Resource Resource Planning Planning Class 7 Class 7
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Resource Resource PlanningPlanning
Class 7Class 7
Enterprise Resource Enterprise Resource Planning (ERP)Planning (ERP)
Organizes and manages a Organizes and manages a company’s business processes by company’s business processes by sharing information across sharing information across functional areasfunctional areas
Connects with supply-chain and Connects with supply-chain and customer management customer management applicationsapplications
Largest ERP provider SAPLargest ERP provider SAP
ERP’s Central DatabaseERP’s Central DatabaseFinance &
Accounting
Sales &
Marketing
Human Resources
Production & Materials
ManagementERP Data
Repository
ERP ImplementationERP Implementation First step is to analyze business First step is to analyze business
processesprocesses Which processes have the biggest Which processes have the biggest
impact on customer relations?impact on customer relations? Which process would benefit the Which process would benefit the
most from integration?most from integration? Which processes should be Which processes should be
standardized?standardized?
Customer Relationship Customer Relationship Management (CRM)Management (CRM)
Plans and executes business Plans and executes business processes that involve customer processes that involve customer interactioninteraction
Changes focus from managing Changes focus from managing products to managing customersproducts to managing customers
Point-of-sale data is analyzed for Point-of-sale data is analyzed for patterns used to predict future patterns used to predict future behaviorbehavior
Supply Chain ManagementSupply Chain Management
Supply chain planningSupply chain planningSupply chain executionSupply chain executionSupplier relationshipsSupplier relationshipsDistinctions between ERP and Distinctions between ERP and
SCM are becoming increasingly SCM are becoming increasingly blurredblurred
ERP and MRPERP and MRP MRP (material requirements planning) MRP (material requirements planning)
was the precursor to ERPwas the precursor to ERP Primarily a production planning and Primarily a production planning and
control systemcontrol system MRP evolved to MRP II (manufacturing MRP evolved to MRP II (manufacturing
resource planning)resource planning) ERP and ERP II continue to extend the ERP and ERP II continue to extend the
links through all business processeslinks through all business processes
Material Requirements Material Requirements PlanningPlanning
Computerized inventory control & Computerized inventory control & production planning systemproduction planning system
Schedules component items when Schedules component items when they are needed - no earlier and no they are needed - no earlier and no laterlater
When to Use MRPWhen to Use MRPDependent and discrete itemsDependent and discrete itemsComplex productsComplex productsJob shop productionJob shop productionAssemble-to-order environmentsAssemble-to-order environments
Material Material Requirements Requirements PlanningPlanning
Materialrequirements
planning
Planned order
releases
Work orders
Purchase orders
Rescheduling notices
Itemmaster
file
Productstructure
file
Master production schedule
Master Production Master Production ScheduleSchedule
Drives MRP process with a schedule of Drives MRP process with a schedule of finished productsfinished products
Quantities represent production not Quantities represent production not demanddemand
Quantities may consist of a combination of Quantities may consist of a combination of customer orders & demand forecastscustomer orders & demand forecasts
Quantities represent what needs to be Quantities represent what needs to be produced, not what can be producedproduced, not what can be produced
Basic MRP Basic MRP ProcessesProcesses
1.1. Exploding the bill of materialExploding the bill of material2.2. Netting out inventoryNetting out inventory3.3. Lot sizingLot sizing4.4. Time-phasing requirementsTime-phasing requirements
MRP OutputsMRP OutputsPlanned ordersPlanned orders
Work ordersWork ordersPurchase ordersPurchase orders
Changes to previous plans or Changes to previous plans or existing schedulesexisting schedules
Action noticesAction noticesRescheduling noticesRescheduling notices
Capacity Requirements Capacity Requirements Planning (CRP)Planning (CRP)
Computerized system that projects Computerized system that projects load from material planload from material plan
Creates load profileCreates load profile Identifies underloads and overloadsIdentifies underloads and overloads
