Chapter 1 Vollmann, Berry, Whybark & Jacobs

1. Manufacturing Planning and ControlVollman/Berry/Whybark/Jacobs: Manufacturing Planning and Control for Supply Chain Management, 5/e (2005)http://www.pom.edu/mpc/index.htm Chapter 1 Vollmann, Berry, Whybark & Jacobs

2. Definition A Manufacturing Planning and Control system is a methodology designed to manage efficiently the flow of material, the utilization of people and equipment, and to respond to customer requirements by utilizing the capacity of our suppliers, that of our internal facilities, and in some cases that of our customers to meet customer demand.

3. A Context for Thinking about Manufacturing Planning and Control (MPC) What are processes? Processes define how we do things! Step 1  Step 2  Step 3  etc. So, what is the role of MPC? The MPC system tells the processes what to work on. Plans the resources that processes use (i.e. people, equipment, material). Plans for what processes will be doing in the future.

4. Definition Plan the use of people Mfg Planning and Control System Efficient use of our capacity and that of our suppliers. Possibly even our customers. Manage the efficient flow of materials Driven by customer demand and other Customer requirements Often part of a company’s ERP system.

5. Agenda • What influences the MPC system design? • What are the typical support activities? (LT, MT, ST) • Performance indicators • MPC Framework (FE, E, BE) • Matching MPC system with Needs • Classification Schema • Evolution & Responses

6. Key Areas of Influence on MPC system design • Degree of Internationalization Sempre più elevato per la spinta ad esternalizzare il processo di produzione e concentrarsi su progettazione e mercato. Nike. Macintosh. Dell (cfr. Chase). • Role of the customer in the system Variabilità della dimensione e tipologia della domanda che richiede flessibilità produttiva ottenuta abbassando scorte, tempi di risposta e costo delle transazioni nel sistema informativo con SC molto diversificate e sparse • Increasing use of Information Technology. Necessario per supportare LeanSC con dati e procedure comuni per unità organizzative funzionalmente, geograficamente e culturalmente disparate e differenti

7. Typical Support Activities • Long Term • Intermediate Term and • Short Term.

8. Long Term (Piano di Produzione=>MPS) The system is responsible for providing information to make decisions on (cfr. Variabili strategiche, p.13 Seminario)): • The appropriate amount of capacity (intende quantità per ogni tipo di capacità produttive) - including supplier capacity - to meet the market demands of the future. • Provide the appropriate mix of human resource capabilities (profili tecnici e/o professionali), technology, and geographic locations.

9. Intermediate Term The fundamental issue is matching supply and demand in terms of both volume and product mix. • Planning for the right logistics. • Providing customers with information on correct quantities and location to meet market needs. • Planning of capacity to determine employment levels, budgets, overtime and subcontracting needs, etc.

10. Short Term There is a need for detailed scheduling of resources to meet production requirements. • Involves time, people, material, equipment and facilities. • Involves people working on the right things. • Involves tracking the use of resources and execution results. • Provide problem-solving support.

11. Performance Indicators • Output results • Equipment utilization • Cost associated with different departments, products, labor utilization, and project conditions. • Measures of customer satisfaction such as late deliveries, product returns, quantity and quality errors.

12. Costs and Benefits of MPC systems • The costs of an MPC are substantial but so can be the • Rewards (see examples). • Common to see ERP system costs measured at 5-10% of cost of goods sold.

13. An MPC System Framework • Front End (cfr.p.14 e segg. del Seminario) • Set of activities and systems for overall direction setting (Demand Management, Sales & Operations Planning, Resource Planning and MPS) • Engine • Material Requirements Plans (MRP): Systems for detailed material and capacity planning. • Back End • Depicts the MPC execution systems

14. Resource Planning Sales and operations planning Demand management Enterprise Resource Planning (ERP) System Master production scheduling Front End Detailed capacity planning Detailed material planning Engine Material Requirements Plans (MRP) Shop-floor systems Supplier systems Back end Manufacturing Planning and Control System

15. Front End • Demand Management Previsione di domanda del cliente finale. Ordini.Rapporti interaziendali. Specifiche su parti di ricambio. • Sales & Operations Planning Coordinamento delle risorse produttive disponibili per rispondere ai piani di vendita (sales/marketing planes). • Resource Planning Previsione delle risorse produttive e loro coordinamento • Master Production Schedule (MPS) Cosa bisogna produrre e in quali tempi

16. Resource Planning Sales and operations planning Demand management Enterprise Resource Planning (ERP) System Master production Scheduling (MPS) Front End • Front End • Set of activities and systems for overall direction • setting (Demand Management, Sales & Operations Planning, Resource Planning and MPS) Detailed capacity planning Detailed material planning Engine Material and capacity plans Shop-floor systems Supplier systems Back end Manufacturing Planning and Control System

