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

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

P r e s i d e n t
Lance B a c h l i & As s o c i a t e s , L t d .
Des P l a i n e s , I l l i n o i s
ABSTRACT VALUE ANALYSIS I N MANUFACTURING
T h i s p ap er d e s c r i b e s how any co mpany
can b e a W o r l d - Cl a s s c o m p e t i t o r b y u s i n g
Va l u e An a l ys i s ( VA) . I t n o t e s wh er e VA
can b e u s ed i n m a n u f a c t u r i n g co mp ani es ,
b u t mo s t o f t h e p ap er e x p l a i n s how VA i s
u s ed t o s e l e c t o r d e v e l o p o t h e r t o o l s ,
namel y MRP, M R P - I I , J I T , CIM, CIE, DRPS,
R o b o t i c s and AGVS.
COMPETITIVE MANUFACTURING
I N THE WORLD MARKET
Ev er y m a n u f a c t u r i n g co mpany i n t h i s
c o u n t r y mu s t a g g r e s s i v e l y wo r k a t l e a d i n g
t h e wo r l d i n p r o d u c t d e s i g n , ma n u f a c t u r e ,
d i s t r i b u t i o n and s e r v i c e i f t h e y want t o
co mpet e i n t o d a y' s wo r l d eco no my. W o r l d
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 d o i n g r e v e r s e
e n g i n e e r i n g o n o u r p r o d u c t s , p r o c e d u r e s
and met h o d s . Many can j u s t d u p l i c a t e o u r
p r o d u c t s u s i n g t h e i r l o we r - c o s t r e s o u r c e s
and c l a i m o u r ma r k e t s . Ot h e r s make b e t t e r
u s e o f t h e i r r e s o u r c e s b y u s i n g i n g e n u i t y
and some t o o l s t o i mp r o v e u po n wh at we
h av e d o ne and , a g a i n , c l a i m o u r ma r k e t s .
B o t h o f t h e s e p r o c e s s e s t a k e t i m e .
Ti me i s t h e key t o U.S. m a n u f a c t u r i n g ' s
s u r v i v a l . We mu s t u s e t h i s t i me t o o u r
a d v a n t a g e . Ou r p r i m a r y means f o r co m-
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 ah ead o f
o t h e r s b y g e t t i n g t h e g r e a t e s t p o s s i b l e
v a l u e f r o m o u r r e s o u r c e s i n d o i n g wh at we
d o b e s t ; c r e a t i n g new i d e a s , t e c h n i q u e s ,
p r o c e s s e s , p r o d u c t s , e t c . We mu s t d o t h i s
o f t e n and q u i c k l y. Th e p r o c e s s o f VA i s
t h e mo s t p o we r f u l t o o l a v a i l a b l e t o h e l p
m a n u f a c t u r i n g co mp ani es d o j u s t t h a t .
A l l p o r t i o n s o f a m a n u f a c t u r i n g
co mpany' s r e s o u r c e s can b e b e t t e r u t i l i z e d
t o p r o d u ce mo r e and b e t t e r o u t p u t wi t h t h e
a i d o f VA. VA a l s o wo r ks we l l wi t h o t h e r
p r o c e s s e s , s ys t ems , t e c h n i q u e s and met h o d s .
PRODUCTION
O U T S ID E
PRODUCTION
S U P P L I E R S
DEVELOPMENT/OPERATING CYCLE
FOR MANUFACTURING ORGANIZATIONS
Fi g u r e 1.
Fi g u r e 1 r e p r e s e n t s t h e d ev el o p ment ,
and o p e r a t i n g c yc l e o f a m a n u f a c t u r i n g
co mpany i n s i m p l i f i e d f o r m . Each o r g a n i -
z a t i o n h as o ne o r mo r e f u n c t i o n s wh i c h
c o n t r i b u t e t o t h e o v e r a l l g o a l o f maki ng a
s u b s t a n t i a l p r o f i t f o r t h e s t o c k h o l d e r s
t h r o u g h t h e ma n u f a c t u r e and s a l e o f
p r o d u c t s .
VA can b e u s ed i n each ar ea o f t h e
co mpany, s o met i mes i n s e v e r a l ways . Wh er e
i t i s a p p l i e d d epend s u po n t h e need s o f
t h e p a r t i c u l a r co mpany i n v o l v e d . Th e
g e n e r a l r u l e i s t o u s e VA wh er ev er
r e s o u r c e s a r e t o o c o s t l y f o r t h e v a l u e o f
t h e r e s u l t s b e i n g a c h i e v e d .