Capacity TermsCapacity TermsLoad profileLoad profile
Compares released and planned Compares released and planned orders with work center capacity orders with work center capacity
CapacityCapacityProductive capability; includes Productive capability; includes
utilization and efficiencyutilization and efficiencyUtilizationUtilization
% of available working time spent % of available working time spent workingworking
More Capacity TermsMore Capacity TermsEfficiency – how well the Efficiency – how well the
machine or worker performs machine or worker performs compared to a standard outputcompared to a standard output
LoadLoadThe standard hours of work The standard hours of work
assigned to a facilityassigned to a facilityLoad percentLoad percent
The ratio of load to capacityThe ratio of load to capacityLoad % = Load % = ((load/capacityload/capacity)x100%)x100%
SchedulingScheduling
SchedulingSchedulingSpecifies when labor, Specifies when labor,
equipment, facilities are needed equipment, facilities are needed to produce a product or provide to produce a product or provide a servicea service
Last stage of planning before Last stage of planning before production occursproduction occurs
Objectives in SchedulingObjectives in Scheduling Meet customer due datesMeet customer due dates Minimize job latenessMinimize job lateness Minimize response timeMinimize response time Minimize completion timeMinimize completion time Minimize time in the systemMinimize time in the system Minimize overtimeMinimize overtime Maximize machine or labor utilizationMaximize machine or labor utilization Minimize idle timeMinimize idle time Minimize work-in-process inventoryMinimize work-in-process inventory EfficiencyEfficiency
Shop Floor ControlShop Floor Control
1.1. Loading - Check availability of Loading - Check availability of material, machines & labormaterial, machines & labor
2.2. Sequencing - Release work orders Sequencing - Release work orders to shop & issue dispatch lists for to shop & issue dispatch lists for individual machinesindividual machines
3.3. Monitoring - Maintain progress Monitoring - Maintain progress reports on each job until it is reports on each job until it is completecomplete
Scheduling and monitoring day to day production of a jobScheduling and monitoring day to day production of a job
LoadingLoadingAllocate work to machines Allocate work to machines
(resources)(resources)Perform work on most efficient Perform work on most efficient
resourcesresourcesUse assignment method of linear Use assignment method of linear
programming to determine programming to determine allocationallocation
SequencingSequencingPrioritize jobs assigned to a Prioritize jobs assigned to a
resourceresource If no order specified use first-come If no order specified use first-come
first-served (FCFS)first-served (FCFS)Many other sequencing rules existMany other sequencing rules existEach attempts to achieve to an Each attempts to achieve to an
objectiveobjective
Sequencing RulesSequencing Rules FCFS - first-come, first-servedFCFS - first-come, first-served LCFS - last come, first servedLCFS - last come, first served DDATE - earliest due dateDDATE - earliest due date CUSTPR - highest customer priorityCUSTPR - highest customer priority SETUP - similar required setupsSETUP - similar required setups SLACK - smallest slackSLACK - smallest slack CR - critical ratioCR - critical ratio SPT - shortest processing timeSPT - shortest processing time LPT - longest processing timeLPT - longest processing time
Theory of ConstraintsTheory of ConstraintsNot all resources are used evenlyNot all resources are used evenlyConcentrate on the” bottleneck” Concentrate on the” bottleneck”
resourceresourceSynchronize flow through the Synchronize flow through the
bottleneckbottleneckUse process and transfer batch sizes Use process and transfer batch sizes
to move product through facilityto move product through facility
Theory of ConstraintsTheory of Constraints• What to Change• What to Change to• How to cause the change
Chapter 4Chapter 4
Quality Quality ManagementManagement
Quality is a measure of goodness that is inherent to a product or service.
Bottom line: perspective has to be from theCustomer – fitness for use
““The degree of excellence of a The degree of excellence of a thing” (Webster’s Dictionary)thing” (Webster’s Dictionary)
““The totality of features and The totality of features and characteristics that satisfy needs” characteristics that satisfy needs” (ASQ)(ASQ)
Fitness for useFitness for useQuality of designQuality of design
What Is Quality?What Is Quality?
