812 - Demand Management and Planning - G.1

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 TABLE OF CONTENTS Rev Letter:
G.1
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1 PURPOSE............................................................................................................................................2 2 SCOPE.................................................................................................................................................2 3 PARENT DOCUMENT.........................................................................................................................2 4 PROCESS............................................................................................................................................2 5 DEMAND PLANNING PROCESS FLOW............................................................................................4 6 CUSTOMER INITIATION, SUPPLY CHAIN DESIGN AND IMPLEMENTATION................................5 7 LEGAL AGREEMENTS.......................................................................................................................5 8 RULES FOR DEMAND PLANNING....................................................................................................6 9 MULTI-SITE PROCESSING..............................................................................................................11 10 DEMAND RECEIPT, ANALYSIS, LOADING AND MAINTENANCE...............................................13 11 MRP GENERATIONS......................................................................................................................19 12 FINANCIAL FORECASTING...........................................................................................................22 13 WO RELEASE TO MANUFACTURING...........................................................................................23 14 WO CHANGES................................................................................................................................23 15 VENDOR MANAGED INVENTORY (VMI) AND KANBAN..............................................................24 16 DEMAND PLANNING METRICS ....................................................................................................30 17 TOOLS.............................................................................................................................................30
Confidential For Internal Use Only

*Notice: This document is considered UNCONTROLLED when it exists in any printed form. See the Plexus Intranet for the current master version of this document.
Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 1 Rev Letter: G.1
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PURPOSE This Standard Operating Procedure is to define the demand planning process for all Plexus Electronic Assembly Sites. Expected results from the SOP are: Define Metrics for Demand Planning Define demand planning process to support Supply Chain Designs including: o Subassembly kanban planning o Finished goods kanban planning o Configure to Order requirements (CTO) o Direct Order Fulfillment (DOF) Define policies and rules for demand planning Define multi-site planning Define demand receipt, analysis, loading and Material Requirements Planning (MRP)generations Define the process of releasing and changing of work orders (WOs)
SCOPE Demand Management & Planning responsibility ultimately resides with the Demand Analyst (DA). This person will be in direct contact with the site Customer team, Plexus supplying site Customer team in a multi-site Supply Chain, and may also have direct contact with the Customer. PARENT DOCUMENT CP 2459 - Supply Chain Policies and Design PROCESS The DA will adhere to the Corporate Scheduling Process (SOP 811) and this SOP unless the customer contract contains verbiage that conflicts with the contents of this SOP. The Customer Team is a group of Plexus employees who are responsible for delivery of the Customers enditems. Generally, the team will consist of, at a minimum, A Demand Analyst (DA) who is any Plexus employee who is responsible for loading customer forecast. (The forecast is a Customers prediction of the product they need from Plexus in the future.), customer demand, scheduling manufactured parts, and generating MRP (which is an Enterprise Resource Planning (ERP) sub-system that utilizes bill of material data, inventory data, customer forecast, customer orders and dependant demand to calculate requirements for materials, WOs and due dates)/ Master Production Scheduling (MPS) (which is the application that ties overall business planning and forecasting to detail operations for a given customer) The DA is also called a Planner, Material Team Manager (MTM) who is the point person for the buyers and DAs to raise issues concerning delivery, purchasing, planning, etc. In sites with no MTM, the Site Materials Manager fills this role. Focus Factory (FF) Manager Program Manager (PM) who works closely with the Customer to communicate delivery times and manage customer needs and Production Planner.
3 4 4.1
The Customer Team has the responsibility to react to customer requests following the contract. If a contract is not in place or the contract does not address an area of demand planning, the corporate scheduling process must be followed to ensure uniformity across sites. Confidential For Internal Use Only
Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 4.2 4.3 Rev Letter: G.1
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If the DA has any questions or doubts pertaining to demand management, he / she must escalate the issue to the MTM and/or Site Materials Manager. The DA needs to plan consistent with the Customer agreement and the Supply Chain design objectives within the confines of Plexus policy. Additionally, provide support for ongoing measurement to those objectives.

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 5 DEMAND PLANNING PROCESS FLOW Rev Letter: G.1
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CP 2459 Supply Chain Policies and Design

Start New customer? No Yes
SOP 812 Section 9 Rules for Demand Planning SOP 48

Contract Negotiation Process
SOP 811 Corporate Scheduling Process

No Corporate Scheduling Process All issues resolved Yes Consume forecast (or reduce forecast and enter Sales Order) Yes Enter Sales Order Rules for MRP Generation
Current Customer
Supply Chain Design Process
Supply chain analyzed & designed? No Yes Yes Push? No Yes
SOP 812 Section 9 Rules for Demand Planning

Follow rules for DA on Demand Planning
SOP 812 Section 10 Multi-Site Processing

Multi-site Processing Yes Is customer Multi-Site? Receive demand
Review Rules for DA on Demand Planning
Review date and quantity changes No Quantity and date the same? Yes Is it forecast Yes Was item previously forecasted? No Corporate Scheduling Process
SOP 812 Section 12 MRP Generations

Generate MRP for Mfg Items Yes Are schedule changes accurate? No Generate raw material MRP
SOP 180 Purchasing Execution and Control

Purchasing Execution End Manufactur ing Execution
Customer Manager initiates contracting process No
No
Yes All issues resolved No Update Forecast
SOP 812 Section 9 to 9.3
Pull? No Mixed Model? Yes
PSA Yes Read and or other comprehend agreement contract complete?
SOP 812 Section 8 Legal Agreements
No (Customer PO)
Monthly Forecast Review? No
Yes
Monthly Forecast Review Process Yes
Generate Financial Forecast
Forecast for an existing period? No
Yes Analyze forecast Corporate Scheduling Process
Yes All issues resolved No
Legend
Customer Manager Customer Team Supply Chain Analyst Site Management Demand Analyst
Forecast Yes for a new period?
SOP 812 Section 13 Financial Forecasting
Significant change?
Review and update financial forecast
SOP 812 Sections 12.2.3, 14 and 15 Work Order Creation, Release & Changes
No End
SOP 812 Section 11 Demand Receipt, Analysis, Loading and Maintenance
SOP 812 Section 11 Demand Receipt, Analysis, Loading and Maintenance

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 6 Rev Letter: G.1
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CUSTOMER INITIATION, SUPPLY CHAIN DESIGN AND IMPLEMENTATION When a new Customer initiates business with Plexus or when an existing Customer transitions between sites, changes its business model, or a Customer initiates a supply chain improvement request (i.e., on time delivery to request date), refer to CP 2459 for associated roles and responsibilities. LEGAL AGREEMENTS The supply chain model should be represented in a Professional Services Agreement (PSA) which is a legal contract between Plexus and the Customer that states the terms and conditions of our manufacturing agreement., Document of Understanding (DOU) which is a formal contract between Plexus and the Customer. or other appropriate legal contract) with the Customer. Refer to SOP 48 for additional details. The DA) shall read and comprehend their customer contracts. The DA shall review any areas of the PSA (or other appropriate legal contract) that may pertain to: Supply chain model details including service level which is the expected level of affirmative availability against the order line. Expressed in the form of a percentage or probability of an order being filled completely, flexibility which represents the amount of upside or downside variation that an inventory strategy can support versus average demand over lead-time and liability objectives including finished goods, sub-assembly or raw materials inventory levels
7.1
Customer supplied forecasts. Special attention should be given to the timing of receipt of forecast, frequency of forecast and granularity of the forecast Customer purchase orders (POs) Frozen zones and demand changes within lead-time Cancellation windows Assembly lead-times
Long lead-time parts which is any component where the procurement lead-time plus the fixed manufacturing lead-time exceeds the acceptable lead-time for delivery after receipt of an order. Component lead-times Customer supply of materials Customer contracted component agreements
CTO requirements and lead-times. CTO which is the process of producing and picking all of the required parts (based on Customer selected features and options) that are needed for shipment to the Customer or the Customers Customer. DOF requirements and lead-times. DOF is typically referred to as the process of shipping a discrete Customer order directly to the Customers Customer (end user). Sustaining services (Warranty, Service Center) Customer Returned Goods (CRG)processes and agreements OIX (Obsolete, Inactive and Excess Inventory) Non-Cancelable Non-Returnable (NCNR) definitions and terms Engineering Change orders (ECO)

