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Mrp MRPII Erp Implementation
 

Mrp MRPII Erp Implementation

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    Mrp MRPII Erp Implementation Mrp MRPII Erp Implementation Presentation Transcript

      • MRP, MRPII, ERP Implementation
      • Anand Subramaniam
      • Concepts & Manufacturing Strategy
      • Product Life Cycle, Products & Process
      • Elements & Links - MRP, MRP II, Close Loop, ERP, TOC
      • Inventory Concepts - EOQ, ROP, Lead Times
      • Bills of Material Concepts - Pegging, Planning BOM
      • WO / MO Processing, WIP & Routing Concepts
      • MPS, ATP, Forecasting, Planning Fences & RCCP
      • MRP Concepts - Filters, Recommendation, MRP Logic
      • Capacity Planning Concepts - Efficiency, Utilization
      • PAC Concepts - Scheduling & Control, Critical Ratio
      • Implementation Time Frame & Competency Matrix
      Discussion Points
    • MAIN CONCEPTS OF SUPPLY CHAIN MANG.
        • Begin with the customer
        • Manage logistics assets
        • Organise customer management
        • Integrate sales and operations planning
        • Leverage manufacturing and sourcing
        • Focus on strategic alliances and relationship management
        • Develop customer-driven performance measures
    • MANUFACTURING STRATEGY Identifying the Competitive Edge by:
      • Delivery - reduce backlog of production.
      • Customer Service - realistic lead time quoted.
      • Customer Service - produce “On-time”.
      • Quality & Cost Control.
      • Plant and Staff Utilisation.
    • FOCUSSED STRATEGIES - OP. PLANNERS
      • Strategies used to meet non-uniform demands
      • Chase Demand strategy – vary production to match demand ie by hiring and lay-off, use of overtime & sub-contacting. There is no inventory build-up.
      • Level Production Strategy - produce at a constant rate and use inventories. This strategy retains a stable work force producing at a constant output rate. Inventory is accumulated to satisfy peak demands. Sub-contracting is allowed and back orders can be accepted. The use of promotional programs may be used to shift demand.
      • Produce with Stable work force – where utilisation rate is varied. This strategy retains a stable work force but permits overtime, part time & idle time. It permits back orders, sub-contracting, & use of inventories. It avoids the determinantal effects of lay-off.
    • PRODUCT LIFE CYCLE, PRODUCTS & PROCESS
    • PRODUCT LIFE CYCLE CHARACTERISTICS Stages Strategy
    • INDUSTRY / MANUFACTURING TYPES B A T C H S I Z E VOLUMES PROJECT JOB BATCH PROCESS continuous flow LARGE SMALL LARGE SMALL Commercial Printer Heavy Equipment ASSEMBLY LINE Automobiles Sugar / Oil Refinery Construction
    • MANUFACTURING ENVIRONMENT Volume V a r I e t y Project Continuous Flow Repetitive Batch Job Shop Business Drivers: Price, Speed, Quality, Design, Flexibility etc. Hospital care Text Books PCs or Cars Gas, Oil, Elect Ship Building High Low High
    • MANUFACTURING PROCESSES Product Layout (Line) Project Layout Process Layout (Functional) Manufacturing Processes Intermittent Production Continuous Production Repetitive Production Job Shop
    • PROCESS (FUNCTIONAL) LAYOUT - JOB SHOP Eg: Machine Shops, Hospitals, Tax Consultants
    • PRODUCT (LINE) LAYOUT Eg: Automobiles, Computers
    • PROCESS PLANNING CHARACTERISTICS
    • PRODUCT POSITIONING & PROCESS CHOICE Job Shop Batch Flow Low Volume /High Variety Medium Volume / Medium Variety High Volume /Low Variety High Volume / Standard Mixed Repetitive Dedicated Repetitive Continuous Process 1 2 3 4 5 Product Structure Group 2 Group 1 High Quality Group3 Group 4 Group 5 High Quality High Quality Competitive Cost Low Cost High Flexibility Some Flexibility Some Flexibility Low Flexibility Standardized High Cost High Cost Medium Cost Some Automation Automated General Purpose General Purpose General Purpose Specific Purpose MTO ATO ATO MTS MTS Specific Purpose
    • Elements & Links - MRP II
    • DEMAND MATCHED WITH SUPPLY MRP Inventory Forecast Sales Inventory Policy DEMAND SUPPLY Recommendation Inter W/house Transfer Stock Adjustment POP WOP
    • MRP II SYSTEM Business Plans Marketing Plans Production Plans Master Production Schedule Resource Plan RCCP Final Assembly Schedule Demand Management Forecasts Distribution Orders Requirements Plan Customer Orders Material Requirements Plan CRP Production Activity Control Order Release Operation Scheduling Dispatching Expediting Production Reporting Purchasing Vendor Selection Order Placement Vendor Scheduling Order Follow up Performance Reporting` Top Management Planning Operations Management Planning Operations Management Execution
    • ELEMENTS & DIFFERENCE - MRPII VS. MRP ROUGH CUT CAPACITY PLANNING WORK IN PROCESS MASTER PRODUCTION SCHEDULE MATERIAL REQUIREMENTS PLANNING SALES ORDERS PROCESSING FORECASTS WORKS ORDERS PURCHASE ORDERS WORK IN PROGRESS CAPACITY PLANNING ROUTING BILLS OF MATERIAL INVENTORY CONTROL
    • PLANNING LEVELS - 4 KEY CONCEPTS Business Plans Marketing Plans Production Plans Master Production Schedule Resource Plan RCCP Material Requirements Plan CRP PAC PLAN IMPLEMENT & CONTROL Priority Capacity Long Range Medium Range Short Range INPUT / OUTPUT CONTROL Short Range OPERATION SEQUENCE PURCHASE Engine Back End Front End
    • MRP CLOSED LOOP CONCEPT PERFORMANCE MEASURES MPS RCCP MRP CRP PAC PURCHASE Feedback Feedback Yes Yes No No
    • TRADITIONAL MRPII APPROACH
      • Assumes infinite capacity.
