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Chapter 14

Chapter 14. Resource Planning. Enterprise Resource Planning (ERP). Organizes and manages a company’s business processes by sharing information across functional areas Connects with supply-chain and customer management applications Largest ERP provider SAP. Finance & Accounting. Sales

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Chapter 14

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  1. Chapter 14 Resource Planning

  2. Enterprise Resource Planning (ERP) • Organizes and manages a company’s business processes by sharing information across functional areas • Connects with supply-chain and customer management applications • Largest ERP provider SAP

  3. Finance & Accounting Sales & Marketing Production & Materials Management ERP Data Repository Human Resources ERP’s Central Database

  4. ERP Implementation • First step is to analyze business processes • Which processes have the biggest impact on customer relations? • Which process would benefit the most from integration? • Which processes should be standardized?

  5. Customer Relationship Management (CRM) • Plans and executes business processes that involve customer interaction • Changes focus from managing products to managing customers • Point-of-sale data is analyzed for patterns used to predict future behavior

  6. Supply Chain Management • Supply chain planning • Supply chain execution • Supplier relationships • Distinctions between ERP and SCM are becoming increasingly blurred

  7. ERP and MRP • MRP (material requirements planning) was the precursor to ERP • Primarily a production planning and control system • MRP evolved to MRP II (manufacturing resource planning) • ERP and ERP II continue to extend the links through all business processes

  8. Material Requirements Planning • Computerized inventory control & production planning system • Schedules component items when they are needed - no earlier and no later

  9. When to Use MRP • Dependent and discrete items • Complex products • Job shop production • Assemble-to-order environments

  10. Master production schedule Product structure file Material requirements planning Item master file Planned order releases Work orders Purchase orders Rescheduling notices Material Requirements Planning

  11. Master Production Schedule • Drives MRP process with a schedule of finished products • Quantities represent production not demand • Quantities may consist of a combination of customer orders & demand forecasts • Quantities represent what needs to be produced, not what can be produced

  12. Basic MRP Processes Exploding the bill of material Netting out inventory Lot sizing Time-phasing requirements

  13. MRP Outputs • Planned orders • Work orders • Purchase orders • Changes to previous plans or existing schedules • Action notices • Rescheduling notices

  14. Capacity Requirements Planning (CRP) • Computerized system that projects load from material plan • Creates load profile • Identifies underloads and overloads

  15. Capacity Terms • Load profile • Compares released and planned orders with work center capacity • Capacity • Productive capability; includes utilization and efficiency • Utilization • % of available working time spent working

  16. More Capacity Terms • Efficiency – how well the machine or worker performs compared to a standard output • Load • The standard hours of work assigned to a facility • Load percent • The ratio of load to capacityLoad % = (load/capacity)x100%

  17. MRP planned order releases Open orders file Capacity requirements planning Routing file Load profile for each machine center Capacity Requirements Planning

  18. 120 – 110 – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Hours of capacity Normal capacity 1 2 3 4 5 6 Time (weeks) Initial Load Profile

  19. Remedies for Underloads Acquire more work Pull work ahead that is scheduled for later time periods Reduce normal capacity

  20. Remedies for Overloads Eliminate unnecessary requirements Reroute jobs to alternative machines or work centers Split lots between two or more machines Increase normal capacity Subcontract Increase the efficiency of the operation Push work back to later time periods Revise master schedule

  21. 120 – 110 – 100 – 90 – 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – Work an extra shift Hours of capacity Push back Pull ahead Push back Overtime Normal capacity 1 2 3 4 5 6 Time (weeks) Adjusted Load Profile

  22. Chapter 16 Scheduling

  23. Scheduling • Specifies when labor, equipment, facilities are needed to produce a product or provide a service • Last stage of planning before production occurs

  24. Scheduling by Process Type • Process Industry • Linear programming • EOQ with noninstantaneous replenishment • Mass Production • Assembly line balancing • Project • Project -scheduling techniques (PERT, CPM)

  25. Objectives in Scheduling • Meet customer due dates • Minimize job lateness • Minimize response time • Minimize completion time • Minimize time in the system • Minimize overtime • Maximize machine or labor utilization • Minimize idle time • Minimize work-in-process inventory • Efficiency

  26. Shop Floor Control Scheduling and monitoring day to day production of a job Loading - Check availability of material, machines & labor Sequencing - Release work orders to shop & issue dispatch lists for individual machines Monitoring - Maintain progress reports on each job until it is complete

  27. Loading • Allocate work to machines (resources) • Perform work on most efficient resources • Use assignment method of linear programming to determine allocation

