BASF’s SCM Learning

System

APICS Triangle Chapter

May 12, 2009
Alan L. Milliken CFPIM CIRM CSCP CPF
Business Process Education Manager
BASF Corporation
 Alan L. Milliken CFPIM CIRM CSCP CPF

• 20+ years at major manufacturing sites working in Production, Logistics,

Process & Quality Control, Industrial Engineering, Training, and Scheduling
• 14+ years as a Supply Chain Consultant and APICS Instructor including two
years in Mexico City helping BASF Mexicana improve their supply chain
• Identified by an independent consulting firm as one of three APICS members
who best answer the question, “What is a Supply Chain Manager?”
• Served as an SME (Subject Matter Expert) on the team that developed the new
Certified Supply Chain Professional (CSCP) program.
• Served as an SME on the team that developed the new Certified Forecasting
Professional (CFP) for the Institute of Business Forecasting (IBF)
• Engineering Degree from Auburn University and MBA from Clemson
University
 BASF

• Founded in 1865 as Badische Anilin und Soda Fabric

• The world’s leading chemical company with sales of
approximately $80B in 2008
Value-Based Management
(Business Perspective)
Start Here

Shareholders Shareholders
receive High ROI provide Capital

E A
U
3. Create Value for Your 1. Invest in Adding Value

D
Shareholders to Products & Services
L

Your

D
Firm
A

E
V D

And receive
Value in
2. Deliver Value to Your Return
Customers
Value-Based Management
(Learning & Development Perspective)

Start Here

You & You and Your Firm

Shareholders provide Capital for
receive High ROI Education & Training

E A
U
3. You Create Value for 1. You Invest in Adding Value to

D
Your Firm’s Yourself through Education,
L

Shareholders YOU Training & Experience

D
A

E
V D
And receive
Value in
Return
2. You Deliver Value to
Your Firm
Value-Based Management Approach

Value can be created by:

Profit
increasing Profit
and/or

reducing capital employed

(e.g., inventories, receivables)
Reducing
capital
employed
Source: Kurt Bock – Chief Financial Officer – BASF Group

The company’s definition of success should define the

contents of the learning system.
Where Does Value Come From?

Triad of Operational Excellence

TECHNOLOGY PROCESS

PEOPLE

Which one controls how much “value” the other two generate?
Value Drivers and Associated Metrics
Drive Performance
Analysis of a “Value Driver” in
Supply Chain

Forecasting
Improved Service, Less
Inventory, Lower Costs

YES – Marketing,Sales,
Operations, SC, Finance

% Error e.g. [(Fcst-

Actual)/Actual]

Process Improvements,
Education & Training,
Better Systems, etc..

Logistics Cost,
Production Cost,
Delivery Performance,
Inventories

SAP R3, Global

Reporting System, GIIC

Source: BASF Group Value Based Management Handbook

Functional Strategies Driven by Competitive
Priorities Help to Prioritize Learning:

Market & External Identification of Customers, Products,

Competition, Socioeconomic Environment
Environment Analyses

Corporate Overall missions & goals of the Organization,

Recognition of Distinctive Competencies.
Strategy
Must develop the
supply chain
Future Direction Competitive expertise
(Global Strategy, Priorities(Cost, required to plan
& execute
New Products & Quality, Time,
strategy.
Services, etc…) Price, etc..) Capabilities
• current
Functional Area Strategies • needed
Finance • plans
Marketing
Operations
Supply Chain
others
Source: Operations Management, Fifth Edition, Krajewski & Ritzman
Learning Priorities must be Linked to the
Business Model

CIM: Trader-Transactional Supplier

Product: Commodity Bulk Chemical
Competitive Priorities: Price & On-Time Delivery
Supply Chain Value Drivers:
Supply Chain Capabilities:
SC Competencies Required:
- Supply Chain Costs
- Delivery Reliability
- Inventory Investment
- Accurate Forecasting
- Production Cost Minimization
- Inventory Optimization
- Demand Planning
- Supply Planning
- Inventory Management
 BASF’s Vision