      • Assumes fixed planned lead times including Queue times.
      • MRP calculates materials to meet the MPS.
      • CRP is used to determine capacity requirements & report loadings to the planner.
      • MRP & CRP planning is disconnected ie. serialised, and not synchronised.
      • Lacks hour by hour precision.
      • Can work well where capacity is not a problem and where the short term production plan is reasonably stable.
      S&OP MPS MRP Make Buy CRP PUR
    • ERP - ENTERPRISE RESOURCE PLANNING
      • Graphical User Interface (GUI)
      • Relational Database - Oracle, SQL Server, Access, Progress, Informix
      • 32 bit client/server
      • Internet Enabled
      • Enterprise focused Business Planning and Control System for Manufacturers, Distributors and others.
      • Appeals to multi location and global enterprises.
      • More integrated applications than MRPII, and broader in scope.
      • Comprehensive but it doesn’t cover everything.
      • May be weak in some of the things it does eg. scheduling.
      • May be complemented by “best of breed software”.
      • Backbone Information System and Corporate Database.
      • Advanced Information Technology enablers.
      ERP - ENTERPRISE RESOURCE PLANNING
      • Principles:
      • Simultaneous planning of all resources (materials, capacity, tools)
      • Global rather than local optimisation.
      • Focus on synchronising flow.
      • Bottleneck resources determine throughput and should be treated differently to non-bottlenecks.
      • The level of utilisation of a non-bottleneck resource is controlled by the constraints of the system and must not simply be activated.
      TOC / SYNCHRONOUS MANUFACTURING
    • DISTRIBUTION GL AR COM PO REQ INV AP POP SCHED MRP WO MRP WO WIP BOM, WO MRP MRP Job Costing
    • MANUFACTURING SCHEDULED ORDERS PO REQS INV BOM MRP WO CRP WIP ROUTING RCCP AP AR GL GL AP AR COM POP Job Costing MPS
    • MRP CLASSIFICATION
        • Class A = employs MRP in a closed loop mode and everything is formalised. MRPII has the financial and operating system married together and has a simulation capability .
        • Class B = top management doesn’t use the system to run the business directly instead see MRP as a production and inventory control system .
        • Class C = uses MRP primarily as an inventory order technique rather than as a scheduling technique and master schedule is typically overstated .
        • Class D = uses MRP working in the data processing department and inventory records are poor .
    • INVENTORY CONCEPTS
    • DEPENDENT DEMAND
      • Dependent demand consists of raw materials, components, & subassemblies that are used in the production of the parent or end items.
      • Eg. demand for computer chips depends on the demand for the (parent item) PC .
      • Manufacturing inventory demand is largely dependent & predictable.
      • Dependent demand is calculated, and it is predictable
      • Since the components are needed only when the finished product is manufactured thus components become lumpy because demand can be large at some time and none at other times.
    • INDEPENDENT DEMAND
      • Independent demand consists of finished products, service parts and other items whose demand arises more directly from the uncertain market environment.
      • Independent demand require some kind of forecasting.
      • Due to uncertainty, safety stocks are used.
      • Independent demand is relatively stable.
    • INVENTORY POLICY
      • POLICY ON TIME
      • Lead Time - Manufacture
      • Reorder Days - Purchasing
      • Safety Days - Purchasing
      • Review Time - days between Stock checks
      • POLICY ON INSPECTION
      • Batches Received - since last inspection
      • Inspection Cycle - say “20” to inspect every 20th batch
      • Inspection Yield - used by MRP for WO
      • Expected P&R Yield - used by MRP for PO
    • INVENTORY CONTROL
      • Stocktaking facilities - Periodic Vs. Perpetual
      • ABC analysis
      • Pareto analysis
      • Stock movement tracking / reporting
      • Traceability
    • ABC INVENTORY / PARETO ANALYSIS 100 80 60 40 20 0 20 40 60 80 100 % Total Value % of Inventory Items Class A Class B Class C Exact quantity EOQ Batch Re-order level
    • MAKE TO STOCK COST CONSCIOUS SALES FORECAST MRP RECOMMENDATIONS BOM COST CONTROL INVENTORY FINANCE AND ACCOUNTS SYSTEMS COST CONTROL POP COST CONTROL WIP TRACK ROUTES OPTIONAL WORKS ORDERS MPS RCCP
    • MAKE TO ORDER CAPACITY CONSCIOUS SALES ORDERS WIP POP INV MRP RECOMMENDATIONS MPS BOM ROUTES WORKS ORDERS CRP RCCP
    • LEAD TIME
      • Lead Time - is the time from the receipt of the order to the delivery of the product.
      • Cumulative Lead Time - the longest planned length of time to accomplish the activity in question.
    • DELIVERY LEAD TIMES Purchase Manufacture Assemble Ship Manufacture Assemble Inventory Ship Inventory Manufacture Assemble Ship Manufacture Inventory Assemble Ship M T S M T O A T O Cumulative Lead Time Delivery Lead Time Design Engineer to Order
    • RE-ORDER LEVEL TIME S T O C K L E V E L SAFETY STOCK LEVEL (SS) R O Q ROL LT EXAMPLE- USAGE ( U) = 10 UNITS / DAY LEAD TIME ( LT) = 5 DAYS SAFETY STOCK (SS) = 20 UNITS REORDER LEVEL (ROL) = SS + ( LT x U ) = 20 + ( 5 X 10 ) = 70 UNITS ROQ = user defined 20 40 70
    • ECONOMIC ORDER QUANTITY C O S T ORDER QUANTITY E.O.Q . ORDER PLACEMENT/ SETUP COST (OC) STOCK HOLDING COST (SHC )
    • ECONOMIC ORDER QUANTITY E.O.Q. Occurs Where : Cost of stock holding = cost of placing order setup cost Cost of buying / making EOQ (1) cost of placing a purchase order will be the administration cost x the number of orders ( oc ) (2) the cost of setting up a machine will be the setup time x setup rate x number of batches. The number of orders will be the annual demand ( a ), divided by the order quantity ( oq ). Cost of buying/making will be = ( a / oq ) x oc
    • ECONOMIC ORDER QUANTITY Cost of holding stock Money tied up in stock holding per year will incur an opportunity cost based on the annual cost of capital ( r ) and have a unit cost ( cs ). Average stock holding assuming no safety stock = ( oq/2 ) . Cost of holding stock will be - ( oq x cs x r) / 2 Total cost for any order = (a / oq) x oc + (oq x cs x r) / 2
    • ECONOMIC ORDER QUANTITY EOQ = 2 x OC x A CS x R (minimum of total cost, differentiating with respect to OQ and setting derivative = 0)
    • DISADVANTAGES - EOQ & ROP
      • RE-ORDER POINT
      • Independent demand.
