The document discusses planning for Siemens' manufacturing process using MRP. It forecasts demand for Siemens' S7-400 CPUs at 902,600 units for the following year based on past sales data. It also provides seasonal adjustments to the monthly forecasts. The document then discusses aggregate planning strategies like level scheduling and subcontracting. It notes limitations from a lack of specific numbers and not analyzing capacities. Finally, it discusses considerations for optimizing the MRP process like incorporating CRP and balancing time, quality and cost.

1. Hillary Raya, Ramon Rodriguez, Julius
Malone & Nikhil Chandankhede
Winter 2016
CSU East Bay
Planning for Siemens Manufacturing:
Working Through the MRP Process

3. PRODUCT
Siemens Digital Factory
• S7-400 CPUs
Product Family of Central Processing Units
Part of automation systems
• Applications
Power generation
Water treatment plants
Traffic flow automation
Airport automation

4. FORECASTING
Assumptions
1.Yearly forecasts do not follow
seasonal pattern
2.Monthly forecasts do follow
seasonal pattern
3.For 10-year period forecast is
not cyclic
Results
Linear regression! Lowest MAD.
Forecast of 902,600 units.
Methods Used
1.Linear Regression
2.Exponential Regression
3.Moving 3-Year Average
4.Moving 4-Year Average

5. NUMBEROFUNITS
INTHOUSANDS

6. FORECASTING
Actual data 2005-2014 to predict demand in 2016
22,801 orders
87,129 orders
Q1 
Added seasonality for actual orders per quarter
= 0.26  234,676 units
20,754 orders
87,129 orders
Q2  = 0.24  216,624 units
19,858 orders
87,129 orders
Q3  = 0.23  207,598 units
23,716 orders
87,129 orders
Q4  = 0.27  243,702 units July - September
April - June
January - March
October - December

7. Recall: Aggregate operations planning main purpose is to specify
optimal combination of production rate, workforce level and inventory
on hand
• Strategies used & why:
-Siemens mainly uses Level Strategy
-Subcontracting considered
• Main assumptions: Maintenance cost at 15% of all expenses, % of
resources allocated to production line, fixed number of machines,
beginning inventory @ 25% of demand forecast
• Given more time & access: more specific numbers, capacities effect
on aggregate planning, better understand how ERP software
integrates with aggregate planning
AGGREGATE PLANNING

8. COST & NUMBERS MATRIX

9. AGGREGATE PLANNING SUMARY

11. MDS

12. MRP

13. ERP
What is Enterprise
Resource Planning?

14. Uses of ERP software
● Eliminates duplication of data
● Information across departments
● Productivity
● Inventory management
● Material cost
● Human resource management
● Boosting profit
● Customer interaction
● Customer service

15. Different ERP Vendors
● SAP
● Oracle
● Microsoft
Dynamics

16. SAP vs Oracle
● Average Implementation duration
20 months
● Average delays 2 months
● Average implementation Cost of
$16.8 Million or 18.6% of the
Revenue.
● ERP solution Benefit factor of
72.2%.
● Focuses more on research and
design
● Focuses more on Customization as
compared to quick development of
application.
● Average Implementation duration
18.6 months
● Average delays 4 months
● Average Implementation Cost of
$12.6 Million or 10.6% of the
Revenue.
● ERP solution benefit factor of
58.0%.
● Focuses more on flexibility and
ease to use
● Focuses more on Quick
development of application and
not on customization.

17. SUMMARY
Considerations
• Lack of information  more assumptions
• No Capacity Requirements Planning (CRP)
Optimize
Time  Speed
Quality  Flexibility
Cost  Efficiency