3
1989 SAVE CONFERENCE PROCEEDINGS
Many p a p e r s h av e b een w r i t t e n a b o u t VA
a p p l i c a t i o n s f o r M a r k e t Res ear ch ( o ne i s
r e f e r e n c e d , 3.) , P r o d u c t Des i g n and
P u r c h a s i n g g r o u p s , s o t h e s e a r e a s w i l l n o t
b e d i s c u s s e d . Ot h e r a r e a s o f manu f ac-
t u r i n g i n e f f i c i e n c i e s h av e b een ap p r o ach ed
b y o t h e r s ys t ems and p r o c e s s e s . Th e
r e ma i n d e r o f t h i s p ap er w i l l l o o k a t some
o f t h e s e .
PRODUCTION
PRODUCTIVITY IMgROVEMENT
Th e p r o d u c t i o n g r o u p s o f a manu -
f a c t u r i n g co mpany t y p i c a l l y c o n t a i n t h e
l a r g e s t amo u nt o f r e s o u r c e s . T h e r e f o r e ,
t h e y o f f e r t h e b i g g e s t a r e a f o r ma x i mi z i n g
o u t p u t and m i n i m i z i n g c o s t s . VA h as o f t e n
b een u s ed as a t o o l f o r i m p r o v i n g p r o d u c t -
i v i t y b y l a r g e amo u nt s , t y p i c a l l y 50% and
s o met i mes c o n s i d e r a b l y mo r e.
Th e p r e f e r r e d ap p r o ach i s t o d o a VA
s t u d y o n t h e e n t i r e m a n u f a c t u r i n g o p e r a -
t i o n t o o r g a n i z e a p l a n t wi t h r e g a r d t o
t h e b i g p i c t u r e , and t o p i n p o i n t a r e a s
t h a t a r e wo r t h f u r t h e r i n - d e p t h s t u d i e s .
Du r i n g t h e i n i t i a l s t u d y t h e wh o l e
o p e r a t i o n can b e a n a l yz e d b as ed u po n any
c o n d i t i o n s t h a t may b e i m p o r t a n t t o t h a t
co mpany. Fo r ex amp l e:
- p l a n n e d f u t u r e p r o d u c t s .
- F l e x i b l e M a n u f a c t u r i n g .
- J u s t - I n - T i m e o p e r a t i o n s .
- Gr o u p Te c h n o l o g y.
- make v e r s u s b u y.
- any o t h e r c o n s i d e r a t i o n s .
Th e f o l l o w- u p s t u d i e s o n s u b - o p er a-
t i o n s can b e p e r f o r me d c o n s i d e r i n g :
- a l l o f t h e p r e c e e d i n g .
- o v e r a l l s t u d y r e s u l t s .
- v a l u e mi s mat ch .
- o u t - o f - d a t e met h o d s .
- o t h e r s o f i mp o r t a n c e .
T h i s ap p r o ach n o t o n l y i mp r o v e s
p r o d u c t i v i t y , b u t o f t e n r ed u ces many o t h e r
c o s t s o f m a n u f a c t u r i n g s u ch a s , e n e r g y,
m a t e r i a l , e q u i p me n t , s u p p o r t , o v e r h e a d ,
and mo r e.
PRODUCTION
SELECTING OTHER SYSTEMS
Many s ys t ems h av e b een a p p l i e d , many
mo r e h av e b een t h e o r i z e d , and s t i l l mo r e
w i l l e v o l v e i n t h e f u t u r e . Ex ampl es o f
s ys t ems t h a t co mp ani es a r e c o n s i d e r i n g a r e
MRP, MRP-II, JIT/TQC, KANBAN, SPC, Q u a l i t y
Ci r c l e s , Q u a l i t y p r o g r ams f r o m Demi ng ,
J u r a n , Cr o s b y, Ta g u c h i , e t c ., FMS, SMED,
EMI, CAD/CAM/CAE, CIM, CIE, DRPS, AGVS,
R o b o t i c s , and t h e l i s t g o es o n.
W i t h a l l o f t h e s ys t ems , t e c h n i q u e s
and met h o d s a v a i l a b l e t o m a n u f a c t u r i n g
co mp ani es , wh i c h a r e b e s t f o r yo u r s ? How
d o yo u s e l e c t t h e r i g h t o n e ( s ) ? W h i ch
c o m b i n a t i o n w i l l g i v e t h e b i g g e s t b ang f o r
t h e b u ck?