      • Backward looking.
      • Constant checking of R.O.P. for every part required.
      • High stock levels maintained.
      • ECONOMIC ORDER QUANTITY
      • Elements of E.O.Q. formula are extremely difficult to calculate.
      • E.O.Q. suggests that high setup costs are acceptable.
    • BILLS OF MATERIAL CONCEPTS
    • BILLS OF MATERIAL BOM Inventory Components Assemblies Bulk Issue Recipes & Formulas Explosion Add material at stages in production PRODUCTION LINE Explosion is the process of translating product requirements into component requirements, taking existing inventories & scheduled receipts into account
      • Pegging refers to the ability to work backward from components requirements to identify the parent item or items that generated those requirements.
      • It shows only the specific part numbers that produce the specific gross requirements in each time period.
      • Pegging information can trace the impact of a material problem all the way up to the order it would affect.
      • Where used data indicates for each part number, the part numbers of all items on which the part is used.
      PEGGING & WHERE USED / IMPLOSION
      • Describe the structure for basic assemblies of parts that are common to different end items.
      • Eg. several models of a car may contain the same transmission or air conditioning.
      • By scheduling these items as common modules, production can be smoothened and inventory investment minimised.
      • These are used for End Items that contain many options.
      MODULAR BOM
    • PLANNING BOM
      • Are artificial or “pseudo” bills created by production control to facilitate planning.
      • They do not necessarily constitute a “buildable” combination of items but can be very useful for scheduling purposes and for items having a long lead time.
      • Eg. Planning bill might consist of minor assemble items such as nuts or bolts used for a wheelbarrow.
      • In order to provide quick response to customers, options are frequently scheduled on an % of end item.
    • BILLS OF MATERIAL
      • REVISION AND DRAWING NUMBERS
      • PLANNING BILLS
      • RECIPES / FORMULAE
      • PART SUBSTITUTIONS
      • TRIAL KITTING
      • WHERE USED
      • PEGGING
    • WORKS ORDER (WO) / (MO) - CONCEPTS
      • Works Order or Manufacturing Order
      • Kits
      • Picking lists
      • Batch tracking / Lot traceability
      • Rejection and scrap allowance
      • Backflushing
      WORKS ORDER PROCESSING
    • WORKS ORDER COMPLETION INSTANT ISSUE PICKING LIST WORKS ORDER ISSUES WORKS ORDER COMPLETION BACKFLUSHING WORKS ORDER PROCESSING MATERIAL ISSUES WORKS ORDER COMPLETION
    • CREATE WO / PO FROM CUSTOMER ORDER CUSTOMER ORDER BACK TO BACK RAISE WO M.R.P. PURCHASE FROM ORDERS SALES ORDERS RAISE WO
    • WO INTEGRATION - CONCEPTUAL OVERVIEW Inventory Job Costing Routing BOM MRP WORKS ORDERS RCCP CRP WIP Issues & Completions Input to MRP MRP creates WO and re-schedules Costs post to Job Route copied to WO BOM Copied to WO Load input Load input for WO scheduling Schedule written back to WO Records Operations Posts Costs to WO
    • ROUTING CONCEPTS
    • ROUTING
      • Working Patterns
      • Skill Groups / Operators
      • Work Centres / Machines
      • Tool Control
      • Standard Operations
      • Capacities / Load
    • ROUTING WORK IN PROGRESS WORKS ORDERS HOW LONG WHAT WHO WHERE Set time Operations Operator Work Centres Op. time Tools Skills group Machines Delay time CAPACITY PLANNING
    • ROUTING
      • Define the processes & milestone operations.
      • Specify sub-contract operations.
      • Associate special materials with operations.
      • Specify tools used with operations.
      • Specify and link machines to work centres and operators to skill groups.
      • Specify times for each operation.
      • Define cost rates and efficiency factors.
      • Specify factory patterns (Shifts, Holidays,etc).
      • Specify weekly capacities for RCCP.
      • Specify detailed instructions to shop-floor.
      • Adequate control and monitoring of progress.
    • FACTORY PATTERNS SHIFT PATTERNS Capacity planning will work within the Shift Pattern ( ie availability). But will not plan during periods covered by Holiday or Downtime Patterns. (ie non -availability) Maintenance Pattern Downtime Holiday Pattern
    • WORK- IN - PROGRESS CONCEPTS
    • WORK-IN-PROGRESS
      • Track by - Operation, and Event.
      • Record time against each operation and report on the progress of work on the shop-floor.
      • Record - downtime, scrap and / or rework at each operation.
      • Milestones reached.
      • Comprehensive analysis of work in progress.
      • Real time inquiry on shop-floor events.
      • When used with CRP, WOP and routing, it provides a complete shop floor control system .
