01 ECO v3.0 Master

© APICS CONFIDENTIAL AND PROPRIETARY1 1

Execution of Operations

Session 1

APICS Certified in Production and Inventory Management (CPIM)

Execution and Control of Operations

1 1 © APICS CONFIDENTIAL AND PROPRIETARY

Course Objectives

1 2 © APICS CONFIDENTIAL AND PROPRIETARY1 2

Provide a review of principles and techniques as follows:– Execution of operations– Control of operations– Management and communication– Design tradeoffs

Provide a review of quality initiatives and continuous improvement.

Present techniques for evaluating performance.

Provide a basis for further study leading to APICS CPIM certification.



Case Studies and Review

Activity


Management and

Communication

Scheduling and Authorization

Quality and Continuous

Improvement

Control of Costs and Quality

Control of Production

Design Tradeoffs

1. 2. 3. 4.

5. 6. 7. 8.

1 3

Learning Objectives

Manufacturing Planning– Describe the critical influence of strategic and business planning on an

organization’s manufacturing environment.

– Explain the influence of manufacturing process choices on execution and control of operations (ECO) choices.

– Explain the options posed by the interface between detailed scheduling and planning (DSP) and ECO.

– Contrast the use of material requirements planning (MRP)-based and lean/JIT-based execution systems in authorizing production in flow shop operations.


Learning Objectives (cont.)

Defining Execution and Control Systems– Differentiate between manufacturing environments and manufacturing

process types.

– Explain the key differences between mass and continuous production processes.

– Describe the relationship between manufacturing processes and process layouts.

– Differentiate between batch and flow processes.

– Differentiate between rate-based and time-phased planning.

– Differentiate between push and pull principles.

– Explain the use of the pull system in replenishing inventory in lean/JIT production systems.

– Explain the market facing and manufacturing characteristics best suited to MRP-based and lean/JIT-based shop floor systems.




Session 1

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Manufacturing Planning

Manufacturing Planning Hierarchy

Resource Planning

Rough-Cut Capacity Planning (RCCP)Master Scheduling

Sales & Operations Planning (S&OP)

Master Planning of Resources

Capacity Planning Material Planning

Scheduling

Strategic Planning

Business Planning

Near term

Man

ufac

turin

g P

lann

ing

and

Con

trol

Detailed Scheduling & Planning

Execution & Control of Operations

Long term

Intermediate term

Dire

ctio

n S

ettin

g

Production Control

Production Reporting

© APICS CONFIDENTIAL AND PROPRIETARY1 71 7

Strategic and Business Planning

Set direction for manufacturing planning and control.

Focus on the medium-to-long (business plan) and long-term (strategic plan).

Determine order fulfillment strategies.

Determine process choices.

Influence process layouts.


Manufacturing Planning & Control


MPC Phase Level

Master Planning of Resources Tactical Planning

Detailed Scheduling and Planning

OperationsExecution and Control of

Operations

Master Planning of Resources

Sales and operations planning (S&OP): Integrate functional plans into a product-family sales and operations plan

Master scheduling: Disaggregate the production plan to create an end-item master production schedule (MPS)

Demand management: Ensure sales and operations plans and MPS are consistent with forecasts and orders

Distribution planning: Plan distribution inventory and validate adequacy of logistics resources to execute the sales and operations plan and MPS


Detailed Scheduling and Planning

Discrete products made using job shop/intermittent production

Time-phased material planning logic: material requirements planning (MRP)

Infinite capacity planning: capacity requirements planning (CRP)

Discrete and nondiscrete products in assembly lines and continuous manufacturing

Rate-based material planning logic: production schedule

Finite capacity planning


Batch Processes Flow Processes

• End item and component quantities needed to execute the MPS

• When items and quantities will be needed

• Items and quantities currently in stock

• Sufficiency of workers and equipment

Outputs


Prioritize, sequence, and authorize work.

Execute plans, expedite, implement controls, record results.

Feedback results to master scheduling and production control to enable adjustments to plans.

Authorize production based on issuance of a schedule (MRP-based system).

