Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 1 Logistical applications and optimizations

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 2 overview Introduction November 02 - definition of business processes November 16 - overview of logistical business processes December 07 - functionality of production processes January 18 - special problems within the supply chain handling December 21 - functionality of sales and distribution processes November 23 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 3 Review on the last session You have learned about vendor managed inventory as an example of purchase optimization You have learned about the main functionality of purchase support processes 1.Marketplaces and e-procurement 2.Vendor evaluation 3.Supplier relationship management You have developed a supply plan You have learned about the main functionality of purchase execution processes 1.Purchase requirements 2.Bidding 3.Purchase order 4.Delivery and payment You have learned about the main parts of a material requirement planning 1.Stock minus by forecast, sales orders or reservations 2.Stock plus by production orders and purchase orders You have developed an actual disposition list

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 4 About this lecture All sessions are split into 2 blocks: from 08:30 to 10:00 and from 10:15 to 11:45 Each session starts with a short review of the last lectures subjects Next I will give you a short theoretical overview of the days subject Each group will then present the results of their discussions I will present theoretical explanations for the discussed subjects Then I will show a example solution for a potential written test question Finally I will give a summary of the key messages for this session Next you probably will develop 3 different subjects in a brainstorming session in 3 groups

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 5 About the written test The written test will NOT be on Friday, February 8th 2013 from 8:30 to 10:00 but on Friday, February 15th 2013 from 8:30 to 10:00 On Friday, March 1 st 2013 from 12:00 to 13:30 we will invite the best participants of the test to a Business Lunch with Dr. Straub (Head of EVONIK Applications Services)

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsslide 6 overview Introduction November 02 - definition of business processes November 16 - overview of logistical business processes December 07 - functionality of production processes January 18 - special problems within the supply chain handling December 21 - functionality of sales and distribution processes November 23 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 7 Functionality of production processes Production planning Production optimization Short break Part 1 Manufactoring execution Part 2

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 8 Production planning Production optimization Short break Part 1 Manufactoring execution Part 2 Functionality of production processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 9 Functionality of production processes, Part 1 Production is the core process of any manufactoring company. Therefore a well design production IT process is a very high potential. Problems and potentials The coordination of production processes with other core logistical processes such as purchase, disposition, distribution and sales is essential for a lean supply chain organisation. The „vertical integration“ provides the interaction of both production planning and production execution processes. The challenge and the aim is the fully IT covered „paperless production“

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 10 Functionality of production processes, Part 1 Understand the important inputs and outputs of each component Understand the main functionality of production planning system Learning targets Understand the involved acting logical business units Understand the interaction with other processes Understand the main functionality of production optimization system

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 11 Plant CustomerStoreTransport Supplier Supply chain processes Supply chain processes represent all main logistical activities for creation of value according to the business definition

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 12 Sales Production planning and scheduling Shipment and distribution Purchasing Logistical crossover processes Business support processes Supply chain processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 13 Production planning Production optimization Short break Part 1 Manufactoring execution Part 2 Functionality of production processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 14 Materials requirements planning (MRP) Materials requirements planning (MRP) Planned production order Production order Actual production QM on produced material MRP lists Goods Used Material & Quantity Production schedule Release Certificate Production planning Delivered to stock Goods Receipt

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 15 Purchase Requir. Materials Requirements Planning (MRP) Materials Requirements Planning (MRP) Sales and Operations Planning (SOP) Sales and Operations Planning (SOP) Conversion of Planned Orders Release of Production and Process Orders Release of Production and Process Orders Actual Production Confirmation Production Controlling MRP lists Goods Receipt Production Papers Planned Order Goods Issue Sales Order Forecast Time and Material MES Material Mangmt Purchase MM CO QM Contr. Inspection Lot Inspection Lot Inspection Results Inspection Results Sales Production planning

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 16 Sales orders and forecasts are the two entries into the MRP process Sales and operations planning (Demand planning) Sales orders are automatically delivered by the sales processes Productions directly to stock without sales orders are usually on the basis of experience leading to a forecast Forcast and sales orders are compensated Production planning Forcasts are usually done by sales departments in cooperation with at least the main customers Forcasts might as well be based on mathematical models interpreting the sales historie and extrapolating the privious data

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 17 Sales orders and forecasts are the two entries into the MRP process Material requirement planning (MRP) According to the BOM the MRP produces reservations on the next level of dispoosition The MRP produces planned production orders or purchase requirements Rules for lot sizes and production times are described in the master data Usually the MRP is done by a disposition department Production planning Planned production orders and purchase requirements are the systems suggestions according to the existing master data