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 7.2 7.2.1 7.2.2 Rules for loading demand when no PSA exists. If a PSA, DOU or other legal agreement has not been signed with the Customer, only hard POs received from the Customer should be loaded into JDE. Plexus is legally liable for all components brought in for which the contract does not state otherwise. A forecast should not be used to drive in material unless stipulated in the contract, and the Customer accepts liability for all components procured to that forecast. The DA should only drive materials when receiving POs from the Customer via hard copy, e-mail or from direct access into their web portal or system unless otherwise stated in the PSA. Again, the contract should drive our planning and scheduling process. Planning should not occur unless some form of agreement or contract is signed. In the case of a new Customer, a DOU or PSA should be signed to cover liability for Plexus to begin procuring materials. RULES FOR DEMAND PLANNING The supply chain design will directly affect how the DA shall plan for materials and set up in JDE. It is the DAs responsibility to review and comprehend the supply chain design. After review, the DA shall set up in JDE, interpret and maintain demand according to the design and shall follow the applicable rules for demand planning. The Demand Analyst should determine if the Customer will be serviced via a push model which are the traditional forecast driven methods for material acquisition, production scheduling, and manufacturing. This is based on a predetermined schedule based on customer forecasts or schedules, pull model which is the procurement, manufacture, or movement of items as demanded for use or to replace those consumed from a downstream kanban. Pull manufacturing generally utilizes kanbans to control materials in the manufacturing process, or mixed model. Where some level of pull process is involved, there may be kanbans set up to aid in the movement of materials. A kanban is a signal or card that can pull raw materials and/or assemblies through the manufacturing process. Kanbans can be set up for either purchased or manufactured parts. Kanban planning is further detailed in WI 2912. The DA should understand the customer fulfillment model(s) that will be utilized by the Customer. Refer to CP 2459 Supply Chain Design. The general business models are: Buy to Order (BTO) which is the process of buying materials based on the receipt of a PO from the Customer.- Make to Order (MTO) which is a model where product is built after receipt of a customer order. The terms Assemble or Build to Order can be used interchangeably with make to order.; Buy to Stock (BTS) which is the process of buying materials so they are in stock, available for shipment or use in manufacturing. - Make to Order (MTO); Buy to Stock (BTS) - Make to Stock (MTS) which is a model where product can be finished before receipt of a customer order so it is available at the time of customer request. When a customer order is received, the goods are pulled from inventory and shipped to the Customer. The term Assemble to Stock or Make to Forecast can be used interchangeably with make to order. and Buy to Stock (BTS) - Make to Stock (MTS) - CTO Rev Letter: G.1
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8.1
8.1.1
8.2

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 8.3 Rev Letter: G.1
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The DA and MTM should verify the model by determining the ARO (After Receipt of Orders LeadTime). ARO is the number of calendar days between the receipt of a customer order, and the expected delivery at a Customer designated locations. The DA should also verify the assembly FML (fixed manufacturing lead-time which is the time to deploy material, assemble product, test product and may include vendor time (if the part has to be sent to a vendor for processing).), transit lead-time which is The time it takes to ship the materials from the supplier or manufacturing plant to the desired delivery location., and component lead times (which is also known as Purchasing Lead Time, is the period (in calendar days) it takes for a vendor-supplied component from day of order placement to the time component is received at the desired location) for the Bill of Material (BOM) items which defines the relationship between a parent item and all the required components. It lists the quantity required of each component item to produce a quantity of the parent item, it contains a lead-time offset field which is a set number of days used to delay or expedite the receipt of a component or completion of a sub-assembly, effectivity dates and issue codes. (Refer to CP 2459 Supply Chain Policies and Design for the appropriate flow chart). The DA needs to understand the sources of demand, whether they are independent or dependent demand. Independent Demand is the demand for an item that is unrelated to the demand for other items. Sales orders (SO), forecast and finished goods or parts required for service are examples of independent demand. Dependent demand is directly related to, or derived from, the bill of material structure requirements and is calculated by MRP and is not forecasted. A given inventory item may have both dependent and independent demand at any given time. For example, a part may have dependent demand (from an HLA) as well as independent demand (for a service part.) The point at which the independent demand is given to us by the Customer and the location of the part on the BOM will have a direct impact on how the DA will plan for the assembly. The DA must understand that demand may be received from another Plexus facility if multi-site planning is part of the Supply Chain solution. Multi-site planning is any instance where one or more Plexus site(s) acts as the supplier(s) for other Plexus site(s). The DA needs to understand the BOM structure to correctly plan demand for the Customer. The associated decision processes will be used by the Customer Team to determine which planning model will be employed based upon the product fulfillment objectives of the Customer. JDE Set Up and Maintenance of Assemblies In order for WOs to process correctly, item number data must be maintained properly. The DA is responsible for maintaining item parameters which is the ERP system designated area where part number information is kept (i.e., lead time levels, part type, planning parameters, etc.). This term may differ from site to site, to ensure proper processing in JDE. The information must be maintained in accordance with this SOP and the contract that has been negotiated between Plexus and the Customer.
8.4
8.5
8.6
8.7
8.7.1
Once a BOM is loaded into JDE, the Demand Analyst will ensure the proper codes are set on the assembly. Demand Analysts must review their portfolio of assemblies to ensure the system parameters that drive MRP and WO processing are maintained with accurate information. This means the review and on-going maintenance of all active parts for manufacturing lead-time. For a manufactured assembly, the product should be listed as an assembled part in the part setup. Confidential For Internal Use Only
Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 8.7.2 Manufactured Lead-times Rev Letter: G.1
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8.7.2.1 All assemblies should have a fixed number of days for lead-time. 8.7.2.2 Lead-Time Analysis: Initialization on new assembly numbers - Prior to generating MRP on new items, DAs should collaborate with the Customer team to determine the accurate manufactured lead-time. The leadtime analysis process is detailed in the next section. The manufacturing lead-time or FML field is expressed in working days. (5 days equals one workweek). The FML time includes the time to kit material, assemble product, test product and may include vendor time (if the part has to be sent to an outside vendor for processing which is a manufactured part number that requires a vendor to perform additional value added processing prior to completion of a WO. A typical route will include Plexus operation(s), a vendor operation (outside process) followed by Plexus processes and WO completion. The lead-time for this product must include the vendor time in addition to the Plexus manufacturing time). The default cumulative lead-time level which is the combined total of purchasing lead-time and manufacturing lead-time, (cumulative FML) should be no more than 15 days. With the exception of outside processing, cumulative FMLs in excess of 15 days require approval of the Site Materials Manager.