Use visual systems to authorize start of production at work stations (lean/JIT-based system).

Maintain planned rate of production.


Batch Processes Flow Processes

Problem 1.1 Manufacturing Planning

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Planning Level Responsibility Detail

Planning Horizon

Time Periods

Review Frequency

© APICS CONFIDENTIAL AND PROPRIETARY


Planning Level Responsibility Detail

Planning Horizon

Time Periods

Review Frequency

Business planning

S&OP

MPS

Distribution planning

Detailed material planning

Detailed capacity planning

President or CEOProducts, markets, revenue

Product familyBusiness unit executives

Master scheduler

Production or capacity planners

Logistics planner

Schedulers, shop supervisors

End item

Same as S&OP/MPS; resources

End item components

Workstation, part number, operation

Weeks, days, hours

Similar to MPS

3 to 18 months

15 months minimum

15 months to several years

Years, quarters, months

Months, quarters

Weeks, days

Same as S&OP/MPS

Weeks, days

Weeks, days, next job

Week, day

Week, day

Same as S&OP/MPS

Month, quarter

Annual, semiannual, quarter

Day, hour

Same as S&OP/MPS

Problem 1.1 Solution



Session 1

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Defining Execution and Control Systems

Introduction

Manufacturing environments

Production processes

Process layouts

Requirements for execution and control activities


Manufacturing Environments

Product Volume

Pro

du

ct

Va

rie

ty

HighLow

High

Engineer-to-Order

Make-to-Order

Assemble-to-Order

Make-to-Stock

Le

ad T

ime

Short


Long

Process Types: Manufacturing

Project

Jobbing

Batch

Mass

Continuous Flow

Manufacturing process types

Process tasks

Process flow

Diverse/complex

Intermittent

Repeated/divided

Continuous

Var

iety

Source: Operations and Process Management, Slack et al., 2nd ed., 2009; reprinted by permission of Pearson Education

HighLow

High

Volume


Process Layouts

Fixed positionlayout

Functionallayout

Cell layout

Productlayout

Based aroundprocess resources

Process layout

Based aroundproducts/services

Source: Operations and Process Management, Slack et al., 2nd ed., 2009; reprinted by permission of Pearson Education

Var

iety

HighLow

High

Volume


Execution and Control: Selection Factors

CategoryBatch Processes

Flow Processes

Process typeJob shop or Intermittent

Batch flow Mass Continuous flow

LayoutFunctional (process)

Functional or product

Product Product

Routing Product specificProduct specific

Fixed Fixed

SchedulingOperations scheduling

Operations scheduling or : rate-based scheduling

Production scheduling: rate-based

Production scheduling: rate-based

Control MRP/PAC MRP/PAC MRP/PACMRP/ process flow scheduling

Transaction requirements

Very high High Low Low

Productivity toolsLean/TOC/Six Sigma

Lean/TOC/Six Sigma

Lean/TOC/Six Sigma

Lean/TOC/Six Sigma


Principles of Push Systems

Rely on MPC to plan production priorities and capacity.

For batch processes– Create detailed time-phased schedules.– Release and push work orders through operations based schedules.– Use MRP-based production activity control.– Maximize capacity utilization.

For flow processes – Produce to rate-based schedules.– Maximize rate of product flow. – Create finished goods inventory as necessary.


Push Model

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Supplier

MPS/Rough-Cut Capacity Planning

Material and Capacity Planning

Purchase Order

Work Center

Work Order

S&OP/Resource Planning

Information push


Principles of Lean/JIT

Produce products only to customer orders.

Level demand so that work may proceed smoothly.

Link processes to customer demand through visual tools.

Maximize the flexibility of people and machinery.


Pull System Model


Part Z Manufacturer

Company X National DC

Company X Regional DC

Company X Dealer

Material flow

Information flow

Source: Lean Production Simplified, Dennis, 2nd ed., 2007

Pull System Simulation: Starting Instructions

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Coin flip = tails; customer orders a

white

To customer

2

WIP

FGI

1One-hour delivery lead time

Three-hour production lead time

3

1-3: Three actions triggered by coin flip (customer order)

4. Status before next coin flip

WIP

FGI

Queue Queue

4


WIP: work in process; FGI: finished goods inventory

Problem 1.2 Pull System Simulation

1. Did you ever reach a stockout situation?

2. How many coin flips were necessary to make your determination?

3. What can you conclude about the need for finished goods inventory?


1. What is the lowest level to which WIP and FGI can be reduced and still achieve 100 percent customer service with a one hour delivery lead time?