Many o f t h e s e s ys t ems a c c o mp l i s h wh at
t h e y wer e i n t e n d e d t o d o and many h av e
n o t . So met i mes e x p e c t a t i o n s a r e t o o h i g h ,
b u t o f t e n t h e cau s e i s a l a c k o f h a v i n g a
s o u nd p r o c e d u r e f o r s e l e c t i n g and i n s t a l l -
i n g s ys t ems .
Her e a g a i n . Val u e An a l yz i n g t h e
need s , want s and r e s o u r c e s o f t h e co mpany
i s a s u p e r i o r met h o d f o r d e c i d i n g . Us i n g
t h e VA p r o c e s s p r o v i d e s t h e means t o
a n a l yz e s ys t ems s o o r g a n i z a t i o n s can
ch o o s e and i mp l ement t h e s ys t e m( s ) t h a t
p r o v i d e t h e g r e a t e s t v a l u e f o r t h e
co mpany.
Ge n e r a l l y, t h e s t e p s f o r a n a l yz i n g
s ys t ems t o g e t t h e b e s t v a l u e a r e :
De f i n e t h e g o a l ( s ) t o b e a c h i e v e d b y
t h e s t u d y.
Es t a b l i s h a s co pe o r f r amewo r k f o r t h e
s t u d y.
De t e r mi n e r e s t r i c t i o n s ( no ne i s b e s t ) .
De t e r mi n e t h e 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 .
- Op e r a t i n g l i m i t s ( p eo p l e & d o l l a r s ) .
- R e t u r n On I n v e s t me n t r e q u i r e m e n t s .
De t e r mi n e c u s t o me r s , u s e r s , and t h e
c h i e f b u yi n g i n f l u e n c e s .
De t e r mi n e and g e t t h e b e s t p e o p l e f o r
t h e s t u d y. I n c l u d e as many s ys t em
i mp l e me n t e r s as p o s s i b l e .
Dev el o p a s c h e d u l e t h a t w i l l f i t e v e r y
p e r s o n i n v o l v e d .
Res er v e t h e l o c a t i o n f o r t h e s t u d y
t h a t i s r emo v ed f r o m i n t e r r u p t i o n s .
De t e r mi n e and f i l l a l i s t o f a l l o f t h e
n e c e s s a r y i t e ms f o r t h e s t u d y.
No t i f y a l l t eam memb er s , t h e i r b o s s es
and u p p er manag ement t h a t t eam member
a t t e n d a n c e i s mand at o r y, and e x p l a i n
a l l a s p e c t s o f t h e s t u d y.
B e g i n t h e s t u d y b y d e t e r m i n i n g t h e
co mpany f u n c t i o n s t o b e a c c o mp l i s h e d
r e g a r d l e s s o f t h e s ys t ems b e i n g
e v a l u a t e d .
Dev el o p a FAST d i a g r a m f o r t h e ab o v e.
I d e n t i f y need s and want s f u n c t i o n s f o r
t h e s ys t e m( s ) b e i n g s t u d i e d .
Set a v a l u e o n a l l o f t h e f u n c t i o n s .
No r m a l l y, t h i s i s t h e l o we s t c o s t t o
r e l i a b l y p e r f o r m t h e f u n c t i o n s .
Ev a l u a t e t h e p e r f o r ma n c e o f t h e s ys t ems
t h a t s a t i s f y t h e need s and want s
f u n c t i o n s .
Es t a b l i s h t h e f u n c t i o n c o s t s ( b o t h f o r
p u r c h a s e and o p e r a t i o n ) f o r each o f
t h e s ys t ems b e i n g e v a l u a t e d .
Co mpar e t h e a l t e r n a t i v e s and s e l e c t t h e
b e s t t h r e e .
4
1989 SAVE CONFERENCE PROCEEDINGS
R e p o r t t h e s e l e c t i o n s t o manag ement
wi t h s u f f i c i e n t d e t a i l o f p e r f o r m -
ance, q u a l i t y , c o s t s , e t c . and t h e
p r o p o s e d i m p l e m e n t a t i o n p l a n ( s ) .
P r es s f o r a manag ement d e c i s i o n t o
p r o c e e d wi t h i m p l m e n t a t i o n .
I mp l ement t h e s ys t e m ( s ) , u s i n g as many
o f t h e VA t eam memb er s as p o s s i b l e .
