1. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Supply Chain 2013Supply Chain 2013

2. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
This presentation will clearly show some of the issues with
settings in the Material Master (MM02) in SAP. The volatility
Avantor is experiencing with requirements dropping in and
out, the short falls in materials to produce products for
customers in a timely manner. This will also include the
suggestions of what changes can be made to bring the
Supply Chain process back in to line to allow for a smooth
flow from customer order entry to delivery of products
through the Supply Chain.
Items will include:
•Definitions of Supply Chain terms
•Example of the Supply Chain Settings
•Analysis of MRP Codes 502-601
•Analysis of Display of Purchase requisitions (ME5A)
•Suggested Changes

3. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
MRP Definitions:MRP Definitions:
Planning Time Fence (PTF) (several examples)
You can protect the master plan from any automatic changes to master
schedule items in the near future by using a planning time fence. During the
planning run, the system makes no automatic changes to order proposals
within the planning time fence (which is specifically determined for every
master schedule item). The system always dynamically calculates the end date
of the planning time fence starting from the planning date.
http://help.sap.com/saphelp_40b/helpdata/en/92/bf029544bd11d182b40000e829fbfe/content.htm
Time Fences for Items (PTF)
You can define planning, demand, and release time fence days for an item
based on the cumulative manufacturing lead time, cumulative total lead time,
total lead time, or a user-defined value.
http://docs.oracle.com/cd/A60725_05/html/comnls/us/mrp/tfover.htm
Planning Time Fence (PTF):
a period of time in the planning horizon that is used for planning purposes.
MRP runs will create planned orders just outside of the planning time fence. If
an order was placed within the planning time fence it would adversely effect
component schedules, capacity plans and other orders.
http://www.supplychaindefinitions.com/planning.htm

4. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
MRP Definitions: continuedMRP Definitions: continued
Lead Time: (LT)
The time between the need for goods and the receipt of the goods. This
time can be made up of order prep time, manufacturing time, transportation
time, receiving time and quality check time.
Lead Time: (LT)
The total lead time required to obtain a purchased item. Included here are
order preparation and release time; supplier lead time; transportation time;
and receiving, inspection, and put-away time.
APICS.com
Total Replenishment Lead Time: (TRLT)
The time required for procuring raw materials and producing assemblies or
finished products. The total replenishment lead time is calculated by
adding all planned delivery times or the times required for in-plant
production of the longest production process.
http://help.sap.com/saphelp_scm50/helpdata/EN/35/26beecafab52b9e10000009b38f974/content.htm

5. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
MRP Definitions: continuedMRP Definitions: continued
Safety Stock: (SSL)
(also called buffer stock) is a term used by logisticians to
describe a level of extra stock that is maintained to mitigate
risk of stockouts (shortfall in raw material or packaging) due
to uncertainties in supply and demand. Adequate safety
stock levels permit business operations to proceed according
to their plans.Safety stock is held when there is uncertainty
in the demand level or lead time for the product; it serves as
an insurance against stockouts.

6. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Slide 7 shows Potassium Chloride procured from (DSW).
The original settings of the Planning Time Fence were set at 10 days.
(Planning Time Fences for all materials have been set to 10 or 20 days)
The lead time is 126 days to receive material from DSW. While discussing this issue
with the team about the fulfillment of customer orders for part number X, we
discovered the Total Replenishment time was set at 40 days (MM02). This is the
data that is driving the dates on the sales orders for customer delivery.
In review with a PDT of 10 days, a customer order can drop in on the 11th
day with a
delivery date set by the system at 40 days. With a lead time of 126 days Avantor will
always be late by an average of 86 days or more. This is based on the settings in the
material master (MM02). (now updated)
Updating the material master to reflect accurate Planning Time Fences, accurate
Lead Times, and accurate Total Replenishment lead times will provide customer
services with accurate information for the customer. The supply chain can now work
to a more proactive approach instead of being in a total reactive mode.
Customer Orders will now be set outside the Planning Time Fence with a delivery
date of 140 days from receipt of order. (This does not mean a customer order cannot
be moved in then utilize Safety Stock to satisfy the order) This will drive the more
accurate information to satisfy Avantor customers needs.

7. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Original Setup of PN X
0 10 40 126
Planning
Time Fence
(PDT)
Total
Replenishment
Lead time
Updated Setup of PN X
0 126 140
PDT/Lead
Time
Total
Replenishment
Example of Lead times:

8. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Analysis MRP Codes :
601 Packaging (295 Part numbers, codes, SKU’s)
502 Pre Pack materials ( 696 Part numbers, codes, SKU’s)
Weekly the MD07 screens are exported to an excel format to review the replenishment needs.
The weekly numbers show a schedule attainment for both codes between 80 and 92%.
Developing a long term procurement strategy that allows for a steady flow of material based on
the MRP settings in SAP is the process being utilized. Working towards a just in time
philosophy.
The previous discussion in this presentation shows why this analysis takes 6 to 8 hours. The
fact the process of supply will always be behind demand, because the times in SAP are setup
to fail. One of the common themes are repeat orders for the same items, as an example items
set as make to order. These make to order part numbers range with a cost of $7 to $25 dollars
each. None of these items have a Safety Stock Level set, with this example Avantor is
spending more money placing repetitive orders over and over just in 2013. Attached to the
email with this presentation is the analysis out of MD07 for MRP codes 601/502. All red listed
codes are at 91.5% schedule attainment, the yellow highlighted at 91.5% attainment. (2/17/13)
Achieving 100% is not realistic but with setting the data in the material master accurately will
greatly improve the move to 100%. But this also means making a shift to a different business
strategy, providing suppliers with long term purchasing plans. As an example with packaging,
improved SSL, along with a regular monthly delivery based on usage will improve turns and
reduce costs

9. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Analysis of Display of Purchase requisitions (ME5A)
This screen was discussed at the meeting on Friday May 15th
that procurement was
to use going forward. This is a total shift from the direction that procurement has
been directed previously to use MD07 since SAP went live. Hopefully this will clearly
show why at this time this screen cannot be utilized. After reviewing the output of
the ME5A screen the only requisitions in the ME5A screen were requisitions that
were created after running MRP (MD02) screen dating out through 2014. Based on
the conversations with TEAM the settings now only allow requisitions to be created
in the opening period. Unless the user runs MD02 to create requisitions. Based on
the red lights of the 601/502 analysis of MD07 77% (planned orders not
requisitions) of the part numbers would be missed when using the ME5A screen.
Long term if the modifications to the material master are implemented then this
would be the preferred method to release requisitions.
Note: opening period is predetermined by settings in the
configuration and the material master, when a requisition is
converted from a planned order.

10. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Suggested Changes:Suggested Changes:
1. Setup Planning Time Fences for all Part Numbers.
(based on lead times not a standard number for all items.)
2. Align the Planning Time Fences, Lead times and the Replenishment Lead time.
3. Setup all buy parts to generate requisitions, not planned orders. All make items
are planned orders, all buy items are requisitions.
4. Reduce the number of variances among the part number setups.
5. Enhance the process of material issue involving process orders. Making
inventory more accurate, up to date. (lag time between physical material pull
and SAP issuing is causing inaccurate MRP numbers)
6. Review all Safety Stock Levels
7. Align suppliers with one procurement agent.
8. Define roles and responsibilities between procurement and strategic
purchasing.
9. Develop business strategy across the organizations for a structured supply
chain.
10. Develop a better strategy involving logistics with suppliers. (some suppliers
handle logistics, others Avantor has to coordinate logistics.)

11. CONFIDENTIAL AND PROPRIETARY – For internal use only, not for external distribution.
Summary:
Based on the review of the MRP codes 601/502 along with
the Material Master data making the changes will aid all of
the supply chain to work forward instead of constantly
working in a recovery/reactive mode.