  28. Sequencing • Prioritize jobs assigned to a resource • If no order specified use first-come first-served (FCFS) • Many other sequencing rules exist • Each attempts to achieve to an objective

  29. Sequencing Rules • FCFS - first-come, first-served • LCFS - last come, first served • DDATE - earliest due date • CUSTPR - highest customer priority • SETUP - similar required setups • SLACK - smallest slack • CR - critical ratio • SPT - shortest processing time • LPT - longest processing time

  30. CR considers both time and work remaining CR = = If CR > 1, job ahead of schedule If CR < 1, job behind schedule If CR = 1, job on schedule time remaining due date - today’s date work remaining remaining processing time Critical Ratio Rule Ties scheduling to Gantt Chart or PERT/CPM and project crashing

  31. Sequencing Jobs Through Many Machines/Processes • Facility is dynamic, new jobs added • Develop global sequencing rules • First-in-system, first-served (FISFS) • Work-in-next-queue (WINQ) • Fewest # remaining operations (NOPN) • Slack per remaining operation (S/OPN) • Remaining work (RWK) • Study system via simulation

  32. Monitoring • Gantt Chart • Shows both planned and completed activities against a time scale • Input / Output Control • Monitors the input and output from each work center

  33. Advanced Planning and Scheduling Systems • Infinite - assumes infinite capacity • Loads without regard to capacity • Then levels the load and sequences jobs • Finite - assumes finite (limited) capacity • Sequences jobs as part of the loading decision • Resources are never loaded beyond capacity

  34. Advanced Planning and Scheduling Systems • Advanced planning and scheduling (APS) • Add-ins to ERP systems • Constraint-based programming (CBP) identifies a solution space and evaluates alternatives • Genetic algorithms based on natural selection properties of genetics • Manufacturing execution system (MES) monitors status, usage, availability, quality

  35. Theory of Constraints • Not all resources are used evenly • Concentrate on the “bottleneck” resource • Synchronize flow through the bottleneck • Use process and transfer batch sizes to move product through facility

  36. Theory of Constraints • What to Change • What to Change to • How to cause the change

  37. Chapter 3 Quality Management Quality is a measure of goodness that is inherent to a product or service. Bottom line: perspective has to be from the Customer – fitness for use

  38. What Is Quality? • “The degree of excellence of a thing” (Webster’s Dictionary) • “The totality of features and characteristics that satisfy needs” (ASQ) • Fitness for use • Quality of design

  39. Quality • Quality Management – not owned by any functional area – cross functional • Measure of goodness that is inherent to a product or service

  40. FedEx and Quality • Digitally Assisted Dispatch System – communicate with 30K couriers • 1-10-100 rule  1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix  10 – if caught later in different department or location = as much as 10X cost  100 – if mistake is caught by the customer = as much as 100X to fix

  41. Product Quality Dimensions • Product Based – found in the product attributes • User Based – if customer satisfied • Manufacturing Based – conform to specs • Value Based – perceived as providing good value for the price

  42. Dimensions of Quality (Garvin) • Performance • Basic operating characteristics • Features • “Extra” items added to basic features • Reliability • Probability product will operate over time

  43. Dimensions of Quality (Garvin) • Conformance • Meeting pre-established standards • Durability • Life span before replacement • Serviceability • Ease of getting repairs, speed & competence of repairs

  44. Dimensions of Quality (Garvin) • Aesthetics • Look, feel, sound, smell or taste • Safety • Freedom from injury or harm • Other perceptions • Subjective perceptions based on brand name, advertising, etc

  45. Service Quality • Time & Timeliness • Customer waiting time, completed on time • Completeness • Customer gets all they asked for • Courtesy • Treatment by employees

  46. Service Quality • Consistency • Same level of service for all customers • Accessibility & Convenience • Ease of obtaining service • Accuracy • Performed right every time • Responsiveness • Reactions to unusual situations

  47. Quality of Conformance • Ensuring product or service produced according to design • Depends on • Design of production process • Performance of machinery • Materials • Training

  48. Quality Philosophers • Walter Shewhart – Statistical Process Control • W. Edwards Deming • Joseph Juran – strategic and planning based • Armand Fiegenbaum – total quality control “entire business must be involved in quality improvement”

  49. Deming’s 14 Points Create constancy of purpose Adopt philosophy of prevention Cease mass inspection Select a few suppliers based on quality Constantly improve system and workers Institute worker training

  50. Deming’s 14 Points Instill leadership among supervisors Eliminate fear among employees Eliminate barriers between departments Eliminate slogans Remove numerical quotas

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