module 3 :erp manufacturing perspective

Module 2 : ERP Manufacturing Perspective

(5Hrs.)

By

Mrs. Shital H. More

What does a company’s strategy consist of ?

Company strategies concern,

• How to grow the business • How to satisfy customers • How to out compete rivals • How to respond to changing in market conditions • How to manage each functional piece of the business • How to achieve strategic and financial objectives

Historical Perspective

MRP – Material

Requirements

Planning

MRP II – Manufacturing

Resource Planning

ERP- Enterprise

Resource Planning

Outline :

1. MRP: Material Requirement Planning

2. BOM: Bill Of Material

3. MRP II: Manufacturing Resource Planning

4. DRP : Distributed Requirement Planning

5. PDM : Product Data Management

1. Material Requirements Planning (MRP)

• Material Requirements Planning is a time phased priority-planning technique that calculates material requirements and schedules supply to meet demand across all products and parts in one or more plants.

1. Material Requirements Planning (MRP)

• What products are we going to make?

• What are the material needed to make the product?

• What are the material that we have in stock?

• What are the items that need to be purchased?

• Information Technology plays a major role in designing and implementing Material Requirements Planning systems and processes as it provides information about manufacturing needs (linked with customer demand) as well as information about inventory levels.

MRP techniques

• Focus on optimizing inventory.

• Used to explode Bills Of Material(BOM), to calculate net material requirements and plan future production.

• MRP systems use four pieces of information to determine what material should be ordered and when orders should be placed:

1. The master production schedule, which describes when each product is scheduled to be manufactured;

2. Bill Of Materials, which lists exactly the parts or materials required to make each product;

3. Production cycle times and material needs at each stage of the production cycle time; and

4. Supplier lead times.

MRP in context with production management processes

Material Requirements Planning System

Based on a master production schedule, a material requirements planning system:

• Creates schedules identifying the specific parts and materials required to produce end items

• Determines exact unit numbers needed

• Determines the dates when orders for those materials should be released, based on lead times

MRP Inputs MRP Processing MRP Outputs

Master

schedule

Bill of

materials

Inventory

records

MRP computer

programs

Changes

Order releases

Planned-order

schedules

Exception reports

Planning reports

Performance-

control

reports

Inventory

transaction

Primary

reports

Secondary

reports

Master Production Schedule(MPS)

• States which end items are to be produced, when they are needed, and in what quantities

• includes quantities of products to be produced at a given time period.

• Quantities are included both at aggregate and detailed levels.

• Aggregate may refer to monthly production and detailed may refer to weekly or daily production.

• The master production schedule takes the form of a table in which rows represent products and columns represent time components.

15

©The McGraw-Hill Companies, Inc., 2004

Firm orders

from known

customers

Forecasts

of demand

from random

customers

Aggregate

production

plan

Bill of

material

file

Engineering

design

changes

Inventory

record file

Inventory

transactions

Master production

Schedule (MPS)

Primary reports Secondary reports

Planned order schedule for

inventory and production

control (work orders,

purchase orders),

rescheduling notices

Exception reports

Planning reports

Reports for performance

control

Material

planning

(MRP

computer

program)

Bill Of Materials

• gives information about the product structure,

i.e., parts and raw material units necessary to

manufacture one unit of the product of interest.

Bill Of Materials

Bill of materials (BOM): One of the three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.

Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels.

Product Structure Tree: Example 1

Chair

Seat

Legs Cross

bar

Side

Rails

Cross

bar

Back

Supports

Leg

Assembly

Back

Assembly

Level

0

1

2

3

Bicycle(1)

P/N 1000

Handle Bars (1)

P/N 1001

Frame Assembly (1)

P/N 1002

Wheels (2)

P/N 1003 Frame (1) P/N 1004

Product Structure Tree: Example 2

Inventory Records

• One of the three primary inputs of MRP

• Includes information on the inventory status of each item by time period

– Gross requirements (quantity)

– Scheduled receipts

– Amount on hand

– Lead times

– Lot sizes

– And more....

1.2 MRP objectives

The main theme of MRP is “getting the right

materials to the right place at the right time”.

MRP Objectives

Dimension: Objective specifics

• Inventory: Order the right part

Order the right quantity

Order at the right time

• Priorities: Order with the right due date

Keep the due date valid

• Capacity: Plan for a complete load

Plan for an accurate load

Plan for an adequate time to view future load

Outline :

1. MRP: Material Requirements Planning





Manufacturing Resource Planning (MRP II)

• Material requirements planning (MRP) and manufacturing resource planning (MRPII) are predecessors of enterprise resource planning (ERP)

• It is defined as a method for the effective planning of all resources of a manufacturing company.

• It addresses operational planning in units, financial planning and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP.

• It is a total company management concept for using human resources more productively.

Manufacturing Resource Planning (MRP II)

• MRP II went beyond computations of the materials requirement to include loading and scheduling.

• MRP II systems could determine whether a given schedule of production was feasible, not merely from material availability but also from other resource point of view

• Include production facilities, machine capacities and precedence sequences.

Key functions and features

• MRP II is not a proprietary software system and can thus take many forms.

• It is almost impossible to visualize an MRP II system that does not use a computer, but an MRP II system can be based on either purchased–licensed or in-house software.

Key functions and features

Every MRP II system is modular in construction.

Characteristic basic modules in an MRP II system are:

1. Master production schedule (MPS)

2. Bill of materials (BOM)

3. Production resources data

4. Inventories and orders (inventory control)

5. Purchasing management

6. Material requirements planning (MRP)

7. Capacity planning or capacity requirements planning (CRP)

Long-Range Planning

• At the top of the hierarchy we have long-range planning.