T h i s a p p r o a c h h e l p s t o o r g a n i z e
e v e r yo n e ' s t h i n k i n g s o t h a t t h e b e s t
p o s s i b l e s o l u t i o n s can b e o b t a i n e d i n t h e
s h o r t e s t t i m e w i t h t h e l e a s t u s e o f
r e s o u r c e s . F o l l o wi n g a r e d e s c r i p t i o n s o f
a f ew o t h e r t o o l s and how t h i s VA p r o c e s s
i s u s ed t o s e l e c t t h e b e s t f o r i n d i v i d u a l
co mp ani es .
MRP
M a t e r i a l R e q u i r e me n t s P l a n n i n g (MRP)
i s a t i me - p h a s e d p r i o r i t y , p l a n n i n g and
s c h e d u l i n g s ys t em t h a t u s es p r o d u c t
s t r u c t u r e d a t a , i n v e n t o r y s t a t u s d a t a ,
o pen o r d e r d a t a and mas t er p r o d u c t i o n
s c h e d u l e 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 -
ment s 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 t h e l a t e
1960' s . I t was a ma j o r s t e p f o r wa r d o v e r
p r e v i o u s met h o d s 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 o v e r m a t e r i a l r e q u i r e m e n t s f o r t h e
m a n u f a c t u r i n g p r o c e s s o f any co mpany. I t
was o r i g i n a l l y a manu al s ys t em, wh i c h
b ecame c o mp u t e r i z e d . Th er e a r e many
v e r s i o n s o f MRP o n t h e ma r k e t f r o m wh i c h
co mp ani es may ch o o s e i f t h e y d e c i d e t o
i mp l ement s u ch a s ys t e m.
MRP s ys t ems can b e i mp l ement ed as a
s t a n d - a l o n e s ys t em o r as a p a r t o f a
l a r g e r s ys t em c a l l e d MRP-II.
MRP-II i s a c l o s e d l o o p s ys t em t h a t
c o n t a i n s t h e f o l l o wi n g s u b -s ys t ems s h o wn
i n Fi g u r e 2.
Top
Minaa<itianl
Planning
Business Pian
Market ing Plan
Pr oducl l on Pian
Resource Requirement s;
Plan OK?
OparatlonG
Planning
Mast er Pr oduct ion
Schedul e
Rough-Cut Capacit y
Plan OK?
Malarial Requirement s Planf-
Capaclt y Requiremenl sl
Plan OK?
Operation
Scheduling
Vendor
Scheduling
O fiaralloni
Managamanl
E xecution
Shop Floor
Control
Purchasing
1=
I Perlormance Measurement
MANUFACTURING RESOURCE PLANNING
Mo s t
d e v e l o p e d
a v a i l a b l e
m u l t i t u d e
p ack ag es .
t h e b e s t p
s h o u l d a c
Ei t h e r way
make t h e b
Fi g u r e 2.
o f t h e s e s u b - s ys t em
i n t o co mp u t er s ys t e
i n t h e mar k et p
o f v e n d o r s i n a
Th e q u e s t i o n a r i s e
ackag e f o r each c
o mpany c r e a t e i t s
VA can b e e f f i c i e
e s t s e l e c t i o n f o r
s h av e b een
ms t h a t a r e
l a c e b y a
v a r i e t y o f
s , wh i c h i s
o mpany? Or ,
own s ys t em?
n t l y u s ed t o
t h e co mpany.
Fo r s e l e c t i n g an MRP o r MRP-II
s ys t em, u s e t h e p r o c e s s d e s c r i b e d e a r l i e r ,
co mp ar i ng t h e s ys t ems r e g a r d i n g :
MRP-II
M a n u f a c t u r i n g Res o u r ce P l a n n i n g (MRP-
I I ) i s a met h o d f o r t h e e f f e c t i v e p l a n n i n g
o f a l l t h e r e s o u r c e s o f a m a n u f a c t u r i n g
co mpany. I t a d d r e s s e s o p e r a t i o n a l p l a n -
n i n g i n u n i t s and f i n a n c i a l p l a n n i n g i n
d o l l a r s and h as s i m u l a t i o n c a p a b i l i t y t o
ans wer " wh a t - i f " q u e s t i o n s .