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 Rev Letter: G.1
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There will be known and expected exceptions to the 15-day FML. One of these known exceptions is a part that requires outside processing. Outside processing is where a site does not have manufacturing capabilities to perform a process so the site must purchase the services from an outside vendor. When a vendor performs outside processing, those services, combined with the Plexus processing time are totaled in the BOM Matrix Report. If a part requires a vendor to perform these processing options, then the assembly is expected to exceed the 15day goal. Since outside processing on certain assemblies is an expected and natural occurrence, not all parts will be able to achieve a goal of 15 days or less. Another exception will be newly created parts. New parts that have not been previously built at Plexus may be set to a higher FML until the known manufacturing time has been determined. 8.7.2.3 The lead-time analysis process documented WI 2652 details the process for analyzing and reviewing FMLs as with a Customer team. Key elements of this process include: Review of the requirements/rules for the program. This includes contractual requirements, capacity constraints, material constraints, manufacturing engineering data, ARO expectations, transit time, flexibility expectations, and service level (OTD) expectations. A BOM Matrix Report and WO Cycle time data are compared to determine if FMLs appear to be realistic given actual historical performance. Use of these tools is detailed in WI 2652. The Customer team will meet to discuss the FMLs and related factors such as lead-time offsets, Customer expectations, Inventory minimization. The MTM and Manufacturing discuss and resolve any open issues. The finalized lead-time parameters are entered in JDE and are communicated to the Customer, if requested.
All assembly part numbers must be associated to the appropriate Demand Analyst via a Planner Code which is a designator on an item information screen that will identify who the Demand Analyst is for the assembly. The term may differ based on ERP system. This must be accomplished before MRP is generated for said assemblies. 8.7.3 MRP planning parameters should be properly set prior to MRP generations. These parameters are JDE specific and shall be covered in the Work Instruction (WI) 2652 Demand Management & Planning.
8.7.3.1 Assemblies can be planned Lot for Lot which will plan WOs for each day there is customer demand (allow the system to plan each order individually) or periods of supply which is a system planning set up that will gather demand for a certain time and create or suggest a WO for multiple customer orders (group planned WOs together). Using a minimum order quantity can create a risk that more units will be planned in a period than are required. Consideration should be made for grouping demand together (periods of supply) for WOs to avoid the risk of these excess assembly inventories. If periods of supply are used, however, any cancellation of the grouped demand will not trigger status 10+ WOs to be reduced. It is preferable for the grouping to be less than a month of supply (19 working days or less). The preferred method for planning Kanban assemblies would be lot for lot which is a system planning set up that will plan WOs for each day there is customer demand..

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8.7.3.2 Phantom assemblies is an assembly that is not physically built and stocked, and is in essence a collection of parts that are planned for by MRP. Phantom assemblies should have a lead-time set as zero days so MRP will plan the detail parts automatically. 8.7.3.3 Reorder quantity is the fixed quantity to be reordered when the level of inventory drops below a pre-defined quantity (often the reorder point (ROP)). This is typically a calculated economic order quantity rounded up to a chosen multiple or minimum order quantity. ROP is a quantity that initiates a replenishment signal in an ERP system. When the total nettable inventory and WOs fall to, or below, the ROP, the DA is to initiate a new WO to replenish the stock above the ROP. This is calculated as the average usage during the production lead-time + transit time (ARO) of the assembly plus any safety stock loaded to accommodate variables such as service level and demand variability. 8.7.3.4 Maximum reorder quantity is a number that is the maximum quantity that can be built at one time. This is an effective field to limit the size of planned WOs generated during an MRP regeneration 8.7.3.5 Minimum reorder quantity is a number that is the minimum quantity that can be built at one time. This is a field used by MRP to suggest a minimum build quantity for an assembly regardless of demand. It is used in conjunction with the Multiple Order Quantity (MOQ) which is the quantity or lot size of an assembly that should be built for each WO. I.e. if the MOQ = 10; WOs will be in multiples of 10 units. 8.7.3.6 . For example, if customer demand for a certain day is 10 units and the minimum reorder quantity is 20, a suggestion will be made for 20 units while carrying the added inventory into the next planning period(s). 8.7.3.7 Multiple order quantity (MOQ) is a quantity that can be used for rounding up planned order quantities to a set multiplier. Two examples of where MOQ should be used are: 1. Printed circuit board assemblies (PCBAs) that are panelized. (i.e., a panelized board may contain 10 small circuit boards on one panel. The PCBAs are populated at a point beyond surface mount and in a subsequent process, separated into individual boards.) Populating the MOQ field will cause MRP to create a message suggestion to build in a multiple of the populated quantity. For example, if the multiple is 10 and this periods demand is for 125, the system will generate an order message for 130 units. 2. Customer directed sizes - If the MOQ is customer directed: the Customer should be liable for the remaining inventory created by the MOQ. It is preferable that they increase their PO in these given quantities. 8.7.3.8 Safety stock will simulate demand that nets against available balance, thus MRP will plan for the additional materials to be on hand. Safety stock is designed to cover for variations in demand. Safety stock must be zero unless: 1. Stipulated in the Customer Contract to cover customer demand variations as in a kanban model or line side-stocking model. 2. 3. Necessary to accommodate supply needed to service multiple manufacturing lines. Approved by the Site Materials Manager.

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 8.7.4 Rev Letter: G.1
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Scrap Planning The DA should be aware of all potential OIX impacts due to any type of scrap planning.
8.7.4.1 Assemblies The yield for manufactured assemblies should be set to 100% unless approved by a or Site Materials Manager. The root cause for the scrap should be investigated and resolved. The yield should be removed as soon as possible. If the scrap issue is temporary, the DA could potentially increase the WO quantity to accommodate for the potential fallout. 8.7.4.2 Components Scrap planning for components should be done for our Customer to maximize service level while limiting unnecessary liability. Scrap planning may be performed by someone other than the DA, but must be approved by either the MTM or Site Materials Manager. 8.7.5 Planning for Accessories or non-BOM components Planning for items such as non-BOM accessory items or floor stock may be performed by someone other than a DA, but must be approved by the MTM or Site Materials Manager. Items that are used in CTO or DOF can be planned for by ROP / Reorder Quantity or a Min / Max system. The Customer is often involved in providing input to Plexus personnel on the appropriate stocking levels. The DA should be aware of all potential OIX impacts due to the planning for these parts. Lead-time offset is JDE functionality where a planned order receipt (purchased or manufacturing part) can be planned at an earlier or later period based on the lead-time for the item. Examples of where lead-time off-set may be utilized are: to allow for an earlier receipt to accommodate for receiving inspection; or for starting a manufacturing part later because it is utilized later in the manufacturing process. Maintenance of Assembly Lead-time Information
8.7.6
8.7.7
8.7.7.1 At a minimum of once a quarter, DAs should review the manufacturing lead-times of assemblies and subassemblies with the Customer Team and update the assembly lead-time in the system. Manufacturing lead times should also be reviewed with the Customer team if a significant assembly revision or alteration of the manufacturing process has been initiated. 8.7.7.2 At a minimum of once a quarter, DAs should review all JDE item and planning parameters described above and update the information in the applicable system. The item parameters must be reviewed at least once a quarter and discussed with the Customer Team. 8.7.7.3 If agreement cannot be reached with the Customer Team, the DA shall escalate the issue to the Site Materials Manager for resolution. After resolution, the DA shall communicate the results with the Customer Team. 9 9.1 MULTI-SITE PROCESSING For Customers that provide end product (finished goods) demand at one site, but another site provides component or lower level product, the following demand planning process may be utilized. (For clarification purposes, the DA for the finished goods (FG) site will be referred to as the FG DA and the DA for the lower level (LL) product will be referred to as the LL DA.)

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Multi-Site Demand Planning
Customer
Start
Forecasted Demand
Purchase Orders
Rescheduled or New Demand
There may be joint calls with both Plexus sites and the Customer
Finished Goods Site Demand Analyst (FG DA)
Demand Planning Process Lower Level Demand Forecast and Purchase Orders/Sales Orders
Update commit information
Prioritize boards when there are capacity or supply variability constraints
PM (and possibly DA) communicates with the Customer on a regular basis
Lower Level Supply Site Demand Analyst (LL DA)
Receive Exploded Demand for Lower Levels
Demand Planning Process
Generate commit dates for demand
Identify Capacity and supply constraints. Provide what-if results (if needed)
It is preferable that both sites utilize the same part number, master planning number, etc., for multi-site demand planning. All multi-site DAs shall ensure JDE is configured correctly to properly coordinate multi-site planning, including MRP processing. The Customer demand (in the form of forecast or POs), will be planned by the site FG DA. The FG DA is responsible for generating the applicable version multi-site MRP to calculate and recommend messages for the applicable site(s). The DA shall perform their demand planning processes and generate lower level demand (in the form of forecast and/or POs) and send it to the LL DA. The FG DA shall provide timely and accurate forecasts and POs to the LL DA or designated site representative. The goal of the LL DA is to provide on-time receipt of goods to the FG site. The LL DA should load JDE per the requested delivery dates at the FG site. The LL DA shall allow for the appropriate transit time in their demand planning process (so the product is received at the FG site when required). The LL DA should perform their demand planning process and notify the FG DA of any capacity or component supply constraints if the request dates from the FG DA cannot be met. 9.2 The Plexus Supplier Portal and intercompany orders (O1,O2, S1,S2) may also be used to coordinate intersite demand. These tools serve as a much simpler, semi-automated method of communicating demand and promise dates between two Plexus sites. This functionality is described in WI 2912.

