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, ³What 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 receive High ROI Shareholders provide Capital

E
3. Create Value for Your Shareholders 1. Invest in Adding Value to Products & Services

Your Firm

2. Deliver Value to Your Customers

And receive Value in Return

Value-Based Management
(Learning & Development Perspective)
Start Here You & Shareholders receive High ROI You and Your Firm provide Capital for Education & Training

E
3. You Create Value for Your Firm¶s Shareholders 1. You Invest in Adding Value to Yourself through Education, Training & Experience

YOU

And receive Value in Return 2. You Deliver Value to Your Firm

Value-Based Management Approach
Value can be created by:
increasing Profit and/or reducing capital employed (e.g., inventories, receivables)

Profit

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 ³value´ the other two generate?

Value Drivers and Associated Metrics Drive Performance

Analysis of a ³Value Driver´ in Supply Chain
Forecasting
Improved Service, Less Inventory, Lower Costs YES ± Marketing,Sales, Operations, SC, Finance % Error e.g. [(FcstActual)/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 Environment Analyses Corporate Strategy
Identification of Customers, Products, Competition, Socioeconomic Environment

Overall missions & goals of the Organization, Recognition of Distinctive Competencies.

Future Direction (Global Strategy, New Products & Services, etc«)

Competitive Priorities(Cost, Quality, Time, Price, etc..)

Functional Area Strategies Finance Marketing Operations Supply Chain others
Source: Operations Management, Fifth Edition, Krajewski & Ritzman

Capabilities ‡ current ‡ needed ‡ plans

Must develop the supply chain expertise required to plan & execute strategy.

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 Costs - Delivery Reliability - Inventory Investment Supply Chain Capabilities: - Accurate Forecasting - Production Cost Minimization - Inventory Optimization SC Competencies Required: - Demand Planning - Supply Planning - Inventory Management

Supply Chain Value Drivers:

BASF¶s Vision

Form the best team in the industry
Earn a premium on our cost of capital

Help our customers to be more successful

Ensure sustainable development

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 Business Integration
‡ *BSUG Teams (e.g. Matls. Mgmt.) ‡Application Development Team

Human Resources
‡ Logistics/SCM HR Operations ‡ N. A. Learning CoE ‡ Compensation & Performance Mgmt. Services

Logistics/SCM
‡Supply Chain Council ‡ BPO Consulting Team ‡ MM Education & Training Team

SAP Training & Support
‡ *BSUG Teams (e.g. Matls. Mgmt.) ‡Software Applications 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 ³Best 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 on personality, personal trait, and values. Describe capabilities in a specific area of knowledge (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, improved decision making, more creativity, and the ability to manage change.

Improve your ability to develop and maintain collaborative working relationships (inside & outside the firm) and 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 ³Analytical 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 ³what-if´ and ³if-then´ scenarios

Harvard Mentor Management Program (HMMP) is used to support Global/Personal Competencies.
BASF 2015 HPO 2006 Required Competencies Training Available
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 successful Customer Focus Marketing Essentials (HMMP) Marketing & Sales Academy (to be launched in 2nd quarter)

Leading a team (HMMP) Form the best team in industry Leading Employees to Success/Teamworking Keeping teams on target (HMMP) Working with a virtual team (HMMP) Environmental, Safety and Health Orientation The Journey to EH&S Excellence (to be launched in 3rd quarter)

Ensure sustainable development

Examples of SCM Technical Competencies
Information Technology  ERP System  Advanced Systems  PC Skills

SCM Competencies General Skills  Continuous Improvement  Project Management  Contract Management  Data Analysis  Demand Planning  Supply Planning  Execution & Control  Inventory Management  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 Appro ved E xternal Providers
Learning Curriculum by Technical Competency Technical Competency
Demand Planning & Budgeting

Recommended Courses/Seminars
Certified Professional Forecaster (CPF) APICS CPIM - Master Planning of Resources Budgeting Finance Essentials Logistics Optimization (Dist/Transp/Log Modeling) Warehousing Short Course World Class Warehousing & Materials Management Third Party Logistics Managing Warehouse Operations Maximizing Warehouse Space Using Metrics to Achieve Results Warehousing Management Third Party Logistics Global Logistics Management Export Management Import Management Hazardous Materials Compliance Law I (Rail and Motor) Law II (Ocean, Air, Intermodal) International Transport 10 Courses - Import, Export, Compliance 17 Seminars - Import, Export, Compliance