MRP-II e v o l v e d a f t e r i t b ecame c l e a r
t h a t MRP d i d n ' t c o n t a i n t h e t o t a l ans wer
i n t h e q u e s t f o r a c h i e v i n g t h e t h r e e
p r i m a r y, b u t c o n f l i c t i n g , g o a l s o f manu -
f a c t u r i n g co mp ani es .
A. M a x i mi z i n g cu s t o mer s e r v i c e .
B. M a x i mi z i n g t h e e f f i c i e n c y o f p l a n t
o p e r a t i o n s .
C. M i n i m i z i n g i n v e n t o r y i n v e s t m e n t .
a l l ar eas o f t h e i r e f f e c t s o n p e r f o r -
mance ( p r o d u c t i v i t y) i mp r o v ement .
t h e c o s t s o f each s ys t em co mpar ed .
t h e i r p o t e n t i a l f o r g r o wt h .
t h e i r f l e x i b i l i t y .
t h e i r c o m p a t i b i l i t y wi t h o t h e r s ys t ems
t h a t may b e i n s t i t u t e d a t some f u t u r e
d a t e . e.g . JIT/TQC.
The VA a p p r o a c h t o s e l e c t i n g o t h e r
s ys t ems o r g a n i z e s a " g r o u p " o f p e o p l e i n t o
a " t eam" t h a t d e v e l o p s co mp l ex i n f o r m a t i o n
i n t o r a t h e r s i m p l e d a t a f o r e f f e c t i v e
d e c i s i o n mak i ng .
J I T
J u s t - I n - T i m e ( JI T) can b e d e f i n e d as
an o p e r a t i n g p h i l o s o p h y f o r t h e e n t i r e
co mpany wh i c h h as as i t s o b j e c t i v e t h e
e l i m i n a t i o n o f wa s t e . Th i s can a l s o mean
a l e a d t i me r e d u c t i o n p r o g r am.
5
1989 SAVE CONFERENCE PROCEEDINGS
Was t e i s a n yt h i n g o t h e r t h a n t h e
mi ni mu m amo u nt o f e q u i p me n t , m a t e r i a l s ,
p a r t s , s p ace, and wo r k e r ' s t i m e , wh i c h
a r e a b s o l u t e l y e s s e n t i a l t o ad d v a l u e t o
t h e p r o d u c t .
To a c h i e v e an e f f e c t i v e l e v e l o f
J I T o p e r a t i o n s t a k e s a l o t o f t i m e ,
t r i a l s , e r r o r s and c o r r e c t i o n s , and i s
n e v e r q u i t e f i n i s h e d . I t i s , t h e r e f o r e , a
c o n t i n u o u s i mp r o v ement p r o g r am.
1. Th e o v e r a l l CIM o p e r a t i o n .
2. A s e p a r a t e VA s t u d y f o r each o f t h e
t h r e e a b o v e - l i s t e d a r e a s p l u s a s t u d y
o f t h e s o f t wa r e , h ar d war e and d a t a -
b as es i n v o l v e d .
3. Th e ab o v e s t u d i e s may r e q u i r e mo r e VA
s t u d i e s i n s e p a r a t e a r e a s u nd er each
c a t e g o r y, d e p e n d i n g u po n c o m p l e x i t y.
CIE
Un l i k e mo s t MRP-t ype s ys t ems , J I T i s
n o t a s e t o f co mp u t er p r o g r ams . Ho wev er ,
t h e r e a r e some J I T t e c h n i q u e s u s ed b y some
co mp ani es t h a t may b e a p p l i e d t o o t h e r s .
Th e r e ma i n d e r mu s t b e d e v e l o p e d i n - h o u s e
f o r each p a r t i c u l a r co mpany' s need s .
Her e, a g a i n u s i n g t h e VA s e l e c t i o n
p r o c e s s , a l o n g wi t h Val u e-Ad d ed s e n s i -
t i z i n g , can p r o d u ce t h e b e s t r e s u l t s f o r
i n s t i t u t i n g J I T i n any co mpany. No r mal VA
s t u d i e s a r e a l s o u s e f u l f o r e s t a b l i s h i n g
J I T .
Val u e-Ad d ed s e n s i t i z i n g can a l s o b e
c l a s s i f i e d as t h e e l i m i n a t i o n o f wa s t e .
Sh i g eo Sh i ng o c l a s s i f i e d t h e s ev en was t es
t h a t s h o u l d b e e l i m i n a t e d .
