bolton - introduction

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Manufacturing Resource PlanningM&IS 34064 Section 001

David F. Bolton, CFPIM, C.P.M. Materials Manager, Rotek Inc.

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Session 1

Manufacturing v. Service Organizations Customer Influence in Design Process Categories Order Winners and Qualifiers Business Environment Issues Process Analysis and Information Flows General Information Flows

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Manufacturing Resource Planning (MRP II)

“A method for the effective planning of all resources of a manufacturing company”

—APICS Dictionary

Objective: to integrate the resources of an organization

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Introduction

Introduction of planning and control–all businesses use some form–management must exploit principles

discussed in this text to exceed What impact does the customer have on

the whole selection process?–What system to use is influenced by you

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Manufacturing Planning and Control

Involves Production planning Implementation and control Inventory management

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1.1 Manufacturing v. Service Operations

What does a manufacturing firm provide? ...example

A service firm?…example

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1.1 Manufacturing v. Service

Timing–how long would you wait to have a dishwasher

repaired? Customer Contact

–ever had a poor customer service rep? Quality

–how would it be measured? Inventory

–stored capacity (service at 100% for spares)

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1.2 Customer Influence in Design

Design of the planning and control system is influenced by the customer

Make-to-stock (MTS) Assemble-to-order (ATO)

–package-to-order (breakfast cereal sizes) Make-to-order (MTO) Engineer-to-order (ETO)A number of issues influence these decisions...

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Wealth Creation

What is wealth? Where does wealth

come from? How can we increase

our wealth? How can we add value?

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External Environment

World competition Quality Customer

expectations

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Lead Time

“A span of time required to perform a process”—APICS Dictionary

Delivery lead time “The time from the receipt of a customer order to the

delivery of the product”—APICS Dictionary

Cumulative lead time “The longest planned length of time to accomplish the

activity in question”—APICS Dictionary

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Manufacturing Strategies

Make-to- Stock

Design

Inventory Manufacture Assemble Ship

Delivery Lead Time

Manufacture Inventory Assemble Ship

Manufacture Assemble Inventory Ship

Purchase Manufacture Assemble Ship Engineer-to-Order

Make-to- Order

Assemble- to-Order

Delivery Lead Time

Delivery Lead Time

Delivery Lead Time

Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, third edition, Prentice-Hall, 1998

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1.3 Process Categories

The customer influence can also impact the process used by the firm to deliver...

Project Job Process Batch or Intermittent Processing Repetitive or Flow Processing ContinuousWhat are some examples of each, and why?

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Manufacturing Processes

ContinuousProduction

RepetitiveProduction

Product Layout

Intermittent Production(Job Shop)

Process Layout Project Layout

Manufacturing Processes

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Product Layout

Workstations in sequence needed to make product

Work flows at a nearly constant rate Little work-in-process inventory

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Characteristics of Product Layout

Limited range of similar products Dedicated workstations Sufficient demand Capital intensive

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Advantages of Product Layout

Little work-in-process inventory Short throughput and manufacturing lead

times Lower unit cost

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Process Layout

Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, second edition, Prentice-Hall, 1996

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Characteristics of Process Layout

Intermittent lot production Many different parts processed at

workstations General-purpose machinery Similar types of skills and equipment in

each department Work moves only to required stations

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Characteristics of Process Layout

Relatively easy to change product or volume

Complex and expensive production and inventory control

High work-in-process inventory levels Longer lead times

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Product ProcessCapital costFlexibilityAnnual setup costRun costWork-in-process inventoryProduction and inventory controlcostsLead time

Product Layout vs. Process Layout

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Characteristics of Project Layout

Used for large, complex projects Project remains in one location for

assembly Avoids cost of moving the product

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Business Strategy

To meet customer expectations, a company must be market oriented.

All functions in a business must support this concept.

Operations must be tuned to meet the needs of the marketplace.

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Customer Expectations

Meeting customer expectations requires good communications

Understanding customer needs Two-way communication Working with customers to solve design

and production problems Freeness and openness

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1.4 Order Winners and Qualifiers

Characteristics that provide value to the customer

Price–standard (catalog)–custom (negotiated)

Quality–tangible (conformance, reliability)–intangible (aesthetics, brand)

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1.4 Order Winners and Qualifiers

Characteristics that provide value to the customer...

Delivery–speed–reliability

Pre- and post-sale service Flexibility (product and volume)

–volume–variety

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Customer Expectations (Cont.)

Order qualifiersCompetitive characteristics needed to be a viable competitor

Order winnersCompetitive characteristics that cause customers to choose firm’s products and services

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1.5 Business Environment Issues

The business must understand their market. Customer “learning”

–quality as an order winner v qualifier Competitor moves

–may change strategies (price once a winner, now a qualifier

Multiple markets (may influence system) Product design changes

–technology rapidly changing

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1.6 Process Analysis, Info Flow

The business must understand its internal process and information flow...

Control and reporting points–MRP and many reporting points–JIT and few reporting points

Process analysis and improvement–process mapping–process improvement–process reengineering–value stream mapping

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1.6 Process Analysis, Info Flow

Process Mapping–developing a detail view of the flow of

information• how complete?• How efficient?• Eliminate redundancy• how effective?

Process improvement–Kaizen events

• continuous improvement

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1.6 Process Analysis, Info Flow

Process reengineering–radical changes in processing possible?

• Flow v. batch production? Value stream mapping

–start with customer and map operations–determine takt time

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1.7 General Information Flow

Level of detail increases as information flows from top to bottom

Time horizons tend to decrease

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Capacity Management Techniques

CapacityRequirements

Planning (CRP)

Priority Management Techniques

ResourcePlanning

(RP)

Sales and OperationsPlanning

(SOP)

Rough-CutCapacity

Planning (RCCP)

MasterProductionSchedule

Material Requirements

Planning (MRP)

Production Activity Control

(PAC) Operation Sequencing

Input/Output Control

Planning and Control Hierarchy

At each level, there are three questions:

What are the priorities?

What capacity is available?

How can differencesbe resolved?

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A Typical Manufacturing Organization

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ENGINEERING

PRODUCTION

FINANCE

QUALITY

MARKETING

SALES

Traditional “Silo” Organizations

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Dominant flow of products and services

Dominant flow of demand and design information

Basic Supply Chain

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Physical Supply/Distribution

Movement of goods from suppliers to the beginning of the production process and from the end of the production process to consumersActivities

Transportation Distribution inventory Warehousing Packaging Materials handling Order entry

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Profit = Revenue – Expense

Company Objectives

Best customer service Lowest production costs Lowest inventory investment Lowest distribution costs

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Conflicts in Traditional Supply Systems

FinanceMarketing Operations

This implies

Inventory investment

Objective

Customer service

Production efficiency

Increase profit and cash flow, reduce investment

Increase revenue Reduce manufacturing cost

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Role of Materials Management

Demand Resources

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Why Plan?

To satisfy customer demand and ensure the availability of resources

Material Capacity

Demand Resources

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These are questions of priority and capacity.

A Good Planning and Control System