17. Engine • Detailed Capacity Planning (DCP) Determina in dettaglio quali risorse produttive (persone, macchine, …) occorrono per la produzione • Detailed Material Planning (DMP) Determina in dettaglio quali parti e materie prime occorrono per la produzione in base alla “esplosione” (BOM: Bill Of Materials) dei prodotti finali • Material Requirements Plans (MRP): Determina in dettaglio in quali tempi occorrono le parti e le materie prime, in base al coordinamento delle risorse produttive e ai BOM dei prodotti finali

18. Resource Planning Sales and operations planning Demand management • Engine • Systems for detail material and capacity planning. Enterprise Resource Planning (ERP) System Master production scheduling Front End Detailed capacity planning Detailed material planning Engine Material and capacity plans Shop-floor systems Supplier systems Back end Manufacturing Planning and Control System

19. Back End (execution systems) • Supplier systems Coordinamento tempi e quantità delle parti e delle materie prime con I fornitori • Shop-floor systems Coordinamento e scheduling dettagliato delle operazioni per le attività produttive

20. Resource Planning Sales and operations planning Demand management Enterprise Resource Planning (ERP) System Master production scheduling Front End • Back End • MPC execution systems – Track progress and collect data. Detailed capacity planning Detailed material planning Engine Material and capacity plans Shop-floor systems Supplier systems Back end Manufacturing Planning and Control System

21. Matching MPC System with the Firm needs (A DYNAMIC PROCESS) • As competitive conditions, customer expectations, supplier capabilities, and internal needs change the MPC should change. Di conseguenza anche l’importanza relativa dei vari moduli dell’MPC cambia nel tempo. • The trend is towards on-line data access and systems (principale cambio tecnologico: intra e inter unità organizzative). • Physical changes influenzano l’MPC: • Outsourcing mfg (manufacturing). • Hollowing (ricercando) out of corporation (?), etc. • Providing information at the level where decision are made, in appropriate time and frames, directly from the shop floor • Firms competing in product variety strength MPS and DMP • Firms competing on delivery speed need to improve execution.

22. MPC Classification Schema(enfasi degli approcci dell’MPC a seconda della complessità, cioè numerosità dei componenti, e cadenza dei prodotti) Da destra a sinistra diminuiscono: tempi dei cicli e di risposta, immagazzinato e simili Number of Subparts Project Managment MRP Just-in-time Repetitive (Beni discreti) Flow (quantità) Seconds Minutes Days Weeks Months Time between successive units

23. MPC Classification Schema Flow (chemical plants, food, etc.) Number of Subparts Project MRP Just-in-time Repetitive Flow Seconds Minutes Days Weeks Months Time between successive units

24. MPC Classification Schema Repetitive Mfg. (automobiles, high volume consumer products (i.e. TVs) Number of Subparts Project MRP Just-in-time Repetitive Flow Seconds Minutes Days Weeks Months Time between successive units

25. MPC Classification Schema Just-in-Time systems (feedback management for shorter life cycle products – e.g. fashion items). Focus on minimizing inventory in the supply chain. Number of Subparts Project MRP Just-in-time Repetitive Flow Seconds Minutes Days Weeks Months Time between successive units

26. MPC Classification Schema MRP (feedforward management formanagement of complicated longer life products, i.e. machines, electronic equipment). Number of Subparts Project MRP Just-in-time Repetitive Flow Seconds Minutes Days Weeks Months Time between successive units

27. MPC Classification Schema Project (unique; long term), buildings, one of a kind (satellites). Number of Subparts Project MRP Just-in-time Repetitive Flow Seconds Minutes Days Weeks Months Time between successive units

28. MPC Classification Schema • Flow (chemical plants, food, etc.) • Repetitive Mfg. (automobiles, watches, personal computers) • Just-in-Time systems (shorter production cycles) • MRP (management of complicated parts product) • Project type (unique; long time).

29. Principles • The framework for the MPC is general and all 3 phases must be performed but specific applications must reflect particular firm conditions and objectives. • In SC environments, the MPC must coordinate the planning and control efforts. • MPC systems should support the strategy and tactics pursued by the company.

30. Principles • Different Manufacturing processes dictate the need for different designs of the MPC. • The MPC should evolve to meet changing requirements in the market, technology, products, and processes. • The MPC should be comprehensive in supporting the management of all manufacturing resources.

31. Principles • Different Manufacturing processes and Supply Chains need different designs of the MPC. … one size does not fit all. • The MPC must evolve to meet changing requirements in the market, technology, products, and processes. • Major problem – the conflict between the flexible and changing needs of companies and the inflexibility of ERP systems.

32. ERP Companies • SAP • Oracle • Microsoft • My Interest in the Topics • Syllabus – Next Class

33. Principles • An effective MPC can contribute to competitive performance by lowering costs and providing greater responsiveness to the market. • In firms that have an integrated ERP system and database, the MPC system should integrate with and support cross-functional planning through the ERP system.