supply chain management (planning and control systems) report

Report Research By:

Maen Aloquili

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Planning and Control Systems |

SUPPLY CHAIN MANAGEMENT

PLANNING AND CONTROL SYSTEMS 236 BSS

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Executive Summary

This paper examines and analyses three different manufacturing companies, by describing

proper optimal systems for each company. This allows them to manage their resources to

facilitate them to the end consumer in terms of volume of output, low cost levels, quality and

quantity, and shorter time targets. The suitable systems that we can apply to each company

are the Material Requirement Planning system (MRP), a hybrid system, which is a

combination of the Just-in-Time (JIT), and MRP systems, and the Just-in-Time system (JIT).

Introduction

Supply chain management is concerned with running and monitoring different types of

activities to ensure that all processes and operations are working effectively. This will

include plans, schedules and resources to provide enough materials and equipment to the

operation. According to (Slack et al, 2007) they define the planning and control management

system as:

“Planning and control is the reconciliation of the potential of the operation to supply products

and services, and the demand of its customers on the operation. It is the set of day-day

activities that run the operations on an ongoing basis.”

The control process in some cases, deals with variables to allow the redesign of the process

and to put all resources needed together. In order to make proper adjustments for specific

elements we need to consider equipment and materials. This can bring improvements and

gain extra credibility with the customer in the long term.

As a result, we have three different kinds of manufacturing companies that will be explained

in detail in this paper. These three companies are manufacturers of Air Conditioning, lawn

mowers and food products. For each company it is required to describe an appropriate

planning and control system that can fit its operations, and to explain the reasons of why we

implement these specific systems in terms of customer needs, variation in demand over time

and appropriate structure of downstream supply chain moving to the end consumer.


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1- Manufacturing of Air Conditioning

For each manufacturer, there are different highly specialised units (high variety and

low volume). Their customers will issue an invitation to tender document (ITT), giving

them exact specifications of the air conditioning such as cooling capacity, `foot print`

required, operating temperature and when to be fitted. These units will be part of a

building project. The average lead-time from order to delivery and assembly is 7

weeks, but in some cases, the lead-time can be 4 months or longer.

1.1 appropriate planning and control system

An appropriate planning and control system, which is recommended for the

manufacturer of Air Conditioning units for industry, is Material Requirement

Planning (MRP).

According to Jacobs and Chase, 2008, the MRP system is a process using the

push system to predict sales and future demand. This helps companies to specify

the volume of products and time horizon, to ensure that all components and

materials are available for production and delivery to the final customer. It also

keeps inventory levels low.

The MRP system provides schedule plans for manufacturing activities to

determine when each product should be order and produce.

The reason that I have chosen the MRP system is to determine how many

products we should produce for the customers in the correct period, and to control

the quantity of components they purchase to meet all the customer needs and at a

competitive price without decreasing customer service.

1.2 Customers’ needs and expectations

To the Air Conditioning manufacturer, customer expectations of quality are high.

When the customer issues an ITT document to upgrade the air conditioning with

new premium levels of brands or units such as cooling capacity or operating


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temperature, they should be able to determine what elements and features they

want to upgrade in their air conditioning. Then the manufacturer for this product

would be able to provide the exact final product that the customer requested.

On the other hand, the team members who are responsible for redesigning the

product for clients should give alternative solutions and outline the goals and the

team members’ tasks. This will reassure the customer demands are being met.

Also by keeping, the customer informed with changes in plans this will increase

the success of the process. (Millett, 2007)

Managing all resources required will lead to increased operational flexibility in to

meet customer. As (Vollmann, et al, 2005) mentioned, “Mass customisation

implies flexibility to produce a variety of products to meet increasing customer

demand... to meet whatever volume is required.”

1. 3 variations in demand over time

Demand management is identifying the customer orders and making accurate

sales forecasts. Response to customer orders should be efficient and effective.