1. Was t e o f o v e r p r o d u c t i o n .
2. Was t e o f wa i t i n g .
3. Was t e o f t r a n s p o r t a t i o n .
4. Was t e o f p r o c e s s i n g i t s e l f .
5. Was t e o f s t o c k s .
6. Was t e o f mo t i o n .
7. Was t e o f maki ng d e f e c t i v e p r o d u c t s .
Th e e i g h t h was t e h as b een d e s c r i b e d
as t h e " was t e o f manag i ng t h e s ev en
wa s t e s ." Much o f t h e t i m e o f f i r s t and
s eco nd l e v e l s u p e r v i s o r s i s s p e n t d o i n g
j u s t t h a t .
Co mpu t er I n t e g r a t e d En t e r p r i s e ( CIE)
i s t h e i n t e r f a c i n g o f mo s t o f t h e co mp u t er
s ys t ems o f a b u s i n e s s t o o p t i m i z e r e s o u r c e
u t i l i z a t i o n and b e t t e r c o n t r o l t h e b u s i -
nes s . Th i s a l l o ws t h e b e s t c o mb i n a t i o n o f
a c t i v i t i e s t o :
A. Max i mi z e cu s t o mer s e r v i c e .
B. Max i mi z e t h e e f f i c i e n c y and e f f e c t n e s s
o f co mpany o p e r a t i o n s .
C. M i n i mi z e r e s o u r c e i n v e s t m e n t .
Th e VA ap p r o ach i s t h e same as f o r
CIM e x c e p t t h e r e a r e mo r e i t e ms t o
c o n s i d e r , wh i c h make i t mo r e co mp l ex .
Ho wev er , t h e VA ap p r o ach o r g a n i z e s and
s i m p l i f i e s t h e p r o c e s s s o t h a t t h e b e s t
s o l u t i o n s a r e o b t a i n a b l e .
AGVS
Au t o mat ed Gu i d ed Ve h i c l e Sys t ems
(AGVS) a r e co mp u t er c o n t r o l l e d p i l o t l e s s
v e h i c l e s u s ed f o r t r a n s p o r t i n g m a t e r i a l
and u s u a l l y l o a d i n g and u n l o a d i n g m a t e r i a l
o r p a r t s f o r p r o c e s s i n g a t au t o mat ed
wo r k s t a t i o n s .
CIM
Co mpu t er I n t e g r a t e d M a n u f a c t u r i n g
( CIM) i s t h e o r d e r l y i n t e g r a t i o n o f
co mp u t er - b as ed o p e r a t i o n s t o o p t i m i z e
r e s o u r c e u t i l i z a t i o n . Ar eas t h a t a r e
t y p i c a l l y i n v o l v e d a r e :
P r o d u c t and P r o ces s De s i g n .
M a n u f a c t u r i n g P l a n n i n g and Co n t r o l .
P r o d u c t i o n P r o c e s s .
Th e VA p r o c e s s f o r d e t e r m i n i n g t h e
b e s t ap p r o ach f o r d e v e l o p i n g a CIM s ys t em
t h a t b e s t f i t s a co mp ani es need s , i s t o
h av e s e v e r a l VA s t u d i e s t h a t ex ami nes
i t e ms i n t h e f o l l o wi n g o r d e r :
AGVS s ys t ems t y p i c a l l y r e p l a c e co n-
v e yo r s and /o r t r a n s p o r t eq u i p ment , and
l o a d i n g / u n l o a d i n g eq u i p ment . Th ey o f f e r
g r e a t f l e x i b i l i t y , and p r o v i d e u s e f u l
e x p e r i e n c e f o r f u t u r e a u t o ma t i o n . On t h e
n e g a t i v e s i d e , t h e y a r e c o s t l y and
t y p i c a l l y r e q u i r e b a l a n c e d p r o d u c t i o n .
To make an AGVS s ys t em wo r k e f f e c -
t i v e l y r e q u i r e s c a r e f u l p l a n n i n g , ch ang es
t o h i s t o r i c manag ement and o p e r a t i o n a l
p h i l o s o p h y, wo r k e r m o t i v a t i o n and t r u e
t eamwo r k. Op e r a t o r i n t e r f a c e w i i 1 i n f l u -
ence s ys t em p e r f o r ma n c e .
When d o i n g a VA s e l e c t i o n o f an AGVS,
co mpar e:
P er f o r mance i mp r o v ement s a c h i e v e d b y
t h e s ys t ems .
Co s t s .
Q u a l i t y r e q u i r e d o f o u t p u t .