    • SHOP FLOOR DOCUMENTS
      • Job ID card
      • Material requisition card
      • Transfer card
      • Operation card
      • Return to stores card
      • Job status card
      • Bar-coding
    • WO FLOW WITH W.I.P TRACKING WO Entry Trial Kitting Picking List Mat. Issue WIP Tracking WO Completion Trial Kitting WIP Tracking WO Completion Trial Kitting WIP Tracking WO Completion Backflush Material Trial Kitting WIP Tracking Issue Material WO Completion WO Entry Trial Kitting WIP Tracking Backflush Milestones WO Completion Backflush Material WO Entry WO Entry WO Entry Mat. Issue
    • PRACTICAL CONSIDERATIONS
      • How much detail ?
      • How many operations ?
      • What level of WIP tracking is required ?
      • Have you defined the milestones ?
      • Have you identified the constrained resources ?
      • What shop floor controls are needed ?
      • How important is quality control ?
      • Have you defined alternative routes and operations ?
    • GROSS REQUIREMENTS PLANNING
    • WHY USE GRP ?
      • To experiment with something new viz..,
        • when unusual orders are received
        • to introduce new product lines
        • to budget future production
      • To provide quick estimate of the component requirements based on the sales forecast and stock on-hand.
      • To manipulate the MRP plan by amending forecasts.
    • GRP PROCESS Decide on the Planning Horizon & enter Forecasts Generate Requirements from Forecasts Review Reports & check Projected Stocks Check Report for Results & check Projected Stock Make Adjustments to Forecasts If satisfied with results raise Works Orders
    • FORECASTING TECHNIQUES
    • FORECASTING ROLE IN PRODUCTION PLANNING Business Planning Production Planning (Aggregate Plan) Rough Cut Capacity Planning Material Planning Capacity Planning Material Control Capacity Control Demand Management Master Schedule Forecast Long Range Short Range Physical Plant Capacity Equipment Capacity Products Critical Equipment Availability Equipment & Labour Scheduling
    • PLC - EFFECT ON FORECASTING METHOD
    • FORECASTING METHOD - TIME SERIES
    • FORECASTING - OPINIONS & JUDGEMENT
    • FORECASTING METHOD - OTHERS L = low: M = medium: H = high: SR = short range: MR = medium range: LR = long range
    • FORECASTS / MRP- INTEGRATION
      • Run MRP and include forecasts in the processing.
      • Check MRP recommendations and decide where changes are necessary.
      • Make changes by amending forecasts.
      • Re-run MRP to effect the changes made on the forecasts.
      • Carry out this process until satisfied .
      • Raise actual orders from MRP which should include the approved forecasts.
    • MASTER PRODUTION SCHEDULING
    • AGGREGATE PLANNING & MASTER SCHEDULING
      • Aggregate planning
      • Planning activities with product families viz, products, customers rather than specific models of individual goods or services
      • Master scheduling
      • Follows from aggregate planning and expresses the overall plan in terms of the specific end items to produce and the dates to produce them.
      • It uses the information from both forecasts and orders on hand.
      • It is the major driver of all production activities.
    • MPS - PROCEDURE Enter and amend MPS Produce MPS Report up to a specified horizon Incorporate MPS results directly into MRP Recommendations Create MPS directly from MRP recommendation Create Products
    • MPS - KEY POINTS TO NOTE
      • MPS is the anticipated manufacturing schedule for selected items of stock.
      • MPS is ONLY run for significant items of stocks, or for those items where there are accurate forecast of quantities .
      • MPS are usually finished products that contribute a significant percentage of the sales revenue.
      • Stock items should be marked as MPS item in Inventory.
    • MPS & BOM LEVEL # of Components / Raw Materials # of End Products - FAS # of Sub-Assemblies The MPS level need not be the top level, but should be the level in the BOM that gives the greatest control and simplicity of use. MPS MPS MPS Make to Stock Make to Order Assemble to Order
    • MASTER SCHEDULING - MTS, ATO, MTO
      • MTS – there are fewer end items stocked to support customer service and MPS is structured around those end items.
      • ATO – eg automobile, where the MPS is done for the major assembly level items.
      • MTO – eg customised furniture, where there are fewer raw materials than end items and here the master schedule is structured around the raw material usage.
    • DEMAND & PLANNING TIME FENCE
      • Demand time fence
      • Is firm or frozen where no changes are allowed without management approval .
      • Planing time fence
      • Where changes will not automatically be made via computers to accommodate demand.
      • The master scheduler manages the work and he / she has some discretion in overriding the constraints.
    • MPS - TIME FENCES T0 T1 T2 T3 FIXED FENCE FIRM PLANNED FORECAST HORIZON
      • MRP HORIZON (WEEKS)
      • longest purchase lead time (weeks) - stock holding (weeks) + manufacturing lead times (weeks) - finished goods stock (weeks)
      • FIXED FENCE (WEEKS)
      • Period during which no further schedule changes are possible
      • End result is to achieve a balance between risk of stock holding and the required service level.
      SALES DEMAND FORECAST
        • MRP HORIZON
    • AVAILABLE TO PROMISE (ATP)
      • Stock available for future period.
      • ATP may be larger than the B/F of previous period as it excludes forecasts, as forecasts are unconfirmed sales orders .
      • Once stock has been promised it is unavailable and will be excluded from next period’s figures.
      • Uncommitted portions of inventory or planned production
    • HOW IS ATP DETERMINED?
      • ATP is the portion of the on-hand inventory plus scheduled production that is not already committed to the customer orders.
      • For the 1 st period the ATP includes the beginning inventory plus any MPS amount in that period.
      • In subsequent periods ATP consists of the MPS amount in that period minus the actual customer orders already received for that period and all other periods until the next MPS amount is available.