Form the best

team in the Help our
industry customers to be
more successful

Earn a premium
Ensure sustainable
on our cost
development
of capital

None of these business & functional strategies can be achieved

without competent employees who have been provided the necessary
capabilities (behavior, knowledge, & skills) to succeed.
 Learning System – Virtual Organization

SAP
SAP Training Business
Human
Logistics/SCM & Support Integration
Resources

• Logistics/SCM HR •Supply Chain • *BSUG Teams • *BSUG Teams

Operations Council (e.g. Matls. (e.g. Matls.
Mgmt.) Mgmt.)
• N. A. Learning CoE • BPO Consulting
Team •Software •Application
• Compensation &
Applications Development
Performance Mgmt. • MM Education &
Training Team Team
Services Training Team

Virtual Team

The Logistics-Supply Chain Community both provides input to help

guide these services and receives outputs from these services.
 Identifying and Defining Key
Personal & Technical Competencies
Adding Value through Individual Competency

The “Best Team” can be built by fostering the use of personal and
professional competencies. Competencies describe the personal
behavior, skills, and knowledge of a person. Competencies
differentiate individual performance and contribution to the team.
There are two types of competencies:
Refer to capabilities based Describe capabilities in a
on personality, personal specific area of knowledge
trait, and values. (e.g. Supply Chain
Management) and are based
on education & experience.

Success

Competencies enable employees to create value!

 Examples of Personal Competencies

Improve your ability to guide and

inspire employees to meet their
maximum potential and the ability to
work on a team.

Lead to better utilization of resources, Improve your ability to develop and

improved decision making, more maintain collaborative working
creativity, and the ability to manage relationships (inside & outside the firm) and
change. express facts and ideas in a convincing
manner.
Sample Definition of a Personal Competency

Once the list of personal competencies is developed, a detailed definition of

each is required. For example many supply chain roles require competency
in “Analytical Thinking.”
Analytical Thinking is the ability to identify key issues and
relationships, patterns and connections buried in a mass of
data. A person in a job role requiring this competency should
demonstrate:
• the ability to break down problems and identify basic
relationships
• see inter-relationships in complex information
• do complex analyses including “what-if” and “if-then”
scenarios
Harvard Mentor Management Program (HMMP)
is used to support Global/Personal
Competencies.
HPO 2006 Required
BASF 2015 Training Available
Competencies

Value Based Management

(Learning Portal)

Earn a premium on our cost of capital Business and Financial Acumen Financial Essentials (HMMP)

Marketing Essentials (HMMP)

Focusing on your customer (HMMP)

Help our customers to be more

Customer Focus Marketing Essentials (HMMP)
successful
Marketing & Sales Academy
(to be launched in 2nd quarter)

Leading a team (HMMP)

Leading Employees to
Form the best team in industry Keeping teams on target (HMMP)
Success/Teamworking

Working with a virtual team (HMMP)

Environmental, Safety and Health The Journey to EH&S Excellence (to be

Ensure sustainable development
Orientation launched in 3rd quarter)
Examples of SCM Technical Competencies

Information Technology
 ERP System
 Advanced Systems
 PC Skills

SCM Competencies
General Skills  Demand Planning
 Continuous Improvement  Supply Planning
 Project Management  Execution & Control
 Contract Management  Inventory Management
 Data Analysis  Distribution & Transportation
 Foreign Trade

Technical Competencies describe capabilities in a specific functional area and are

based on education and experience. Each operational function must define those
Technical Competencies needed to successfully implement their strategies.
Define Levels of Technical Competency

