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LESSON 4 Optimizing PPC Performance

LESSON 4 Optimizing PPC Performance. 29 August 2014. Lesson Objectives. Upon completion of this lesson, you should be able to: Explain the requirements for Material Requirements Planning (MRP) success Evaluate the likelihood of MRP success using appropriate metrics for a given scenario

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LESSON 4 Optimizing PPC Performance

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  1. LESSON 4Optimizing PPC Performance 29 August 2014

  2. Lesson Objectives Upon completion of this lesson, you should be able to: • Explain the requirements for Material Requirements Planning (MRP) success • Evaluate the likelihood of MRP success using appropriate metrics for a given scenario • Determine initiatives to improve MRP performance • Evaluate inefficiencies and issues for a given scenario

  3. Lesson Topics This lesson will cover the following topics: • Requirements for MRP Success • MRP Metrics • MRP Performance Improvement • Evaluating Inefficiencies

  4. What’s In It For Me? Your understanding of metrics-based performance improvements and refinement for MRP processes will enable you to identify issues and support your suppliers in addressing challenges they may encounter

  5. Lesson Introduction How is Material Requirements Planning (MRP) success achieved?

  6. Requirements for MRP Success Lesson Topics: Requirements for MRP Success MRP Metrics MRP Performance Improvement Evaluating Inefficiencies

  7. Requirements for MRP Success

  8. Requirements for MRP Success (cont.) ACCURATE DATA CONTROLLED PRODUCTION Master Planning Scheduling (MPS) Controlled order launching Bill of Materials (BOM) MRP Success (High % of workcompletedon time) Minimal lost production Inventory Lead time Minimal late deliveries Capacity Low defect rate EFFECTIVE PROCESSES Short set-up times MRP checked against capacity Short lead times MRP regenerated promptly BOM update/engineering change coordination

  9. Accurate Inventory Data Inventory must be accurate • Accurate production/receipt quantities • Disciplined storage policies • Regular cycle counting • Low inventory levels

  10. Controlled Order Launching Release work orders to floor only if material is available • Keeps Work-in-Process (WIP) inventory to a minimum • Focuses efforts on important aspects of the work • Reduces confusion Order launching is the process of releasing orders to the shop or to vendors

  11. Which of the following is a requirement for a successful MRP system? Question and Answer • Daily changes to the MPS • Accurate inventory data • High defect rate • Large inventory of materials

  12. Which of the following supports MRP success by ensuring accurate inventory data? Question and Answer • Estimated production/receipt quantities • Long lead times • High inventory levels • Regular cycle counting

  13. MRP Metrics Lesson Topics: Requirements for MRP Success MRP Metrics MRP Performance Improvement Evaluating Inefficiencies

  14. MRP Metrics

  15. Likelihood of MRP Success To ensure likelihood of MRP success: • Evaluate processes often • Use metrics for continuous improvement and refinement

  16. High-Level Metrics for MRP Percentage of work completed on time

  17. Performance-Related Metrics Rate of defects Machine/operator efficiency Machine/station downtime Process-Level Metrics for MRP • MPS-Related Metrics • MPS stability • Forecast accuracy • Materials-Related Metrics • BOM accuracy • Inventory accuracy • Inventory levels • Inventory turns

  18. MPS-Related Metrics • MPS stability • Frequency of changes for each bucket • Is frozen horizon of MPS maintained? • Forecast accuracy • Standard deviation of forecast error (σ) • Standard deviation of forecast error divided by actual demand (% error)

  19. Materials-Related Metrics • BOM accuracy • % of parts with correct BOM • Inventory accuracy • % of parts with correct inventory levels • Average % error in recorded inventory levels • Inventory levels (lower is better) • Inventory turns • Annual sales volume divided by average inventory investment. Example: Annual sales volume $500,000 and average inventory investment of $100,000 has inventory turnover of 5. This means the inventory was replaced (turned) 5 times during the year.