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 18 With the conversion the status of the production operation is changed from suggestion to actual plan Conversion of planned production orders Usually the conversion of planned orders into production orders is done by a production department Production planning

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 19 With the release of a production order production papers are printed to be passed to the working floor for execution Release of production orders Usually the release of production orders is done by a production department Production planning With the release of a production order the preparation of the quality management is triggered too With the release of a production order allocation of input material is triggered too The release of production orders changes the status from „actual planned“ to „start working“

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 20 With the confirmation of a production order the used time and material is booked and the stock is reduced Conformation of production orders Usually the conformation of production orders is done by a production department Production planning With the confirmation of a production order quality management is started With the confirmation of a production order the produced amount of material is booked to the stock The conformation of production orders changes the status from „start working“ to „working (partly) terminated“ While the quality management is in process, the produced material is kept pending in the quality check inventory

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 21 With the controlling of a production order the moving internal average price of the material is adjusted Production controlling Production controlling usually is done by the controlling department Production planning Production controlling is based on the figures delivered to the system in the confirmation process

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 22 Production planning Production optimization Short break Part 1 Manufactoring execution Part 2 Functionality of production processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 23 Sales Production planning and scheduling Shipment and distribution Purchasing Logistical crossover processes => advanced planning systems (APS) Business support processes Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 24 Production Distribution Sale Purchase Network Design (ND) Supply Network Planning (SNP) Procurement Planning Procurement Planning Demand Planning (DP) Global ATP Transport. Planning & Vehicle Scheduling (TP/VS) Transport. Planning & Vehicle Scheduling (TP/VS) Production Planning & Detailed Scheduling (PP/DS) Production Planning & Detailed Scheduling (PP/DS) Long Term Mid Term Short Term DistributionPla nning & Deployment Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 25 Demand Planning (DP) Supply Network Planning (SNP) Transport Planning (TP/ VS) Detailed Scheduling (DS) Production Planning (PP) Deployment Planning Horizon Planning the supply chain with APS Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 26 Generation of detailled production plans –Machine scheduling Methods –Genetic Algorithm –Constraint Programming Time horizon –One week or one month, split into days or hours –Rolling updates in hours –Continous Scheduling Determination of valid working plans for workshops Production Planning & Detailed Scheduling Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 27 Process Orders R/3 Manual Planning w/Excel Release / Print Process Orders APO PP/DS Planning Table APO Optimization APO Alert Monitor APO Manual Data Changes in R/3 Process Orders R/3 Release / Print Comparison of manual planning and planning with APS Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 28 Supply silos Extruders Personal Transport tanks Cattle Warehouse Filling at extrusion in bags, small bundles or feed silos Bag racking Typical planning scenario with APS Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 29 „Bottom-Up“ APS implementation is a success factor Optimization automatically 1x daily or on demand is best practice Reduction of the „manual planning times„ around 80% Reduction of the buffer times at the demand point in time around 50% Comment of a planner on the planning quality: „We did not become worse!!„. High acceptance of advanced planning systems in the companies due to “low hanging fruits” as a quick business benefit Typical experiences with APS Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 30 Practical part: developing the subjects Group A: You produce 3 materials: B (Black) Y (Yellow) W (White) on only one machine Material B is needed: 100 pc on 1.7., 50 pc on 1.8. Lotsize is 50 in 10 days Material Y is needed: 50 pc on 1.8., 100 pc on 1.9. Lotsize is 100 in 10 days Material W is needed: 50 pc on 1.7., 50 pc on 1.9. Lotsize is 50 in 10 days Cleaning time W after B is 10 days, W after Y is 10 days, Y after B is 10 days Cleaning time B after W or Y is 0 days What is your production plan ? 1.you have 20 minutes for group discussion and writing down your ideas 2.afterwards each group has 5 minutes for the presentation of your ideas 3.your are free to use any presentation medium Group B: You produce 3 materials: G (Grey) P (Pink) C (Clear) on only one machine Material G is needed: 100 pc on 1.7., 50 pc on 1.8. Lotsize is 50 in 10 days Material P is needed: 50 pc on 1.8., 100 pc on 1.9. Lotsize is 100 in 10 days Material C is needed: 50 pc on 1.7., 50 pc on 1.9. Lotsize is 50 in 10 days Cleaning time C after P is 10 days, C after G is 10 days, P after G is 10 days Cleaning time G after C or P is 0 days What is your production plan ?

