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  • MRP-II, CIM, JIT/TQC, AND OTHER FASCINATING VE APPLICATIONS

    Lance J. B a c h l i , PE, CVS, CPIM President

    Lance B a c h l i & Associates, L t d . Des P l a i n e s , I l l i n o i s

    ABSTRACT VALUE ANALYSIS IN MANUFACTURING

    This paper describes how any company can be a World-Class c o m p e t i t o r by usi n g Value A n a l y s i s (VA). I t notes where VA can be used i n manufacturing companies, but most o f the paper e x p l a i n s how VA i s used t o s e l e c t or develop o t h e r t o o l s , namely MRP, MRP-II, J I T , CIM, CIE, DRPS, Robotics and AGVS.

    COMPETITIVE MANUFACTURING IN THE WORLD MARKET

    Every manufacturing company i n t h i s c o u n t r y must a g g r e s s i v e l y work a t l e a d i n g t h e w o r l d i n p r o d u c t design, manufacture, d i s t r i b u t i o n and s e r v i c e i f they want t o compete i n today's w o r l d economy. World c o m p e t i t i o n i s c o n t i n u o u s l y doing reverse e n g i n e e r i n g on our produ c t s , procedures and methods. Many can j u s t d u p l i c a t e our products using t h e i r lower-cost resources and c l a i m our markets. Others make b e t t e r use of t h e i r resources by using i n g e n u i t y and some t o o l s t o improve upon what we have done and, a g a i n , c l a i m our markets.

    Both of these processes take t i m e . Time i s the key t o U.S. manufacturing's s u r v i v a l . We must use t h i s time t o our advantage. Our pri m a r y means f o r com-p e t i n g i s t o c o n t i n u o u s l y s t a y ahead of ot h e r s by g e t t i n g t he g r e a t e s t p o s s i b l e value from our resources i n doing what we do best; c r e a t i n g new ideas, techniques, processes, p r o d u c t s , e t c . We must do t h i s o f t e n and q u i c k l y . The process of VA i s the most powe r f u l t o o l a v a i l a b l e t o help manufacturing companies do j u s t t h a t .

    A l l p o r t i o n s of a manufacturing company's resources can be b e t t e r u t i l i z e d t o produce more and b e t t e r o u t p u t w i t h the a i d of VA. VA also works w e l l w i t h other processes, systems, techniques and methods.

    PRODUCTION OUTSIDE PRODUCTION SUPPLIERS

    DEVELOPMENT/OPERATING CYCLE FOR MANUFACTURING ORGANIZATIONS

    Figure 1.

    Figure 1 represents the development, and o p e r a t i n g c y c l e of a manufacturing company i n s i m p l i f i e d form. Each o r g a n i -z a t i o n has one or more f u n c t i o n s which c o n t r i b u t e t o the o v e r a l l goal of making a s u b s t a n t i a l p r o f i t f o r t h e stockholders through t h e manufacture and sale of products.

    VA can be used i n each area of the company, sometimes i n s e v e r a l ways. Where i t i s a p p l i e d depends upon the needs of the p a r t i c u l a r company i n v o l v e d . The general r u l e i s t o use VA wherever resources are too c o s t l y f o r the value of the r e s u l t s being achieved.

    3

  • 1989 SAVE CONFERENCE PROCEEDINGS

    Many papers have been w r i t t e n about VA a p p l i c a t i o n s f o r Market Research (one i s re f e r e n c e d , 3 . ) , Product Design and Purchasing groups, so these areas w i l l n ot be discussed. Other areas of manufac-t u r i n g i n e f f i c i e n c i e s have been approached by o t h e r systems and processes. The remainder o f t h i s paper w i l l look a t some of these.

    PRODUCTION PRODUCTIVITY IMgROVEMENT

    The p r o d u c t i o n groups of a manu-f a c t u r i n g company t y p i c a l l y c o n t a i n t he l a r g e s t amount of resources. Therefore, they o f f e r t h e b i g g e s t area f o r maximizing o u t p u t and m i n i m i z i n g c o s t s . VA has o f t e n been used as a t o o l f o r improving p r o d u c t -i v i t y by l a r g e amounts, t y p i c a l l y 50% and sometimes c o n s i d e r a b l y more.

    The p r e f e r r e d approach i s t o do a VA study on t h e e n t i r e manufacturing opera-t i o n t o organize a p l a n t w i t h regard t o the b i g p i c t u r e , and t o p i n p o i n t areas t h a t are worth f u r t h e r i n - d e p t h s t u d i e s . During the i n i t i a l study t he whole o p e r a t i o n can be analyzed based upon any c o n d i t i o n s t h a t may be im p o r t a n t t o t h a t company. For example:

    - planned f u t u r e p r o d u c t s . - F l e x i b l e Manufacturing. - Just-In-Time o p e r a t i o n s . - Group Technology. - make versus buy. - any ot h e r c o n s i d e r a t i o n s .

    The f o l l o w - u p s t u d i e s on sub-opera-t i o n s can be performed c o n s i d e r i n g :

    - a l l of the preceeding. - o v e r a l l study r e s u l t s . - value mismatch. - o u t - o f - d a t e methods. - o t h e r s of importance.

