enterprise resource planning i · enterprise resource planning i slide 1 l3 page i lecture 3 •...

Production Management II (Prof. Schuh)

Enterprise Resource Planning I

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Assistant:Dipl.-Ing. T. Hö[email protected] Aditec 208Phone: 0241 / 80-27391

Production Management II- Lecture 3 -


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Lecture 3

• Overview of the tasks of ERP systems in production planning and control• Knowledge of the historical development of IT-systems for production planning

and control• Classification of the scopes of duties of ERP systems within the operational

process • Distinction of the different task focuses of ERP systems when used in different

company types



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L1 IT in Production ManagementL2 Customer Relations ManagementL3 Enterprise Resource Planning IL4 Enterprise Resource Planning IIL5 Enterprise Resource Planning IIIL6 Supply Chain Management IL7 Supply Chain Management IIL8 Product Lifecycle Management IL9 Product Lifecycle Management IIL10 Product Lifecycle Management IIIL11 Digital Production site planning and simulationL12 Methodology for system selection

Quality ManagementTechnical InvestmentPlanning

Cost Management in Workshops

Production Management II

Production Management I Manufacture andAssembly Compatible Construction

Production Site Planning

Innovation Managementwith Dr. Wiedeking

• Basics• Methods and auxiliary means/devices• Process & construction organization

• Construction task in small group• Construction examples• Construction regulations

• Workshop facility planning• Storage & transportation planning• Human resources planning

• Integrated management task/job• Product and product program planning• Organization and staff conduct/behavior

• Cost accounting• Investment appraisal & evaluation• Balances

• Quality assurance systems• Quality planning• Product liability

• Workshop facility planning• Technology planning• Cost accounting

Lecture Landscape of the Department of Production Engineering (SS 2004)

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Lecture 3



Table of contents of lecture 3:

1. Short summary of lecture L3 page 1

2. Survey of ERP-systems L3 page 2

3. Exercise E3 page 1

3.1 Task 1: Making a throughput time diagram E3 page 3

3.2 Task 2: Determination of the order range E3 page 9

3.3 Task 3: Evaluation of the planning quality of PPC E3 page 10

4. System presentation E3 page 12

5. Sample solutions E3 page 13

5.1 Sample solution of task 1 E3 page 14



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Lecture 3



References Lecture 3:

Eversheim; Schuh Betriebshütte – Produktion und Management. Springer-Verlag. Berlin, Heidelberg, New York. ISBN 3-540-59360-8. 1996

Infor business solutions AG infor:MES – Manufacturing Execution System. Produktinformationsschrift, Friedrichsthal 2003

Infor business solutions AG infor:COM – ProduktbeschreibungProduktinformationsschrift, Friedrichsthal 2003

Nyhuis Supply Chain Monitoring mit FAST/log –Logistikcontrolling. GTT Hannover. Produktinformationsschrift. 2003

Scheer Der computergesteuerte Industriebetrieb, Springer, Berlin/Heidelberg, 1990

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Lecture 3



Short summary of lecture 3:

ERP-systems (ERP = Enterprise Resource Planning) are among other things used to support production planning and control (PPC).

In the course of the development of IT-systems the functionality has been extended from a mere quantity planning to a companywide information integration.

The system presentation with the ERP-system „infor:COM“ provides an insight into the classic tasks of PPC, that are typically performed.

The exercise on the creation of a throughput time diagram shows how these can be used in order to identify planning correlations quickly and draw conclusions from sources of failure.

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Lecture 3



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CRM

Classification of the Lecture Episode ERP into the Context

SCM

PLM

Custo-mers

Suppliers

Products

ResourcesER

P

Company

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Lecture 3



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Enterprise Resource Planning for Production Planning and Control

ERP is a holistic, process-oriented software solution, which performs the task of production planning and control. ERP makes the required information available to all related divisions of the company.

Characteristic features:• Has consequences for various divisions of a company, such as production,

distribution, logistics, staff, and administration.• Many default basic functions• Provides a basis for further management software tools

Production Planning and Control (PPC)

Enterprise Resource Planning (ERP)

Production Planning pre-plans the workflow during the creation of a product for a certain time considering certain general conditions and realizing predetermined objectives.

Production Control tries to realize the planning as completely as possible in spite of unavoidable changes concerning the order quantity and the order date as well as disturbances by machine failure or loss of manpower, delays in delivery, and scrap.

(source: Eversheim, 1996; BH 14.5)

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ERP systems support the classic tasks of production planning and control. They are supported by an integrated data base.This makes it possible for the management to use a consistent data base with consistent rules for companywide evaluation. This avoids single divisions of the company doubting the correctness of data.Furthermore, ERP systems support companywide standardisation of production processes with the help of consistent evaluation standards.Moreover, the use of a consistent IT system increases productivity and saves time.

