Transcript Chapter 11

Chapter 14
Resource
Planning
Enterprise Resource
Planning (ERP)
 Organizes and manages a
company’s business processes by
sharing information across
functional areas
 Connects with supply-chain and
customer management
applications
 Largest ERP provider SAP
ERP’s Central Database
Finance &
Accounting
Sales
&
Marketing
ERP Data
Repository
Human
Resources
Production &
Materials
Management
ERP Implementation
 First step is to analyze business
processes
 Which processes have the biggest
impact on customer relations?
 Which process would benefit the
most from integration?
 Which processes should be
standardized?
Customer Relationship
Management (CRM)
 Plans and executes business
processes that involve customer
interaction
 Changes focus from managing
products to managing customers
 Point-of-sale data is analyzed for
patterns used to predict future
behavior
Supply Chain Management
 Supply chain planning
 Supply chain execution
 Supplier relationships
 Distinctions between ERP and
SCM are becoming increasingly
blurred
ERP and MRP
 MRP (material requirements planning)
was the precursor to ERP
 Primarily a production planning and
control system
 MRP evolved to MRP II (manufacturing
resource planning)
 ERP and ERP II continue to extend the
links through all business processes
Material Requirements
Planning
 Computerized inventory control &
production planning system
 Schedules component items when
they are needed - no earlier and no
later
When to Use MRP
 Dependent and discrete items
 Complex products
 Job shop production
 Assemble-to-order environments
Material
Requirements
Planning
Product
structure
file
Master
production
schedule
Material
requirements
planning
Item
master
file
Planned
order
releases
Work
orders
Purchase
orders
Rescheduling
notices
Master Production
Schedule
 Drives MRP process with a schedule of
finished products
 Quantities represent production not
demand
 Quantities may consist of a combination of
customer orders & demand forecasts
 Quantities represent what needs to be
produced, not what can be produced
Basic MRP
Processes
1. Exploding the bill of material
2. Netting out inventory
3. Lot sizing
4. Time-phasing requirements
MRP Outputs
 Planned orders
Work orders
Purchase orders
 Changes to previous plans or
existing schedules
Action notices
Rescheduling notices
Capacity Requirements
Planning (CRP)
 Computerized system that projects
load from material plan
 Creates load profile
 Identifies underloads and overloads
Capacity Terms
 Load profile
Compares released and planned
orders with work center capacity
 Capacity
Productive capability; includes
utilization and efficiency
 Utilization
% of available working time spent
working
More Capacity Terms
 Efficiency – how well the
machine or worker performs
compared to a standard output
 Load
The standard hours of work
assigned to a facility
 Load percent
The ratio of load to capacity
Load % = (load/capacity)x100%
Capacity Requirements
Planning
MRP planned
order
releases
Routing
file
Capacity
requirements
planning
Load profile for
each machine center
Open
orders
file
Hours of capacity
Initial Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Normal
capacity
1
2
3
4
Time (weeks)
5
6
Remedies for Underloads
1. Acquire more work
2. Pull work ahead that is scheduled
for later time periods
3. Reduce normal capacity
Remedies for Overloads
1. Eliminate unnecessary requirements
2. Reroute jobs to alternative machines or
work centers
3. Split lots between two or more machines
4. Increase normal capacity
5. Subcontract
6. Increase the efficiency of the operation
7. Push work back to later time periods
8. Revise master schedule
Hours of capacity
Adjusted Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Pull ahead
Overtime
1
2
Work
an
extra
shift
3
Push back
Push back
4
Time (weeks)
Normal
capacity
5
6
Chapter 16
Scheduling
Scheduling
 Specifies when labor,
equipment, facilities are needed
to produce a product or provide
a service
 Last stage of planning before
production occurs
Scheduling by
Process Type
 Process Industry
 Linear programming
 EOQ with noninstantaneous replenishment
 Mass Production
 Assembly line balancing
 Project
 Project -scheduling techniques (PERT, CPM)
Objectives in Scheduling
 Meet customer due dates
 Minimize job lateness
 Minimize response time
 Minimize completion time
 Minimize time in the system
 Minimize overtime
 Maximize machine or labor utilization
 Minimize idle time
 Minimize work-in-process inventory
 Efficiency
Shop Floor Control
Scheduling and monitoring day to day production of a job
1. Loading - Check availability of
material, machines & labor
2. Sequencing - Release work orders
to shop & issue dispatch lists for
individual machines
3. Monitoring - Maintain progress
reports on each job until it is
complete
Loading