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Where constraints exist on the LL site, the FG DA should provide input and guidance to the LL DA in terms of prioritization of the lower level demand. Upon request from the FG DA, the LL DA shall provide access to supply/demand data to provide a quicker response to what-if scenarios to the Customer. The FG DA and the LL DA shall communicate at least on a weekly basis. The FG PM is the primary person to communicate with the Customer, but based on Customer request, there may be joint calls with both Plexus sites and the Customer. Demand changes and engineering changes received from the Customer should be clearly communicated to both sites and reacted to as soon as possible. The FG DA should also communicate any supply chain impacts to the LL site such as life cycle changes; test yield impacts; expected Customer pull; item parameter changes such as lead-time; multiple order quantities; ROPs, etc. For OIX purposes, the FG DA should aide the LL DA for rationale on why the FG demand changed. (Please refer to SOP 721 for further details.) Both DAs should be involved in the initial review of the supply chain design and make recommendations for improving the supply chain whenever possible.
10 10.1
DEMAND RECEIPT, ANALYSIS, LOADING AND MAINTENANCE Sales and Operation Planning Process The sales and operation planning process brings together all of the plans for the business (sales, development, manufacturing sourcing and financial) into one integrated set of plans to strategically direct the business. It is performed at a management level at the master product family to at each site, and rolled up for management review and analysis. Understanding Demand
10.2
10.2.1 The DA may ask the Customer questions pertaining to forecasting and demand receipt. Topics that may be covered are: 10.2.1.1 Granularity of the forecast How often will the forecast be received from the Customer? Will the forecast be stated in daily, weekly, monthly, or quarterly buckets? Will the SO be in the same buckets (in daily, weekly, monthly, or quarterly)? Are they different? If so, why? If the expected SOs are expected to be more finite than the forecast, should Plexus assumption that the SOs will be received at the end of the month? The DA needs to understand that the impact of changes between the forecast versus SO ( POs received from the Customer). o In a push environment, forecasts that are less than actual SO will create extra what if, expediting and freight costs. (Additional freight costs should be paid for by the Customer.) In a pull environment, SOs that exceed the design flexibility will create extra what if, expediting and freight costs. (Additional freight costs should be paid for by the Customer.)

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Forecasts that are greater than actual sales will create past due demand and excess inventory if not properly managed. The DA shall monitor and remove from JDE any past due period forecasts which are scheduled forecast orders with a scheduled pick date in the current or prior weeks. o If the Customer feels the past due demand will be needed for the next planning period, the Customer will have to revise their current forecast to include the past due for the proper future period. The DA is responsible for understanding this policy and escalating violations to the PM and MTM / Site Materials Manager for resolution with the Customer.
Will the product be manufactured weekly, bi-weekly, or monthly? The more finite the manufacturing schedule, the more impact the Customer forecast and SO granularity have on Plexus. The goal of the DA is to have Customer demand as finite as needed to best minimize stock levels and demand variability in the supply chain. Is the product line a Higher Level Assembly or system build? Items that tend to be bulkier in nature and run on a progressive line with materials that can consume a large amount of floor space should be batched in smaller build quantities.
10.2.1.2 SF Demand Within Assembly Cumulative Lead-time Unless specifically prevented by contract, SF lines with scheduled pick dates within the cumulative lead-time of an assembly should be removed prior to each MRP update and release to purchasing. The completion date for any forecast demand due within this period is no longer realistic because manufacturing can no longer realistically complete the order by the scheduled pick date on the SF. If a Customer actually wanted the product with the period PO for an order inside cumulative FML would already have been received by Plexus. Allowing this forecast to remain will cause inventory to accumulate beyond the required level to service remaining Customer forecast. If demand is received in monthly buckets but loaded in weekly buckets throughout the month scheduled pick dates inside the cumulative lead-time should also be removed. 10.2.1.3 Forecast Accuracy Does the Customer currently measure its forecast accuracy, and can they share the history with Plexus? Does the Customer make any assumptions with the forecast? (i.e., Does the Customer take past history and adjust it based on a factor? Do they estimate the forecast at X% over last year this period?) Knowledge of forecast accuracy can help explain variations in demand, inventory levels, and service level performance. 10.2.1.4 Forecast Receipt If the forecast is not received from the Customer in the agreed period, the DA shall escalate the issue with their Customer counterpart. The escalation process should be used if the forecast issue is not resolved in the agreed to period. Please refer to the escalation process later in this SOP. 10.2.1.5 Does the Customer forecast at the highest-level end item? Do they forecast at a sub-assembly level? It is imperative that the DA understand the impact of the BOM on the demand planning process. The DA should ensure that the master schedule accurately reflects the desired Customer. (Caution should be taken if the Customer forecasts at a sub-assembly level as the receipt of Higher Level SO had the ability to duplicate demand at a sub-assembly level. It is the responsibility of the DA to ensure duplicate demand does not exist during a MRP generation.)

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10.2.1.6 Infrequent or Unplanned Demand Are there other types of demand that may affect the ability to deliver product to the Customer? The most common types of infrequent demand are CRG, service and prototype manufacturing. Does the Customer perform demand planning for any of these items? Have they considered some type of assured supply or safety stock for these types of items? Does the Customer forecast or plan for CRG or service part usage? If the Customer does not have a plan for CRG / service part usage, do they understand the trade off between CRG on-time delivery and end product on-time delivery? Does the Customer forecast or plan for prototypes for long lead-time materials? If the prototypes consume the raw materials for other production items, does the Customer understand the impacts to on-time delivery? 10.2.1.7 DOF / CTO Is the Customer seeking DOF or CTO services? If so, please refer to SOP 2036 Direct Order Fulfillment and Configure to Order Process for questions to ask the Customer. If the JDE Configurator is to be used, reference WI 2912 for detailed information. 10.2.2 Rules for how to interpret the forecast 10.2.2.1 Frozen Zone 1. The frozen zone is the period of time in which the Customer is limited or prohibited from making changes to demand inside a defined lead-time. It is the responsibility of the DA to understand the frozen zone, and its impact on demand planning. The DA should analyze the agreed-to frozen zone to make sure it is adequate to properly service the Customer based on the PSA. If the DA feels the frozen zone is inadequate, they should work with the PM and the Customer Manager (which is a Plexus employee who works with a Customer on contract negotiations, relationships, and conflict resolution) to update the PSA. 2. Is there a penalty or added costs if the Customer violates the frozen zone? The DA should work with the Customer to aid their understanding of the frozen zone, and the impacts on Plexus as well as the Customer. If demand is receipted inside the frozen zone, the DA should follow SOP 811 and assist the Customer Team in identifying issues and associated costs that should be charged to the Customer. 10.2.2.2 If the Customer forecast is relatively accurate and expected SOs are more finite (and often predictable), and multiple WOs are expected to be generated for the product in the month, then the DA should consider loading the forecast in a more granular fashion than the received forecast (i.e. If the Customer forecast is 150 pieces of product A for the month, but they generally provide SOs for 20 pieces week 1; 30 pieces week 2; 40 pieces week 3 and 60 pieces week 4; then the DA should split the 150 piece forecast into weekly buckets.) 10.2.2.3 Transit Time Demand including forecast and SOs should be entered to accommodate for the transit lead-time and to achieve on-time delivery requests to the Customer. Load the completion date that drives the planning system earlier than when the Customer requests it. This will allow Plexus to accommodate the shipping time to the Customer. Transit time should not be built into your FML.