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PPC: Allocation of the Production in a Simplified Company

Development

Sale

Material flow

Information flow

PurchaseProduct creation

Logistics

Administration & Staff

Suppliers

Manufacturing Assembly Customer

Slide 5

Distribution

The Product creation as center of the value-added chain can be seen in the company‘s heart. Further supporting areas are the sale and administration and staff.

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Lecture 3



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Task Structure of PPC: PPC/ERP-Model from Aachen

Cross-sectional tasksCore tasks

Production program planning

Production requirements planning

Procurement planning and

control

Data management

In-plant production planning and

control

Ord

er c

oord

inat

ion

PPC

-Con

trol

ling

Stor

age

(source: Eversheim)

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Task Structuring of PPC/ERP (1)

Sales planningStock planningPrimary requirement planningResource rough planning (order anonymous)Gross secondary requirement determinationNet secondary requirement determinationClassification of type of procurementThroughput time scheduling Capacity requirement determinationCapacity coordination

Lot size calculationDetailed schedulingDetailed resource planningPlanning of order successionAvailability monitoringOrder releaseOrder controlResource control

source: Luczak, Eversheim, 1997

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Order accountOrder entry/evaluationSelection of supplierOrder releaseOrder control

Core tasks


Production requirements planning

Procurement planning and control

In-plant production planning and control

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Task structuring of Production Planning and Control PPC/ERP (2)

Order processingOrder reviewOrder rough planningResource rough planning (customer specific)Order ManagementStock logistics managementStock controlStorage location managementBatch managementStock inspectionStock takingInformation editingInformation evaluationConfigurationWorkpiece managementParts list managementWork plan managementResource managementPlanning data managementOrder managementCustomer managementSupplier management

Order coordination

Storage

Sectional tasks

Data management

source: Luczak, Eversheim, 1997

PPC Controlling

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Quantity planning

MR

P

Time-phased production plan for final products

primary requirements (manufactures)

gross dependent requirementsExplosion of bill of materials

net dependent requirementsstocks

The initial MRP concept, i.e. the determination of quantity and material requirements, was developed in the fifties and represents the change from a consumption-oriented to a demand-oriented dispatching of material.

source:Scheer1990

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MRP: Material Requirement Planning

Tasks of MRP are the determination of material requirements, procurement, storage and allocation of raw materials, parts and components which are needed for the production-line. Starting point for MRP is a time-phased production plan for final products.Based on this plan, MRP determines lot sizes for all intermediate products with the help of explosion of bill of materials and forward calculation of order dates in such a way that a feasible overall plan is generated. All materials needed are supplied in the required quantities early enough to guarantee in-time production of final products.MRP only considers material quantity requirements; therefore, it does not guarantee that sufficient production capacities are available at each point of time to execute all orders planned.

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MRP I: Material Resource Planning I

order initiation and control

capacity scheduling

quantity planning

production program planning

time-phase production plan for final products


gross dependent requirements


periodic aggregationcalculation of order quantity

production and assembling lots

capacity schedulingavailable capacity

fine scheduling of production orders & sequencing

order initiation

production progress monitoringM

RP I

In the middle of the sixties, the MRP I concept was developed as an MRP add-on, which also included the production capacity in planning for the first time.

As all information about the exact production flow isn’t always available at the time of dispatching of orders, it is common practice to feed back the results of a planning step to an earlier planning step.

MR

Psource:Scheer1990

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Explosion of bill of materials

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MRP II: Management Resource Planning II

quantity planning

MR

Porder initiation and control

In the eighties, the MRP II concept was finally developed, which also takes into consideration economic and strategic aspects of production planning.

The MRP II concept is still widely used because it is the basis for most current IT-systems in this field.

capacity scheduling

production program planning

time-phased production plan for final products


gross dependent requirements


periodic aggregationcalculation of order quantity

production and assembling lots

capacity schedulingavailable capacity

fine scheduling of production orders & sequencing

order initiation

production progress monitoring

sales planning

budgeting

MR

P I

MR

P II

source:Scheer1990

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Explosion of bill of materials

MRP II is a technique for the planning of all resources within a manufacturing company. It integrates monetary budgeting, market-oriented production program planning, capacity and material requirements planning as well as production control, production data acquisition (PDA) and machine data acquisition (MDA). Planning is performed sequentially with a series of feedback loops. MRP II has evolved from MRP. We speak of MRP II if the results of MRP planning activities are fed back and used for the planning of the production program.MRP II denotes a higher level of integration of planning, the results of which are used for further steps of corporate planning. MRP II is suitable for well predictable production processes with continuous order entries. [source: Competence Site / Gabler Wirtschaftslexikon]

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Learning from MRP II:

„The maximisation of the resources utilisation results in the maximisation of profit.“

