) Par tnerships are be ing developed wi th h igh-volume, repet i t ive-shipment ,strategic cus tomers to imp rove the rel iabil i ty and reduce the costs of s upply.LogsPlus func tionality is us ed for replenishment to Turbo si tes.

1. Turbo customer/product combinations are chosen for high strategic business

value, targeting cases where we can reduce the overall supply chain costs andinventories. This is a joint decision among sales, marketing, and operations.2. Total delivered cost is tracked, and the two companies work together to reduce

it.3. Written goals and plans exist to evaluate the performance of each Turbo channel

offering.4. Turbo replenishment customers share their production and consumption plans

with us to allow more predictable, automated replenishment planning. Thesetime-phased plans have adequate horizons to plan materials. Capacity is linkedto the planning process.

5. Requirements for each SKU at each location are updated weekly or morefrequently.

6. Performance for replenishment is measured and tracked.

7. Electronic commerce is utilized to minimize transaction costs.


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Supply Management Process

B6. Master Production Scheduling 4 3 2 1 0(See also Section E1.) Corporate tool: LogsPlus, Mimi o o o o o

The master production schedule process is co ntinu ally managed in order to ensure a balance of stabil i ty and responsiveness. The master prod uction schedule is maintained in Logs Plus at the SKU level for each produ ction unit . The sum of

these represents th e family-level S&OP prod uction plan.

1. Accountability for maintaining the Master Production Schedule is clear, and theimportance of this effort is reflected in the organization and reporting relationshipof the Master Production Scheduling function.

2. A written Master Production Scheduling policy is followed. The policy includesauthorities and policies for changing the MPS.

3. Master Production Schedulers are highly experienced individuals with a deepunderstanding of the business, the manufacturing process, and themanufacturing planning and control systems.

4. Master Production Schedulers identify issues and provide backgroundinformation for input to the S&OP process.

5. The Master Production Schedule is realistic over the entire S&OP horizon - i.e.,it is capacity and materials feasible.6. Master Production Schedulers react to feedback that identifies problems with

materials or capacity availability and initiate resolution.7. Master Production Schedule changes are measured and reviewed for root cause.8. Planning bills of material, where appropriate (e.g. for aggregated Make-To-Order

supply planning), are used and maintained by the Master Production Schedulers.9. MPS stability is measured and improved. Goals for improvement are established

and achieved.10. Formal policy with clear accountability governs the use safety stock to increase

responsiveness and compensate for variability in supply or demand.11. The bill of material structure supports the forecasting and master scheduling

processes. All MPS levels on the BOM (e.g., scheduled intermediates) are

identified and planned.12. The MPS is in weekly, daily, or smaller periods and is updated at least weekly

over the S&OP planning horizon.13. The MPS horizon is firmed using time fences and firm planned orders.

Guidelines for the length of the horizon include: operational cost of changing theschedule, cumulative lead time, current backlog, and the need for stability of operations.

14. Forecast consumption processes in LogsPlus are used to maintain the forecastbetween forecasting periods.

15. Rough-cut capacity planning, or its equivalent, is used to evaluate the impact oncritical resources of significant master schedule changes. Demonstratedcapacity is compared to required capacity.

16. A weekly Master Production Schedule communications meeting is attended byall using functions.


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B7. Capacity Analysis 4 3 2 1 0Corporate tool: LogsPlus, Mimi, Prism o o o o o

The capacity planning p rocess is b ased on realist ic demon strated prod uction rates for each produ ct in the MPS for a given produ ction u nit . . This is us ed to evaluate the feasibil i ty of m aster schedules and the S&OP. Maintenance and rel iabil i ty efforts are used to increase demonstrated capacity.

1. Planned capacity equals demonstrated plus planned (committed) improvements.2. Manufacturing is accountable for maintaining capacity planning parameters in

Prism, Mimi, LogsPlus, and DCSs and for the validity of capacity plans.3. Cycle times are measured and improved; when proven, these improvements are

reflected in the capacity plan.4. Equipment uptime is improved through predictive maintenance. When proven,

these improvements are reflected in the capacity plan.5. Accurate parameters (e.g., batch cycle times, transition times, sequence rules)

are built into Mimi scheduling models.6. Plant layouts are revised to simplify and improve the physical flow through the

plant.7. The business has considered the use of theory of constraints and/or cycle time

methodologies.


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Materials and Services Planning Process

C1. Planning of External Supply 4 3 2 1 0(See also Section E2.) Corporate tools: LogsPlus, Prism Procurement o o o o o

A) A Suppl ier S tra tegy i s in p lace for a ll acquis i tions - - regardless of purchase classif ication

1. Volume requirements are leveraged across sites and regions to minimize totalacquisition costs, and simplify sourcing plans and maximize supplier performance.

2. Suppliers are categorized and potential tools identified for each category: Strategic Alliance Long-term supply contracts with suppliers who are pre-

qualified, for sourcing larger volume key materials. Relationship attributes:

Business plans, Supplier Long-Range Plans and Suppliers Schedules areprovided.

Asset management through use of supplier-owned, and supplier-managedinventory programs, JIT delivery process, etc.