• This involves three functions:

1. Resource planning,

2. Aggregate planning,

3. Forecasting.

• The length of the time horizon for long-range

planning ranges from around six months to five

years.

Forecasting

• The forecasting function seeks to predict demands in the future.

• Long-range forecasting is important to determining the capacity, tooling, and personnel requirements.

• Short-term forecasting converts a long-range forecast of part families to short-term forecasts of individual end items.

• Both kinds of forecasts are input to-the intermediate-level function of demand management.

Resource planning

• Resource planning is the process of determining capacity requirements over the long term.

• Decisions such as whether to build a new plant or to expand an existing one are part of the capacity planning function.

• An important output of resource planning is projected available capacity over the long-term planning horizon.

• This information is fed as a parameter to the aggregate planning function.

Aggregate planning

• Aggregate planning is used to determine levels of production, staffing, inventory, overtime, and so on over the long term.

• The level of detail is typically by month and for part families.

• The aggregate planning function will determine whether we build up inventories in anticipation of increased demand (from the forecasting function), "chase" the demand by varying capacity using overtime, or do some combination of both.

Intermediate Planning

include production planning functions:

• Demand management

• Rough-cut capacity planning

• Master production scheduling (MPS)

• Material requirements planning

• Capacity requirements planning

Demand management

• The process of converting the long-term aggregate forecast to a detailed forecast while tracking individual customer orders is the function of demand management.

• The output of the demand management module is a set of actual customer orders plus a forecast of anticipated orders.

• As time progresses, the anticipated orders should be "consumed" by actual orders.

RCCP • Rough-cut capacity planning (RCCP) is used to

provide a quick capacity check of a few critical resources to ensure the feasibility of the master production schedule.

• Although more detailed than aggregate planning, RCCP is less detailed than capacity requirements planning (CRP), which is another tool for performing capacity checks after the MRP processing.

• RCCP makes use of a bill of resources for each end item on the MPS.

CRP • Capacity requirements planning (CRP)

provides a more detailed capacity check on MRP-generated production plans than RCCP.

Short-Term Control

The plans generated in the long- and intermediate-term planning functions are implemented in the short-term control modules, of job release, job dispatching, and input/output control.

Outline :






• Distribution requirements planning (DRP) is a system for inventory management and distribution planning.

• Extends the concepts of MRPII

• DRP provides the basis for integrating supply chain inventory information and physical distribution activities with the Manufacturing Planning and Control system.

• Managing the flow of materials between firms, warehouses, distribution centers.

• DRP helps manage these material flows. Just like MRP did in Manufacturing.

Distribution Requirements Planning

• DRP enables the firm to capture data, including demand conditions, for modifying the forecast and to report current inventory positions.

• DRP provides data for managing the distribution facility and the database for consistent communications with the customers and the rest of the company.

DRP Purposes

DRP & Demand Management

• Demand management is the connection between mfg. and the marketplace.

• Plans derived from the DRP information and shipping requirements are the basis for managing the logistics system.

• Continually adjusts changes in the demand, sending inventories from central warehouse to distribution centers where they are needed.

DRP & Demand Management (Cont)

• DRP is connected to the logistics system

– By helping determine vehicle capacity planning.

– Helping loading.

– Determining warehouse capacity.

– Provides the data to accurately say when availability will be improved and delivery can be expected.

Basic DRP Record

• Forecast requirements (Gross Requirement)

• In transit (Scheduled Receipts)

• Projected available balance (Available)

• Planned Shipments (Planned Order Releases)

Safety Stock and DRP

• When there is more uncertainty in terms of timing, then it may be better to use safety lead time.

• When the uncertainty is in quantity then safety stock may be better.

• Carry safety stock where there is uncertainty (near the customer) or where there is some element of independent demand

• Management uses DRP to plan and coordinate:

– Transportation

– Warehousing

– Workers

– Equipment

– Financial flows

Uses of DRP

Outline :






• Product data means all the information that is somehow relevant to the product.

• Examples of product data :

− Product configurations

− Part definitions and other design data

− CAD drawings, Geometric models

− Images (scanned drawings, photographs, etc.)

− Manufacturing process plans

− Electronically stored documents, notes and correspondence

−Hardcopy documents

−Project plans

− Price catalogues

− Purchase orders

− Bill of materials, etc

Product data management (PDM)

• Product data management (PDM) is a tool to manage all the above mentioned product data and also product development process.

• PDM systems handle the masses of data and information required to design, manufacture and/or assembly products and then support and maintains them.

Who is using PDM?

• Typically the PDM users have been designers and engineers.

• But PDM systems have expanded to include people in many other areas, including manufacturing personnel, project managers, and administrators, as well as those in sales, marketing, purchasing, shipping, and finance.

Product Data Management allows users to:

• Enter and review bills of material.

• Create work centres, and enter costing and accounting information,generate lead times.

• Enter and review processes, operations, ingredients, co-products for process manufacturing.

• Set up, review, approve, and print engineering change orders.

• Set up start dates, manage overlapping and concurrent operations, and calculate lead times

Data integration by system integration

Benefits of using PDM

1. Enhanced co-operation

2. Integration tool

3. Faster Processes

4. Improve productivity by re-using product design information

5. Track and manage all product changes/revisions/approvals

Questions

1. What is MRP? Explain.

2. Explain in Brief MRP II.

3. What is BOM? Explain with example.

4. Explain in brief DRP.

5. What is PDM. Explain what are the benefits of using PDM.

module 3 :erp manufacturing perspective

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