TABLE OF CONTENTS Page EXECUTIVE SUMMARY 3 OVERVIEW QUESTIONS 10 I. Planning and Control Processes 11 II. Data Management 14 III. Continuous Improvement Processes 15 IV. Performance Measurements 16 V. Overview Question Summary 18 AUDIT QUESTIONS 21 I. Planning and Control Processes 22 A. Strategic Planning 22 B. Business Planning 24 C. Sales & Operations Planning 25 D. Financial Planning, Reporting and Measurements 28 E. “What if?” Simulations 30 F Demand Management-Forecasting, Sales Planning and Order Entry and Promising 31 G. Master Production Scheduling 34 H. Supplier/Purchasing Management 37 I. Material Planning and Material Control 39 J. Capacity Planning and Capacity Control 43 K. New Product/Engineered Product Planning and Control. 44 II. Data Management 46 III. Continuous Improvement Processes 48 A. Education and Training 48 B. Continuous Improvement 52 IV. Performance Measurements 59 V. Audit Questions Summary 65 APPENDIX 67 EXECUTIVE SUMMARY þ Introduction to the ABCD checklist The following report is an ABCD checklist audit of Hypro Corporation. The ABCD checklist was developed by The Oliver Wight Company for use as an evaluation tool to measure the effectiveness of a manufacturing company's abilities to plan and control their business operations. The ABCD checklist is an audit tool which focuses not only on the manufacturing operations , but the company as a whole. All functional areas within the company are evaluated for a high level of integration with the company's objectives and an ability to deliver excellent customer service. Strong emphasis is placed on the subjects of business planning, manufacturing strategy, sales and operations planning, and continuous improvement. þ How the checklist is Used The ABCD audit does more than tell Hypro where they are today, but also gives feedback regarding areas of potential improvement so that Hypro can build a stronger tomorrow. The checklist is designed so it can be performed on a regular basis to continually monitor Hypro's development as a manufacturing organization. This baseline audit will greatly reduce the amount of time required to complete future audits. The ABCD checklist consists of two categories of yes/ no questions; overview questions and audit questions. þ The overview questions consist of 35 high-level questions separated into four sections: planning and control, data management, continuous improvement, and performance measurements. The focus of the overview questions is to determine, on a high-level, if the correct processes are in place and how effectively they are being used. þ The audit questions are much greater in quantity and detail, and are designed to support the overview questions. The focus of the audit questions is on specific actions being used within each process and also takes a closer look at the effectiveness of the processes. The audit questions provide a foundation for a yes/no response to an overview question. Each overview question has the categories of associated audit questions listed in parenthesis after the question. A company's classification as a manufacturing company is determined by the number of "no" responses received to the thirty-five overview questions. The following numerical scale determines Hypro's ABCD classification: Class A 0 to 3 "no" responses Class B 4 to 7 "no" responses Class C 8 to 10 "no" responses Class D 11 to 14 "no" responses þ ABCD Defined The quantitative evaluation of the checklist can be translated into subjective categories which identify key characteristics of companies at each level: LEVEL PLANNING AND CONTROL PROCESSES CONTINUOUS IMPROVEMENT PROCESSES Class A MRP II effectively used company-wide; significant improvements in customer service, productivity, inventory, and costs are realized due to the effective processes utilized by the company. Continuous improvement has become a way-of-life for employees, suppliers, and customers. The company has made considerable progress in the areas of quality, increased throughput, and reduced production costs. Class B Supported by top management; used by middle management to achieve measurable company improvements. Most departments participating and active involvement with some suppliers and customers; making substantial contributions in many areas. Class C Operated primarily as better methods for ordering materials; contributing to better inventory management. Processes utilized in limited areas; some departmental improvements. Class D Information inaccurate and poorly understood by users; providing little help in running the business. Processes not established. þ Hypro's ABCD Status The responses to the over 275 audit questions asked during the interview process at Hypro were e