    • CREATE MPS FROM MRP MASTER PRODUCTION SCHEDULE Works Orders MPS Report CREATE MPS FROM MRP Current Sales Orders Forecast (Sales) Forecast (Spares) Reorder
    • MASTER PRODUCTION SCHEDULE PRODUCTION PLANNING MASTER SCHEDULING PROCESS BALANCE SUPPLY/DEMAND CHECK AND ANALYSE RESOURCES
      • OUTPUTS
      • PROJECTED INVENTORY
          • Planned inventory based on forecast and actual
          • demand
      • AVAILABLE TO PROMISE
          • Uncommitted portions of inventory or planned
          • production
      • RECOMMENDATIONS
          • Suggested quantities according to order policy rules
    • ROUGH CUT CAPACITY PLANNING
    • OBJECTIVE OF RCCP
      • To check feasibility of the MPS.
      • To serve as an early warning for bottlenecks and under utilization of Work Centre or Skill Group.
      • To assess, the effect of changes to the product mix.
      • To give a rough “ YES ” or “ NO ” verdict on the feasibility of the production plan.
      • If satisfied with the RCCP results, a detailed schedule could be developed.
    • RCCP - HIGHLIGHTS
      • Backward schedules at infinite capacity
      • Weekly capacities and load displayed
      • User defined load:
        • Works orders
        • Sales orders
        • MPS orders
        • Sales forecasts
        • Production forecasts
        • Spare sales forecasts
        • MRP recommendations
      • Tagging to show load details
    • RCCP - CAPACITY & LOAD DETAILS
      • RCCP is closely linked to:
        • Routing module which supplies the capacity information.
        • Sales Order Entry (actual), WOP (actual), MRP and MPS (forecasts) modules supplies the demand information (load).
        • WIP module provides an up-to-date information on the outstanding operations or quantities to be planned.
    • RCCP - DETERMINING CAPACITY
      • Being a rough plan, the Work Centre (WC) capacity as a whole is divided equally between the number of machines within the WC, and same applies for Skill Groups.(SG)
      • Efficiency of SG & WC are ignored .
      • If no capacity exists for SG or WC, one will be automatically generated using standard capacity entered in the routing module.
      • Capacity for each WC & SG is recorded in weekly buckets which is divided into Hrs/week.
    • RCCP - DETERMINING LOAD
      • Load being the amount of scheduled work, and is expressed in hours / week.
      • Setup and delay time (transit or load) can be included as part of the load.
      • Load is determined by the required quantity of the product.
      • To avoid duplication, care must be exercised when selecting the load.
      • Contingency percentage may be included in the plan to model different load scenarios.
    • AVOID LOAD DUPLICATION
      • “ MANUFACTURING TO STOCK”
      • MPS is used to examine Forecasts and Sales Orders - to determine the load.
      • For long term Forecasts: WO, SO & MPS should be excluded from the range selection.
      • To evaluate MPS where the load is calculated using WO & MPS : SO & Forecast should NOT be included.
    • AVOID LOAD DUPLICATION
      • “ MANUFACTURING TO ORDER ”
      • Load is determined from Sales Orders only .
      • For long term forecasts: SO should be excluded if they fall within the forecast period.
      • When MRP is run, plan would calculate load from WO and MRP recommendation. Do not include SO or Forecasts in the MRP plan.
    • RCCP - RUN TIME PARAMETERS
      • Start and End Dates
      • Include a Load Contingency Factor
      • Complete in Week Due
      • Plan for Held Orders, Set ups, Delays
      • Tag Load to Orders
      • Regenerate Available Capacity
    • “What If” SCENARIOS
      • Produce projected schedules having set up existing or proposed Works Orders or Trial Works Orders.
      • Use the result from these schedules to see the effect that new orders have upon production.
    • MATERIAL REQUIREMENTS PLANNING
    • WHAT ARE WE TRYING TO ACHIEVE USING MRP?
      • THE RIGHT PARTS
        • IN THE RIGHT QUANTITIES
          • AT THE RIGHT PLACE
            • AT THE RIGHT TIME
      • GOOD CUSTOMER SERVICE
      • CORRECT LEVELS OF INVENTORY & WIP
      • EFFECTIVE USE OF RESOURCES
      • THE BOTTOM LINE - INCREASED PROFITS
    • MATERIAL REQUIREMENTS PLANNING PURCHASE ORDERS WORKS ORDERS MATERIAL REQUIREMENTS PLANNING
    • MRP PROCESS Prepare for MRP Generate MRP Recommendations Print WO & PO from their respective Modules Review, adjust, & Approve Recommendations Raise approved Orders Re-generate Recommendations Report
      • Produces a comprehensive analysis of the material requirements.
      • By including MPS and Forecasts, MRP provides a more detailed analysis.
      • MRP recommendations are produced by backward scheduling the order and component requirements.
      • M RP achieves Backward scheduling by reducing WIP, postpone the commitment of raw materials to specific products and minimise storage time of completed components.
      • So MRP is the combination of backward scheduling and gross to net explosion.
      MRP - HIGHLIGHTS
    • MRP - CHARACTERISTICS - DEPENDENT DEMAND - TIME PHASED DELIVERIES - CAPACITY INDEPENDENT
    • MRP - PREREQUISITES
      • Formal Planning Process:
        • Business Plans
        • Forecasts
        • Production Plan
        • Realistic MPS
      • Needs consistent parameters as frequent changes will confuse results
      • Data Integrity
        • BOM
        • Inventory
        • Open Orders
        • Lead Times
      • Inventory Policy Rules
      • Management & User Commitment
      • Trained Staff
    • MRP - INPUTS & OUPUTS
    • MRP - ELEMENTS / CONSIDERATION
      • Recommendation MUST be analyzed to determine reasons.
      • Accepting less than 90% of the recommendation indicate base data is inaccurate.
      • Constant minor changes may cost more than you save.
      • MRP Calendar
      • MRP Filters (user defined)
        • Cancel orders
        • Bring Forward
        • Delay
        • Increase
        • Minimum Uplift
      • Bucket Sizes
        • Days , Weeks
        • Specific
    • MRP - INVENTORY POLICY
      • LEAD TIMES
        • Lead & Review Time
      • REORDER & SAFETY STOCK LEVELS
      • BATCHING RULES
        • Q = precise qty
        • M = multiple EOQ
        • A = minimum EOQ
        • R = rounded EOQ
        • D = discrete orders
      RECOMMENDATION BASED ON :
    • SAFETY STOCK & SAFETY LEAD TIMES
      • Safety stock and safety lead time are both hedges .