However, because some customers change their mind over time, after ordering a

product, this can lead to changes in delivery time and schedule plans in process.

The volume of sales is also affected by the time of year. During the summer

months, because of increase demand, delivery times can be longer.

In this section, we can use Master Production Schedule (MPS), which includes

main entry to the MRP system and relates time and volume to the specific

products. This drives to know what is assembled, what is manufactured in

process (Slack et al, 2007, p 439-441).

For the Air Conditioning industry, the varieties in demand are hard to identify in

advance and are unpredictable. However, we can assume that the forecast sales

for their product are high in summer and low in winter. This can tell us that

customer demand can vary from year to year and from season to season. As a

result, we cannot use historical data in planning and control process. We should

bear in mind that the product is expected to be in stock and that the lead-time

could be approximately from three to four months in the air conditioning industry.


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1.4 An appropriate structure for the downstream supply chain activities

moving the product to the end consumer

For this product to reach to the final user, the supplier should give proper raw

materials such as metals wires, aluminium’s to the manufacturer. Then these

components can be transferred to different stores to make them ready to

distribute to the retailer, in order to sell them to the customers (see Figure1&2). In

some circumstances, the retailer waits customer orders to know exactly what the

specification they would like to have in their Air Conditioning.

Figure (1)

Figure (2)

Source: (C&G international, 2008) http://www.ceeandgee.com

2- Manufacturer of Lawn mowers

This manufacturer has two products electric power and petrol engine power. These

two products are sold to the public with 20 different product lines. The selling season

is from April to October. The retailer outlet will expect to be out of stock at the end of

selling season.

Supplier Manufacturer Distirbutor Retailer End

Customer


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2.1 Appropriate planning and control system

A suitable planning and control system for lawn mowers manufacture is a hybrid

system, which is a combination of the JIT and MRP systems.

The hybrid system is a dynamic system. This means that the process to produce

these two products can be employed during the operation to reduce inventory level

and eliminate the waste of space and time (Slack et al, 2007).

We have chosen this approach because it can achieve the desired results and

outcomes. It can produce goods effectively according to the complexity of the

operation and levels of control. With low variety and high volume, this can increase

inventory levels and support lead-time.

2.2 Customer needs and expectation

In lawn mower manufacture, by having two different products, electric power and

petrol power and having 20 different product lines, the customers can choose from

variety of products to suit their needs. Customers expect from lawn mower

manufacturers to maintain their lawn, give them guidelines for how to use these

machines properly, speed in delivery and they expect the vendor to manage and to

check the availability of products in stock to meet customers’ expectations.

2.3 Variations in demand over time

In the lawn mower industry, the main selling season is from April to the end of

October; these products should be released before October in order to sell them to

the public.

Sales of lawn mowers can be high with low variation in demand from year to year.

However, within the year there is considerable variation with sales peaking in the

springtime and very low in winter.


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According to the (Productivity Press 2006 : 55-56) “70% of company’s lawn mowers

are sold in spring, during a period of less than 4 months, typically, they can produce

lawn mowers in a minutes or in hour, once they have the raw materials. Moreover,

ErIcksen note that, when customer looking for specific mowers in the spring and the

grass is growing and we don’t have them, they’re going to go to the competitor.”

In order to fulfil the process they needs to set schedules to determine availability of

spare parts and to ensure they have flexible in plant systems.



Raw materials need to be supplied by the extractor in exact amounts to the

manufacturer. The manufacturer produces different types of lawn mowers and

moves them to the distributor who delivers them to the retailer. When they reach the

retailer, his job is to organise and present products in order to sell them to the final

customer.(see Figure 3)

Figure (3)

Extractor

Manufacturer

Dstributor

Retailer

Final Customer


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3- Manufacturer of a brand name food product

Different food products sell minimal variance in volume per month during the year.

3.1 Appropriate planning and control system

An appropriate system that is applicable to food manufacturer is Just in Time (JIT)

philosophy.

