Tara Plastics Tara Plastics Business Process Planning Business Process Planning Workshop Workshop Presented by: The Georgia Tech Center for Manufacturing Information Technology Course Instructors: Greg Holland Tarun Kataria Mackenzie Stevenson
Apr 01, 2015
Tara PlasticsTara Plastics
Business Process Planning WorkshopBusiness Process Planning Workshop
Presented by:The Georgia Tech
Center for Manufacturing Information Technology
Course Instructors:Greg HollandTarun Kataria
Mackenzie Stevenson
Workshop ObjectivesWorkshop Objectives
• Identify issues, tasks, and business and software requirements for future system implementation
• Review best practices and begin business and system process definition
• Define how you want to run your company and what tools you’ll need to do it
TEAM Process ChartTEAM Process Chart
Shipping / Receiving
Master Scheduling
Capacity Planning
Shop Orders
Shop Floor & Inventory Control
Customer MasterVendor Master
Company MasterWarehouse Master
Location Master
Item MasterOperation Master
Product Config. Master
Work Center MasterShop Calendar
Customer Order EntryPeachtree
® Accountin
g
Finite Schedule
MRP
Sales Tax Codes
Chart of Accounts
A/R A/P
Material Planning
Purchasing
TEAM Database
Bill / Route StructureBill / Route Structure
MAKE TO STOCK
Stock end items & fill orders from stock Limited number of end items Forecast
MAKE TO ORDER
Produce subs, components, & end items on receipt of order Combination of standard and custom subs/components Customer orders
ASSEMBLE TO ORDER
Stock subs/components; assemble end items per order Large number of end items Forecast subs/components Customer orders for end items
ENGINEER TO ORDER
Unique parts/subs/components per order Unlimited number of end items Customer orders
Manufacturing EnvironmentsManufacturing Environments
Supermarket LocationsSupermarket LocationsSupply Chain Lead Times (Weeks)
Customer Lead Times (Weeks)
BagExtrudeTreatBlendPurchase Raw Material
9 717 4 1
<1
<4
<7
<9
<17
RoutingRouting
• Describes how an item is manufactured Operations Sequence of operations Work center data (available capacity) Standards (run time, set-up time, move time, queue
time) Testing might also be included
Bill of MaterialBill of Material
EndItem A
PurchasedPart E
SubassemblyB
PurchasedPart F
ComponentC
Raw MaterialD
Level 0
Level 1
Level 3
Level 2
Bill of MaterialBill of Material
• Raw Materials• Purchased components• Shipping materials• Instructions• Manufacturing Subassemblies• Semi-finished Items
Sheeting RouteSheeting Route
Blend Treat Pack Roll
Sheeting BOMSheeting BOM
Extruded Film
Resins Additives Colors
Wicketed Bag RouteWicketed Bag Route
Blend Treat Pack Roll Wicket
Wicketed Bag BOMWicketed Bag BOM
Extruded Film
Resins Additives Colors
Wicketed Bag
Bag - Rolls RouteBag - Rolls Route
Blend Treat Pack Roll Convert
Bag – Rolls BOMBag – Rolls BOM
Extruded Film
Resins Additives Colors
Bags on Roll
• Low volume, high variety• Functional layout• Spaghetti flow• Multi-level BOM• High WIP• High setup / large batches• Long lead times• MRP
Job Shop vs. FlowJob Shop vs. Flow
Job Shop Flow
• High volume, low variety• Cellular layout• Continuous flow• Flat BOM• Low WIP• Low setup / small lots• Short lead times• Kanban
BOM AccuracyBOM Accuracy• For each BOM item verify:
Item number Unit of measure Parent quantity Quantity per parent item
• Audit methods Floor audit Office/factory review Product teardown Variance analysis of issue vs. receipt variance Product cost rollup
Route AccuracyRoute Accuracy• For each route verify:
Operations Sequence numbers Work centers Run rate
• Audit methods Floor audit Office/factory review Variance analysis of actual labor vs. standard Product cost rollup
BOM / Route AccuracyBOM / Route Accuracy
• Bill of Material Audit BOMs (# parent items correct / total #
of parent items audited)
• Route Audit routings (# correct routings / total # of
routings checked)
Master SchedulingMaster Scheduling
MRP without MPSMRP without MPS
Extruded Film
Resins Additives Colors
Wicketed Bag
1 2 3 4
Item Forecast 200 200 100 100Customer Orders 100 120 80 Gross Requirements 100 200 100 100
Week
MRP with MPSMRP with MPS
Extruded Film
Resins Additives Colors
Wicketed Bag
1 2 3 4
Item Forecast 200 200 100 100Customer Orders 100 120 80 Gross Requirements 100 200 100 100Master Schedule 150 150 100 100
Week
Master Schedule LevelMaster Schedule Level
End Items
Raw Materials
Subs/Components
Goal: Master schedule at narrowest sensible point
System Planning HorizonSystem Planning Horizon
• The greater of… Maximum cumulative lead time from bill of
material, or
Time needed to make capacity changes for work centers or suppliers
Time FencesTime Fences
• Points in time in the planning horizon used to: Define and restrict the degree of allowable
changes within the planning horizon Regulate changes to the schedule that may
adversely affect: component lead times capacity plans customer deliveries cost
MPS Change PolicyMPS Change Policy
Zone AEmergency
Changes
Zone BTrades
Material & Capacity
Committed
Material & CapacityPlanned
Today
Zone CAdds &
ChangesMaterial & Capacity
Scheduled
Cum. LT
Demand Fence 1 Demand Fence 2
Item LT
System Planning Horizon
Releasable Period
Analyzing Change RequestsAnalyzing Change Requests
• Has demand really changed?• What is the impact on the production plan?• Is capacity available?• Is material available?• What are the costs and risks associated with
making the change?• What are the costs and risks associated with
not making the change?