      • Safety lead time is more based on the uncertainty in the timing rather than the quantity.
      • Safety stock tends to be used in MRP where uncertainty about quantities is the problem – scrap.
      • Reasons to carry safety stock of components
      • Not all demand is dependent – spares may have a service requirement that has an independent demand.
      • Variable lead times form suppliers due to uncertainty.
      • Firms may experience machine breakdowns, scrap or last minute customer changes.
    • MRP FILTERS
      • Filters pertaining to MO & PO:
          • Reschedule Orders Cancel Orders
          • Uplift Orders Reduce Orders
      • Minimum time for:
          • Delay Days Bring Forward Days
          • Percentage Uplift Percentage Reduction
          • Firm Planned Days
      • Shortage Decisions:
          • Bring Forward, Calculate, Uplift
    • PURCHASING FILTERS N N N N N N N Y Y Y N Y Y Y Y N Y Y Y Y Y Y Y Y Y LINE VALUE $ 5 10 50 100 500 DELAY ORDER BY DAYS 1 5 10 15 30
    • RECOMMENDATIONS FROM MRP FILTERS
      • Shortfall
        • Bring forward an existing order after the demand date.
        • Uplift the order qty on or before date of demand.
        • Raise a new order.
      • Excess
        • Delay an existing order until the new demand appears.
        • Cancel an order.
    • MRP - CALENDARS
      • In order for MRP to suggest new orders and re - schedules correctly it is essential to provide information about what days of the year are valid for production work and purchase receipts.
      • A calendar for each year should identify days available for -
        • - Purchase receiving ( r )
        • - Production work ( p )
        • - Both production and receipts (b )
        • - Neither /total shutdown ( n ).
      • When MRP is back scheduling a works order, it will note
      • the lead time and count back from the due date through ‘ p ’ or ‘ b ’ days to determine the correct start day.
      • When MRP is planning purchase orders it will count all
      • calendar days as part of the lead time but will only plan
      • receipts on ‘ r ’ or ‘ b ’ type days.
    • MRP - SCHEDULING PROCESS
      • MRP searches through sales orders, works orders, forecasts and / or MPS.
      • For every requirement, MRP establishes existing replenishments by checking WOs and POs.
      • MRP tags the sales order, works order or forecasts that generated the requirement.
      • MRP report includes details of the items that need to be manufactured or purchased and recommends the ordering dates.
      • MRP also calculates the cost of the orders.
      • Rescheduling or cancellation depends on the filters that have been set up.
    • MRP - PLANNING BUCKETS
      • Data generated by MRP is grouped together in buckets of days,weeks or periods.
      • Broader the timeslot more summarized the data.
      • Fine grain plan is produced by bucketing in days.
      • Choice of specifying buckets by defining a list of end dates and a start date.
      • Bucket size is selected before MRP run.
    • REGENERATIVE & NET CHANGE - MRP
      • Regenerative MRP systems – use batch processing to replan the whole system ie full explosion of all items on a say weekly basis.
      • The main disadvantage being the time lag that exists until updated information is incorporated into the system.
      • Net change MRP systems – are on line and react continuously to changes from the master schedule, inventory file and other transactions.
      • But net change can create system nervousness causing over reaction to changes.
    • RUNNING MRP - RECAP
      • Generate MRP recommendation from current sales, forecasts, and / or works orders.
      • Produce report of recommendation and view projected rolling stock status for selected items.
      • From the report, decide whether or not actual orders should be generated.
      • Adjust recommended orders for each stock item or supplier, by altering the approved / held status.
      • If not satisfied, produce an updated report of the adjusted recommendations and make further adjustments until satisfied.
      • Generate work orders and purchase orders from approved recommendation.
    • ADJUST MRP RECOMMENDATION - RECAP
      • MRP allows manual vetting before orders are raised.
      • MRP allows to make final adjustments to requirements without having to run the whole program again.
      • If changes to MRP recommendation are made, the next MRP run is likely to recommend changes back to the original recommendation .
      • Add comments to record the reasoning behind the adjustments, if need be .
    • MRP REPORTS
      • A schedule of planned orders to be released in the future.
      • Order release notices to authorise work on planned orders.
      • Changes (of due dates, quantities) in planned & open orders.
      • Cancellation or suspensions of open orders due to master schedule changes.
      • Inventory status updates.
      • Various planning, performance & exception reports.
    • MRP LOGIC
      • Gross requirements – is the projected needs for raw materials, components, subassemblies or finished goods by the end of the period shown. Gross requirements comes from the master schedule for end items or from the combined needs of other items.
      • Gross Requirements DO NOT take account of any inventory on hand or on order.
      • Scheduled receipts – materials already on order from a vendor or MO due to be received at the beginning of the period. MRP shows the quantity & projected time of the receipt
      • On hand / available – the quantity of an item expected to be available at the END of the time period in which it is shown. This includes amount available from previous period plus planned order receipts and scheduled receipts less gross requirements.
