managing production across supply chain
TRANSCRIPT
MANAGING PRODUCTIONS ACROSS SUPPLY CHAIN
SUSHANT SINHASUSHOVAN BEJ
PLANNING AND CONTROLSales and Operation Planning
Master Scheduling
Vendor order ManagementProduction Activity Control
Material Requirement Planning
MASTER SCHEDULINGIt is a detailed planning process that tracks production output and matches this output to actual custom orders. For e.g.
Month Demand Production Inventory
J anuary 1500 1500 700
February 2500 2500 700
March 4000 5000 1700April 5000 6000 2700
Partial sales and operation plan Master Schedule March
Week 1 Week 2 Week 3 Week 4
Demand 200 250 300 350
Push Mowers Production 650 0 650 0
Inventory 200 650 400 750 400
Demand 400 500 600 700
Power Mowers Production 0 1350 0 1350
Inventory 400 0 850 250 900
Demand 100 150 200 250
Lawn tractors Production 250 250 250 250
Inventory 100 250 350 400 400
700
5000
4000
1700
Beginning Invetory
Total Monthly Production
Total Monthly Demand
Ending Inventory
MASTER SCHEDULE RECORD
Most master schedule or Master Production Schedule record track several key pieces of information as following :
• Forecasted Demand• Booked Orders• Projected Inventory Levels• Production Quantities• Units still available to meet customer need (available to promise)
Forecasted Demand Vs. Booked Orders
• In week 45, for instance, the estimated demand for snow blowers is 150, yet the company already has the confirmed order for 170
• While in the month of December booked orders appear to be lagging forecasted demand.
Now as there is considerable difference b/w demand and booked orders. In that case this MSR will help manager to take decision, whether to cut down the production or lower the price.
Month
Weeks 45 46 47 48 49 50 51 52
Forecasted demand 150 150 150 150 175 175 175 175
Booked Orders 170 165 140 120 85 42 20 0
Master Production schedule 300 0 300 0 350 0 350 0
November Decemeber
MeltoMatic Snow Blower
Projected Ending InventoryIt is a conservative estimate of the inventory position at the end of each week, which is calculated using formula
• EI(t) = EI(t-1) + MPS(t)- maximum{F(t), OB(t)}• Where EI(t)=ending inventory in time period (t), EI(t-1)= ending inventory in time
period (t-1)• MPS(t)=master prod. Schedule quantity available in time period (t),• F(t)=Forecasted demand for the time period (t) and OB(t)=order booked for the
time period (t)
On-hand inventory at end of week 44 100
Month
Weeks 45 46 47 48 49 50 51 52
Forecasted demand 150 150 150 150 175 175 175 175
Booked Orders 170 165 140 120 85 42 20 0
Projected Ending Inventory 230 65 215 65 240 65 240 65Master Production schedule 300 0 300 0 350 0 350 0
MeltoMatic Snow Blower
November Decemeber
Available to PromiseIt indicates the number of units that are available for sale each week, given those that have already been promised to customer
• ATP(t) = EI(t) + MPS(t) - ∑OB(t)• ATP(t)= Available to promise in week ‘t’• ∑OB(t)= sum of all orders booked from week ‘t’ until week ‘z’
On-hand inventory at end of week 44 100
Month
Weeks 45 46 47 48 49 50 51 52
Forecasted demand 150 150 150 150 175 175 175 175
Booked Orders 170 165 140 120 85 42 20 0
Projected Ending Inventory 230 65 215 65 240 65 240 65
Master Production schedule 300 0 300 0 350 0 350 0
Available to Promise 65 40 223 330
MeltoMatic Snow Blower
November Decemeber
Material Requirement PlanningSimply, calculates the timing and quantities of material orders needed to support master schedule.i.e translates the master production schedule into planned orders for actual parts and components needed to make the ordered product.
• different from single inventory approach (independent inventory)eg. Amazon
• dependant inventory approachproducts and parts dependant on each other for complete product.eg. IKEA
MRP is different in managing inventory than EOQ ( Economic Order Quantity ) i.e economic system in which the inventory is managed using less space. MRP is based on :
• Bill of Material• Backward Scheduling• Explosion of Bill of Material
BILL OF MATERIAL
It is a listing of all the subassemblies, intermediate parts, and raw materials that go into a parent assembly, showing the quantity of each required to make an assembly.• Involves PLANNING LEAD TIME i.e time from when a component
or material is ordered until it arrives and is ready to use
Bill of MaterialsChair
Seat Back Assembly
Leg Assembly
Legs (2) Crossbar Side rails (2) Crossbar Back Slats
(3)
1 week
1 week
2 week
1 week
2 week 2 week 2 week 2 week 2 week
}Level 0
}Level 1
BACKWARD SCHEDULING
Calculating the deadline by working backward in time so that the component or material is ready to use in time.
EXPLODING OF BILL OF MATERIAL
The process by which one works backward from master schedule to determine the quantity and time for receiving all the various components and sub- assemblies.