ERP / ERP II:

integrated information supply and control, monitoring and coordination of all processes and activities within the company

MR

PII

• Manufacturing control• PDA/MDA/PTA• Dispatching• Distribution• Purchasing• Logistics

• Financial accounting• Asset accounting• Cost calculation• Human resource mgmt.• Controlling/MIS• Project management• Document management

• e-Procurement• Supply Chain Management

(SCM)• Customer Relationship

Management (CRM)

ER

P

ER

P II

PDA: production data acquisitionPTA: process time acquisitionMDA: machine data acquisition

(source: Infor business solutions AG)

Slide 12

Enlargement of Scope from ERP to ERP II

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Lecture 3

Differences between ERP and ERP II:The task of the traditional ERP is the internal optimisation of a company. ERP II systems, in contrast, optimise the whole value-added chain by collaboration with all business partners.Traditional ERP systems focus on production and logistics. ERP II systems are used by companies of all sectors and fields, including service companies, governments and heavy industry.In contrast to ERP systems, which were only used inside single companies, ERP II systems link all trading partners and thus work across the borders of single companies.While old ERP systems were designed monolithically and self-sufficiently, ERP II systems are internet based and open for integration with other systems. Their modular design allows users to choose program modules suitable for their needs.



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MES as Link between ERP and Process Level

Coordination level

Operational level

Process level

• Production control center• Transportation control• Tool administration

• Process control • Quality management• Production data acquisition

• Material administration• Cells order management• Cells order coordination• Tool administration cell

• Machine driver• Robot manager• Robot driver

ERP

Manufacturing Execution System (MES)

Infor business solutions AG

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Lecture 3

ERP-systems primarily support the rough production planning and control. On deeper company levels more detailed tasks are to be performed, which belong mainly to the autonomous resource administration and control.



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Enterprise Application Integration (EAI) Covers all Company Departments

Slide 14

Development

Sale


Logistics


Suppliers


Distribution

Lecture 3



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As a Part of EAI ERP Covers all Production Relevant Areas

Development

Sale


Logistics


Suppliers


DistributionCAD etc. MRP

MRP I

MRP II

ERP

ERP II

MES

EAI

MRP I: Material Resource PlanningMRP: Material Requirement PlanningMES: Manufacturing Execution SystemCAD: Computer Aided Design

EAI: Enterprise Application IntegrationERP II: Enterprise Resource Planning IIERP: Enterprise Resource PlanningMRP II: Management Resource Planning

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Lecture 3

On the top level Enterprise Application Integration-Systems (EAI) integrate all used subsystems. This covers in addition to IT-systems of the product creation those of the product development and many more.



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SAP and infor:COM – Examples of Established ERP-Systems

R/3R/3Client / ServerClient / Server

ABAP/4ABAP/4

FIFIFinancialaccouting

COControlling

COControlling

TRTreasury

TRTreasury

PSProjekt-system

PSProjectsystem

WFWorkflow

WFWorkflow

ISIndustrysolutions

MMMaterials manage-

ment

HRHuman

resources management

SDSaleSDSale

PPPPProduction

planning

itManage-

ment

QMQualitymanage-

ment PMPeriodical

mainte-nance

Integratedtotal

Opensystems

Client / Server

CompanyData model

Multinationality

Comprehensivefunctionality

Industry neutrality

seesystem presentation

SAPSAP

Slide 16

solutions

architecture

SAP R/3 and infor:COM are two established ERP systems.According to the latest concepts, the open modular structure enables the selection as needed of all required components. infor:COM will be presented in more detail in the system presentation.

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Polylemma of Production

Slide 17

on time delivery

high utilization

Choice of the optimal operating point

Positioning area

low work in progress

low lead time

low costs per unit size

Work in Progress

Min

Min

Max

Max

0 WIPLT

min

WIPC

min

WIPPLA

N

WIPU

max

Costs

Lead Time

Utilization

On Time Delivery

U, LT, C, OTD

Min

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The characteristic traits of production systems can be described clearly through several company characteristics. The production can be positioned on different „operating points“ according to the prioritization of the strategic targets of a company and its type of interaction with the customer.

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Logistictargets

… customer decoupling point

UtilizationStocks

Throughput timesAdherence to delivery dates

Before the … Behind the …

„Customer Decoupling Point“ – Influence on PPC and the ERP System

Program manufacturer

Variant manufacturer

Order-specificmanufacturer

Supp

lier

Cus

tom

er

Source: EversheimBH 14.4

Slide 18

Procurement Manufacturing Assembly Delivery

Program dependant

stocking point

Customer dependant

Customer Decoupling Point

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The manufacturing of the products after the receipt of order shall be aimed at. In case this is impossible due to the product construction, the manufacturing times or the production structure, the products have to be prefabricated to a large extent. But this is not possible with products of a high number of variants or even less with customer specific solutions.