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Lack of Updated Demand The PSA generally states the minimum frequency of expected forecast receipt and expected receipt of firm Customer POs. If the forecast or Customer POs are not received in a timely manner, the following escalation process should be followed:
Escalation Process for Demand Receipt

Demand not received in agreed -to time frame (one week past expected receipt ) DA contacts the PM and / or Customer Get commitment from Customer for expected receipt of demand Demand planning flow DA and PM and / or MTS or Materials No Manager contacts the Customer Manager Ask for commitment from Customer for expected receipt of demand
Receive commitment within 48 hours ? Yes Receive demand as committed? No Contact Customer again
Receive demand within 48 hours ? No Escalate again ?
Yes
Yes
No
Roll MPS / MRP with old demand No Wait for new demand or adjust current demand ? Adjust demand Review and adjust forecast within the frozen zone
Yes
Demand planning flow
Yes No CM escalates within the Customer organization
Yes Receive demand in 24 hours ?
Wait new Wait demand from the Customer
Demand planning flow
10.4
Demand Receipt
10.4.1 The DA will receive a forecast, hard PO, or both, either directly from the PM or the Customer. SOs should be retained by the Financial Analyst (FA) as described in section 10.10. Each time a Customer forecast file is received it should be retained in electronic, soft copy, form for no less than five years. The file can take several forms depending on the method of Customer forecast communication. These include the following:

Emailed spreadsheet - Relevant emails with attached forecast Electronic Data Interchange (EDI) or the Electronic exchange of documents Web portal snapshot or spreadsheet downloaded from a Customer website Fax or hard copy scanned into a commonly accessed format 10.4.2 Soft copy files of the demand data for all site programs should be maintained in a site directory accessible and known to all site DAs, MTMs, and the site Materials Manager. This should be the same general location that the Supply And Demand Enhanced Report (R554051) and Buyer messages are retained. The Customer forecast files in this location should be saved as originally received, without changes.

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 10.5 Demand Analysis Rev Letter: G.1
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10.5.1 The DA should analyze the received demand and determine if there are any significant changes to the schedule. A significant change is generally a change that is greater than 10% in sales dollars in a month. However, the DA and/or the MTM will determine if a specific schedule change is significant with input from the Customer Team. If the DA has a question on the demand, they should contact the Customer to confirm the schedule prior to loading the demand into JDE. 10.5.2 If the demand is within the longest lead-time materials window, they shall execute the Corporate Scheduling Process. Please refer to SOP 811, as it is an integral part of the Demand Planning process. 10.5.3 After demand analysis, the DA should load or update the demand into JDE in a timely basis to limit Plexus liability. 10.5.4 The DA shall ensure that the received demand, along with the MRP / JDE system setup does not create lumpy demand. The DA should try to level-load demand to achieve the optimal operating performance for Plexus and achieve Customer on-time commitments. 10.5.5 In certain cases, a Customer may give Plexus a "Blanket Purchase Order" for a quantity that covers a certain time period, usually a year. For this situation, the recommended action is to load the Blanket PO as a SO with multiple releases (SO lines) throughout the time horizon of the Blanket order. Communication to the warehouse must be made to make sure they do not ship against a line further out on the schedule. The DA should obtain the Customer projected release dates and quantities to load the demand on the Blanket order 10.6 New forecast Forecast can be submitted to Plexus from our Customer. Forecasts should be handled according to the contract that exists between Plexus and the Customer. Existing forecast
10.7
10.7.1 Unconsumed forecast in a Non-Kanban Environment If there is unconsumed forecast left open at the end of the planning period and the Customer has not converted the demand within the frozen zone, the DA shall seek to eliminate the unconsumed demand from JDE by working with the Customer to reschedule the demand in future periods. The DA is responsible for understanding this policy and escalating violations to the PM and MTM /Site Materials Manager for resolution with the Customer. 10.7.2 On occasion, the Customer may make more frequent forecast changes than the contract specifies. The DA should analyze the changes and follow the Corporate Scheduling Process SOP 811. It is in Plexus best interest to load the updated forecast to minimize the associated material liability. If the Customer continues to make frequent forecast changes, the DA shall escalate the issue to the PM for resolution. 10.8 Forecast Consumption Forecast consumption is the act of receiving customer POs and converting the demand from a forecast to a hard SO in an ERP system

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10.8.1 When POs are received from the Customer, the DA shall ensure that the associated forecast (if forecast exists) is reduced by the amount received on the PO. It is the responsibility of the DA to ensure that the new PO does not drive duplicate demand in JDE. WI 2652 shall include the forecast consumption process. When demand is received from the Customer, it may need to be decremented due to the following issues: Any in-transit quantities deducted from Plexus SOs but not from the Customers demand. If assemblies are being purchased from the Customer, they may be held under an alternate part number (i.e., abc123 versus abc123-P). POs received (in the form of system SOs) if the Customer is not already netted from their demand numbers. If the quantity of demand for a specific period (month or quarter) is greater than existing forecasted demand for that period remove the forecast quantity but do not decrement subsequent periods. Safety stock should be deducted from the last period of demand if liability is not specifically addressed in the Customer Contract. 10.8.2 Forecast Consumption and use of the SO Configurator. Additional steps are required if the SO Configurator is being utilized. Demand is entered in the SO Configurator as per WI 2912. A WO will be created as a result of using the Configurator. The WO parts list can be reviewed to determine if there are forecasted items that will need to be reduced to avoid driving duplicate demand. After which, the SF quantities for these items can be reduced as described in WI 2652. 10.9 Date Maintenance The DA is responsible for maintaining the dates for demand in JDE. The DA should eliminate any sales forecast due within the cumulative lead-time of each assembly and inform the Customer that any unconsumed forecast may be added to their next sales forecast to Plexus. This process should be completed at the end of each current planning period (based on the Customer forecasting buckets). If the Customer changes their request dates to Plexus, the DA should update the appropriate dates in JDE (based on the results of the Corporate Scheduling Process).
10.10 SO Entry 1. Customer POs must be approved and signed by the FA, PM and DA. . 2. A valid Customer SO should include the following data: PO number Plexus part number Clearly defined quantity(s) and delivery/ship date(s) Price and payment terms Ship to and bill to address Shipping terms Customer revision number (recommended)

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Exceptions to these requirements may exist for blanket orders where ship to locations and delivery dates may be flexible. 3. There exists a legal requirement to retain all customer orders for eight (8) years. Formal documents should be kept by Finance, and the DAs should have access to the document. 4. Unless otherwise stated in the contract, customer POs (SOs) are our only legal and binding agreement of purchases. Demand retrieved through a portal should be saved to a soft copy or printed out and archived. 10.11 Customer Team Meetings (Reference SOP 811 for Material and Capacity Analysis process). Any significant demand changes should be processed per SOP 811 and must be agreed to prior to making the change in the JDE. 10.12 JDE specific SO entry shall be documented in WI 2652. 10.13 SO dates shall be maintained to accurately drive the WOs and related component orders to best meet the need of Plexus and the Customer. 11 MRP GENERATIONS The DA shall be responsible for generating MRP. The goal of MRP is to balance supply and demand for products. Once demand is loaded, MRP determines what is needed based on forecast, SOs and multi-site demand; subtracting supply (inventory, POs, WOs) and calculating what is needed and when it is needed.
11.1.1 Scheduling Cycle Each Customer (Master Planning Family) will generally have a defined planning schedule. In the case where a DA has multiple Customers, this approach should be staggered on a weekly or biweekly basis. An example is shown in the diagram below:

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 Day 1 Rev Letter: G.1
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Days 1-2
Day 3
Day 4
Day 5
Day 6
Day 7 Day 8
Day 9 Day 10
The flow begins with a MRP Gross generation or Net Change being completion and released from the last planning cycle. (The DA has validated that MRP generated successfully and the Supply & Demand file has been saved to a shared directory). The Purchasing group processes/answers messages - (no scheduling actions taken until Purchasing Leader indicates completion of message processing.) Generally, the DA will not make changes to the system during this time, if possible. (New Customer POs, WO quantity changes, etc.) Run WO Detail for Customer team meeting and communicate completion to the purchasing team for analysis. The Purchasing team begins to update the shortages on the WO Detail Report Net change might be generated at request of the Purchasing team to refresh data. The DA will analyze WO Detail for SO coverage, cursory analysis of component constraints and "first glance" decisions to firm/hold/defer items in schedule Conduct a WO Detail meeting with the Customer team and determine actions needed (kits to firm, orders to reschedule, etc.) The DA will firm kits in system. When Customer POs are received, generate and analyze the What-If or WO Detail When needed, generate MRP for stock end items to clean up schedule after changes. Finish firming kits- Communicate to FF Planner, who analyzes capacity for a certain area of the manufacturing floor. Individual may be responsible for scheduling WOs deployed to the floor, via email. Review top shortages on What-If and determine commitments. Communicate suggested promise dates to PM. When a new forecast is received from Customer, initiate demand analysis (factoring contract and constraints). Upon request from the Purchasing team, generate WO Detail and save to a shared directory As new demand is received, enter it into the JD Edwards based on analysis and completion of MRP for stock end items. Check demand accuracy Examine DA messages and determine required actions Review Supply and Demand report for errors Discuss any changes or problems with schedule with PM Regenerate MRP for assemblies, if needed. (Until valid schedule achieved) Generate a MRP Gross generation or Net Change for release to the buying team. Check the MRP output for accuracy (Regenerate if needed). Generate and save the demand history to shared drive (Supply and demand report) Return to day 1 of the next cycle
11.1.2 After the DA enters the customers forecast and/or SOs into the JDE, they will review all demand for accuracy and then determine if MRP needs to be generated.

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If the DA determined the demand change is significant (i.e., drop-in, reduction, push-out, pull-in, etc.) an MRP generation should occur. For MRP sites, prior to working on messages the DA shall verify that MRP has completed successfully. 11.2 For sites running MRP, the entire demand planning process and release of MRP generation to the purchasing team will occur no more frequently than once every five working days and no less than once every 10 working days. Note: For a Customer with multiple level BOMs, MRP may be generated multiple times during the master scheduling process. After each MRP regeneration, the DA must review the output to validate changes have been processed and the output is acceptable. More frequent generation of MRP must be approved by the MTM or Site Materials Manager. 11.2.1 MRP may be generated more often if the product is a prototype or the Customer is ramping volume, and Plexus needs to acquire additional component materials. These two scenarios are exceptions to the maximum MRP generations stated above. However, if a Customer is continually asking Plexus to generate MRP more than once per week, the DA shall escalate violations to the PM and MTM /Site Materials Manager for resolution with the Customer. 11.2.2 MRP for Manufactured Items 11.2.2.1 How to review and process MRP messages shall be defined in WI 2652. The WI will also address suggested time frames for the DA to complete the processing of MRP and associated message processing. Once all messages and changes are completed (the master scheduling of the manufactured assemblies is complete), the DA can submit another MRP generation. The DA must understand the impact of MRP generations on the Procurement personnel. After verifying that MRP was successful, the DA must communicate that MRP is complete and the procurement team can start answering MRP messages. (The Procurement personnel shall refer to WIs related to SOP 180). 11.2.3 WO Creation 11.2.3.1 If there is no contractual Customer agreement, contract, or Customer PO, no WO kit should ever be opened. The liability for all forms of inventory rest on Plexus if there is no PSA or legal agreement. 11.2.3.2 A WO should be opened once all parts, capacity, and engineering change issues are resolved. 11.2.3.3 For WOs that are firmed (status 10) to be opened (status 20+), it is recommended to reschedule WO start dates in accordance with when shortages will clear. This should be clearly communicated in the Customer team meetings and also to the Customer. WO dates should be maintained, at a minimum, as the WO is released to manufacturing. The WO dates should reflect the expected movement on the manufacturing floor. This enables the capability for manufacturing to schedule and utilize capacity planning functionality. The DA should understand the due date of the WO and should align to meet the Customer ship date. 11.2.3.4 WOs will be created/opened DA by processing a MRP message or manually creating a WO.

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11.2.3.1 The DA shall use MRP to create a WO by responding to an MRP message. The MRP system will make recommendations to the DA that a WO is needed during a designated period of time. The message can be modified if necessary (change dates or quantities) and then processed. The processing of the message will automatically create a WO in JDE. 11.2.3.2 Manually creating a WO is recommended only if there are no existing messages for the said assembly. (If a message exists and a new WO is created, the buyers will see duplicate demand and could purchase excess material). If a WO is opened manually and MRP is planning material, the corresponding planned WO message should be cleared or deleted and MRP regenerated. Otherwise, supply and demand can portray more demand on the component level. Over buying may occur as a result. It is recommended to process MRP messages so the systems will stay consistent in the messaging to sub-assembly and component levels. 12 12.1 FINANCIAL FORECASTING The DA should be involved in the Customers internal forecast review meetings and should generate key information for the financial forecasting process. The DA should be aware of the each assembly and associated dollar amount that is forecasted to corporate for the current and future time periods. They should also be aware of the loaded SO and forecast being driven by MRP. The Customers internal forecast review meeting is the input for the site forecast reviews. Prior to the Customers internal teams forecast review meeting, the DA must drive to answer the following four basic questions, and be able to address the deltas between the four basic questions in the site forecast reviews:
12.2
12.2.1 What is the customer demand? (Sales forecast, Customer POs, etc.) 12.2.2 What is loaded as demand in the system? The demand load should match the customers orders. Exceptions are kanban models, economic order quantities, build sizes or other contractual agreements (PSA, DOU, etc.) 12.2.3 What can we build (Capacity and/or Parts)? Customer demand should not be loaded greater than our capacity to build. We must find ways to resolve the capacity issue internally first (another Focus factory, another plant, etc.) If we have exhausted all means to resolve the issue, we must communicate this to the Customer. 12.2.4 What is the financial forecast to Plexus? 12.2.5 Financial forecast vs. ERP load; If the Customer model is plan to forecast then, the financial forecast should equal or net out with the loaded forecast and POs (SOs) in JDE. If the Customer is in a kanban program, the Plexus ERP system, JDE, will have no demand loaded in the current month to compare to financial forecast. However, there may actually be as much or more demand actually loaded, in the form of kanban ROPs load in the item branch safety stock field, to cover the demand variability over manufacturing lead-time.

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The forecast analysis should be discussed in the Customer teams internal forecast review meetings so issues, such as capacity or part shortages can be raised and resolved. Customer demand, demand load, and financial forecast quantities theoretically, should all equal, with capacity available to match this demand. Our goal is to satisfy what the Customer wants but also alert them of any issues. If capacity is an issue, it is the Customer teams responsibility to escalate the issue to the attention of the Site Manufacturing Manager, and then the General Manager. At the highest level, it is the responsibility of the Director of Operations to resolve the capacity issue. If the constraint is a parts issue, please refer to WI 596. 13 13.1 WO RELEASE TO MANUFACTURING WOs due to be released to manufacturing in the subsequent week should be prioritized by the FF Planner. The Planner must communicate the priority list to the appropriate warehouse personnel and DA. The frequency of communication for WO releases will be determined by the site but will happen at least once per week. The DAs role is to validate that the FF Planner has prioritized for kitting, all WOs for deployment in the following weeks MPS. If the DA determines that the FF Planner has not included all WOs from the prioritized kit list, the DA must solicit the FF Planner for reasons why. If the DA believes the reasons provided are unacceptable, it must be escalated to the MTM. If reasons are acceptable, the DA must communicate to the appropriate team member the fact that scheduled WOs will not be produced and required action and resolution is needed from each person (Notify the Customer, subsequent WO reschedules, etc.) DAs, and in some cases, FF Planners, are the only personnel allowed to open WOs. The exception is for Customer Returned Goods, for which a CRG Coordinator may have authority to open CRG WOs only. WO CHANGES Changes to WOs:
13.2 13.3
13.4
14 14.1
14.1.1 For Customer requests of an increase, drop-in, or pull-in on any schedule, a what-if analysis must be performed and responded to within 48 hours of the request. If the request can be supported, given the lead-time of components and capacity availability, the DA will communicate back to the PM that it is feasible. DAs have the ability to reject the request if the dates are not realistic. (Refer to SOP 811 Corporate Scheduling Process). 14.1.2 If a WO is in Work in Process (WIP), the WO must be completed into stock A WO is considered as WIP from the time the components start to be pulled from inventory and end being in WIP when the unit(s) is completed into inventory as a completed part.. No quantity, date changes, or cancellations of open WOs should occur without permission from the Site Materials Manager. WOs may change in quantity if some of the assemblies are transferred to another assembly part number (i.e. where the Customer includes the revision number as part of the assembly part number or WO).