Incoming inspection and testing eliminated. Supplier certification is usedrather than COAs accompanying shipments.

Electronic transaction path (ERS, EDI, EFT) and electronic transmission of documentation (Advanced Shipping Notification, etc.)

Suppliers run Class A-equivalent processes which can be integrated with our plans and they reliably produce and deliver product to meet our plan in a safemanner.

Partner - Contract suppliers who respond to purchase orders and plannedreleases. Relationships are still leveraged and long-term in nature.Relationship attributes: Concentration on reducing cycle times and streamlining supply process Testing and related quality is supplier responsibility, supplier certification

rather than COAs accompanying shipments. Electronic transaction path (ERS, EDI, EFT) and electronic transmission of

documentation (Advanced Shipping Notification, etc.) Suppliers reliably produce and deliver product to meet our requirements in a

safe manner. Supplier Schedules and Supplier Long-range Plans are shared where

appropriate.Approved Supplier Suppliers for unplanned or custom work, outside testingor where less well- defined specifications for materials or service required exist.One time purchases without established supplier contract.Relationship attributes: Co-development in nature, Toll contractor service, plant trials.

Quality control and testing is critical and is performed by R&H, duringdevelopment process. Contracts/orders are highly specific containing clauses with regard to:

shared risk, safety, product liability and development goals andmeasurements.


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B) A Suppl ier Planning and Schedul ing process provides v is ib i l i ty for Key Materials covering an adequate planning hor izon. Supplier Schedules and Supplier Long-range Plans from our MRPII system are shared regularly/autom atically with our key suppliers.

1. A Supplier selection and evaluation process exists and includes a Supplier Certification Program.

2. Supplier Long-Range Plans that include projections of requirements out 18-

months or longer are shared with suppliers to guarantee adequate capacity tosupport business requirements.3. Future projections that extend beyond the suppliers quoted lead time are based

on Sales & Operations Plan and the long-term Business Plan.4. Key materials are planned and scheduled considering facts, such as, long lead

time and criticality, minimum 13 week (rolling) materials requirements plan isshared with designated suppliers via Supplier Schedules.

5. Key materials are evaluated by site and or region for such processes as: SOI/Consignment supplier owns and manages inventory SMI/VSP (Vendor Stocking program) Integrated Supply - consolidated purchase of materials Consortium buying, shared storage asset costs.

6. Suppliers agree to plan material and capacity to meet the requirements within

the specifications stated: OEM, manufacturers numbers, generic descriptions.7. Appropriate storage environment and receiving techniques are planned for each

material involved.

C) Strong, benef ic ial par tnership re lat ionships are es tabli shed up f ront and cont inue over t ime with the world class supp liers, to facil i tate improvements in q uali ty, cost ,and overall responsiv eness. Our purchase volum es are leveraged acros s sites and regions to achieve improvements in co st , quali ty, and overall responsiveness.

1. Strategic Alliance and Partner suppliers have been educated in the Rohm andHaas Supply Chain management process, MRP II, Maintenance Reliability,SOI/SMI, JIT. They also understand the scheduling process using the R&Hproduction plan and scheduled shipments.

2. Suppliers understand the principal behind "silence is approval" and agree tonotify the Production and Maintenance Planner/Scheduler, in advance, if a duedate will be missed.

3. Methods and goals that determine accountability for supplier deliveryperformance have been established; e.g., delivery fence, commitment zones, on-time delivery.

4. The number of suppliers is reduced and rationalized; this is a stated businessobjective.

5. Inbound transportation costs and reliability are managed and are being improvedwherever possible.

6. A Supplier Rating System is used to trigger improvements in overall supplier performance. Metrics are agreed to between the supplier and R&H. Metrics are

linked to and promote best practices and continuous improvement in accordancewith Purchasing Policies and Practices. Site Procurement staff input non-conformance issues to global/regional buyers: a formal feedback processensures that they receive corrective action responses from suppliers.

7. A supplier certification process allows reduction/elimination of incominginspection and count and weight verification.


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8. A clear policy statement defines the overall roles and responsibilities of theProduction and Maintenance Planner/Schedulers, as well as theBuyers/Strategists and determines at which points each becomes involved in theprocess. The policy covers all communications between the Supplier, thebusiness and the R&H Corporate Supply Chain organization. Site buyers supportthe use of globally-leveraged or regionally-leveraged key suppliers.

9. Point of use delivery is maximized, avoiding centralized storage where possible.

D) Elec t ronic Commerce is used to lower the cos t of doing bus iness wi th suppliers.

C2. Planning of Internal Supply 4 3 2 1 0Corporate tools: LogsPlus o o o o o

A) Time-phased requi rements for monomers and o ther c r i tica l raw mater ials a re driven by the Master Produc tion Schedule at the receiving si te.

1. All internal suppliers are functioning in Turbo channel; planned demands oninternal suppliers are automatically communicated through LogsPlus and Prism,and internal suppliers make and deliver based on the plan. There are no ordersand no manual work by consuming plants to communicate routine demand

figures.2. Production and shipping schedules within the frozen time fence are generated

from LogsPlus.