6
1989 SAVE CONFERENCE PROCEEDINGS
Er g o no mi cs o f a p p l i c a t i o n s .
F l e x i b i l i t y r e q u i r e m e n t s .
Fu t u r e Au t o ma t i o n .
ROBOTICS
I n d u s t r i a l Ro b o t s can d o mo r e t h a n
AGVS. T h e r e f o r e , t h e y a r e c o s t l i e r , and
t h e y a r e f a r c o s t l i e r t h a n p e o p l e . Th e
u s e o f Ro b o t s r e q u i r e s e x p e r t s i n co mp u t er
s c i e n c e , c o mmu n i c a t i o n s and d a t a b as e
t e c h n o l o g y.
Ro b o t s a r e v e r y u s e f u l , and o f t e n
c o s t e f f e c t i v e , wh en u s ed i n h az ar d o u s
a r e a s s u ch as i n :
Ar eas t h a t a r e t o o h o t o r c o l d f o r
h u mans t o b e e f f e c t i v e .
Ar eas c o n t a i n i n g t o x i c f u mes and /o r
c h e m i c a l s .
Hi g h r a d i a t i o n a r e a s .
Ou t e r s p ace.
Ro b o t s a r e a l s o u s ed wh en:
P l a n n i n g f o r a u t o m a t i o n .
De v e l o p i n g s k i l l s .
De v e l o p i n g r o b o t i c t e c h n o l o g y.
En c o u r a g i n g l o n g - t e r m and /o r h i g h - r i s k
p r o j e c t s .
I t ems t o c o n s i d e r :
De t e r mi n e i f t h i s i s a h i g h - c o s t i t e m .
I s t h e h i g h c o s t d u e t o h u man h az ar d ?
Dev el o p a mas t er p l a n .
Co mb i ne m a n u f a c t u r i n g and d e s i g n e n g i -
n e e r s o n t h e p r o j e c t .
P e r f o r m s i m u l a t i o n s t u d i e s o n t h e i m-
p a c t o f u s i n g R o b o t s .
Dev el o p a t eam o f R o b o t i c s e x p e r t s .
Le a r n and b u i l d u po n p a s t e x p e r i e n c e .
When d o i n g a VA s e l e c t i o n o f R o b o t s ,
co mp ar e:
P er f o r mance ( P r o d u c t i v i t y ) .
Co s t s ( i n c l u d i n g h a z a r d s ) .
Q u a l i t y r e q u i r e d o f o u t p u t .
Er g o no mi cs .
Fu t u r e a u t o m a t i o n .
DELIVERY
Th e d i s t r i b u t i o n s ys t ems o f manu-
f a c t u r i n g co mp ani es h av e f o r many ye a r s
b een an o p p o r t u n i t y a r e a f o r VA s t u d i e s .
R e s u l t s h av e b een j u s t as g o o d h e r e as i n
t h e o t h e r ar eas o f co mp ani es . I n a d d i -
t i o n , c o m m e r c i a l l y a v a i l a b l e d i s t r i b u t i o n
s ys t ems h av e b een a n a l yz e d f o r b e s t v a l u e .
DRPS
D i s t r i b u t i o n R eq u i r ement s P l a n n i n g
Sys t ems (DRPS) a r e a v a i l a b l e t h a t d e t e r -
mi ne t h e need s t o r e p l e n i s h i n v e n t o r y a
b r a n c h war eh o u s es . Fr e q u e n t l y, a t i m e -
p h as ed o r d e r p o i n t ap p r o ach i s u s ed wh er e
t h e p l a n n e d o r d e r s a t t h e b r a n c h war eh o u s e
l e v e l a r e " e x p l o d e d " v i a MRP l o g i c t o
b eco me g r o s s r e q u i r e me n t s o n t h e s u p p l yi n g
s o u r c e .
When d o i n g a VA s e l e c t i o n o f DRP
s ys t ems , co mpar e:
P e r f o r ma n c e .
Co s t s .
Th e MRP/MRP-II s ys t em u s ed .
Pu s h o r p u l l d i s t r i b u t i o n .
P r o d u c t ma r k e t s : c u r r e n t and f u t u r e .
Sys t em g r o wt h p o t e n t i a l .
SERVICE
Se r v i c e g r o u p s h av e cu s t o mer c o n t a c t
ev en mo r e t h a n M a r k e t i n g . De t e r m i n i n g t h e
v a l u e s t h a t cu s t o mer s p l a c e o n t h e s e r v i c e
f u n c t i o n s can b e a c q u i r e d u s i n g t h e same
t e c h n i q u e s as d o ne i n VA f o r m a r k e t i n g .