Material PlanningMaterial Planning
How To Do It What We Have Done
Plan To Do
Calculate Material
Requirements
What We Need To Do & When
Materials Required
On-Hand Inventory & Open OrdersBill of Material
Demand
Material Requirements Planning (MRP)Material Requirements Planning (MRP)
MRP FrequencyMRP Frequency
• Advantages: Updates requirements based on most recent
demand information Ensures material and capacity are used to meet
actual demand
• Disadvantages: MRP regeneration time Could cause nervousness in the schedule if
schedule change policies lax
MRP DatesMRP Dates• Due Date
Expected receipt date for a shop order or purchase order indicating when it’s available to use.
• Release Date Planned or scheduled releases determined by subtracting
the lead time from the planned or scheduled receipt date• Need Date
Required date for intended use; in MRP the release date for a parent item determines the need date for the component child item
• Receipt Date When an order is planned or scheduled to be received
usually as a result of a planned or scheduled release
Buffer TypesBuffer Types• Safety Stock
Material buffer exceeding that which is needed to satisfy gross requirements Used when there is uncertainty about quantity
• Safety Lead Time Time buffer which requires early release and
receipt dates for shop orders and purchase orders Used when there is uncertainty about timing
Buffer ComparisonBuffer Comparison
OpeningBalance 1 2 3 4 5
Gross Requirements 40 20 20 0 30Scheduled Receipts 50Proj. Avail. Balance 40 50 30 60 60 30Planned Receipt 50 Planned Release 50
Period
Safety Stock = 20 unitsLead Time = 2 periodsOrder quantity = 50 units
Buffer ComparisonBuffer Comparison
OpeningBalance 1 2 3 4 5
Gross Requirements 40 20 20 0 30Scheduled Receipts 50Proj. Avail. Balance 40 50 30 10 60 30Planned Receipt 50Planned Release 50
Period
Safety Lead Time = 1 periodLead Time = 2 periodsOrder quantity = 50 units
Buffer IssuesBuffer Issues• Buffer Size
How should I determine the right amount of safety stock and safety lead time?
• Buffer Location Where do I place buffers to offer the highest
protection at the lowest cost?
• Buffer Conflicts How do I avoid the problem of working on
orders to satisfy safety stock or safety lead time requirements instead of actual orders?
Buffer SizeBuffer Size• Safety Stock Calculation
Uncertainty in supply and demand quantity SS = Zs
Z = Value from normal table to match desired service levels = Standard deviation of supply or demand per period
s can be approximated by 1.25 MAD (mean absolute deviation)
Safety FactorsSafety Factors
Desired Service Level Z MAD
90% 1.28 1.60
95% 1.65 2.06
98% 2.05 2.56
99% 2.33 2.91
Safety Stock CalculationSafety Stock Calculation
Item # 12345
Month DemandAverage Demand
Absolute Deviation
January 94 114 20February 110 4March 130 16April 120 6
Sum 454 46
Average past demand 114
Mean Absolute Deviation 114 / 46 = 11.5
Safety Stock @ 90% SL 1.60 x 11.5 = 18.4
Safety Stock @ 95% SL 2.06 x 11.5 = 23.7
Safety Stock @ 98% SL 2.56 x 11.5 = 29.4
Capacity PlanningCapacity Planning
Capacity TypesCapacity Types
• Demonstrated Capacity Capacity available in the past and expected in the future;
based on actual output (standard hours) per week• Available Capacity
Based on shop calendar and work center setup. Syn. Planned capacity
• Required Capacity The expected hours from the item routing to process all
planned and scheduled requirements in a work center
Objective: Balance available capacity with required capacity
Available CapacityAvailable Capacity
Available Capacity =(Loading Time) x (Utilization) x (Efficiency)
Loading Time = (available hours) - (scheduled downtime)
Utilization = (actual hours run)/(loading time)
Efficiency = (standard hours produced)/(actual hours charged)
Infinite vs. Finite CapacityInfinite vs. Finite Capacity
• Infinite Resource is loaded without regard to
capacity available to perform the work in a given time period
• Finite Resource is loaded with no more work than
it can be expected to complete in a given time period
Infinite Capacity PlanningInfinite Capacity Planning
Capaci
ty
Planned Capacity
open orders
open orders
plannedorder
s1 3 5 7
open orders
open orders
plannedorder
s
plannedorder
splannedorder
splannedorder
s
plannedorder
s
Required Capacity
2 4 6
Resource Capacity Profile
Time Period
Finite Capacity Scheduling (FCS)Finite Capacity Scheduling (FCS)
Creates a realistic production schedule that recognizes and respects resource
limits
Creates a realistic production schedule that recognizes and respects resource
limits
Capacity Planning DecisionsCapacity Planning Decisions
• Infinite Capacity Tool: Resource Capacity Profile
• Finite Capacity Tool: Late Orders Report
Adjust schedule and / or capacity Adjust schedule and / or capacity to ensure supply meets demand to ensure supply meets demand
and schedule is realisticand schedule is realistic
Production PlanningProduction Planning
Production Planning Production Planning Process
Demand
SupplyMaster
Production
ScheduleWhat are we going to make?