B) Supp ly ing and consuming bus ines s un i ts j o in t ly m anage t he supp ly cha in fo r best cos t/performance; their roles and respons ibil i t ies are clear.

1. The supplier business/site owns and manages the availability of the suppliedmaterial. The customer business/site trusts the supplier to meet their needs.

2. Both the internal supplier and user operate under the silence is approvalprinciple; both are responsible for providing feedback on schedule changes or problems.

3. In-transit inventory is tracked (and considered in the replenishment plans) andany delays are reported real-time into the system.

4. Lead times are established with all internal suppliers.5. Accounting and other transaction processing activities are minimized.6. A single set of quantity and quality are used and trusted by both the user and

internal supplier; no COAs are sent.


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C3. Transportation and Warehouse Planning 4 3 2 1 0Corporate tools: Being defined/developed o o o o o

A ) Th e s am e demand, supply, and inventory data used in the S&OP process is also used to plan and co ntract transportat ion and warehousing services across the order f i l l ne twork .

1. Demand forecast data is available at key customer ship-to level to guide logisticsplanning and contracting.

2. Our supplier rating system is used to align the carriers service and capabilitieswith the requirements of our strategic customers.

3. Best practices are benchmarked against chemical and other industries.

B) The focus of logis t ics cont rac ts i s on par tner ing wi th prefer red transport/warehousing providers for b est overall cost and perform ance.

1. Carrier and warehouse strategies are developed by Logistics staff in partnershipwith all business teams so that we can leverage volumes across businesses.

2. The number of warehouses and carriers is continually reduced. Single sourcingwith Partner providers, where practical, is a stated strategy for achieving bestcost/performance.

3. Carrier selection is based on the total (short-term/longer-term) lane networkcosts/services, rather than as the lowest rate for individual lanes.

4. Partner carriers participate with Rohm and Haas and our strategic customers inthe continuous improvement of the delivery/transportation process.

5. We work with our partners carriers to identify back-haul opportunities (includingpossible coordination with inbound shipments of supplies and materials).

C) Information is shared (preferably electronically) with partner carriers to leverage predictable sh ipments.

1. Our preferred carriers have access to planned shipments in advance2. Carrier performance and responsiveness is tracked and continually improves.


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Order Management Process

D1. Order Entry / Processing 4 3 2 1 0Corporate tools: OPIM, COM, Order Pad, Supply Line o o o o o

A) A mul t i -channel process fac i l i ta tes re l iab le , e ff ic ient order process ing

1. Customers have been categorized into priority classes, with defined service

policies. Sales and CSRs fully understand and implement these policies.2. Demand for Turbo product-customer combinations is handled without need for intervention by the CSR.

3. Orders for Mass Market (make to stock) SKUs are accepted without delay,without the need for checking inventory.

4. Lead time policies and/or CSR schedule visibility enables reliable order promising for special (Make to Order) products.

5. Lead times for MTS and MTO items are clearly defined, and are respected byCSRs, sales, and customers.

B) Order ent ry and promis ing processes focus on cus tomer sat i s fac tion , and are al igned with the master produc tion scheduling s ystem and inventory data.

1. Business policies regarding order processing (e.g., minimum order quantity andlead-time policies) are documented and used.

2. Orders are processed on a timely basis.3. Original customer requested delivery date/time and our promised delivery

date/time are recorded in the system and tracked.4. Any potentially late shipments are tracked, and customers are notified in

advance.5. Customer orders requested but not accepted are tracked as lost sales.6. Individual customer orders are automatically assigned to the location defined in

the sourcing network.

D2. Billing and Collecting4 3 2 1 0o o o o o

1. Invoicing errors are less than 2%. Invoices are eliminated where possible.2. Auto-faxing, consolidated billing, EDI, EFT, and automatic cash application are

used where appropriate to minimize transaction costs.3. A process is in place to correct and improve timeliness of when invoices are sent

to customers.4. Shipping transaction entries drive the updating of the billing system at the same

time as the inventory system.5. Risk assessment and credit management process does not interfere with the

processing of orders or flow of material to strategic customers.


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Production Processes

E1. Plant Scheduling 4 3 2 1 0(See also Section B6.) Corporate tools: Mimi Scheduling o o o o o

A) The deta iled near- te rm plant schedule i s managed as an in tegral par t of the overall Master Production Schedule Process. The process balances schedule stabil i ty with responsiveness. The multi-channel framework is used to enable greater stability.

1. LogsPlus master production schedule requirements are sequenced using Mimiby the appropriate plant scheduler.

2. Changes to the detailed production schedule are quickly communicated to allappropriate personnel.

3. Missed schedules are communicated daily in order to reschedule downstreamprocesses and meet Master Production Schedule due dates.

4. Time fences for frozen periods are respected.5. If significant time delays are involved, Quality Control is scheduled as an

operation to support Master Production Schedule due dates.

B) Mimi i s used to l ink the LogsPlus p lans to Pr ism schedules and to opt imize shop floor schedules approp riately within the planning t im e fences.

1. Accountability for maintaining the detailed near-term production schedules isclear, and the method of measurements and the goals have been agreed upon.