Once Technical Competencies are identified, definitions of progressive

levels are needed to define specific job requirements.
Competency:Business Applications Knowledge – ERP System
Level 1: Beginning
• Completed ERP Overview Training for SCM
• Know how and where to find and use ERP tip sheets
• Can use ERP online help functions
• Understand basic system operations and/or commands within ERP System
• Can modify a user profile
• Know how to enter master data in your area of responsibility
• Understand how others are impacted by your inputs into the ERP System
• Can enter a Help desk ticket for the ERP System
Developing the Competency Curriculum
 Major Components of the Technical
Competency Curriculum
APICS
Certified in Production & Inventory Management (CPIM) is a BASF global standard for supply
chain planners (e.g. Master Schedulers, Demand Planners, Material Planners, etc..). The five
CPIM modules are available via the on-line Supply Chain Academy, through local APICS
chapters, and through self-study. Certified Supply Chain Professional (CSCP) is recommended
for those who already achieved CPIM Certification or persons in supply chain functions other
than production & inventory management who meet the eligibility requirements.

SAP R3 Training
SAP specific concepts, processes and transactions training is available via the SAP Training
website.

Supply Chain Academy (SCA)

SCA is an on-line education & training tool used at BASF. It contains approximately 200 on-line
courses including the APICS CPIM body-of-knowledge , Physical Logistics, and International
Trade.

In-House Classes & Webinars

BASF offers in-house classes that focus on supply chain management at BASF in SAP R3.
 List of Approved External Providers

Learning Curriculum by Technical Competency

Technical Competency Recommended Courses/Seminars Duration Cost Delivery Method Exam Vendor/Source

Demand Planning & Budgeting Certified Professional Forecaster (CPF) 2-3 Days $1,300 Classroom Yes IBF
APICS CPIM - Master Planning of Resources Various Various CR, On-Line, SS Yes APICS
Budgeting Self-Paced None Internet Yes Harvard Business School
Finance Essentials Self-Paced None Internet Yes Harvard Business School

Dist. Network Strategy & Design Logistics Optimization (Dist/Transp/Log Modeling) 3 Days $1,730 Classroom No Logistics Institute @ GaTech

Distribution Processes Warehousing Short Course 5 Days $2,780 Classroom No Logistics Institute @ GaTech
World Class Warehousing & Materials Management 12 Mths. Access $2,800 Internet Optional Logistics Institute @ GaTech
Third Party Logistics 2 Days $1,260 Classroom No Logistics Institute @ GaTech
Managing Warehouse Operations 2 Days $700 Classroom No WERC
Maximizing Warehouse Space 2 Days $700 Classroom No WERC
Using Metrics to Achieve Results 2 Days $700 Classroom No WERC
Warehousing Management 6 Mths. Access $750 Internet Optional Institute of Logistics Mgmt.

Foreign Trade (Import/Export) Third Party Logistics 2 Days $1,260 Classroom No Logistics Institute @ GaTech
Global Logistics Management 6 Mths. Access $800 Internet Optional Institute of Logistics Mgmt.
Export Management 6 Mths. Access $750 Internet Optional Institute of Logistics Mgmt.
Import Management 6 Mths. Access $650 Internet Optional Institute of Logistics Mgmt.
Hazardous Materials Compliance 6 Mths. Access $750 Internet Optional Institute of Logistics Mgmt.
Law I (Rail and Motor) 6 Mths. Access $750 Internet Optional Institute of Logistics Mgmt.
Law II (Ocean, Air, Intermodal) 6 Mths. Access $650 Internet Optional Institute of Logistics Mgmt.
International Transport No Limit $205 Study Guide Optional American Society of Tran & Log
10 Courses - Import, Export, Compliance 10 weeks each $1,000 internet Yes World Trade Institute
17 Seminars - Import, Export, Compliance 2 Days Each $1,000 Classroom Yes World Trade Institute
APICS CPIM House of Knowledge

Strategic
Management of Resources
Philosophies Strategies Targets

Product Demand Material Plan

Execution
Master Detailed
&
Planning Scheduling
Internal Resource Capacity Plan Control
of &
of
Resources Planning
Operations
External Resource Supplier Plan