MRP & CRP
What do we need to make it?
When do we have to have it?
Plant Schedule
When and where are we going to make it?
Releasable OrdersReleasable Orders
Shop Orders
Lead TimeDue Date
Demand Fence 1
Today = Release
Date
Firm Planned Orders
Release
Releasable OrdersReleasable Orders
• Caveat 1: Don’t release an order before it’s time Orders released before they’re needed…
Use capacity and materials planned for other orders Cause confusion on the shop floor regarding order
priorities Increase the number of shop orders that need to be
rescheduled if the MPS is changed Increase WIP and FG inventory
Identifying ShortagesIdentifying Shortages
• Caveat 2: Make sure you’re not counting inventory twice in the release process Multiple orders may use the same component
Software summarizes total demand requirements for all releasable orders and compares to on-hand inventory
Demand pegging report identifying the demand from all shop orders for an item
Shortage report identifying allocations greater than on-hand inventory
Manual
Manual
Automatic
Production ControlProduction Control
Production Control ProcessProduction Control Process
1. Shop order release
2. Material issue• Removes inventory from issue location and places into WIP
3. Labor entry• Hours and quantity posted against shop order route to
update hours completed
4. Shop order receipt• Receives shop order item into inventory at work center
location• Material issue occurs for backflush items
5. Inventory transfer
Transaction Reporting MetricsTransaction Reporting Metrics• Quantity received vs. quantity ordered• Quantity issued vs. quantity required• Actual vs. standard operation quantity or hours• Purchase order receipts vs. quantity ordered• QOH vs. cycle count• % of negative location balances
Requires feedback and control mechanisms to not only Requires feedback and control mechanisms to not only correct the errors, but also prevent them from reoccurring.correct the errors, but also prevent them from reoccurring.
Event MonitoringEvent Monitoring
Monitor Exceptions
• Past due shop orders• Past due purchase orders• Downtime• Material shortages• Production delays
Buffers Exceeded?
No
AnalyzeAdjustNotify
Yes
Schedule PerformanceSchedule Performance
• Metrics % shop orders completed by due date / total
shop orders # schedule changes during releasable period Setup costs WIP value
Inventory ControlInventory Control
Controlling Inventory AccuracyControlling Inventory Accuracy• For each inventory location area, determine:
What transactions need to be reported (issues, receipts, adjustments, transfers)
How transactions should be reported (mode) When the transaction should be reported (timing) Who should have authority to move inventory Who should have responsibility for accuracy Who should enter inventory transaction What are the hardware, software, and procedural
requirements to support inventory activities
Multi-location StorageMulti-location Storage
• Item count by multiple locations is a necessary software tool Random location can provide 40% greater space
utilization Supports the need to quickly locate material Set-up a location for any space that material can
placed Avoid assigned locations by item
Cycle CountingCycle Counting
• The systematic counting of parts to: Correct errors Eliminate root causes Maintain inventory accuracy
Cycle Counting MethodsCycle Counting Methods
• Cycle Counting Methods Control Group Random Sample ABC Method Process Control
• The difference in these methods is how the sample is chosen
Measuring AccuracyMeasuring Accuracy
Item Physical QOH Tolerance
Number Count Record (%) Hit Miss
4000 99 100 +\- 2 X
1373 103 100 +\- 5 X
4881 91 100 +\- 5 X
2019 102 100 +\- 2 X
3626 104 100 +\- 2 X
6122 100 100 +\- 0 X
5784 108 100 +\- 5 X
3908 99 100 +\- 0 X
3232 98 100 +\- 2 X
5784 96 100 +\- 5 X
Totals 1000 1000 6 4
Setting TolerancesSetting Tolerances
• Tolerances are a function of: Dollar Value Usage Lead Time Handling Criticality Bill of Material Level Combination of the above
Record AccuracyRecord Accuracy
X 100%Total # of Accurate Records
Total # of Records Counted
Inventory Record Accuracy
Inventory Control Best PracticesInventory Control Best Practices• Capture transactions as soon after the activity is
performed as possible• Restrict authority for conducting activities and
reporting transactions to those with a stake in the accuracy of the data
• Understand and address the impact of backflush transactions on inventory accuracy
• Assign locations and enter transactions only to the level of detail required to support business decisions
• Implement cycle-counting and investigate root causes of inaccuracy