2. There are no off-line tools or parallel work processes in use. The actual shopfloor schedule is taken directly from Mimi scheduling.

3. The detailed production schedule accounts for all plant activity (e.g., preventivemaintenance, equipment cleanouts, etc.) as appropriate and represents arealistic plan.

4. Predictive/preventive maintenance is coordinated with production schedules for

maximum asset utilization.

E2. MRP, Procurement and Paying 4 3 2 1 0(See also Section C1.) Corporate tools: Prism Planning and Procurement o o o o o

A) A materia l requi rements p lanning process der ived from the product ion p lans and schedules generates produ ction/procur ement recom mendations automatically.

1. Material planners understand the product, the manufacturing process, and themanufacturing planning and control system.

2. Everyone, including planners, production supervisors, and buyers, operatesunder the silence is approval principle and each is responsible to providefeedback on schedule problems that cannot be resolved.

3. Planners and Purchasing personnel are responsible for maintaining, periodicallyreviewing, and analyzing the accuracy and validity of all appropriate planningparameters, such as order quantities or lot sizes, lead times, and safety stocks,and price breakpoints.

4. The firm planned order capability of the procurement system is used, only whennecessary to override the suggested plan.

5. Planning, production, logistics and purchasing hold formal review meetings.6. Material requirements planning time periods are weekly or smaller to provide time

for appropriate resolution of priorities.


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7. Planners are trained in and use the following system capabilities: using (at least) single-level pegging to identify the source of demand effectively checking raw material / supplies availability to determine the

feasibility of releasing an order or schedule altering the bill of material for an individual order in order to handle temporary

substitutions using standard logic to generate action/exception messages including need

to release orders, need to reschedule orders, need to cancel orders, change

due dates, or release past due orders.

8. All action/exception messages are prioritized, and identified problems are actedupon, when appropriate, before the next material requirements planning run.

9. A bottom up, re-planning process is used to reconcile problems and handleexception messages.

B) Procurement processes at the si te level are automated through Prism Procurement , requi r ing m inimal manual in tervent ion .

1. Procurement parameters to support Prism Planning are accurate and single-sourced in Prism, and are routinely audited for accuracy.

2. There is an ongoing effort to reduce the number of different raw materials (RM

standardization). Generic chemical names rather than Trade Marked names areused in BOM. (moved here from previous section)

3. Prism Planning is run as often as necessary to maintain valid supplier schedules. Time horizon should be longer than the longest lead time material.Normally, weekly processing is adequate, but daily processing or an on-linecapability may be required.

4. Procurement releases are conveyed to suppliers automatically by Prism, withoutmanual intervention, whenever possible.

5. Supplier Scheduling processes are used where appropriate (see section below);for items not on a supplier schedule, at least 95% of purchase orders arereleased with full lead time.

6. Procurement cycle times (including lead times) are being shortened to reduceinventory and enhance flexibility.\

7. All necessary items, such as materials, inspection procedures, and processinstructions, are managed through formal product change procedures.

8. Planning and control techniques are used to manage the phase-in and phase-outof materials whose sourcing, quality, etc. are being changed.

9. An anticipated delay reporting process is used to maintain receipt due datevalidity.

10. Manufacturing is accountable for real time, accurate receiving data input.

C) The Accou nts Payable process for materials/services is automated and streamlined.

1. Accounts payable, purchasing, and receiving are integrated to material receipt

transactions. Material receipt non conformances are managed to


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D) Procurement activities at the plant si te are al igned with the supply strategy defined in Section C1. For many i tems, Supplier Schedules provide near-term visibil i ty of future demand for key i tems directly to the supplier.

1. The Supplier Schedule displays scheduled receipts (e.g. releases) and plannedorders over the planning horizon for all materials that a Strategic Alliance andPartner suppliers provide.

2. Time periods on Supplier Schedule are weeks or smaller for at least the first 13

weeks.3. The supplier schedulers and buyers meet with planners as frequently as requiredto maintain a valid material schedule.

4. Scheduled receipts cover the suppliers negotiated lead times and plannedorders beyond the lead time give the supplier visibility of future needs.

5. Commitment zones representing firm purchases, material reservations, andcapacity planning are established and clearly identified in the Supplier Schedule.

6. Supplier Schedules are communicated to suppliers at least weekly.Communication is automatic and electronic wherever possible.

7. For requirements further out than the supplier schedule provides, supplier long-range plans are used to provide suppliers with monthly requirements out throughthe S&OP horizon.

8. Delivery or order quantities of purchased materials are managed by EOQ

techniques where appropriate, resulting in adequate inventories with minimumtotal acquisition cost.

E) For multi-business plant si tes, an active network of business (area) and functional staff representatives is in place to drive continuous impro vement through excellent internal custom er relat ionships.

1. Cross-functional teams/network are in place representing all involved areas andmeet on a regular basis.

2. Specific goals and objectives are understood and supported by all.3. Roles and responsibilities are defined for all participants in the process.4. A formal shared risk process is used to agree to put items into inventory, set

inventory levels, link to entities, set maximum/minimum levels, etc.