BASICS of SUPPLY CHAIN MANAGEMENT

 APICS CSCP Body of Knowledge

Four domains of knowledge

– Supply Chain Management Fundamentals
– Building Competitive Operations Planning and
Logistics
– Managing Customer and Supplier Relationships
– Using Information Technology to Enable Supply Chain
Management

CPIM’s primary focus is on “internal operational excellence”

while CSCP’s focus is on the entire supply chain (supplier’s
supplier to customer’s customer) with a global emphasis.
SAP Training & Documentation

• Training is
organized by
process/role (e.g.
Prod. Plng, WM,
TM, C. S., etc…)
• Step-by-Step
includes SAP
screenprints
• Training &
Documentation
linked directly to
SAP Transactions
• Company experts
maintain concepts &
reference docs
 Sample of Supply Chain Academy
(SCA) Courses
Sales & Operations Planning

 SCA Sales and Operations Planning Concepts (MFG107) Self-Study .5 Hour

– The sales and operations planning process is impacted by various elements of the business
environment, integrates the multiple plans of a business, and pr ovides direction for subsequent more
detailed and near-term planning. This course explores the concepts that impact the sales and operations
planning process and the ways that the process can be adapted to fit various environments.

 SCA Sales and Operations Planning Process (MFG108) Self-Study 1 Hour

– This Online Self-Study course explores the five primary steps in the sales and operations planning
process. It also discusses the roles and responsibilities of individuals involved in each step.

 SCA Developing and Validating the Production Plan (MFG201) Self-Study 1 Hour
– The production plan is a key output of the sales and operations planning process that sets product family
production volumes for all subsequent priority planning processes. This course explores the
development and validation of the production plan and the measur ement of the performance of the
production planning process.

S&OP Basic Concepts

 Sample of In-House Class Agenda

Basic-Intermediate SAP R3 Materials Management Workshop - Agenda

Course Name Course Description

Breakfast & Introductions

SC Overview with ERP Integration Supply Chain Management at BASF enabled by SAP R3
Wheel of Jeopardy Game

Setting up Articles in SAP Who-What-When-How for creating articles in SAP R3.

SAP Material Masters Emphasis on key planning factors and how to determine what they should be.
Material Master Word Puzzle

Breakfast
BOM's, Recipes, Resources in SAP Emphasis on proper setup and how used in planning processes.
Use of MD04/MD06 Proper setup and use of Stock Status, Orders, and Exception Messaging in SAP R3
Planning Purchases (RM's & imports) Managing PO's via SAP and the import system.

Process Orders & Prod Schdlg. Use of Repetitive Manufacturing & Discrete Batch functionality in SAP R3.
ATP and Allocation in SAP How to setup and use availability checks in SAP R3.
Materials Management Word Scramble

Breakfast
Reporting & Analyses Using SAP Demo of helpful reports and analyses and hands-on practice by participants.
Support of Transportation Planning Monitoring product availability to support transportation schedule.
Using Product Groups How to select, setup and use Product Groups to streamline planning & manage aggregates.

All Sessions Questions & Answers, Interactive Exercises, Comprehensive Assessment

 Sample Webinar Topics

• Supply Chain Event Management (SCEM)

• When and how to use Re-order Points

• Basics of Inventory Management

• Use of Transfer Orders in TMS

• How to determine Safety Stocks

• How to set Inventory Targets

Assessments of Learning – Key Points

• All courses should include post-assessment (e.g. review quiz,

simulation of knowledge, etc..).
• Major courses (e.g. >4 hours in duration) should also include
pre-assessment to help in determining focus areas and periodic
reviews to reinforce learning throughout the course.
• Thresholds to pass internal assessments (not external
certifications) should be set relatively low to motivate and
reward participation.
• Assessment results should always be kept confidential and
only the highest score should be stored when multiple attempts
are required.
 Participant Evaluations are Used to
Improve the Program

- I learned how to check

the status of a Purchase 1. How to establish an
Ordes through CBIS ATP, Reports, MB5B, Inventory Strategy for
List three things you
transaction. - I learned etc, the main is the each article; 2. How to Material Master
learned from the how is managed the importance to re- Tips on how to optimized configure SAP for each Definitions / MB5T
workshop? demand in SAP. - I schedule the past due in the use of SAP, ATP article; 3. How to (Stock in Transit) /
interpretation, analysis, learned how to adjust SAP, to keep it running functionality, Creation of improve planning Supply Chain Event
ability in SAP parameters better when well groups of materials process Manager (SCEM)

Would you recommend

this course to a Yes, of course Yes, of course To all material planers Yes Yes Yes
colleague?