    • MRP LOGIC
      • Net requirements – net amount needed in the period. This equals the gross requirements less any projected inventory available from the previous period along with any scheduled receipts
      • Planned order receipt – material that WILL BE ORDERED from a vendor or MO to be received at the beginning of the period (similar to scheduled receipt)
      • Planned order release – the planned amount to be ordered in the time period adjusted by the lead-time offset so that materials will be received on schedule. Once the orders are actually released, the planned order releases are deleted from the form and the planned order receipts they generated are changed to scheduled receipts
    • MRP CALCULATION - CONCEPT OVERVIEW BILL OF MATERIALS A B (X 2) C (X 1) D (X 1) STATIC DATA A B C D PRODUCT LEAD TIME (WEEKS) 2 5 1 1 A sales order has been placed for 100 of product ‘A’ to be delivered in week 10. Assuming there was no stock or scheduled orders for any product in the BOM. An MRP explosion would produce the following requirements: SUGGESTION PRODUCT QUANTITY START FINISH WEEK WEEK WORKS ORDER A 100 08 10 WORKS ORDER B 200 03 08 PURCHASE ORDER C 200 02 03 PURCHASE ORDER D 100 07 08
    • MRP - GROSS TO NET EXPLOSION GROSS REQUIREMENTS 200 STOCK ON HAND 50 50 50 50 50 50 50 SCHEDULED ORDERS 100 NET REQUIREMENTS 50 SUGGESTED ORDERS 50 GROSS REQUIREMENTS 100 STOCK ON HAND 0 SCHEDULED ORDERS NET REQUIREMENTS 100 SUGGESTED ORDERS 100 02 03 04 05 06 07 08 09 10 02 03 04 05 06 07 08 09 10 GROSS REQUIREMENTS 50 STOCK ON HAND 20 20 SCHEDULED ORDERS 100 NET REQUIREMENTS 30 -100 SUGGESTED ORDERS 30 -100 02 03 04 05 06 07 08 09 10 WEEK NUMBER A B C PRODUCT
    • MRP - GROSS TO NET EXPLOSION GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 50 NET REQUIREMENTS 50 SUGGESTED ORDERS 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A
    • MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 50 NET REQUIREMENTS 50 SUGGESTED ORDERS 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A (1) CANCEL ORDERS DUE ON WEEKS - 02 AND 04. RAISE A NEW ORDER DUE ON WEEK 08.
    • MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 10 10 10 10 10 10 SCHEDULED ORDERS 10 30 NET REQUIREMENTS -10 -30 90 SUGGESTED ORDERS -10 -30 90 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT From A (2) CANCEL ORDER DUE ON WEEK 02. DELAY ORDER DUE ON WEEK 04 AND INCREASE IT TO 90 UNITS.
    • MRP - FILTERS GROSS REQUIREMENTS 100 STOCK ON HAND 10 20 20 50 50 50 50 SCHEDULED ORDERS 10 30 NET REQUIREMENTS 50 SUGGESTED ORDERS 50 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT (1) USE MRP FILTERS TO SUPPRESS RESCHEDULING SUGGESTIONS WITHIN A CERTAIN TIME WINDOW. (2) USE MRP FILTERS TO PREVENT RESCHEDULING OR CANCELLATION ALTOGETHER.
    • MRP - SUGGESTIONS GROSS REQUIREMENTS 100 STOCK ON HAND 10 10 10 10 10 10 10 110 110 110 SCHEDULED ORDERS 10 30 NET REQUIREMENTS -10 -30 200 SUGGESTED ORDERS -10 -30 200 02 03 04 05 06 07 08 09 10 WEEK NUMBER D PRODUCT MRP SUGGESTIONS: (1) CANCEL ORDERS DUE ON WEEKS 02 AND WEEKS 04. RAISE A NEW ORDER DUE ON WEEK 08. PRODUCT ‘D’ HAS A MINIMUM ORDER QUANTITY OF 200. (2) CANCEL ORDER DUE ON WEEK 02. DELAY ORDER DUE ON WEEK 04 AND INCREASE IT TO 90 UNITS. PRODUCT ‘D’ HAS A MINIMUM ORDER QUANTITY OF 200.
    • EXERCISE - MRP SCHEDULING A B C x 2 D F G x 2 INVENTORY PURCHASE ORDERS B 2 C 0 D 4 E 5 F 4 G 7 on hand
      • D 5 due week 2
          • lead time 6 weeks
      • G 10 due week 8
          • lead time 9 weeks
      WORKS ORDERS MANUFACTURING LEAD TIME B 2 due week 2 C 2 due week 5 E 3 due week 2 B lead time 6 weeks C lead time 4 weeks E lead time 3 weeks F lead time 3 weeks LEVEL 1 LEVEL 2 PHANTOM H REQUIRE PRODUCT A, QUANTITY 10, FOR DELIVERY IN WEEK 9 (i.e. COMPLETE MANUFACTURE IN WEEK 8) E
    • EXERCISE - RECOMMENDATION RAISE NEW ORDERS AMEND EXISTING ORDERS CANCEL EXISTING ORDERS RECOMMENDATIONS TO :- rec.. supply demand r s d r s d r s d r s d r s d r s d Week 1 2 3 4 5 6 7 8 9 A B C D E F G 0 2 0 5 4 5 3 2 10 10 20 10 10 10 10 DUE 6 2 6 2 1 18 4 7 10 13
    • AVOID MRP SYSTEM NERVOUSNESS
        • MRP nervousness causes significant changes to the MRP plan even with minor changes to MPS.
        • The causes for nervousness are due to release of order prematurely or unplanned quantity, unplanned demand (spare parts) and shifts in MRP parameter values (safety stock, lead time),
        • Lot sizing techniques - POQ can amplify the system nervousness at lower levels in the product structure.
        • Reducing the nervousness through = freezing and time fences, selective use of lot sizing e.g. use of fixed order lot quantity at the top level, firming up orders, intelligent and well training users.
    • CAPACITY PLANNING CONCEPTS
    • CAPACITY PLANNING Work in Progress Work Orders
    • CRP - INPUTS & OUPUTS
    • CAPACITY PLANNING RCCP FINITE & INFINITE PLANNING MACHINES WORK CENTRES SKILL GROUPS OPERATORS Hours available Holiday / Sick Efficiency % Hours throughput Worked Capacity Maintenance Manufacturing Schedule
      • Offset load from WIP tracking for completed and in process operation.
      • Four types of schedule available:
        • Infinite
        • Finite
        • Prioritised finite
      • Updates works orders with expected completion date.