E3. Conversion 4 3 2 1 0Corporate tool: Prism o o o o o

A) Performance agains t the scheduled output and product ion cos ts i s t racked continuo usly by all operating staff .

1. Production management is accountable to meet operation due dates.2. Information from Prism on key cost drivers, by SKU, is used to help focus

improvement efforts.3. Operating staff at all levels depend upon Prism as a source of performance and

cost measures.

4. Cost standards are aligned with S&OP plans and adjusted whenever significantprocess changes are made.

B) Root causes of poor per formance are captured on the shop f loor and dr ive active, focused TQL imp rovement. Process capabil i t ies are tracked and impro ved to ensure that product can be rel iably sup plied to the scheduled demand.


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1. A preventive maintenance program is in place, and program compliance ismeasured.

2. Asset utilization (AU and OAU) is measured and continuously improved.3. Cycle times are measured and continuously improved as appropriate.4. Employees at all levels and in all areas are involved in eliminating non-value-

added work.5. A formal and active program exists to increase yield by reducing off-grade and

rework.

6. The time and effort required for product transitions are systematically reduced toenable more flexibility and to shorten minimum production campaigns.

7. Good housekeeping (orderliness) is pursued as a high priority by everyone.8. There is an active goal to simplify and reduce the number of required

transactions and reports.

C) Tol l C on v er si on All tol l op erations have been evaluated against standard c ri teria to decide how each will be integrated into our m anufacturing u nits . The level of integration of to l l opera tions i s based on opt imiz ing cos t , informat ion f low, and product iv i ty.The ult imate goal is to have toll operations that op erate as fully integrated manufacturing op erations wh erever applicable. In the toll selection process,

the abil i ty to be integrated with Supply Chain proc esses is on an equal par with quality and safety criteria.

E4. Production and Quality Reporting 4 3 2 1 0Corporate tools: Prism, QCS, ER Labs o o o o o

A) Timel iness of da ta ent ry in to the sys tems for both qu anti t ies and qual i ty i s adequate so as not to delay meeting supply c omm itments.

1. Accountability and responsibility for the timeliness of data entry is clear.

B) Time for qual i ty tes t ing i s minimized, and u l t imate ly el iminated (SPC). There i s

a single set of quanti ty and quali ty num bers within the system, used and trusted by all functions with in the plant .

1. Production retains responsibility for analysis-pending material until it is classifiedready for shipment.

2. Production takes responsibility for non-shippable stock; it does not occupyneeded storage space or interfere with shipping processes.

C) Specif icat ions are c lear, and there i s no spec wi th in a spec .


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Delivery Processes

F1. Shipping/Delivery Management 4 3 2 1 0 Corporate tools: OPIM, MCMS, others being defined/developed o o o o o

A) The loading/shipping process is streamlined and automated for optimum cos t- effectiveness. Shipping systems are l inked approp riately to prod uction,purchasing, order proc essing, customers, and carriers, so everyone can plan.

1. The appropriate level of forecasts and schedules for operational, tactical andstrategic planning is shared with carriers and our shipping operations on a timelybasis to ensure adequate capacity and to maximize operational efficiencies. TheMCMS tool or EDI is used whenever possible to automate this sharing of information.

2. The system confirms scheduled pick-up date and time with carriers.3. Employees have ready access to the computers and systems they need.4. Timeliness of shipment reporting is sufficient to meet supply commitments.

Accountability and responsibility for the timeliness of data entry is clear.5. The following best-practice concepts and systems have been evaluated for their

benefit on local loading/shipping processes: Carriers provide certified bulk trucks (and we dont re-inspect) whenever

practical. Carriers provide in-transit tracking of all equipment. Primary carriers arrange backups when they cant provide service. Inventory is automatically assignedcorrectlyby the system at the time

chosen by the business. Advanced shipping notices are sent automatically to customers if needed. The system auto-faxes COAs to customers when required. Computer systems manage railcar fleets and track returned containers as

needed. Pallet recycling programs which include customers and suppliers, are being

exploited. The new inventory locator tool and re-warehousing tools are used where

appropriate to plan efficient storage and movement of inventory. The Queuing and Query system is used to print documents only when

needed for shipping. The CGII Labeling system is used to print hazard and shipment labels,

including export marks and customer-specific label information. Scanned bar codes are used where appropriate to provide real-time reporting

of new production, storage locations, and shipments.


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Data Quality

G1. Single Set of Numbers 4 3 2 1 0o o o o o

Everyone in the business uses the nu mbers that are formally managed within the Rohm and Haas MRPII systems fo r al l levels of planning, execution, and reporting.Responsib il i ty and accou ntabil i ty for developing and maintaining accuracy of the data in al l the MRPII systems is clearly defined in a writ ten policy.

G2. Inventory Record Accuracy 4 3 2 1 0o o o o o

There is an inventory contro l process in place that provides accurate raw material ,intermediate, f inished go ods and packagin g inventory d ata required in the planning processes.

Inventory Record Accuracy =# of inventory record accurate within tolerance

Total # inventory records counted> 95%

The inventory record accuracy process and cycle counting are used toidentify and correct the root causes of inventory errors and measureinventory accuracy. The cycle counting process has replaced the periodicphysical inventory.