It is very important to
This is an importan
know the tools we daily Because there are a lot
Because you can course for all the It was very informative
use for our work, in this of contents that can be
improve and It´s logical to know the material planners, it for Planners with
case SAP; we have to place fast in the day to
Why or Why Not? complement your process and share the gives you a better responsibility for
know in detail how it day routine and make
knwoledge of MM best practices. approach in how to maintaining proper
works and how it can remarkable
module in SAP control de operation and system settings.
help us to reach our improvements.
inventories
objectives, for better
Implementing a Competency-Based
Process

“Learning is not compulsory... neither is survival.”

W. Edwards Deming (1900 - 1993)
 Prioritize Competencies by
Position/Role

In order to determine what education & training an employee needs,

Competencies must be prioritized by job. Review of existing job
descriptions, review of current objectives for the position, and surveys of
experts, incumbents, and leaders can be used to prioritize Competencies.

Position/Role Personal Competencies Technical Competencies

Master 1 Analytical Thinking 1 Business Applications Knowledge (ERP)

Production 2 Customer Focus 2 Manufacturing Planning & Controlling
Scheduler 3 Business & Financial Acumen 3 Demand Planning & Budgeting
4 Work Management 4 Inventory Management
5 Communication & Interpersonal Understanding 5 Manufacturing Process Knowledge
6 Team Leadership and Collaboration 6 Product Knowledge
7 BASF Business Knowledge
8 Business Applications Knowledge (PC)
Note: Some competencies are company specific (e.g. Product Knowledge, Manufacturing
Knowledge, Internal Business Knowledge, etc..) and education & training must be developed in-
house.
 Sample Curriculum based on Role &
Competencies

North American Technical Competency Curriculum by Role

Course Cost
Function Job/Role Global Competency Mandatory Required Courses Delivery Hours (USD)

Supply Chain Demand Planner Supply Chain Fundamentals YES APICS Basics of SCM (SCA APX10100) SS On-Line 27.5 $460.00
or APICS BSCM In-House Class IL On-Line 20 $120.00

Supply Chain Plng. (Generic) YES APICS MPR (SCA APX10200) SS On-Line 15.75 $460.00
or APICS MPR In-House Class IL On-Line 20 $120.00

SC Plng. In SAP R3 at BASF YES Basics of SCM in SAP R3 at BASF Classroom 20 $500.00
**NO Advanced SCM in SAP R3 at BASF Classroom 20 $500.00

Forecasting Demand YES DP-SOP In-house Course IL On-Line 20 None

SAP APO Application Trng. YES Provided by Accelerator Implementation TBD TBD

Inventory Management YES APICS Basics of SCM (SCA APX10100) SS On-Line 27.5 $460.00
or APICS BSCM In-House Class IL On-Line 20 $120.00

**Note: The Advanced Class should be mandatory for Supply Planners.

Curriculum includes progression from fundamentals to advanced and

integrates use of systems.
 Evaluate Individual Needs & Develop
Plans
Self Evaluation:
Master Production Scheduler: Self-Evaluation Form

Desired My Current Proficiency Level

Position Technical Competencies Proficiency 1 2 3 Diff.