      CAPACITY PLANNING
    • PRODUCTION ACTIVITY CONTROL CONCEPTS
      • Setting the operation start dates so that jobs will completed by their due date.
      • Measured release / monitoring of work in the system.
      • Feedback of performance data.
      • Comparison of result to the material & capacity plan objectives.
      • Implementation of corrections when needed.
      OPERATIONS SCHEDULING & CONTROL
        • Priority Control – control over the status of the job & work centre activities by specifying the order in which materials or jobs are assigned to work centres and actually authorising or assigning the work to be done.
        • Capacity Control – control over labour & machine time used for jobs and work centre activities by planning & monitoring the time requirements of key work centres.
      CONTROL EXCERCISED - CAPACITY & PRIORITY
    • Input Control is the control over the work being sent to a supplying facility when it is shop floor or vendor. Output Control is the control exercised over the dispatching, expediting & follow up necessary to get scheduled work from a work centre or vendor. Loading is assigning hours of work to work centres in accordance with the available capacity of the work centres. Line Balancing is a charting technique that uses lead-time & assembly sequencing to compare planned component completions with actual component completions. INPUT & OUPUT, LOADING, & LINE BALANCING
    • PURE INFINITE : LOAD ASSESSMENT BASED ON BACKWARD SCHEDULING . THIS IS SIMILAR TO ROUGH CUT CAPACITY PLANNING. INFINITE : AS ABOVE BUT THE DIFFERENCE BEING THAT THE PROCESS WILL ALIGN WITH THE SHIFT PATTERN’S SET UP. FINITE : TAKING THE CURRENT WORKS ORDERS IN NUMBER ORDER AND SUBJECT TO THE SCHEDULING PARAMETERS THIS PROCESS WILL FORWARD SCHEDULE THE WORKS ORDERS . PRIORITISED FINITE : AS ABOVE BUT TAKES THE WORKS ORDERS IN THE ORDER OF ‘SLACK TIME PER REMAINING OPERATION’ OR ‘CRITICAL RATIO’. THESE ARE USED TO PRIORITISE THE WORKS ORDER. TYPES OF SCHEDULING
    • FINITE & INFINITE LOADING
      • Choice of method - depends on environment, methods, work load variability, etc .
      Load up to capacity. Review missed due dates . Assume infinite capacity. Review over and under loads. Finite Infinite
    • FORWARD & BACKWARD SCHEDULING Due Date Work Centre Mon Tue Wed Thu Fri Mon Tue Wed Thu Fri 1 2 3 4 5 1 2 3 4 5
    • CRP - PRIORITIZED FINITE CAPACITY PLAN Prioritized Finite Capacity Planning Work Hours Works Order 1 Works Order 2 00:00 08:00 13:00 17:00 23:59 Sunday - No Capacity 15/8/97 16/8/97 17/8/97 18/8/97 19/8/97 20/8/97 21/8/97 Prioritised Decision Rules are rules used by a dispatcher to determine the sequence in which jobs will be done.
    • CRITICAL RATIO CALCULATION Order Due Date Lead time Remaining Present Day Actual Time A B C 18/5 19/5 20/5 17/5 17/5 17/5 20 days 2 days 2 days 1 day 2 days 3 days Critical Ratio 0.05 behind Schd Critical Ratio = Actual Time Remaining Lead Time Remaining 1.00 On Schd 1.5 Ahead Schd Main Objective being to prioritise work orders
      • Hourly load generated from routing data.
      • Determines the resource capacity using shift, holiday and maintenance patterns.
      • Determines the load created by each operation on a works order.
      CRP - CALCULATION CONCEPT
    • CHARACTERSTICS OF SCHEDULING
    • SCHEDULING & CONTROL - RECAP
      • Release orders to the system in accordance with the priority plan.
      • Assign jobs to specific work centres includes machine loading or shop loading.
      • Provide sequencing priorities to specify the order in which are jobs are to be processed.
      • Control the manufacturing lead time by tracking & expediting jobs if necessary.
      • Monitoring the priority status of jobs via summary, scrap, rework & other reports.
      • Monitor the capacity status of facilities via input / output reports of workload vs capacity.
    • RECAP - MPS, MRP, CRP & PAC Aggregate Plan & MPS Forecast Cust. Order MRP CRP WC Capacity Routing File BOM Inv. Status Are Materials Adequate? Is Capacity Adequate? PAC Priority Control material & Job Capacity Control time Yes Yes Yes Yes Work Load Reports Released PO / WO No Revised MPS No Reschedule Orders Planned Orders Load Projection Report
      • Order Rel.
      • Sequencing
      • Status Control
      • Loading / assign
      • Lead time control
      • Input / output control
    • IMPLEMENTATION TIME FRAME Cost Control Finance CRP INV BOM WO POP MPS SOP RCCP Route WIP MRP MONTHS = 6 1 2 2 1 } } } } 4 3 2 1 STAGE
    • COMPETENCY MATRIX Production Planner Senior Planner Master Scheduler Inventory Planner Logistics Management Accountant General Manager Master Scheduler Bills Of Material POSITION COMPETENCY AREAS Material Requirement Planning Capacity Requirement Planning Order Release 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1 1 = requires expertise : 2 = requires working knowledge : 3 = requires understanding as to why & how decisions are made by others & how it relates to other areas of the firm:
    • RECAP
      • Concepts & Strategy
      • Product Life Cycle, Products & Process
      • Elements & Links - MRP, MRP II, Close Loop, ERP, TOC
      • Inventory Concepts - EOQ, ROP, Lead Times
      • Bills of Material Concepts - Pegging, Planning BOM
      • WO / MO Processing, WIP & Routing Concepts
      • MPS, ATP, Forecasting, Planning Fences & RCCP
      • MRP Concepts - Filters, Recommendation, MRP Logic
      • Capacity Planning Concepts - Efficiency, Utilization
      • PAC Concepts - Scheduling & Control, Critical Ratio
      • Implementation Time Frame & Competency Matrix