    This approach not on l y improves p r o d u c t i v i t y , but o f t e n reduces many o t h e r costs of manufacturing such as, energy, m a t e r i a l , equipment, support, overhead, and more.

    PRODUCTION SELECTING OTHER SYSTEMS

    Many systems have been a p p l i e d , many more have been t h e o r i z e d , and s t i l l more w i l l evolve i n the f u t u r e . Examples of systems t h a t companies are c o n s i d e r i n g are MRP, MRP-II, JIT/TQC, KANBAN, SPC, Q u a l i t y C i r c l e s , Q u a l i t y programs from Deming, Juran, Crosby, Taguchi, e t c . , FMS, SMED, EMI, CAD/CAM/CAE, CIM, CIE, DRPS, AGVS, Robotics, and the l i s t goes on.

    With a l l of the systems, techniques and methods a v a i l a b l e t o manufacturing companies, which are best f o r yours? How do you s e l e c t t he r i g h t one(s)? Which combination w i l l g i v e the b i g g e s t bang f o r the buck?

    Many of these systems accomplish what they were intended t o do and many have not. Sometimes expe c t a t i o n s are too h i g h , but o f t e n the cause i s a lack of having a sound procedure f o r s e l e c t i n g and i n s t a l l -i n g systems.

    Here again. Value Analyzing the needs, wants and resources of the company i s a s u p e r i o r method f o r d e c i d i n g . Using the VA process provides the means t o analyze systems so o r g a n i z a t i o n s can choose and implement the system(s) t h a t p r o v i d e the g r e a t e s t value f o r the company.

    Gen e r a l l y , t he steps f o r a n a l y z i n g systems t o g e t t h e best value a re:

    Define the g o a l ( s ) t o be achieved by the study.

    E s t a b l i s h a scope or framework f o r t he study.

    Determine r e s t r i c t i o n s (none i s b e s t ) . Determine the f i n a n c i a l c o n s i d e r a t i o n s :

    - C a p i t a l i z a t i o n l i m i t s and i t s c o s t s . - Operating l i m i t s (people & d o l l a r s ) . - Return On Investment requirements.

    Determine customers, users, and the c h i e f buying i n f l u e n c e s .

    Determine and get the best people f o r the study. I n c l u d e as many system implementers as p o s s i b l e .

    Develop a schedule t h a t w i l l f i t every person i n v o l v e d .

    Reserve the l o c a t i o n f o r the study t h a t i s removed from i n t e r r u p t i o n s .

    Determine and f i l l a l i s t of a l l of the necessary items f o r the study.

    N o t i f y a l l team members, t h e i r bosses and upper management t h a t team member attendance i s mandatory, and e x p l a i n a l l aspects of the study.

    Begin the study by deter m i n i n g the company f u n c t i o n s t o be accomplished r e g a r d l e s s of the systems being e v a l u a t e d .

    Develop a FAST diagram f o r the above. I d e n t i f y needs and wants f u n c t i o n s f o r

    the system(s) being s t u d i e d . Set a value on a l l of the f u n c t i o n s .

    Normally, t h i s i s the lowest c o s t t o r e l i a b l y perform the f u n c t i o n s .

    Evaluate the performance of the systems t h a t s a t i s f y t h e needs and wants f u n c t i o n s .

    E s t a b l i s h the f u n c t i o n costs (both f o r purchase and ope r a t i o n ) f o r each of the systems being evaluated.

    Compare the a l t e r n a t i v e s and s e l e c t the best t h r e e .

    4

  • 1989 SAVE CONFERENCE PROCEEDINGS

    Report the s e l e c t i o n s t o management w i t h s u f f i c i e n t d e t a i l of perform-ance, q u a l i t y , c o s t s , e t c . and the proposed implementation p l a n ( s ) .

    Press f o r a management d e c i s i o n t o proceed w i t h i m p l m e n t a t i o n .

    Implement the s y s t e m ( s ) , using as many of the VA team members as p o s s i b l e .

    This approach helps t o organize everyone's t h i n k i n g so t h a t the best p o s s i b l e s o l u t i o n s can be obta i n e d i n the s h o r t e s t time w i t h t he l e a s t use of resources. F o l l o w i n g are d e s c r i p t i o n s of a few ot h e r t o o l s and how t h i s VA process i s used t o s e l e c t t he best f o r i n d i v i d u a l companies.

    MRP

    M a t e r i a l Requirements Planning (MRP) i s a time-phased p r i o r i t y , p l a n n i n g and scheduling system t h a t uses product s t r u c t u r e data, i n v e n t o r y s t a t u s data, open order data and master p r o d u c t i o n schedule i n f o r m a t i o n t o c a l c u l a t e r e q u i r e -ments f o r m a t e r i a l s .

    MRP was i n t r o d u c e d i n the l a t e 1960's. I t was a major step forward over p r e v i o u s methods f o r p r o v i d i n g b e t t e r c o n t r o l over m a t e r i a l requirements f o r t he manufacturing process o f any company. I t was o r i g i n a l l y a manual system, which became computerized. There are many ve r s i o n s of MRP on the market from which companies may choose i f they decide t o implement such a system.

    MRP

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