Visual 1-1 Manufacturing Resource Planning M&IS Section 001 David F. Bolton, CFPIM, C.P.M. Materials Manager, Rotek Inc.

Visual 1-2 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

Visual 1-3 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

Visual 1-4 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

Visual 1-5 Manufacturing Planning and Control Involves Production planning Implementation and control Inventory management

Visual Manufacturing v. Service Operations What does a manufacturing firm provide?...example A service firm?…example

Visual 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)

Visual 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...

Visual 1-9 Wealth Creation What is wealth? Where does wealth come from? How can we increase our wealth? How can we add value?

Visual 1-10 External Environment World competition Quality Customer expectations

Visual 1-11 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

Visual 1-12 Manufacturing Strategies Make-to- Stock Design InventoryManufactureAssembleShip Delivery Lead Time ManufactureInventoryAssembleShip ManufactureAssembleInventoryShip PurchaseManufactureAssembleShip Engineer- to-Order Make-to- Order Assemble- to-Order Delivery Lead Time Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, third edition, Prentice-Hall, 1998

Visual 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 Continuous What are some examples of each, and why?

Visual 1-14 Manufacturing Processes Continuous Production Repetitive Production Product Layout Intermittent Production (Job Shop) Process LayoutProject Layout Manufacturing Processes

Visual 1-15 Product Layout Workstations in sequence needed to make product Work flows at a nearly constant rate Little work-in-process inventory

Visual 1-16 Characteristics of Product Layout Limited range of similar products Dedicated workstations Sufficient demand Capital intensive

Visual 1-17 Advantages of Product Layout Little work-in-process inventory Short throughput and manufacturing lead times Lower unit cost

Visual 1-18 Process Layout Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, second edition, Prentice-Hall, 1996

Visual 1-19 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

Visual 1-20 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

Visual 1-21 Product Layout vs. Process Layout

Visual 1-22 Characteristics of Project Layout Used for large, complex projects Project remains in one location for assembly Avoids cost of moving the product

Visual 1-23 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.

Visual 1-24 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

Visual Order Winners and Qualifiers Characteristics that provide value to the customer Price –standard (catalog) –custom (negotiated) Quality –tangible (conformance, reliability) –intangible (aesthetics, brand)

Visual 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

Visual 1-27 Customer Expectations (Cont.) Order qualifiers Competitive characteristics needed to be a viable competitor Order winners Competitive characteristics that cause customers to choose firm’s products and services

Visual 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

Visual 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

Visual 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

Visual 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

Visual General Information Flow Level of detail increases as information flows from top to bottom Time horizons tend to decrease

Visual 1-33 Capacity Management Techniques Capacity Requirements Planning (CRP) Priority Management Techniques Resource Planning (RP) Sales and Operations Planning (SOP) Rough-Cut Capacity Planning (RCCP) Master Production Schedule 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 differences be resolved?

Visual 1-34 A Typical Manufacturing Organization

Visual 1-35 ENGINEERINGENGINEERING PRODUCTIONPRODUCTION FINANCEFINANCE QUALITYQUALITY MARKETINGMARKETING SALESSALES Traditional “Silo” Organizations

Visual 1-36 Dominant flow of products and services Dominant flow of demand and design information Basic Supply Chain

Visual 1-37 Physical Supply/Distribution Movement of goods from suppliers to the beginning of the production process and from the end of the production process to consumers Activities Transportation Distribution inventory Warehousing Packaging Materials handling Order entry

Visual 1-38 Profit = Revenue – Expense Company Objectives Best customer service Lowest production costs Lowest inventory investment Lowest distribution costs

Visual 1-39 Conflicts in Traditional Supply Systems FinanceMarketingOperations This implies Inventory investment Objective Customer service Production efficiency Increase profit and cash flow, reduce investment Increase revenueReduce manufacturing cost

Visual 1-40 Role of Materials Management DemandResources

Visual 1-41 Why Plan? To satisfy customer demand and ensure the availability of resources Material Capacity

Visual 1-42 These are questions of priority and capacity. A Good Planning and Control System