QualityQuality• Quality Management – not owned by
any functional area – cross functional
• Measure of goodness that is inherent to a product or service
FedEx and QualityFedEx 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
Product Quality Product Quality DimensionsDimensions
• 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
Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
1.1. Performance Performance Basic operating characteristicsBasic operating characteristics
2.2. Features Features ““Extra” items added to basic featuresExtra” items added to basic features
3.3. Reliability Reliability Probability product will operate over Probability product will operate over
timetime
Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
4.4. Conformance Conformance Meeting pre-established standardsMeeting pre-established standards
5.5. Durability Durability Life span before replacement Life span before replacement
6.6. Serviceability Serviceability Ease of getting repairs, speed & Ease of getting repairs, speed &
competence of repairscompetence of repairs
Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
7.7. AestheticsAesthetics Look, feel, sound, smell or tasteLook, feel, sound, smell or taste
8.8. SafetySafety Freedom from injury or harmFreedom from injury or harm
9.9. Other perceptionsOther perceptions Subjective perceptions based on Subjective perceptions based on
brand name, advertising, etcbrand name, advertising, etc
1.1. Time & Timeliness Time & Timeliness Customer waiting time, completed Customer waiting time, completed
on timeon time2.2. Completeness Completeness
Customer gets all they asked forCustomer gets all they asked for3.3. CourtesyCourtesy
Treatment by employeesTreatment by employees
Service QualityService Quality
4.4. ConsistencyConsistency Same level of service for all customers Same level of service for all customers
5.5. Accessibility & Convenience Accessibility & Convenience Ease of obtaining serviceEase of obtaining service
6.6. AccuracyAccuracy Performed right every timePerformed right every time
7.7. ResponsivenessResponsiveness Reactions to unusual situationsReactions to unusual situations
Service QualityService Quality
Quality of Quality of ConformanceConformance
Ensuring product or service Ensuring product or service produced according to designproduced according to design
Depends onDepends onDesign of production processDesign of production processPerformance of machineryPerformance of machineryMaterialsMaterialsTrainingTraining
Quality PhilosophersQuality Philosophers Walter Shewhart – Statistical Process Walter Shewhart – Statistical Process
ControlControl W. Edwards DemingW. Edwards Deming Joseph Juran – strategic and planning basedJoseph Juran – strategic and planning based Philip CrosbyPhilip Crosby Armand Fiegenbaum – total quality control Armand Fiegenbaum – total quality control
“entire business must be involved in quality “entire business must be involved in quality improvement”improvement”
Deming’s 14 PointsDeming’s 14 Points1.1. Create constancy of purposeCreate constancy of purpose2.2. Adopt philosophy of preventionAdopt philosophy of prevention3.3. Cease mass inspectionCease mass inspection4.4. Select a few suppliers based on Select a few suppliers based on
qualityquality5.5. Constantly improve system and Constantly improve system and
workersworkers6.6. Institute worker trainingInstitute worker training
Deming’s 14 PointsDeming’s 14 Points7.7. Instill leadership among Instill leadership among
supervisorssupervisors8.8. Eliminate fear among employeesEliminate fear among employees9.9. Eliminate barriers between Eliminate barriers between
departmentsdepartments10.10. Eliminate slogansEliminate slogans11.11. Remove numerical quotasRemove numerical quotas
Deming’s 14 PointsDeming’s 14 Points
12.12. Enhance worker prideEnhance worker pride13.13. Institute vigorous training and Institute vigorous training and
education programseducation programs14.14. Develop a commitment from top Develop a commitment from top
management to implement these management to implement these 13 points13 points
The Deming WheelThe Deming Wheel(or PDCA Cycle)(or PDCA Cycle)