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Customer change influences during manufacture

Determination of the product/component requirement

Classification of the Relevant Characteristics to Describe Company Types

Initial characteristics

Productcharacteristics

Dispositioncharacteristics

Manufacturingcharacteristics

Type of order release

Product spectrum

Product structure

Release of the secondary requirement

Procurement type

Storage

Manufacturing type

Process type in the manufacture of components

Process type in assembly

Manufacturing structure

Source: Luczak, Eversheim, 1997

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Typology „Program Manufacturer"

Structure sizes program bound producing company


Production on order with individual orders

Productspectrum

Products after customer specification

Product structure

Multi-part products with complex structure

Determinationof the product/component requirement

According to requirement on

result level

Release of thesecondary requirement

Procurementtype

Storage

Manufacturing type

Process type in the manufacture

Process typein assembly


Customer change influences during

manufacture

1

2

3

4

5

6

7

8

9

10

11

12

Production on order with blanket orders

Typed products with customer specific

variants

Customer anonymous precustomer order

related final production

Standard products with variants

Production on store

Standard productswithout variants

Multi-part products with simple structure Few-part products

Partly according to expectations, partly according to requirementson comp. level

According to expectations on components level

According to expectations on product

level

Usage orientated on product level

Order orientated partly order orientatedpartly period orientated Period orientated

largeexternal procurement

External procurement in a bigger scale

Little external procurement

No stocking of requirement

positions

Stocking of requirement positions

on lower structure levels


on upper structure levelsStocking of products

Non-repetitive production

Unit and limited-lot production Series production Mass production

Workshop production Island production Batch production Continuous

production

Construction site assembly Group assembly Batch assembly Continuous flow

assembly

Manufacture with large depth

Manufacture with medium depth

Manufacture with minor depth

Many changing influences

Occasional changing influences Few changing influences Source: Eversheim

BH 14.67

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ERP Configuration “Program Manufacturer"


Resourcedisposition

Order inducementOrder control/supervision

Market

Customer

Push control

Finished goods store

Cus

tom

er a

nony

mou

spr

oduc

t dev

elop

men

t

Main control loop

Control loop

Product spectrum

Procurement Product creation

Sales forecast

Source: Eversheim

BH 14.69

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Program Manufacturer: Use of ERP Systems

Mainproduction targets

Planning focus

Control focus

• No planning of indirect areas• Permanent material availability• Minimal control effort in order to save expenses

• Fault repair• Control of efficiency and quality• Equipment availability (material, tools, devices)

• High and steady capacity utilization• Low costs


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Typology „Order-specific Manufacturer"

Structure sizes Order related producing company


Product spectrum

Product structure

Determination of the

product/component requirementRelease of the

secondary requirement

Procurement type

Storage

Manufacturing type

Process type in manufacture




manufacture

1

2

3

4

5

6

7

8

9

10

11

12 Source: EversheimBH 14.63

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result level



variants




Production on store






level







positions








production


assembly





Occasional changing influences Few changing influences

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Main control loop

Control loop

ERP Configuration „ Order-specific Manufacturer"

Customer order inducementand control

Determination of delivery dateResource planning

Resourcedisposition

Manufacture control(anticipated)

Customer specificproduct development

Customer

Prod

uct

Procurement Product creation

Supply confirmation


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„Order-specific Manufacturer“: Use of ERP Systems

Main production targets

Planning focus

Control focus

• Coordination of product development and product creation• Production start without exact specification of the product• Consideration of insecure order offers• Insecure capacity requirements and processing times

• Order inducement• Order control/supervision• Reaction on short-term plan deviations due to Customer’s

change preferences

• Adherence to delivery dates• Short throughput times• Readiness to provide information


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Typology „Variant Manufacturer"


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Structure sizes Company producing variants


Product spectrum

Product structure

Determination of the

product/component requirementRelease of the

secondary requirement

Procurement type

Storage

Manufacturing type

Process type in manufacture




manufacture

1

2

3

4

5

6

7

8

9

10

11

12





result level



variants




Production on store






level







positions








production


assembly





Occasional changing influences Few changing influences

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M Montage

Main control loop

Control loop


Resourcedisposition

Order inducementOrder control/supervision

Order

Push control

Product

Customer

Sale

ERP Configuration „Variant Manufacturer"

Procurement Customer specificProduct creation

Sales forecastC

usto

mer

ano

nym

ous

prod

uct d

evel

opm

ent

Product spectrum


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„ Variant Manufacturer“: Use of ERP-Systems

Mainproduction targets

Planning focus

Control focus

• Program planning• Quantity planning• Optimal product succession/order regarding the production system

• Fault repair• Control of efficiency and quality

• High utilization• Low stocks• Readiness to provide information


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Lecture 3

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