 Allocate work to machines
(resources)
 Perform work on most efficient
resources
 Use assignment method of linear
programming to determine
allocation
Sequencing
 Prioritize jobs assigned to a
resource
 If no order specified use first-come
first-served (FCFS)
 Many other sequencing rules exist
 Each attempts to achieve to an
objective
Sequencing Rules
 FCFS - first-come, first-served
 LCFS - last come, first served
 DDATE - earliest due date
 CUSTPR - highest customer priority
 SETUP - similar required setups
 SLACK - smallest slack
 CR - critical ratio
 SPT - shortest processing time
 LPT - longest processing time
Critical Ratio Rule
CR considers both time and work remaining
CR =
time remaining
work remaining
=
due date - today’s date
remaining processing time
If CR > 1, job ahead of schedule
If CR < 1, job behind schedule
If CR = 1, job on schedule
Ties scheduling to Gantt Chart or PERT/CPM
and project crashing
Sequencing Jobs Through
Many Machines/Processes
 Facility is dynamic, new jobs added
 Develop global sequencing rules
First-in-system, first-served (FISFS)
Work-in-next-queue (WINQ)
Fewest # remaining operations (NOPN)
Slack per remaining operation (S/OPN)
Remaining work (RWK)
 Study system via simulation
Monitoring
 Gantt Chart
Shows both planned and completed
activities against a time scale
 Input / Output Control
Monitors the input and output from
each work center
Advanced Planning and
Scheduling Systems
 Infinite - assumes infinite capacity
 Loads without regard to capacity
 Then levels the load and sequences jobs
 Finite - assumes finite (limited) capacity
 Sequences jobs as part of the loading
decision
 Resources are never loaded beyond
capacity
Advanced Planning and
Scheduling Systems
 Advanced planning and scheduling (APS)
 Add-ins to ERP systems
 Constraint-based programming (CBP)
identifies a solution space and evaluates
alternatives
 Genetic algorithms based on natural selection
properties of genetics
 Manufacturing execution system (MES)
monitors status, usage, availability, quality
Theory of Constraints
 Not all resources are used evenly
 Concentrate on the “bottleneck”
resource
 Synchronize flow through the
bottleneck
 Use process and transfer batch sizes
to move product through facility
Theory of Constraints
• What to Change
• What to Change to
• How to cause the change
Chapter 3
Quality
Management
Quality is a measure of goodness that is
inherent to a product or service.
Bottom line: perspective has to be from the
Customer – fitness for use
What Is Quality?
 “The degree of excellence of a
thing” (Webster’s Dictionary)
 “The totality of features and
characteristics that satisfy needs”
(ASQ)
 Fitness for use
 Quality of design
Quality
• Quality Management – not owned by
any functional area – cross
functional
• Measure of goodness that is inherent
to a product or service
FedEx and Quality
• Digitally Assisted Dispatch System –
communicate with 30K couriers
• 1-10-100 rule
 1 – if caught and fixed as soon as it
occurs, it costs a certain amount of time
and money to fix
 10 – if caught later in different
department or location = as much as 10X
cost
 100 – if mistake is caught by the
customer = as much as 100X to fix
Product Quality
Dimensions
• Product Based – found in the
product attributes
• User Based – if customer satisfied
• Manufacturing Based – conform to
specs
• Value Based – perceived as
providing good value for the price
Dimensions of Quality (Garvin)
1. Performance
 Basic operating characteristics
2. Features
 “Extra” items added to basic features
3. Reliability
 Probability product will operate over
time
Dimensions of Quality (Garvin)
4. Conformance
 Meeting pre-established standards
5. Durability
 Life span before replacement
6. Serviceability
 Ease of getting repairs, speed &
competence of repairs
Dimensions of Quality (Garvin)
7. Aesthetics
 Look, feel, sound, smell or taste
8. Safety
 Freedom from injury or harm
9. Other perceptions
 Subjective perceptions based on
brand name, advertising, etc
Service Quality
1. Time & Timeliness
 Customer waiting time, completed
on time
2. Completeness
 Customer gets all they asked for
3. Courtesy
 Treatment by employees
Service Quality
4. Consistency
 Same level of service for all customers
5. Accessibility & Convenience
 Ease of obtaining service
6. Accuracy
 Performed right every time
7. Responsiveness
 Reactions to unusual situations
Quality of
Conformance
 Ensuring product or service
produced according to design
 Depends on
Design of production process
Performance of machinery
Materials
Training
Quality Philosophers
 Walter Shewhart – Statistical Process
Control
 W. Edwards Deming
 Joseph Juran – strategic and planning based
 Armand Fiegenbaum – total quality control
“entire business must be involved in quality
improvement”
Deming’s 14 Points
1.
