Manufacturing Resource Planning

M&IS 34064 Section 001

David F. Bolton, CFPIM, C.P.M.

Materials Manager, Rotek Inc.

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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

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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
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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

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Manufacturing Planning and Control

Involves

Production planning

Implementation and control

Inventory management

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1.1 Manufacturing v. Service Operations

What does a manufacturing firm
provide? ...example
A service firm?example

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1.1 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)
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1.2 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...

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Wealth Creation
What is wealth?

Where does wealth

come from?

How can we increase

our wealth?

How can we add value?

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External Environment
World competition

Quality

Customer
expectations

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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

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Manufacturing Strategies
Delivery Lead Time
Design

Purchase

Manufacture

Assemble

Ship

Engineerto-Order

Ship

Make-toOrder

Delivery Lead Time

Inventory

Manufacture

Assemble

Delivery Lead Time

Manufacture

Inventory

Assemble

Ship

Assembleto-Order

Inventory

Ship

Make-toStock

Delivery Lead Time

Manufacture

Assemble

Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, third edition, Prentice-Hall, 1998
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1.3 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?
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Manufacturing Processes

Manufacturing Processes
Product Layout
Continuous
Production

Repetitive
Production

Process Layout

Project Layout

Intermittent Production
(Job Shop)

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Product Layout

Workstations in sequence needed to make

product
Work flows at a nearly constant rate
Little work-in-process inventory

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Characteristics of Product Layout

Limited range of similar products

Dedicated workstations

Sufficient demand

Capital intensive

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Advantages of Product Layout

Little work-in-process inventory

Short throughput and manufacturing lead

times

Lower unit cost

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Process Layout

Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, second edition, Prentice-Hall, 1996

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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

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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

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Product Layout vs. Process Layout

Product

Process

Capital cost
Flexibility
Annual setup cost
Run cost
Work-in-process inventory
Production and inventory control
costs
Lead time
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Characteristics of Project Layout

Used for large, complex projects

Project remains in one location for

assembly

Avoids cost of moving the product

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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.

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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

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1.4 Order Winners and Qualifiers

Characteristics that provide value to the
customer

Price
standard (catalog)
custom (negotiated)

Quality
tangible (conformance, reliability)
intangible (aesthetics, brand)
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1.4 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
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Customer Expectations (Cont.)

Order qualifiers
Competitive characteristics needed to be a
viable competitor
Order winners
Competitive characteristics that cause
customers to choose firms products and
services
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1.5 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

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1.6 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
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1.6 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
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1.6 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

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1.7 General Information Flow

Level of detail increases as information
flows from top to bottom

Time horizons tend to decrease

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Planning and Control Hierarchy

Priority Management
Techniques

Capacity Management
Techniques

Sales and
Operations
Planning
(SOP)

Resource
Planning
(RP)

Master
Production
Schedule

Rough-Cut
Capacity
Planning (RCCP)

At each level, there

are three questions:

Material
Requirements
Planning (MRP)

Production
Activity Control
(PAC)

Capacity
Requirements
Planning (CRP)

Input/Output
Control

What are the

priorities?
What capacity is
available?
How can differences
be resolved?

Operation
Sequencing
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A Typical Manufacturing Organization

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Traditional Silo Organizations

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Basic Supply Chain

Dominant flow of products and services

Dominant flow of demand and design information

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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
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Company Objectives
Profit = Revenue Expense

Best customer service

Lowest production costs

Lowest inventory investment

Lowest distribution costs

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Conflicts in Traditional Supply Systems

Marketing
Objective

Increase revenue

Operations

Finance

Reduce
Increase profit and
manufacturing cost cash flow, reduce
investment

This implies
Customer service

Production efficiency

Inventory investment

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Role of Materials Management

Demand

Resources

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Why Plan?
To satisfy customer demand and ensure
the availability of resources

Material
Capacity
Demand

Resources

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A Good Planning and Control System

These are questions of priority and capacity.

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