1. PlanIdentify the problem and develop the plan for improvement.
2. DoImplement the plan on a test basis.
3. Study/CheckAssess the plan; is it working?
4. ActInstitutionalize improvement; continue the cycle.
Also known as the Shewart CycleAlso known as the Shewart Cycle
Six SigmaSix Sigma• Quality management program that
measures and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products
Six SigmaSix SigmaStarted By MotorolaStarted By Motorola
• Define• Measure• Analyze• Improve • Control
Made Famous by Made Famous by General ElectricGeneral Electric40% of GE executives’40% of GE executives’bonuses tied to 6 sigmabonuses tied to 6 sigmaimplementation implementation
Malcolm Baldrige Malcolm Baldrige National Quality Award National Quality Award
• Category 3 – determine requirements, expectations, preferences of customers and markets
• Category 4 – what is important to the customer and the company; how does company improve
Total Quality ManagementTotal Quality Management
1.1. Customer defined qualityCustomer defined quality2.2. Top management leadershipTop management leadership3.3. Quality as a strategic issueQuality as a strategic issue4.4. All employees responsible for qualityAll employees responsible for quality5.5. Continuous improvementContinuous improvement6.6. Shared problem solvingShared problem solving7.7. Statistical quality controlStatistical quality control8.8. Training & education for all employeesTraining & education for all employees
Strategic Implications of Strategic Implications of TQMTQM
Quality is key to effective strategyQuality is key to effective strategyClear strategic goal, vision, missionClear strategic goal, vision, missionHigh quality goalsHigh quality goalsOperational plans & policiesOperational plans & policiesFeedback mechanismFeedback mechanismStrong leadershipStrong leadership
TQM in Service CompaniesTQM in Service Companies
Inputs similar to manufacturingInputs similar to manufacturingProcesses & outputs are differentProcesses & outputs are differentServices tend to be labor intensiveServices tend to be labor intensiveQuality measurement is harderQuality measurement is harderTimeliness is important measureTimeliness is important measureTQM principles apply to servicesTQM principles apply to services
Cost of QualityCost of QualityCost of achieving good qualityCost of achieving good quality
PreventionPrevention Planning, Product design, Planning, Product design,
Process, Training, InformationProcess, Training, InformationAppraisalAppraisal
Inspection and testing, Inspection and testing, Test equipment, Test equipment, OperatorOperator
Cost of QualityCost of QualityCost of poor qualityCost of poor quality
Internal failure costsInternal failure costs Scrap, Rework, Process failure, Scrap, Rework, Process failure,
Process downtime, Price-Process downtime, Price-downgradingdowngrading
External failure costsExternal failure costs Customer complaints, Customer complaints,
Product return, Product return, Warranty, Product Warranty, Product liability, Lost salesliability, Lost sales
Employees and Employees and Quality ImprovementQuality ImprovementEmployee involvementEmployee involvementQuality circlesQuality circlesProcess improvement teamsProcess improvement teamsEmployee suggestionsEmployee suggestions
Cause-and-Effect Diagram Cause-and-Effect Diagram
QualityProblem
Out of adjustmentOut of adjustment
Tooling problemsTooling problems
Old / wornOld / worn
MachinesFaultyFaulty testing equipmenttesting equipment
Incorrect specificationsIncorrect specifications
Improper methodsImproper methods
Measurement
Poor supervisionPoor supervision
Lack of concentrationLack of concentration
Inadequate trainingInadequate training
Human
DeficienciesDeficienciesin product designin product design
Ineffective qualityIneffective qualitymanagementmanagement
Poor process designPoor process design
Process
InaccurateInaccuratetemperature temperature controlcontrol
Dust and DirtDust and Dirt
Environment
Defective from vendorDefective from vendor
Not to specificationsNot to specifications
Material-Material-handling problemshandling problems
Materials
Also known as Ishikawa Diagram or Fish BoneAlso known as Ishikawa Diagram or Fish Bone
Hot House QualityHot House QualityLots of Hoopla and no
follow through
ISO 9000:2000ISO 9000:2000• Customer focus• Leadership• Involvement of the people• Process approach• Systems approach to management• Continual process improvement – GAO• Factual approach to decision making• Mutually beneficial supplier relationships
Implications Of ISO 9000Implications Of ISO 9000Truly international in scopeTruly international in scopeCertification required by many foreign Certification required by many foreign
firmsfirmsU.S. firms export more than U.S. firms export more than
$150 billion annually to Europe$150 billion annually to EuropeAdopted by U.S. Navy, Adopted by U.S. Navy,
DuPont, 3M, AT&T, and othersDuPont, 3M, AT&T, and others
ISO AccreditationISO Accreditation European registrationEuropean registration
3rd party registrar assesses quality program3rd party registrar assesses quality program European Conformity (CE) mark authorizedEuropean Conformity (CE) mark authorized
United States 3rd party registrarsUnited States 3rd party registrars American National Standards Institute (ANSI)American National Standards Institute (ANSI) American Society for Quality (ASQ)American Society for Quality (ASQ) Registrar Accreditation Board (RAB)Registrar Accreditation Board (RAB)
Upcoming EventsUpcoming Events• Final Exam by Saturday• Harley paper due by Saturday
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