I n f a c t , t h e same mar k et r e s e a r c h s e s s i o n
wi t h d i r e c t cu s t o mer c o n t a c t can a l s o b e
u s ed f o r g e t t i n g i n p u t a b o u t c u s t o me r s '
v a l u e o f s e r v i c e f u n c t i o n s . Th e r e s u l t s
can b e u s ed as i n p u t f o r VA s t u d i e s i n
De s i g n , P r o d u c t i o n and D i s t r i b u t i o n .
STRATEGIC PLANNING
DOING THINGS RIGHT VS. DOING RIGHT THINGS
S t r a t e g i c p l a n n i n g h as b een d o ne
u s i n g VA b y many co mp ani es . Th e p r o c e s s i s
t h e same b u t t h e r e s u l t s a r e f a r g r e a t e r
r e g a r d i n g t h e o v e r a l l h e a l t h o f t h e
co mpany. Her e' s wh y.
A b u s i n e s s w i l l p r o b a b l y d e c l i n e i f
i t o n l y i mp r o v e s i t s e f f i c i e n c y ( d o i n g
t h i n g s r i g h t ) .
A b u s i n e s s w i l l p r o b a b l y s u r v i v e i f
i t o n l y i mp r o v e s i t s e f f e c t i v e n e s s ( d o i n g
t h e r i g h t t h i n g s ) .
A b u s i n e s s w i l l p r o b a b l y g r o w i f i t
i mp r o v es b o t h e f f e c t i v e n e s s and e f f i c i e n c y
( d o i n g t h e r i g h t t h i n g s r i g h t t h e f i r s t
t i m e ) . Th i s i s t h e g o a l o f VA as d e f i n e d
b y L a r r y M i l e s and as u s ed i n p r a c t i c e .
7
1989 SAVE CONFERENCE PROCEEDINGS
Us i n g VA a t t o p l e v e l s f o r s t r a t e g i c
p l a n n i n g , a l o n g wi t h c u r r e n t p r o c e s s e s ,
can b e t h e d r i v i n g f o r c e f o r maki ng
co mp ani es wo r l d - c l a s s c o m p e t i t o r s .
MA R K E T
R E S E A R C H
/
\
\
\
PRODUCT
H
DE S IGN
PRODUCTION
O U T S I D E
PRODUCTION
S U P P L I E R S
VALUE ANALYSIS I N THE
DEVELOPMENT/OPERATING CYCLE
FOR MANUFACTURING ORGANIZATIONS
Fi g u r e 3.
CONCLUSION
Fi g u r e 3 g r a p h i c a l l y
wo r k s i n t h e d ev el o p ment
c yc l e o f a m a n u f a c t u r i n g c
v e r y p o we r f u l t o o l wh o s e
b o t t o m l i n e i s d r a m a t i c ,
co mpany can r e d u c e c o s t s
p r o d u c t s , p r o c e s s e s , e t c .
h e l p yo u r p e o p l e g e n e r a t e
i d e a s and s e l e c t t h e o t h e r
s t a y ah ead o f c o m p e t i t i o n .
s h o ws how VA
and p r o d u c t i o n
o mpany. VA i s a
e f f e c t o n t h e
W i t h VA, yo u r
wh i l e i m p r o v i n g
, and i t w i l l
c r e a t i v e , new
t o o l s need ed t o
REFERENCES
1. Thomas E. Vo l l ma n n , W i l l i a m L. B e r r y,
D. Cl a y Wh yb ar k, M a n u f a c t u r i n g P l a n -
n i n g and Co n t r o l Sys t ems , R i c h a r d D.
I r w i n , I n c ., Homewood, I l l i n o i s , 1984 .
2. R o b e r t W. Ha l l , A t t a i n i n g Manu f ac-
t u r i n g Ex c e l l e n c e , Dow J o n e s - I r wi n ,
Homewood, I l l i n o i s , 1987 .
3. Thomas F. Co o k, CVS, De t e r mi n e Va l u e
Mi s -Mat ch b y M e a s u r i n g Us er /Cu s t o mer
A t t i t u d e s , SAVE P r o c e e d i n g s , 1986
I n t e r n a t i o n a l Co n f e r e n c e , p. 14 5-152.
8