2. What assumption needs to be made about customer demand for this lean/JIT replenishment model to work?

Simulation Round 1

Simulation Round 2


1. Did you ever reach a stockout situation?

2. How many coin flips were necessary to make your determination?

3. What can you conclude about the need for finished goods inventory?


1. What is the lowest level to which WIP and FGI can be reduced and still achieve 100 percent customer service with a one hour delivery lead time?

2. What assumption needs to be made about customer demand for this lean/JIT replenishment model to work?

Simulation Round 1

Simulation Round 2

You should not have reached a stockout situation.

Six flips should have been adequate.

Finished goods inventory served as a buffer against stockouts.

One each

The rate of customer demand needs to be steady.


Problem 1.3 MRP and Lean/JIT Systems

Characteristics Best Suited to Shop Floor Systems

Marketing-FacingCharacteristics

Shop Floor Systems

MRP-Based Lean/JIT-Based

Product design

Product variety

Individual product volume/period

Ease of changing total volume

Ease of changing product mix

Delivery speed

Schedule changes

Manufacturing Related Characteristics

Process choice

Organizational control

Work in process



Characteristics Best Suited to Shop Floor Systems

Marketing-FacingCharacteristics

Shop Floor Systems

MRP-Based Lean/JIT-Based

Product design custom standard

Product variety broad narrow

Individual product volume/period low high

Ease of changing total volume easy/incremental difficult

Ease of changing product mix less difficult more difficult

Delivery speed through schedule change through FGI

Schedule changes more difficult less difficult

Manufacturing Related Characteristics

Process choice low-volume batch high volume batch/line

Organizational control centralized decentralized

Work in process high lowSource: Jacobs, et al., Manufacturing Planning & Control for Supply Chain Management, 6th edition, copyright The McGraw-Hill Companies, Inc.



Session 1

1 30

Wrap-Up and Homework

Learning Objectives

Manufacturing Planning– Describe the critical influence of strategic and business planning on an

organization’s manufacturing environment.

– Explain the influence of manufacturing process choices on execution and control of operations (ECO) choices.

– Explain the options posed by the interface between detailed scheduling and planning (DSP) and ECO.

– Contrast the use of material requirements planning (MRP)-based and lean/JIT-based execution systems in authorizing production in flow shop operations.


Learning Objectives (cont.)

Defining Execution and Control Systems– Differentiate between manufacturing environments and manufacturing

process types.

– Explain the key differences between mass and continuous production processes.

– Describe the relationship between manufacturing processes and process layouts.

– Differentiate between batch and flow processes.

– Differentiate between rate-based and time-phased planning.

– Differentiate between push and pull principles.

– Explain the use of the pull system in replenishing inventory in lean/JIT production systems.

– Explain the market facing and manufacturing characteristics best suited to MRP-based and lean/JIT-based shop floor systems.



Vocabulary Check

Objective: Reinforce terminology used in this session.

Complete the activity in class, individually or in pairs, or as homework.

1 33


Vocabulary Check Solution

1 34

F1

P2

C3

O N T I N U O U S M A N U F A C T U R I N GN L

R4

A T E B A S E D S C H E D U L I N GT S

J5

P6

R I O R I T Y P L A N N I N G YO O SB B

7

A T C H P R O C E S S I N G TS A EH L MO

8

P E R A T I O N S S C H E D U L I N GP A

P9

U S H S Y S T E MO

C10

E L L U L A R M A N U F A C T U R I N GT

01 ECO v3.0 Master

Documents

proprietary apics confidential

planning dsp

apics cpim certification

manufacturing processes

timephased planning

manufacturing process

execution of operationssession

manufacturing environments