JIT is a “pull” technique system that aims to have the right resources and material at

minimum levels, at the right time, at the right place. This means providing products

and services exactly when they are needed in order to achieve cost effective

production (Slack et al, 2007).

JIT is the ideal system for the food industry. This is because JIT reduces waste of

lead-time in warehouses, increases flexibility in process, and provides a good quality

to the customers. We use historical data to predict future demand predictable when

deciding the amount of the stocks we need. Any sudden increase in demand can

cause customer services problems.

3. 2 Customers’ needs and expectations

Customers’ needs may change over time this due to variations in the quality of

product, price preferences, and quality of staff service to the customers (Johnson et

al, 2008).

Mass customisation can satisfy personal needs and wants for the customers;

therefore, customers’ expect on time delivery, high speed and good performance in

process, in order to enable them to satisfy their requirements (Boland, 2008).

Customers can require food instantly with low prices and which meets health and

safety standards. If these are achieved customers’ loyalty will increase.


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3. 3 Variations in demand over time

In food manufacture, demand can be predicted, and there is a stable demand

throughout the year with minimal variations between seasons. This demonstrates

that food manufacture can be a continuous process. For example, in KFC demand

for products is continuous and measurable. Then the workers in product line will

have all requirements ready to use, in order to serve the customer on time. This will

lead to the establishment of effective schedules which will minimise the time needed

for each unit.



When we determine the quantity of products we need to produce, we can order them

locally from different markets or even externally. Then these products are transferred

to the specific processes for packaging to put them in a huge warehouse, in order to

distribute them to the retailers (see Figure 4). Then the retailer will decide how to

manage these goods. At the final step, any customer can order his meal from any

restaurant shop such as KFC.

Figure (4)

Extractor Manufacturer Warehouse Distributor Retailer Final

Customer


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Conclusion

This report aims to address proper planning and control system for different types of

business companies to increase competitive advantage between the organisations and to

maximise profitability and inventory levels. To reach this, this required to analyise historical

data separately to know how the organisations perform.

Therefore, supply chain management is dynamic system that integrates each process

effectively to fulfil the company objectives and drive the organisation to reach perfect

performance in future. As a result, MRP, Just-In-Time, and hybrid system can run the

business easily without interrupting the whole operation.

Therefore, those systems can plan and control different stages in the manufacturing process

and make proper adjustments when required in each company, for example, in reducing

costs of distribution, helping to reduce lead-time consumptions and reaching high quality in

production.


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List of References

1. Slack, N., Chambers, S., and Johnston, R. (2007) operations management. 5th edn.

London: Prentice Hall

2. Jacobs, F., and Chase R. (2008) operation and supply management: The Core. New

York: McGraw- Hill

3. Millett, T (2007) Meeting Customer Needs and Wants [online] available from:<http://ezinearticles.com/?Meeting-Customer-Needs-And-Wants&id=795990> [23 October 2007]

4. Vollmann, T.E., Berry, W.L., Clay Whybark, D. (2005) Manufacturing Planning &Control System for Supply Chain Management. 5th edn. New York: McGraw-Hill Companies

5. Productivity, P (2005) lean supply chain: Collected practices and Cases. New York: productivity Press

6. Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy. 8 edn. London: Prentice Hall

7. C&G International,Inc (2008) supply chain management. Ceeandgee [online]. [Accessed 19 January 2010]. Available at: <http://www.ceeandgee.com/service-supply.php>.

8. Boland, M. (2008) Innovation in food industry. Personalised Nutrition and Mass Customisation [online]. Available from:< http://www.entrepreneur.com/tradejournals/article/182614578.html>. [19 January 2010]

http://ezinearticles.com/?Meeting-Customer-Needs-And-Wants&id=795990

http://www.entrepreneur.com/tradejournals/article/182614578.html

supply chain management (planning and control systems) report

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