Inventory accuracy must be measured for all locations of inventory includingdistribution centers and SOI/SMI customer locations.

G3. Bill of Material Accuracy 4 3 2 1 0o o o o o

The planning and co ntrol process is suppo rted by a properly structured, accurate,and integrated set of bil ls of m aterial (formu las, recipes) and related data. Bil l of material accur acy is in th e 98-100 percent range.

Bill of Material Accuracy = # of correct single level bill of material recordsTotal #of single level bills of material auditied

> 98%

Prism is the single source for the BOM and allows for easy and accuratebusiness planning and production planning/execution.

There is a bill of material accuracy audit process in place to ensureaccuracy of the BOM vs. demonstrated usage and to ensure that the sameBOM resides in Prism, LogsPlus, Mimi, and DCSs.

Bills of material are properly structured, represent the way products aremanufactured, and support the planning and control processes. The bills arereviewed to make them flatter.

The primary use of the bill of material is for planning material and reportingconsumption. Costing considerations do not interfere with materialsplanning.

All functions that use the bills of materials participate in their structuring.


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G4. Capacity Parameter Accuracy 4 3 2 1 0o o o o o

The capacity parameters m ust be accu rate to the level of d etail required for planning and scheduling. Accu racy of capacity parameters should be >95%.

Capacity Parameters Accuracy =# of correct capacity parameters

Total #of capacity parameters auditied> 95%

Capacity parameters are accurate and single-sourced in Prism ProductionModels, and are uploaded (preferably electronically) to MIMI and LogsPlus.Capacity Parameters are routinely audited for accuracy.

The capacity parameters must reflect the realistic demonstrated productionrate for the product on the production unit.

G5. Product Change Control Process 4 3 2 1 0o o o o o

A writ ten product or pro cess change policy is followed to ensure consistent and t imely product changes.


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Performance Measurements

Root cause analysis is perform ed in al l areas below to identify and co rrect deviations from planned performanc e. Performance measurements include goals for improvements.

H1. Customer Service - On Time Delivery 4 3 2 1 0o o o o o

A) External Customer Del ivery: A bus iness must have 95% min on t ime de l ivery for customer orders.

On Time Delivery =# of orders delivered within a promised delivery window

Total # of orders> 95%

Promised delivery window is that which is agreed to by the customer An objective for on-time delivery to customer request date exists and

performance against the objective is measured.

B ) D is t ri b ut io n D el iv er y :

On Time Delivery =# of committed shipments delivered within a delivery window

Total # of committed shipments > 95%

C) Internal Auto-Replenishment:

On Time Delivery =# of committed shipments delivered within a delivery window

Total # of committed shipments> 95%

H2. Sales Forecast Accuracy (Family) 4 3 2 1 0o o o o o

Forecast Accuracy (Family) =Volume forecast - actual volume

Volume forecast

Forecast error at the regional family level should be within a defined targetlevel (Typically 5-10%).

Review monthly at S&OP along with cumulative error to detect bias

H3. Sales Forecast Accuracy (SKU) 4 3 2 1 0o o o o o

Forecast Accuracy (SKU) =Volume forecast - actual volume

Volume forecast

Computed for each actively managed forecast SKUs and communicated toresponsible Sales Representative for continuous improvement.

Reviewed monthly along with cumulative error to detect bias Also computed and reviewed for a group of actively managed forecast SKUs

within a sales territory. For example a Sales Manager may target about80% of the actively managed SKUs in each Sales Territory to be accurate towithin 20%.


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H4. Production Performance to Plan (Family) 4 3 2 1 0o o o o o

Production Plan Performance = Actual Mon thly VolumePlanned Monthly Volume

= 98 102%

Performance above and below plan should be tracked to expose bias andtrends.

Reasons for approved plan adjustments must be documented and tracked

H5. Performance to Master Production Schedule 4 3 2 1 0o o o o o

Weekly MPS Performance =# SKUs completed within quantity and timing tolerance

# SKUs planned within the frozen LogsPlus planning period> 95%

The basis of the above calculation is made up of plans for MTS SKUs andreal orders for MTO SKUs.

Performance is measured weekly and summarized for the monthly S&OPreview.

Daily MPS Performance =# SKUs completed within quantity and timing tolerance

# SKUs scheduled within the frozen Mimi schedule period> 95%

MPS Stability = 1 -# of changes in frozen period

# of scheduled or pla nned items

The business must measure the stability of both the daily schedule and theweekly plan at the SKU level of detail as two separate metrics.

There is no fixed Class A performance goal for schedule stability. Changesto the MPS are measured and continuously improved.

Reasons for approved weekly plan or daily schedule changes must bedocumented and tracked.

H6. Supplier Delivery Performance 4 3 2 1 0o o o o o

Supplier delivery to scheduled receipt =# of shipments delivered in promised delivery window

total # of scheduled shipments> 95%

H7. Cycle Time Performance 4 3 2 1 0o o o o o

Cycle t imes for al l supply chain pro cesses are measured and contin ually improv ed.

