Get Started with Program-Based Business

Learning Objectives

After completing this unit, you’ll be able to:

• Explain the pyramid of suppliers and original equipment manufacturers.
• Explain how a program-based business model works.
• Explain the common problems in program-based business and how Manufacturing Cloud helps.
• Enable Program Based Business and set up permissions.

The Pyramid of Manufacturers and Suppliers

Do you know that a single car has more than 20,000 parts and components? The car manufacturer gets these parts and components from many different suppliers, who in turn may depend on other suppliers for raw materials. The supply chain model in the automotive industry thus depends on multiple manufacturers and suppliers. You can think of it as a tiered pyramid, with each layer supplying materials to the layer above it. 

Let’s find out more about these layers. 

• The top layer of the pyramid consists of original equipment manufacturers (OEMs) or car companies. OEMs design vehicles, order components from suppliers, and finally assemble the vehicles. The next three layers of the pyramid consist of suppliers who sell components.
• The second layer of the pyramid consists of Tier 1 suppliers who supply parts or accessories directly to OEMs. Sometimes, Tier 1 suppliers produce parts specifically for one or two OEMs.
• The third layer of the pyramid is made up of Tier 2 suppliers. They supply components to Tier 1 suppliers and other companies.
• The fourth and bottom layer of the pyramid is made up of Tier 3 suppliers who supply raw materials like metal and plastic to all the other layers.

In aerospace, automotive, and other make-to-order industries, manufacturing suppliers work with their customers in a program-based model. Here’s how the model works.

1. Suppliers gather production forecasts for a new program from OEMs or from external research sources such as Information Handling Services Markit (IHS Markit). Companies like IHS Markit host production forecasts on their website for major OEMs and suppliers can easily import that data into their system. A key account manager in a Tier 1 supply company works closely with the OEM account to understand the equipment requirements for the program. Managers often use third-party research data for program forecasts.
2. Based on this data, the supplier forecasts the components that are required for the program and accordingly plans the potential products that they can supply to the OEM.
3. Based on their customers’ program and forecasts of different variants/models in the program, account managers develop forecasts for the components to be used in the proposal.
4. Forecasts are adjusted based on the OEM’s inputs for better accuracy. For sales planning, account managers then review the forecasts and component cost data to decide which forecasts to transform into business opportunities.
5. If the supplier wins the proposal, they find recurring business, which is typically monitored as a sales agreement.

In this module, we follow along as Rayler Motors, a Tier 1 supplier, works with Xela Automotive, a high-profile OEM and a well-known brand in the world of car manufacturers.

Rayler Motors and Xela Automotive

Rayler Motors makes car parts such as brakes, suspensions, gear boxes, and axles. Jackie Leong is an account manager at Rayler Motors and handles the account of Xela Automotive. Whenever Xela Automotive launches a new product line or a product variant, Jackie must try and get visibility into parts requirements to manage the inventory of the components better. Jackie wants to create accurate program forecasts so that she can eventually get some recurring business for Rayler Motors. 

Let’s take a look at how Jackie works with Xela Automotive. When Xela introduces a new product line to the market, Jackie proactively collaborates with Xela’s procurement manager to get updates on the new cars and car variants. She then tracks all the requirements with a car program. Rayler Motors relies on third-party market data such as IHS Markit to obtain forecasts for the new car program and for each of the car variants introduced. 

The third-party data specifies projected quantities and revenues, broken down by car model and make, location, and other market-specific factors. Based on that forecast data, Jackie collaborates with the engineering manager at Rayler Motors to plan forecasts for the parts and components that Rayler Motors can supply to Xela for the new cars. 

Before we dive deep into programs and how Jackie manages them, let’s meet Susan Rehman, the admin at Rayler Motors. Rayler Motors uses Salesforce Manufacturing Cloud to manage their run-rate business with customers like Xela Automotive. Susan reaches out to her Salesforce account executive to find out how Manufacturing Cloud can help manage the program-based business process. She learns about Program-Based Business in Manufacturing Cloud, which includes the data model and workflows that Rayler Motors needs. Susan is ready to find out more.

How Do You Manage Your Program Data?

Xela is launching a new sports car model, the PowerUp. Jackie finds out that Xela is creating two variants: PowerUp XZ and PowerUp XZ Plus, each available in multiple colors. The make and model is different for each variant so it’s critical to forecast the supplier components not just at the program level but also at a variant level. 

For example, the XZ Plus variant will have a sunroof and heated seats. Jackie wants to create a manufacturing program and manage the sales process with accurate forecasts so she reaches out to Susan. Susan captures Jackie’s requirements and notes how Manufacturing Cloud can help with each requirement.

All of this sounds very promising, and Susan is excited! Let’s find out what Susan does to set up the Program Based Business feature.

Assign Permissions

Susan enables the following features in the org.

• Advanced Account Forecasting
• Data Pipelines
• Program Based Business

Next, Susan assigns the following permission sets to Jackie so that Jackie can access the objects for program-based business and manage forecasts.

Susan also assigns the Data Pipelines Base User permission set to the System Administrator profile. This permission set helps admins create, customize, run, and monitor the data processing engine definitions.

In the next unit, Susan explores the predefined Forecast Fact objects that come with Manufacturing Cloud and create forecast sets.

Resources

• Salesforce Help: Enable Program Based Business and Supporting Features
• Salesforce Help: Assign User Permissions
• Salesforce Help: Enable Data Pipelines and Features