Kinexions22 - lessons learned from the roll-out of continuous planning at PQ Corp
- At Kinexions22, chemicals manufacturer PQ Corp shares lessons learned from its roll-out of Kinaxis for demand and supply planning
When customers present their stories at vendor conferences, it's only natural to want to share the successes they've had. But the best sessions are often those that aren't afraid to share the lessons learned from what didn't go according to plan. So my ears pricked up when Al Beninati, President and CEO of PQ Corp, opened his talk at Kinexions22 this week with these words:
A lot of you are looking for a case history of how great the PQ roll-out was for Kinaxis in our early phases. The reality is, I'm here to talk about the things that we could have done better.
PQ is a chemicals manufacturer with a near 200-year history that today is the world's leading supplier of sodium silicates and number two in specialty silicas and zeolite products. These chemicals are used in its customers' end products, ranging from packaging and cleaning products to foods, medicines and biodiesel. They are often a critical performance ingredient for these end products and therefore it's essential to ensure accurate, timely delivery to a wide range of customer specifications. This is quite a challenge, as Beninati explains:
What we, as a global company, are struggling and challenged with is, we have portions of our business that are local, portions that are regional, and portions that are global. With all the different end uses in so many different customers, every customer feels that their requirements are how we should run our company!
To sustain continued growth, the company in 2020 embarked on a transformation project to create an integrated business management landscape for supply and demand planning. This would ensure that it could make the most of planned improvements in manufacturing productivity and throughput, optimize investment in those plants best placed for growth, and enhance its customer account management. The goal is to add $10-15 million to the bottom line within the next 12-18 months.
Iron triangle constraints
As with any project, it was inevitably subject to the competing 'iron triangle' constraints of cost, time and scope. In PQ's case, those translated to cash impact, order lead time, and service levels. Beninati comments:
You can have one or two of these, but you can't really have all three. And that really required decision making on the part of the leadership team as to the strategy that we were going to have in the business overall, which led to our vision ... that we are looking at quality, quantity, and on-time delivery for our customers.
One prerequisite was to switch from a systems framework built to support a traditional quarterly or monthly financial reporting cycle to one that could support a continuous, iterative view of the business. He explains:
We started in a typical place, where many of you are probably very familiar with, where the entire business is driven by what finance needs for the reporting on a weekly, monthly, quarterly basis ... This was all around getting the financials finalized and then looking at, 'Okay, well, what can we do next to maybe modify our results here in the short term?' It really was a short-term focus, at best quarterly — if I'm really being honest, monthly.
This really had to be reversed, flipped on its head, looking at what the customers want. What do we need to drive for the customers in the future, with new products, with demand, with supply?
Obstacles along the way
This change to a continuous, iterative, customer-focused mindset made the Kinaxis philosophy of concurrent planning very attractive. But there were plenty of obstacles to overcome along the way before getting process, policy and IT aligned to deliver what was needed. He comments:
We had a lot of work to do to really ensure that process [and] IT enablement matched our policies that were out in the field, which matched growth for the customer.
Starting out, the assumption was that the first step would be to establish the critical processes that would feed into the Kinaxis product. But once the project started, it became clear that many of the existing processes would need to be rethought. He explains:
As we got into it, you realize that a lot of the processes that we had within our business actually don't really align well with a dynamic, agile type of supply and demand balancing.
But it wasn't simply a matter of sitting down and specifying a new set of processes. There's an interaction between policy, process and how these are enabled by the technology which means that each element evolves in relation to the other. He elaborates:
You're always looking to optimize the process and the enablement at the same time. So when you think, new product, it's really around, how do I get that launch to be more effective? How do I get the visibility, so that we get that feedback loop? On the demand side, it's really looking at, are we actually executing on our own lead time policies? Are we balancing how we do our goal setting, relative to the reality of the process that's out there? ...
What we were driving was, looking at how we can turn what we're doing with our customers into evergreen processes that really meet customer requirements, and improve the overall value creation that we had for the business, in each of the various areas.
Focus on what matters
Having said that, another learning was that it's important to separate the people developing the processes from those working on the implementation. These are both big jobs and inevitably people will focus on either one or the other, and it's crucial not to lose sight of the bigger picture during implementation, and prioritize accordingly. He says:
It's also important to streamline those policies and processes that we really expect to get to. You don't have to implement the model, but you do have to have the end in mind. So all those questions that I mentioned at the beginning, really map out the process would have been a better way to have gone, over the last couple of years. And then focus really clearly on the things that add the most value and concentrate exclusively on those.
IT enablement was also a big challenge in itself. The company has three separate SAP instances, each of which supports one or more of the company's three separate business units — Americas, EMEA, and global. The decision was taken to start the roll-out with Silicates Americas, which runs on just one SAP instance. Having proven it there, the next step will be to expand into the other business units in phases and connect in the other SAP instances.
Even with a single SAP instance, there were still a number of different inputs required to bring together master data, customer and product information in the first phase, using Talend to map data from SAP into Kinaxis. He comments:
Everyone has issues with data, data integrity, data management. It really is important though, to think through which key elements need to be standardized and utilized.
The first step is now live and is already delivering results. Beninati says:
We successfully deployed RapidResponse to be able to take all of that and provide us a clear picture of what is our demand, supply, inventory, and then the S&OP on every single element. We're live in North America right now. We're on the cusp of really generating the high value for the business overall, in areas like interplant transportation, how we're operating from a campaigning perspective.
The next step will be to add closed-loop processes between Kinaxis and SAP. In another example of the interaction between policy, process and enablement, at the moment those processes are being handled manually while the company figures out the optimal automation. He explains:
We are doing that in a manual way right now. And what it's really doing is it's helping us to refine our processes and our policies. And you know, I harp on that, I came in with a preconceived notion that those had to be first. The reality is, it should be an iterative process of policy, then your process, and your enablement, and those move up together.
That automation is "right around the corner," he says, and then it will be time to deploy to the other two SAP systems and roll out the solution across the rest of the business.
For more diginomica stories from Kinexions22 visit our Kinexions22 event hub. The event was live in San Diego from May 9-11th 2022 and many sessions, including the above, are available to view on-demand until the end of June. Click here to register and view now.