H8. Quality Performance 4 3 2 1 0o o o o o

Quality objectives are established, performance is m easured, and goals are achieved for pro duction and supplier defects.

H9. Financial Performance 4 3 2 1 0o o o o o

Financial perform ance (revenue, cost, and pro fit) vs. set objectives is m easured mon thly and com mun icated broadly in the organization. The busin ess team has confidence in the validity of the f inancial data and uses i t for bus iness decisions within S&OP.


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Appendix A Additional Metrics to be Considered

B1. Sales and Operations Planning Process

#SKUs added / #SKUs discontinued over time % Customers classified in prioritized categories % of SKUs , volume and inventory in make-to-stock and make-to-order

channels Total Supply Chain cost/unit

B2. Forecasting and Demand Planning

sum of the absolute value of the deviations of individual SKU error / totalforecast

% of SKUs above or below a target accuracy level

B4. Distribution Planning & Replenishing

DRP network completeness: 98% of SKUs are sourced correctly Bill of distributions > 98%

B5. Turbo Replenishment Planning

Inventory versus agreed target range Actual consumption versus plan % shipments pre-planned/expedited Transactional costs removed

B6. Master Production Scheduling

B7. Capacity Analysis

C1. Planning of External Supply

Number of suppliers Supplier performance ratings/improvement

C2. Planning of Internal Supply

Cost of premium shipments

C3. Transportation and Warehouse Planning


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D1. Order Entry/Processing

% Perfect Orders % responses to customers in < x minutes Order entry errors as % of orders Pricing errors as % of orders Number of orders awaiting processing % reduction in manual processing of orders Cycle time from order receipt to release to plant/warehouse call to order ratio % of orders received electronically % of orders processed hands-free # business policy exceptions granted

D2. Billing and Collecting

Fewer than 2% invoicing errors % of invoices handled by automatic cash application % of strategic customer orders referred to credit during order processing.

ratio of shipments made to invoices generated % of invoices automatically released (system audited)

E1. Plant Scheduling

Orders (i.e., Prism schedules) are released with full material and capacityavailability at least 95% of the time

E2. MRP, Procurement and Paying

Number of action/exception messages for each planner Volume/causes of rescheduled demands % payments made electronically

E3. Conversion

Percent unplanned maintenance downtime

E4. Production and Quality Reporting

Slow moving and Off-Grade (SMOG) inventory reductions

F1. Shipping/Delivery Management

% of carriers linked to our order systems % of carriers providing EDI delivery data


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Appendix B Class A Auditing Process

The MRP II Class A auditing process is valuable throughout the implementation process. The 3 different audit types(Directional, Pre-Audit and Final) have many similarities. They differ mainly in degree of reviewing actual operationalprocesses vs. planned / under development processes. Directional audits look and feel more like education andconsulting than they feel like actual audits. Pre-audits feel more like audits and are primarily to gauge readinessand timing for Class A. The final audit is a true audit (similar to an ISO audit).

The directional audit assumes some processes are in place, some are being developed and some are only planned.The directional audit is designed to accommodate varying degrees of implementation. The pre-audit on the other hand assumes that all the processes are in place and in addition to looking at these processes, there is additionalemphasis on the steps that need to be taken to get the critical metrics for the processes to Class A status. Abusiness should be very close to starting their three continuous months run for Class A status when the pre-audit isperformed. The final audit assumes the business has Class A processes achieving Class A performance.

Type Pre-Requisite Objective Timing ProcessDirectional MRP II

Implementation plan

in placeSome processesimplemented andworking

- Evaluate the project resourcesand direction vs the Class A

implementation project goals- Provide assistance, guidance to

remaining processimplementations

- Assess if already implementedprocesses are Class A inpractice

During MRP IIImplementation. Once /

Quarter or as needed

Varies by Processstatus (Types A, B,

C) to accommodatevarying degrees of implementation

Pre-Audit All the processesare in place andworking on Class Ametric performance

- Review issues, remaining Class A gaps for each process.

- Identify the few steps that needfocus to achieve Class A metricperformance.

Business is close (2-3months?) from Final

Audit

Assessment of Process Operationsin the work place(All Type A)

Final Audit Business has Class A processes inplace and achievingClass A metricperformance

- Assess and provide rating vs.Class A

- Provide suggestions for improvements, gaps to focus on

Initial audit and follow-upaudit after threecontinuous months of Class A status.

Assessment of Process Operationsin the work place(All Type A)

The general flow of all the audits is the same: The detailed process is outlined below.

1. A kick-off session for all the participants to explain what will be going on and to go over some rules andassumptions,

2. Individual process reviews: The details vary based on the stage of implementation. Stage A: Processes that are implemented: this would include a detailed review of the process and work

practices with the people who operate the process - in their work place. It would also examine process metricsand action plans designed to move the process to Class A performance levels.

Stage B: Processes that are under development : review with the full process development team or teamleader to review progress, action plans, issues, and timetables. May include for major process components thathave been put in place a detailed review of the process and work practices with the people who operate theprocess - in their work place.

Stage C: Process developments not started yet: review the timetable and plans and resource requirements.