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Engineering changes: Product that is in WIP during an ECO cut in must either be upgraded to the new revision, shipped under the current revision or scrapped and charged to the Customer. If there are common components, a kit can be de-kitted (with approval from the Site Materials Manager). The components can then be removed from the active BOM, dispositioned, and charged to the Customer. VENDOR MANAGED INVENTORY (VMI) AND KANBAN VMI is an inventory model where Plexus holds stock at a Customer Controlled location. On a regular basis, on-site inventory levels are reviewed and are restocked to predefined levels. This is done to reduce the portion of the ARO time associated with transit from Plexus to the Customers dock. A kanban program will probably be required to support a VMI model such as that shown. However, kanban programs may be implemented without VMI in place. Kanban and WO initial sizing, resizing and maintenance Kanban is a pull indicator that is controlled by a card or other type of signal such as a WO or electronic signal. It is the responsibility of the DA to work with the Customer team to determine and maintain the appropriate kanban sizing / resizing quantities. The Material Team Leader will perform the actual calculation. WI 2912 documents the appropriate fields that need to be maintained. The DA will use output from the ROP/ROQ Calculator as the source of data for kanban / WO sizing. Based on other conditions such as size and space limitations or packing sizes, etc., the kanban may be adjusted slightly in this tool. It is the responsibility of the DA to work with the Customer team to determine and maintain the appropriate process for signaling kanbans. Please refer to CP 2459 Supply Chain for additional information about supply chain design. Refer to WI 2912 for additional detail concerning kanban maintenance and review. Kanban sizes are heavily influenced by lead-time. For this reason, the DA should regularly review and maintain FML accuracy as described in this document. Kanban quantities shall be recalculated as often as needed due to changes in the Customer Demand over time, floor space reduction, lead-time reduction, service level change, or other significant factors. It is recommended that this review occur monthly. FML and Kanban quantities must be reviewed at least once per calendar quarter or within the guidelines of the agreement with the Customer. It is suggested that the Customer be a reviewer of this data.
15 15.1
16.2
For Kanban planning, the DA must evaluate kanban replenishments. The Assembly Kanban Report will help with this analysis. Refer to WI 2912 for directions to set-up, run, and maintain the report. In a Kanban process communication with the Customer is essential. Periodic meetings should occur with the Customer. In this meeting the following should be discussed: Go over any issues with current orders Look into the future (Are there any extremely large orders that would cause early actions)? Look at trends of order bookings Talk about unconsumed forecast and what is happening with it

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Forecasting and Consumption Since the Re-order point covers the probable demand within the manufacturing lead-time there should not be any sales forecast (SF) loaded within the greater of the current month or (if demand is loaded after week two of the fiscal month) cumulative lead-time of the assembly. This is important to follow as failure to do so may create excess supply within lead-time. This process is due to having to create a work around in JDE since it does not support true ROP WO generation. In addition, this preserves the ability to populate and share forecasts. There will be no SF loaded in the current month. As a result there will be no past due SFs. If a Customer expects to defer forecast this should be updated in a new forecast to Plexus. The DA should analyze the impact of the forecast changes and their impact on inventory planning and the OIX process. The total impact of these forecast changes will be lessened by the buffering of assembly level kanbans and the fact that the majority of component inventory will be on various supply chain programs.
15.3
Process Flowchart
15.3.1 Regardless of the exact combination of VMI, mix and placement of kanbans, and supporting processes four distinct processes occur: 1. Forecast entry and MRP generation of component requirements for the supply base 2. Processing of Customer kanban pulls to update JDE inventory balances and recognize transfer of ownership
3. Opening of WO kanbans when assembly supply is below an ROP 4. ROP/ROQ parameters will be reviewed and adjusted to reflect changing conditions.
15.3.2 Kanban with VMI The example below is an illustration of a generic kanban process with VMI. In the example, the placement of assembly level inventory in the two Plexus sites servicing a Customer is shown. The PCBA supply and demand relationship between the two sites is also shown. In the example, Inventory pulls occur when the Customer uses Plexus owned inventory in the Customer VMI storage location. The Customers accumulated pulls are summarized at the end of the Customers business day. The total daily pulls for all VMI parts are summarized under one PO number. The pull signals are then communicated to Plexus via EDI or emailed PO.

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812
LL Site
Rev Letter: G.1

FG Site HLA Forecast
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Forecast
Replenishment Signals
FML+ Transit Time
PCBA
FG Site HLA Mfg
Customer Controlled Location FG VMI
Replenishment Signals
WO Pulls
Transit time PCBA Mfg LL Site (10 Days) WO Pulls PCBA
Customer Controlled Location FG VMI
Replenishment Signals HLA Forecast
Replenishment Signals MRP HLA Mfg. LL Site (3 Days) Customer Controlled Location FG VMI Replenishment Signals HLA Forecast
Transit time 5 Days
Kanban with VMI - Multiple Sites 15.3.3 In the next example, a finished goods kanban is maintained at the Plexus site rather than a VMI at a Customer controlled location. In this model, a Customer must be willing to accept a delay in delivery equal to the transit time to the Customer controlled delivery point.

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Kanban without VMI - Multiple Sites 15.4 Model Requirements and ROP/ROQ Levels ROP/ROQ levels are calculated based upon manufacturing lead-times, transit times to the VMI pull point, demand variability and required service level. The higher these variables are and the smaller the ARO requirement is, the higher the ROP will need to be to maintain the desired service level. In the Kanban with VMI example the ROP/ROQ model shows it takes 3 days to manufacture and 5 days to transport VMI HLAs to the Customer. The 3 days to manufacture assumes that all subassembly kanbans are in place to support the HLA pull. The assembly level inventory model in this example should have ROPs established to accommodate the need to replenish the ROP in less than eight (5 + 3) days when needed. If subassembly kanbans are not in place the time to manufacture the HLA ROP will probably need to be higher. When a WO is opened, the subassemblies that go into it will not be complete and available. In this situation, the lead-time used to calculate an HLA ROP would include the leadtime of all child subassemblies not supported by kanbans. This cumulative lead-time can be obtained from the JDE BOM Matrix Lead-time Report. Confidential For Internal Use Only
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Subassembly Kanban Levels The process flowcharts show examples of kanban (triangles) placement. Just as subassembly kanbans should be in place to support HLA pulls many subassemblies will require additional child subassembly kanbans. These additional subassembly kanbans ensure immediate availability to their parent assemblies. This decoupling of upstream steps allows Plexus to defer final configuration and isolate the final conversion lead-time to the HLA.
For the sake of efficiency and clarity, it is recommended that if a shippable item uses a pull system all child items below it follow the same model. The exception to this being if demand is so infrequent and intermittent that a kanban model is clearly not cost effective. If conventional MRP is used for subassemblies they will be pushed to an MRP model while other parent items pull inventory as required. The conflict between the push and pull models will lead to shortages, poor On time delivery (OTD) which is a measure of delivery performance to an internal or external goal and higher inventories. It will also require the DA to perform extra non-value added effort required when using two planning systems instead of one.
15.6
Component Requirements Just as assembly level kanbans are required to support the ARO and service levels, components should be on pull programs as well. At a minimum, 80% of all components should be on some form of supply chain program prior to kanban implementation. If this is not done, ROPs should be calculated at higher level. It is recommended that at least 95% of all components be buffered via supply chain or safety stock in JDE for components. Components not on pull programs will subject parent assemblies to place and chase shortages when WOs are opened. A conflict between assembly level pull and component level push to MRP will also occur. Intersite Demand As displaying in the kanban illustrations above, Inter-site demand consists of three elements: Forecast supplied by the LL site to the FG site Inter-site POs upon ROP/ROQ violation at the FG site supplied to the LL site. Delivery of product within the ARO lead-time agreed to by the two sites.
15.7
In the figure, Kanban with VMI, the FG site is maintaining assembly level kanbans before the parent item production operations to ensure immediate availability of subassemblies supplied by the LL site. If the ARO between Plexus sites in this example were X days the ROP calculated for this kanban is calculated based on the X days it may take from the point inventory drops below the ROP until replenishment. The LL site may also need to maintain a kanban for the units it supplies to ensure that that the ARO is no more than X days. 15.7.1 Communication for Kanban Planning in Multi-site Environment The FG DA communicates the weekly kanban forecast requirements to the LL DA. This may be done using the Supplier Portal or an Excel spreadsheet (see WI 2652). This is what should be loaded into the LL DAs MRP. If the spreadsheet is used the LL DA may also need to receive a copy of the FG sites Assembly Kanban Report (see WI 2652), which shows the levels of inventory the FG DA has on hand. Weekly meetings must occur between the DAs. The Assembly Kanban Report can be used by both DAs to facilitate and prioritize expected kanban releases. Additionally during this meeting the FG DA should communicate any large upcoming orders that the Customer has notified the FG Confidential For Internal Use Only
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DA of. The LL DA must communicate any capacity issues or part shortages (WO Detail) in this weekly meeting.