2.
3.
4.
Create constancy of purpose
Adopt philosophy of prevention
Cease mass inspection
Select a few suppliers based on
quality
5. Constantly improve system and
workers
6. Institute worker training
Deming’s 14 Points
7. Instill leadership among
supervisors
8. Eliminate fear among employees
9. Eliminate barriers between
departments
10. Eliminate slogans
11. Remove numerical quotas
Deming’s 14 Points
12. Enhance worker pride
13. Institute vigorous training and
education programs
14. Develop a commitment from top
management to implement these
13 points
The Deming Wheel
(or PDCA Cycle)
4. Act
1. Plan
Institutionalize
improvement;
continue the
cycle.
Identify the
problem and
develop the
plan for
improvement.
3. Study/Check
2. Do
Assess the plan;
is it working?
Implement the
plan on a test
basis.
Also known as the Shewart Cycle
Six Sigma
• Quality management program that
measures and improves the
operational performance of a
company by identifying and
correcting defects in the company’s
processes and products
Six Sigma
Started By Motorola
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Define
Measure
Analyze
Improve
Control
Made Famous by
General Electric
40% of GE executives’
bonuses tied to 6 sigma
implementation
Malcolm Baldrige
National Quality Award
• Category 3 – determine
requirements, expectations,
preferences of customers and
markets
• Category 4 – what is important to the
customer and the company; how
does company improve
Total Quality Management
1.
2.
3.
4.
5.
6.
7.
8.
Customer defined quality
Top management leadership
Quality as a strategic issue
All employees responsible for quality
Continuous improvement
Shared problem solving
Statistical quality control
Training & education for all employees
Strategic Implications of
TQM
 Quality is key to effective strategy
 Clear strategic goal, vision, mission
 High quality goals
 Operational plans & policies
 Feedback mechanism
 Strong leadership
TQM in Service Companies
 Inputs similar to manufacturing
 Processes & outputs are different
 Services tend to be labor intensive
 Quality measurement is harder
 Timeliness is important measure
 TQM principles apply to services
Cost of Quality
Cost of achieving good quality
Prevention
 Planning, Product design,
Process, Training, Information
Appraisal
 Inspection and testing,
Test equipment,
Operator
Cost of Quality
Cost of poor quality
Internal failure costs
 Scrap, Rework, Process failure,
Process downtime, Pricedowngrading
External failure costs
 Customer complaints,
Product return,
Warranty, Product
liability, Lost sales
Employees and
Quality Improvement
 Employee involvement
 Quality circles
 Process improvement teams
 Employee suggestions
Cause-and-Effect Diagram
Measurement
Faulty
testing equipment
Inadequate training
Environment
Old / worn
Quality
Problem
Defective from vendor
Not to specifications
Dust and Dirt
Tooling problems
Lack of concentration
Improper methods
Machines
Out of adjustment
Poor supervision
Incorrect specifications
Inaccurate
temperature
control
Human
Materialhandling problems
Materials
Poor process design
Ineffective quality
management
Deficiencies
in product design
Process
Also known as Ishikawa Diagram or Fish Bone
Hot House Quality
Lots of Hoopla and no
follow through
ISO 9000:2000
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Customer focus
Leadership
Involvement of the people
Process approach
Systems approach to management
Continual process improvement – GAO
Factual approach to decision making
Mutually beneficial supplier relationships
Implications Of ISO 9000
 Truly international in scope
 Certification required by many foreign
firms
 U.S. firms export more than
$150 billion annually to Europe
 Adopted by U.S. Navy,
DuPont, 3M, AT&T, and others
ISO Accreditation
 European registration
 3rd party registrar assesses quality program
 European Conformity (CE) mark authorized
 United States 3rd party registrars
 American National Standards Institute (ANSI)
 American Society for Quality (ASQ)
 Registrar Accreditation Board (RAB)
Upcoming Events
• Final Exam in class in 2 weeks
• Presentations next week
• Harley Papers by last week of class
Operations and Life
“I would rather
attempt to do something
great and fail than
attempt to do nothing at
all.”
Zen and Operations Management
In your next assignment
remember the dead fish!
Even a dead fish can
swim down stream
and give the illusion of
progress!!!