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 31 Example solution for a potential test task, Part 1 You produce 3 materials: B (Black) Y (Yellow) W (White) on only one machine Material B is needed: 200 pc on 1.7., 100 pc on 1.8. Lotsize is 100 in 10 days Material Y is needed: 100 pc on 1.8., 200 pc on 1.9. Lotsize is 200 in 10 days Material W is needed: 100 pc on 1.7., 100 pc on 1.9. Lotsize is 100 in 10 days Cleaning time W after B is 10 days, W after Y is 10 days, Y after B is 10 days Cleaning time B after W or Y is 0 days What is your production plan ? StartTypeEndAmount 1.6.Product W Product B Product B Cleaning10.7. Product Y Product B Cleaning10.8. Product W Product Y

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 32 Summary and key messages, Part 1 Production optimization very high and quick benefits Literature 1.Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 The main challenge within production optimization is the modelling of the system Reliable master and transaction data are indespensable Production planning is mandatory for any Production optimization

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 33 Production planning Production optimization Short break Part 1 Manufactoring execution Part 2 Functionality of production processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 34 Production planning Production optimization Short break Part 1 Manufactoring execution Part 2 Functionality of production processes

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 35 Functionality of production processes, Part 2 The link between production planning at the ERP level and production execution at the shop floor level is seldom realised Problems and potentials If the production planning and the production execution is connected mainly selfdeveloped interfaces are used

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 36 Functionality of production processes, Part 2 Understand the important inputs and outputs of each component Understand the needed components for a MES (Manufactoring Execution System) Learning targets Understand the involved acting logical business units Understand the importance to customize the actual constellation Understand the importance of standard interfaces to the ERP system

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 37 Horizontal Integration Materials Planning Order Release Confirmation Production Controlling Production Order Conversion Enterprise Resource Planning Production Control Systems Sales Order Horizontal Integration Electronic Shiftbook Electronic Shiftbook LIMS Detailed Production- documents Detailed Production- documents Process Flow Operations Process Flow Operations Deployment planning Deployment planning Historical Machine-data and Control-data Historical Machine-data and Control-data Resource- planning Resource- planning Batch Handling Batch Handling Manual Inventory Management Manual Inventory Management Detailed Scheduling Detailed Scheduling Production execution

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 38 QM Control History + Efficiency- analysis Genealogy + Batch Tracing PDC Documents Administration Documents Administration LIMS Available Capacity Personnel power Flow- control Flow- control Detailed Production Planning Detailed Production Planning APS BW ERP (R/3) MES Process Management Process Management PCS Plant Maintenance Management Plant Maintenance Management Resources Production execution

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 39 Production execution Typical MES scenario

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 40 Production execution Process messages as kernel of MES functionality

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 41 Maintenance management Maintenance of tools and machines periodical or preventive maintenance Spare part procurement QM Monitoring the production quality Integration in LIMS Document administration job instruction Drawings production papers Production execution Typical MES fuctionality

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 42 Available Capacity employees (time- and attendance recording, also completion confirmation) resources Process management Production monitoring in a pokier sense Descision support in case of error Machine control Can be adopted by MES, but also through FLS Production execution Typical MES fuctionality

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 43 Sequential control monitoring and control of the production flow product tracking Batch tracing Tracing of components Genealogy and batch tracing conditioning and archiving of operating data Analysis of resource workload and –availability Key Performance Indicator (KPI) History and Service analysis Production execution Typical MES fuctionality

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 44 closing the gap between office- and machinery world increase of the efficiency, flexibility, competitive position, delivery reliability MES provides the vertical integration between business economics and production + logistics augments operational readiness of the manufacturing facilities by abbreviated response times in exceptional cases online coupling of business economics and production enables completely continious business processes complete integration of IT by grouping of single solutions and definined interfaces between ERP – MES – FLS simple integration of new functions resp. connection of new production plans advanced & optimized process flows wider, transparent pools increase of the decision certainty Production execution Benefits by using a MES system

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 45 Flexible expansion Analysis-, planning- and simulation options Integration of existing application scenery well-engineered technical solutions Investment- and implementation effort running operation expenses acceptance of the users Production execution Criteria on requirements for the asortment of MES

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 46 Summary and key messages, Part 2 Literature 1.Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 MES is the mayor challenge to integrate the shop floor and the ERP systems The interfaces are the most complicated structures and should be provided by the supplier of the MES systems The functionality of MES systems may very according to the supplier The functionality must be selectable according to the users demand

Matthias Mekschrat h_DA WS 2012/13Logistical applications and optimizationsSlide 47 Thank you very much for your participation …… and see you on Friday, 21st of December