3. A final review session with all the participants to review the results of the audit and to re-establish or re-committo the Class A target date.


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4. A close-out meeting with the local executive sponsor to review staffing, resources, commitment and timing One person from the site (usually the Class A project manager), and one person from the Supply Chain supportteam (Supply Chain Center or business support team) would normally attend all the sessions with the auditor to actas silent observers. No more than 3 external people should participate in the audit.

Confidentiality is a key component of the individual process audits. Process operators need to be very open with theauditor.


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DIRECTIONAL AUDIT

0) Preparation Establish the audit schedule Define and invite all will be affected, included in the audit Preliminarily define expectations (time required, general process, outcomes). Full audit if all plant

processes typically would require 2 or more days. For processes that are planned or under development (Stage B or C), distribute current project plans to

external participants For processes that are implemented (Stage A), assemble and distribute prior the following documentation

packet: Few paragraphs discussing how the process was implemented vs. the business template (what

local options were implemented, etc.) Process definition documents (relevant ISO documents, procedures, flowcharts, etc.) Responsibility Matrix (whos responsible for which tasks and who their back ups are) Latest process metrics performance

1) Kick-off sessionWho: External participants (MRP II consultant, Supply Chain support, other);

Local project team, all who will be talked to in the audit

Where: Appropriate meeting room

Objectives Explain the process and what will be going on Explain, discuss the expected outcomes Set, review the work schedule Discuss the rules:

Confidentiality: all participants need to be open and honest about how things really work and whatthe issues. There will be no ramifications of the honesty

Process: Presentation and Q & A

2) Individual process reviews: The details vary based on the stage of implementation.

-Stage A: Processes that are implemented: Detailed review of the work practices with the people who operatethe process - in their work place/

Who: External participants (MRP II consultant, Supply Chain support, other);Local site coordinator (optional), those who operate the process (to doers)

Where: in the workplace of those who operate the process

Objectives Assess if work completed is truly Class A in practice Provide assistance, guidance if there are gaps, issues etc. in the work

Process: Answer questions about how they operate the process such as:

Tell me what you do What are the inputs and outputs of your tasks in the process? What do you do with these inputs? What are the procedures the define what you do? What are the metrics you track and use? Who: MRP II Consultants to those who operate the process


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Review current process metrics and action plans designed to move the process to Class A performancelevels. Provide guidance, assistance where possible. Who: MRP II consultant, Supply Chain support

personnel Assess work practice vs. the MRP II principles and the Class A checklist. Highlight any potential issues,

gaps in the project plans. Who: MRP II consultant, Supply Chain support personnel

-Stage B: Processes that are under development: This is a mixture of the Stage A and C process. UseStage A process with process components that are operating and in place. Use Stage C process for components being implemented or yet to do.

-Stage C: Process developments not started yet: review the timetable and plans and resource requirements.

Who: External participants (MRP II consultant, Supply Chain support, other);Local site coordinator, local process owner, others as desired


Objectives Review the timetable and plans and resource requirements Assess if work completed is Class A in practice Provide assistance, guidance to upcoming implementation tasks outcomes

Process: Explain the project status and plans Who: Local process owner or site coordinator Describe the process is that will be put in place. The level of detail should match that of the process

templates flowchart (A flowchart walk through could be used). Who: Local process owner Check for understanding of the Class A checklist. Are there any questions, concerns, unclear items?

Who: All with the MRP II consultant Highlight any potential issues, gaps in the project plans Who: MRP II consultant, Supply Chain support

personnel)

3) Final review session.Who: External participants (MRP II consultant, Supply Chain support, other);

Local project team, other participants as desiredWhere: Appropriate meeting room

Objectives Review the results of the audit. There could be many gaps, issues highlighted during the assessment. Is

the implementation on track vs. the critical path milestones? Re establish, re commit to the Class A target date Agree on action items as needed

Process: Presentation and Q & A

4) Close-out meeting to review staffing, resources, commitment and timingWho: External participants (MRP II consultant, Supply Chain support, other);

Local site coordinator, local executive sponsor


Objectives Review staffing, resources. Discuss adjusting if necessary. Review commitment and timing. Discuss adjusting if necessary. Agree on action items as needed

Process: Discussion and Q & A


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PRE-AUDIT

0) Preparation Establish the audit schedule Define and invite all will be affected, included in the audit Preliminarily define expectations (time required, general process, outcomes) Full audit if all plant

processes typically would require ?? . Assemble and distribute prior the following documentation packet: Few paragraphs discussing how the process was implemented vs. the business template (what

local options were implemented, etc.) Process definition documents (relevant ISO documents, procedures, flowcharts, etc.) Responsibility Matrix (whos responsible for which tasks and who their back ups are) Latest process metrics performance

1) Kick-off sessionWho: External participants (MRP II consultant, Supply Chain support, other);

Local project team, all who will be talked to in the auditWhere: Appropriate meeting room

Objectives Explain the process and what will be going on Explain, discuss the expected outcomes Set, review the work schedule Discuss the rules:

Confidentiality: all participants need to be open and honest about how things really work

class a check list

Documents