Master Production Scheduler Business Applications Knowledge (ERP) 3

Manufacturing Planning & Controlling 3
Demand Planning & Budgeting 2
Inventory Management 2
Manufacturing Process Knowledge 2
Product Knowledge 3
BASF Business Knowledge 2
Business Applications Knowledge (PC) 3

plus

Performance & Development

Review with Your Leader

= a Plan
 Example of an Individual Plan

EDUCATION & TRAINING PLAN

EMPLOYEE NAME: Sample Plan YEAR: 2008

COURSE TARGET FOR

TECHNICAL COMPETENCY COURSE DESCRIPTION DURATION COST($) COMPLETION

Business Applications (ERP) Advanced Matl. Mgmt. Course 24 Hours N/A June, 2008

Manufacturing Planning & Controlling APICS CPIM MPR 24 Hours $300 Sept., 2008
APICS CPIM MPR Exam 2 Hours $100 Oct., 2008

COURSE TARGET FOR

PERSONAL COMPETENCY COURSE DESCRIPTION DURATION COST($) COMPLETION

Customer Focus Focusing on Your Customer 2 Hours N/A April, 2008

Teamwork/Teambuilding Working with a Virtual Team 2 Hours N/A Nov., 2008

Grand Totals= 54 Hours $400

DO HANDOUT EXERCISE
Practice Exercise: Response at BASF

Directions: Assign each Competency to only one of the two positions.

Competencies SC/Logistics Mgr. Master Prod. Schdlr.

Analytical Thinking XXXXX

Customer Focus XXXXX

Strategic Thinking XXXXX

Financial Acumen XXXXX

Work Management XXXXX

Leadership XXXXX

Change Management XXXXX

Teamwork XXXXX

ERP System XXXXX

Network Strategy XXXXX

Manufacturing Processes XXXXX

Continuous Improvement XXXXX

Distribution Processes XXXXX

BASF Bus. Knowledge XXXXX

 Key Performance Indicators (KPIs)

KPI’s can be used to measure participation and confirmation

of learning. Examples include:

• No. of Education & Training Hours Taken per Year

• No. & Percent of Employees Participating

• Number of Exams Passed

• Certifications Received
 Current Status at BASF

• 175 employees have participated in on-line CPIM classes

in 2008/09.

• 38 employees participating in an on-line CSCP class.

• 150 employees participated in 2.5 Day SAP-MM

Workshop

• 106 CPIM’s and 15 CSCP’s Globally

• 100 CPIM Exams taken in 2008 (28 outside US)

• 224 APICS Members via Enterprise Membership

• 100+ SCA Users taking 400+ Hours per Year

Summary of the Learning System

Identify & Define Global Identify & Define Technical

(Personal) Competencies (SCM) Competencies

Competitive Priorities & Prioritize Competencies Develop Curriculum by

Value Drivers by Position Competency

Assess Individual Needs

based on Position

Develop Individual
Education & Training
Plans

Monitor Progress and

Provide Feedback
 Alan’s Perspective on Education’s ROI

Alan has just completed a presentation to the Group Vice-president and

his staff regarding the need for supply chain education in their business.

Director’s Question to Alan:

“Alan, what if we educate & train all our supply chain employees and
they leave.”

Alan’s Response to Director:

“More importantly, what if we do not educate and train them and they stay?

GVP’s Response:
“Alan, all of my units will be participating in the program.”
 Final Thought

or FIRM

“Our progress as a nation can be no swifter than our progress in

education. The human mind is our fundamental resource.”

John Fitzgerald Kennedy

Practice Exercise: Competencies by Job

Directions: Assign each Competency to only one of the two positions.

Competencies SC/Logistics Mgr. Master Prod. Schdlr.

SC/Logistics Mgr. – the Analytical Thinking

person responsible for Customer Focus
planning, organizing,
and controlling supply Strategic Thinking

chain/logistics Financial Acumen

activities.
Work Management
Master Production Leadership
Scheduler – the person
Change Management
charged with
establishing, managing, Teamwork
reviewing, and ERP System
maintaining a master
Network Strategy
schedule.
Manufacturing Processes

Continuous Improvement

Distribution Processes

BASF Bus. Knowledge