MRP RECORD
A record needs to be maintained for the various components and sub-assemblies.
GROSS REQUIREMENT (GR)
The number of products needed for the order.Eg. 500 wooden chairs is the gross requirement
This depends on:• Inventory carried over / closing stock (EI)• Scheduled receipts / units already on order (SR)• Planned receipts / new ordersThis helps to determine any new orders need to be placedi.e NET REQUIREMENTS (NR)
NR(t) = GR(t) - EI(t) – SR(t)
ADVANTAGES OF MRP
• Directly tied to the master production and indicates exact timing and quantity of orders of all components.
• Allows managers to trace every order for lower level items through all the levels of the BOM.
• Tells precisely to the firm and the supplier what needs to be made when.
CONSIDERATIONS FOR MRP
• Requires organizational discipline.
• Must have accurate information ( Master schedule, BOM etc. ).
• Must also incorporate uncertainty so as to offer reliable service. Because a change in a single step can cause drastic effects on the complete procedure ( MRP nervousness ).
Production Activity Control & Vendor Order Mgmt. System
• In this emphasis shifts from planning to execution
• Other capabilities of the system• Route & prioritize jobs going through the supply chain• Coordinate the flow of goods and materials b/w a facility and other
supply chain partners• Provide supply chain partners with performance data on operation
and supply chain activities
Job Sequencing• Job sequencing rules have been used for decades to determine the
order in which job should be processed when resources are limited and multiple jobs are waiting to done.• Critical Ratio =(Total task time remaining)/(days until due)
Carlos Restoration Services
Total Task Days Crticial
JOB Step 1 Step 2 Step 3 Time Until Due RatioUptown Gallery 3 2 3.5 8.5 21 0.405
High Museum 5 2 1 8 20 0.400
Chester College 3 2 5 10 10 1.000
Smith 6 4 1 11 15 0.733
Estimated Days
Which is BEST?First come-first served Days
JOB Start End Start End Start End LateUptown Gallery 0 3 3 5 5 8.5 0
High Museum 3 8 8 10 10 11 0
Chester College 8 11 11 13 13 18 8
Smith 11 17 17 21 21 22 7
Average Lateness 3.75
Earliest Due Date DaysJOB Start End Start End Start End Late
Chester College 0 3 3 5 5 10 0
Smith 3 9 9 13 13 14 0
High Museum 9 14 14 16 16 17 0
Uptown Gallery 14 17 17 19 19 22.5 1.5
Average Lateness 0.375
Earliest Due Date DaysJOB Start End Start End Start End Late
Chester College 0 3 3 5 5 10 0
Smith 3 9 9 13 13 14 0
Uptown Gallery 9 12 12 15 15 18.5 0
High Museum 12 17 17 19 19 20 0
Average Lateness 0.000
Step 1 Step 2 Step 3
Step 1 Step 2 Step 3
Step 1 Step 2 Step 3
Monitoring & Tracking Technology
• Recently, Radio Frequency Identification (RFID), bar coding and online order tracking system have been developed to trace the movement and location of materials in the supply chain and report on the progress of specific jobs.
• Beside helping the company to control its operation and supply chain activities, these system also alert managers to potential problems.
• For e.g. It could help in provide users with real-time information about
the status of manufacturing jobs and required materials. If a shortage of materials threatens to delay job, the system flags the problem and indicates which jobs will be affected.
SYNCHRONISING PLANNING AND CONTROL ACROSS SUPPLY CHAIN
This is done using:• Distribution Requirement Planning (DRP)• KANBAN
DRP helps to synchronize supply chain partners at the MASTER SCHEDULE level.
Kanban helps to synchronize supply chain partners at the PRODUCTION ACTIVITY CONTROL and VENDOR ORDER MANAGEMENT level.
SYNCHRONIZING PLANNING AND CONTROL
PLANNING AND CONTROL
PRODUCTION ACTIVITY CONTROL (PAC) VENDOR ORDER MANAGEMENT SYSTEM
MATERIAL REQUIREMENT PLANNING
MASTER SCHEDULING
SALES AND OPERATION PLANNING ( S&OP)
DISTRIBUTION REQUIREMENT PLANNING
• Time based planning approach similar to MRP
• Observe planned orders at the point of demand ( warehouse ) to determine forecaster demand at source level ( plant )
• Uses MRP style logic to feed accurate demand information into the master schedule
DISTRIBUTION REQUIREMENT PLANNING
KANBAN SYSTEM
Uses cards, containers or visual cues to control the production and movement in the supply chain• Production Activity Control• Vendor Order Management Systems
PRODUCTION ACTIVITY CONTROLAssures that the in-house manufacturing takes place according to plan
VENDOR ORDER MANAGEMENTAssures that the materials ordered from the supply chain partners are received when needed
KANBAN SYSTEMSimply a pull systemi.e Actual downstream demand sets off a chain of events that pull materials through the various process steps.i.e When a finished product goes out, it pulls the materials from the previous steps.