Duration
2-3 Days Various Self-Paced Self-Paced 3 Days 5 Days 12 Mths. Access 2 Days 2 Days 2 Days 2 Days 6 Mths. Access 2 Days 6 Mths. Access 6 Mths. Access 6 Mths. Access 6 Mths. Access 6 Mths. Access 6 Mths. Access No Limit 10 weeks each 2 Days Each

Cost
$1,300 Various None None $1,730 $2,780 $2,800 $1,260 $700 $700 $700 $750 $1,260 $800 $750 $650 $750 $750 $650 $205 $1,000 $1,000

Delivery Method
Classroom CR, On-Line, SS Internet Internet Classroom Classroom Internet Classroom Classroom Classroom Classroom Internet Classroom Internet Internet Internet Internet Internet Internet Study Guide internet Classroom

Exam
Yes Yes Yes Yes No No Optional No No No No Optional

Vendor/Source
IBF APICS Harvard Business School Harvard Business School Logistics Institute @ GaTech Logistics Institute @ GaTech Logistics Institute @ GaTech Logistics Institute @ GaTech WERC WERC WERC Institute of Logistics Mgmt.

Dist. Network Strategy & Design Distribution Processes

Foreign Trade (Import/Export)

No Logistics Institute @ GaTech Optional Institute of Logistics Mgmt. Optional Institute of Logistics Mgmt. Optional Institute of Logistics Mgmt. Optional Institute of Logistics Mgmt. Optional Institute of Logistics Mgmt. Optional Institute of Logistics Mgmt. Optional American Society of Tran & Log Yes World Trade Institute Yes World Trade Institute

APICS CPIM House of Knowledge

Strategic Management of Resources
Philosophies
Product Demand

Strategies
Material Plan

Targets

Master Planning of Resources

Internal Resource

Detailed Scheduling & Planning

Capacity Plan

External Resource

Supplier Plan

Execution & Control of Operations

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 ³internal 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
(MFG107) Self-Study .5 Hour  SCA Sales and Operations Planning Concepts ± The sales and operations planning process is impacted by various elements of the business environment, integrates the multiple plans of a business, and provides 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. (MFG108) Self-Study 1 Hour  SCA Sales and Operations Planning Process ± 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.

(MFG201) Self-Study 1 Hour  SCA Developing and Validating the Production Plan ± 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 measurement of the performance of the production planning process.

S&OP Basic Concepts

Sample of In-House Class Agenda
as -In e med a e SA Cou se ame a e als anagemen Wo s op - Agenda Cou se es p on

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Suppl C a n

anagemen a

AS ena led

SA

W o-W a -W en-Ho fo ea ng a les n SA mp as s on e plann ng fa o s and o o de e m ne a

e s ould e

mp as s on p ope se up and o used n plann ng p o esses ope se up and use of S o S a us de s and ep on essag ng n SA anag ng 's a SA and e mpo s s em se of epe Ho e anufa u ng s ee o se up and use a a la l a fun onal e s n SA n SA

emo of elpful epo s and anal ses and ands-on p a e pa pan s on o ng p odu a a la l o suppo anspo a on s edule o sele se up and use odu oups o s eaml ne plann ng manage agg ega es Ques ons Ans e s In e a e e ses Comp e ens e Assessmen

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 Im prove the Program
- I learned how to check the status of a Purchase Ordes through CBIS transaction. - I learned how is managed the demand in SAP. - I learned how to adjust parameters better when 1. How to establish an Inventory Strategy for each article; 2. How to Tips on how to optimized configure SAP for each article; 3. How to the use of SAP, ATP functionality, Creation of improve planning process groups of materials

List three things you learned from the workshop?
interpretation, analysis, ability in SAP

ATP, Reports, MB5B, etc, the main is the importance to reschedule the past due in SAP, to keep it running well

Material Master Definitions / MB5T (Stock in Transit) / Supply Chain Event Manager (SCEM)

Would you recommend Yes, of course this course to a colleague?

Yes, of course

To all material planers

Yes

Yes

Yes

Why or Why Not?

It is very important to know the tools we daily use for our work, in this case SAP; we have to know in detail how it works and how it can help us to reach our objectives, for better

Because you can improve and complement your knwoledge of MM module in SAP

It´s logical to know the process and share the best practices.

This is an importan course for all the material planners, it gives you a better approach in how to control de operation and inventories

Because there are a lot of contents that can be place fast in the day to day routine and make remarkable improvements.