  20. Performance-Related Metrics • Machine/operator efficiency • Output versus planned output at rated capacity • Verifies MRP assumptions/data • Machine/station downtime • Defects • Many metrics possible

  21. Evaluate the MPS samples, viewable by selecting the thumbnail image below, to determine the likelihood of MRP success. Question and Answer • Unlikely • Neutral • Likely • Not enough information

  22. Evaluate the MPS samples, viewable by selecting the thumbnail image below, to determine the likelihood of MRP success. Question and Answer • Unlikely • Neutral • Likely • Not enough information

  23. MRP Performance Improvement Lesson Topics: Requirements for MRP Success MRP Metrics MRP Performance Improvement Evaluating Inefficiencies

  24. MRP Performance Improvement

  25. MRP Performance Improvement • Resolving MRP exceptions • Reducing variation • Materials-related initiatives • Shrinking lead times • Reducing set-up time All initiatives should be executed within the context of continuous improvement

  26. General Initiatives • Investigate MRP exceptions, find root causes, and resolve • Resolve in methodical, disciplined manner just as one would a quality improvement problem • Reduce variation • Preventive maintenance • Standard operating procedures • Dimensional variation

  27. Materials-Related Initiatives • Cycle counting of inventory • Reduce inventory levels • Stored materials at point-of-use rather than central warehouse • Use common components in products

  28. Time-Related Initiatives • Shrink lead times • Procurement • Manufacturing • Reduce set-up time • Time to change from production of one part to another • Smaller batches

  29. Information systems Electronic information rather than routing slips/travelers Bar codes, Radio Frequency Identification (RFID) Additional Initiatives • Lean Manufacturing • Visual control • Short travel distances • Work cells

  30. Recently an unexpected stock out occurred, even though the MRP system indicated sufficient stock. Which of the following action may improve MRP performance? Question and Answer • Increasing lead times • Increasing set-up times • Reducing inventory levels • Regular cycle counting of inventory

  31. Requirements for MRP Success Lesson Topics: Requirements for MRP Success MRP Metrics MRP Performance Improvement Evaluating Inefficiencies

  32. Evaluating Inefficiencies • System • Set of interacting processes • Process • Set of value-added work activities/transactions that use designated resources to transform a set of specific inputs into a set of specific outputs

  33. Process Thinking SYSTEM Result Process Target Process Process Input Boundary Step Step Step

  34. Process Quality SYSTEM Feedback Loop Observe outputs Input Result Process Target Process Process Boundary Compare to specifications Step Step Step Judge Modify Process

  35. Tools for Defining and Viewing Processes Process Model: SIPOC CCustomers IInputs PProcess OOutputs SSuppliers Provides inputs to process Materials, resources, or data Structured set of activities Products or services resulting from process Recipient of process output

  36. Tools for Defining and Viewing Processes (cont.) Process Model: 4M

  37. Evaluating Inefficiencies • Use Lean Manufacturing or Six Sigma methodologies when appropriate to treat the underlying problems in the process, not the symptoms of MRP failure • Use a disciplined approach to improve MRP performance

  38. Example: Medical Care Process

  39. Example: Cause and Effect Diagram Possible causes of Failure Mode Manpower Machines Milieu (Environment) Lack of training Improper calibration Improper setup Insufficient maintenance Effect Failure Mode Incorrect processing speed Defective materials Insufficient materials Measurement Method Materials

  40. Summary Having completed this lesson, you should now be able to: • Explain the requirements for MRP success • Evaluate the likelihood of MRP success using appropriate metrics for a given scenario • Determine initiatives to improve MRP performance • Evaluate inefficiencies and issues for a given scenario

  41. Summary (cont.) Your ability to evaluate a supplier’s MRP processes will enable you to identify opportunities for process improvements to increase their effectiveness and provide higher levels of customer service.

  42. Module 4 Wrap Up Activity Refer to the Module 4 Wrap up Activity • As a team, answer the questions in the Module 4 Wrap Up Activity File • Each team must answer all the questions. • Each Team must be prepared to present their answers. • You have the remaining time as directed by the instructor to complete this activity.

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