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Kanban Performance Analysis An important part of the kanban process is analysis of the ROPs to make sure they are properly sized. One way to do this is creating a run chart of the on hand inventory and WIP. This will show when the kanban level is over/under consumed and needs to be addressed. A health of the kanban or VMI Viewer report may be used by the Material Team Leader to provide additional information. These documents can be obtained from a Supply Chain Specialist. DEMAND PLANNING METRICS The metrics (based on Customer Contractual Agreements) used to monitor the demand planning and execution are: (Refer to WI 2652 on available reports to generate.) On-Time-Delivery (OTD) to customer request date Fixed Manufacturing Lead-Time (FML) Days of Inventory (All materials) Days o Raw Material Inventory WO cycle time Demand load versus financial forecast No Past Due Sales Forecast TOOLS WO Detail Application (Reference WI 813) Manufacturing Order Schedule (MOSCH) Management (Reference SOP 811) ROP/ROQ Calculator (Reference WI 2912) Assembly Kanban Calculator (Reference WI 2912) BOM Matrix Report (Reference WI 2652) WO Cycle Time Comparison to FML (Reference WI 2652)
16 16.1
17

Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 Rev Letter: G.1 REVISION HISTORY
REV E.1 F RELEASE DATE 04 Nov 2008 12 Mar 2009 ORIGIN Cheri Wolf Charles Kraus/Cora Schroeder REASON FOR CHANGE (S) Incorporated CR #23208. Changed title of WI 2912 from Configure to Order Process to Demand Management Using the JDE Configurator in Section 3. Incorporated CR #24929. Added requirement to retain forecasts and JDE records in a shared location (11.4). Customer PO requirements and SO approval verbiage also changed (11.10). Added definition of Past Due Period Forecast. Incorporated CR #25574. Update job title from Director of Operations to General Manager in Sections 9.7.2.2 .and 13.2.5. Incorporated CR #32745. Converted to Lean formatting. Referenced WI 2912 in Section 8.1.1 and removed detailed description of pull indicator, WI 2652 and moved information to Section 8.7.2.3, etc. Updated ARO definition in 8.3. In Section 8.7.2.1, added for after lead time. In Section 8.7.2.2, 1st para. changed must to should collaborate with Customer Team, 2nd para. added cumulative in the last 2 sentences, 3rd para. changed FML metric to BOM Matrix Report, clarified last 2 sentences. (Section 8.7 - Specify no SF demand to be loaded inside cumulative assembly lead- time. Overview of process to set lead-times). In Section 8.7.3 made parameter plural in first sentence. Rewrote Section 8.7.3.1, mentioning risk in using minimum order quantity, removed and is an acceptable alternative for assemblies only, added status 10+ after trigger in 4th sentence, changed 20 work days to 19 working days or less. In Section 8.7.3.3, updated reorder quantity and ROP definition. In Section 8.7.3.4, rewrote last sentence regarding size of planned work orders generated during an MRP regeneration. In Section 8.7.6, removed time after later in 1st sentence. In Section 9.1, changed will to may in 1st sentence of first para., changed process to coordinate in second para., Rewrite discussing Supplier Portal overview in Section 9.2. SF demand inside Lead-time - 10.2.1.2 & 10.9, first bullet point. In Section 10.2.1.4, changed time frame to period. In Section 10.2.1.6, changed impact to affect. In Section 11.2.3.3. added (status 10) and opened (status 20+). In Sections 11.2.5 and 11.2.6, removed For MRP sites, In Sections 11.2.6, rewrite sentence on over buying. Added EDI definition in Section 11.4.1. In Section 11.7.1, added in a to the heading. In Section 12.2.5, rewrite of paragraph regarding demand. In Section 14.2, rewrite of last sentence. Added Section 15, regarding Kanban and VMI overview. In Section 18, added last 4 tools in list. Incorporated CR #39487. Changing document references Page 31 of 32
02 Jun 2010
Charles Kraus
G.1
21 Mar 2011
Charles Kraus

Page 32 of 32


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Standard Operating Procedure (SOP) Demand Management and Planning Document Number: 812 TABLE OF CONTENTS Rev Letter:

Confidential For Internal Use Only

Confidential For Internal Use Only

CP 2459 Supply Chain Policies and Design

SOP 812 Section 9 Rules for Demand Planning SOP 48

SOP 811 Corporate Scheduling Process

Supply Chain Design Process

Supply chain analyzed & designed? No Yes Yes Push? No Yes

SOP 812 Section 9 Rules for Demand Planning

SOP 812 Section 10 Multi-Site Processing

Review Rules for DA on Demand Planning

SOP 812 Section 12 MRP Generations

SOP 180 Purchasing Execution and Control

Customer Manager initiates contracting process No

Yes All issues resolved No Update Forecast

SOP 812 Section 9 to 9.3

Pull? No Mixed Model? Yes

PSA Yes Read and or other comprehend agreement contract complete?

SOP 812 Section 8 Legal Agreements

Monthly Forecast Review? No

Monthly Forecast Review Process Yes

Generate Financial Forecast

Forecast for an existing period? No

Yes Analyze forecast Corporate Scheduling Process

Yes All issues resolved No

Forecast Yes for a new period?

SOP 812 Section 13 Financial Forecasting

Review and update financial forecast

SOP 812 Section 11 Demand Receipt, Analysis, Loading and Maintenance

SOP 812 Section 11 Demand Receipt, Analysis, Loading and Maintenance

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Multi-Site Demand Planning

Rescheduled or New Demand

Finished Goods Site Demand Analyst (FG DA)

Update commit information

Prioritize boards when there are capacity or supply variability constraints

PM (and possibly DA) communicates with the Customer on a regular basis

Lower Level Supply Site Demand Analyst (LL DA)

Receive Exploded Demand for Lower Levels

Demand Planning Process

Generate commit dates for demand

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Escalation Process for Demand Receipt

Receive demand within 48 hours ? No Escalate again ?

Demand planning flow

Yes No CM escalates within the Customer organization

Yes Receive demand in 24 hours ?

Wait new Wait demand from the Customer

Demand planning flow

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only

Confidential For Internal Use Only