It was very informative for Planners with responsibility for maintaining proper system settings.

Implementing a Competency-Based Process

³Learning 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
Master Production Scheduler 1 2 3 4 5 6

Person l Competencies
Analytical Thinking 1 Customer Focus 2 Business & Financial Acumen 3 Work Management 4 Communication & Interpersonal Understanding 5 Team Leadership and Collaboration 6 7 8

ec nic l Competencies
Business Applications Knowledge (ERP) Manufacturing Planning & Controlling Demand Planning & Budgeting Inventory Management Manufacturing Process Knowledge Product Knowledge BASF Business Knowledge 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 inhouse.

S a m p le C u rric u lu m b a s e d o n R o le & C o m p e te n c ie s
North American Technical Competency Curriculum by Role Function Job/Role Global Competency Mandatory YES Required Courses APICS Basics of SCM (SCA APX10100) or APICS BSCM In-House Class APICS MPR (SCA APX10200) or APICS MPR In-House Class Basics of SCM in SAP R3 at BASF Advanced SCM in SAP R3 at BASF DP-SOP In-house Course Provided by Accelerator Implementation APICS Basics of SCM (SCA APX10100) or APICS BSCM In-House Class Delivery SS On-Line IL On-Line SS On-Line IL On-Line Classroom Classroom IL On-Line TBD SS On-Line IL On-Line Course Hours 27.5 20 15.75 20 20 20 20 TBD 27.5 20 $460.00 $120.00 Cost (USD) $460.00 $120.00 $460.00 $120.00 $500.00 $500.00 None

Supply Chain Demand Planner Supply Chain Fundamentals

Supply Chain Plng. (Generic)

YES

SC Plng. In SAP R3 at BASF

YES **NO YES YES YES

Forecasting Demand SAP APO Application Trng. Inventory Management

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

Curriculum includes progression from fundamentals to advanced and integrates use of systems.

I D
Self Evaluation:
M r r r

N

&

r
D r R r M C rr r D

C M M D M M C

C

plus Performance & Development Review with Your Leader = a Plan

Example of an Individual Plan
EDUCATION & TRAINING PLAN
EM L EE NAME: Samp e Plan EAR: 2008

TECHNICAL COMPETENCY us ness Applica ions (ERP) Manu actu ing Planning & Controlling

COURSE DESCRIPTION Ad anced Ma l. Mgm . Cou se APICS CPIM MPR APICS CPIM MPR Exam

COURSE TARGET FOR DURATION COST($) COMPLETION 24 Hou s 24 Hours 2 Hours N/A $300 $100 June 2008 Sept., 2008 ct., 2008

PERSONAL COMPETENCY Customer Focus eam ork/Teambuilding

COURSE DESCRIPTION Focusing on Your Customer Working with a Virtual Team

COURSE TARGET FOR DURATION COST($) COMPLETION 2 Hours 2 Hours N/A N/A April, 2008 Nov., 2008

rand Totals=

54 Hours

$400

DO HANDOUT EXERCISE

Practice Exercise: Response at BASF
Directions: Assign each Competency to only one of the two positions. Competencies Analytical Thinking Customer Focus Strategic Thinking Financial Acumen Work Management Leadership Change Management Teamwork ERP System Network Strategy Manufacturing Processes Continuous Improvement Distribution Processes BASF Bus. Knowledge XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX SC/Logistics Mgr. Master Prod. Schdlr. XXXXX 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 (Personal) Competencies

Identify & Define Technical (SCM) Competencies

Competitive Priorities & Value Drivers

Prioritize Competencies by Position

Develop Curriculum by 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 uestion to Alan:

³Alan, what if we educate & train all our supply chain employees and they leave.´ Alan¶s Response to Director: ³More importantly, what if we do not educate and train them and they stay? GVP¶s Response: ³Alan, all of my units will be participating in the program.´

Final Thought

or FIRM ³Our 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 ob
Directions: Assign each Competency to only one of the two positions. Competencies SC/Logistics Mgr. Master Prod. Schdlr.

SC/Logistics Mgr. ± the person responsible for planning, organizing, and controlling supply chain/logistics activities. Master Production Scheduler ± the person charged with establishing, managing, reviewing, and maintaining a master schedule.

Analytical Thinking Customer Focus Strategic Thinking Financial Acumen Work Management Leadership Change Management Teamwork ERP System Network Strategy Manufacturing Processes Continuous Improvement Distribution Processes BASF Bus. Knowledge

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