Introduction toOperations Management

is the management of the direct resources required to produce the goods and services provided by an organization.

Management activities performed include selecting, designing, operating, controlling and updating productive systems

Types of Decisions

1. Strategic or long-range decisions

2. Tactical or medium- range decisions

3. Operational planning and control or short-range decisions

Questions Raised

At Strategic Level: 1. How well we make the product? 2. Where do we locate facilities? 3. How much capacity is needed? and 4. When should capacity be added?

At Tactical Level: 1. How many workers do we need? 2. When do we need them? 3. Is overtime needed or perhaps an additional shift? 4. When to deliver material? and 5. Is a finished goods inventory needed?

At Operational Level: 1. Jobs to be done today or this week? 2. To whom tasks are assigned? and 3. Which jobs have priority?

Role of OM Within an Organization

M arke tin g s tra teg y O p era tion s s tra teg y F in an ce s tra teg y

C orp ora te S tra teg y

M arke tp lace

The Transformation Process

Inputs

Customers/or materials

Transformation

Process

Transformation process

Outputs

Goods & Services

Types of Transformation

• Physical, as in manufacturing

• Locational, as in transportation

• Exchange, as in retailing

• Storage, as in warehousing

• Physiological, as in healthcare

• Informational, as in telecommunications.

OM Contributions to Society

1. Higher Standard of Living

2. Better Quality Goods & Services

3. Concern for the Environment

4. Improved working conditions

Value chain Trend toward having the transformation process work more closely with suppliers and customers alike is often referred to as a product’s

value chain.

Definition : All steps that actually add value to the product without distinguishing where they are added. This concept attempts to eliminate all non-value added steps(steps such as inspections and inventory), and results in a higher degree of dependence among the value added functions that are linked to the chain.

Societal Development Vs. Mode and Technology of production

Capital-IntensiveLabor-Intensive

Stone Age,Bronze Age (Lasted over 500,000 years)

Agrarian stage,Craftsmanship

(Lasted 100,000 years)

Industrial Age (200 years old)

Service – Information Age ? (Evolving)

Few Workers Mode of Production Many Workers

Technology of production

Complex Sophisticated

Simple Primitive

S

ocie

tal

Dev

elop

men

t

Systems and procedures analyst

Organizational level Manufacturing industries Service Industries

Upper Vice president ofmanufacturing

Vice-president of Operations(airline)

Middle

Regional manager of manufacturing

Chief administrator (hospital)

Plant manager Program Manager

Store Manager(dept store) Facilities Manager

(wholesale distributor)

LowerDepartment supervisor

Foreman

Branch Manager (bank) Department supervisor

(insurance company)Crew chief

Production controller Materials Manager

Quality ManagerPurchasing agent

Work methods analyst Process Engineer

Assistant Manager

Purchasing agentInspector

Dietician (hospital)Customer service manager

Line and staff jobs in operational Management

Major Responsibilities of OM Managers

1. To estimate the demand for the products and services the company sells,

2. To produce these products and services efficiently, i.e. at the lowest cost possible,

3. To produce these products and services with a reasonable level of quality, and

4. To produce them cleanly, i.e. with minimum harm to the environment

ModelsA model is an approximate representation of reality.Two Types of Models:

1. Physical Models :a) Iconic --- looks like the real systemb) Analog --- acts like the real system.

2. Symbolic Models:a) Verbal --- using language to model thought,b) Mathematical --- using Math. to model reality

Mathematical ModelsMath Models differ in four respects :

1 ) Purpose ----------------a) descriptive, b) optimization.

2 ) Mode -------------------a) analytic,

b) numeric.

3 ) Randomness ---------- a) deterministic,

b) probabilistic.

4 ) Generality ------------- a) applicable to one system.

b) transferable to other

systems.

Challenges Facing OM Managers

• Effectively consolidating the operations resulting from mergers & acquisition,

• Developing flexible supply chain to enable mass customization of products and services,

• Managing global suppliers, production, and distribution networks,

• Managing a diverse workforce,

• Effective response to restructuring, reengineering, and downsizing,

• Conforming to environmental constraints, ethical, standards, and governmental regulations,

• Developing and integrating new process technology with existing one.

Chapter 2

Operations Strategy & Competition

Competitiveness refers to the firm’s position in the marketplace.

Operations Strategy refers to how the operations management function contributes to the firm’s ability to achieve its competitive advantage in the marketplace. Operations Strategies are developed from the competitive priorities of an organization which include: 1. Low cost, 2. High quality, 3. Fast delivery, 4. Flexibility, and 5. Service.

Operations Strategy is thus concerned with a long-term plan in order to determine how to best utilize the major resources of the firm so that there is a high degree of compatibility between these resources and the firm’s long -term corporate strategy.

Planning Issues

Major long term issues include:

1. How big do we make the facilities? Plant size

2. Where do we locate them? location

3. What type of processes or technologies do we install to make the products? Process

Tactical issues include:

1. Workforce size, 2. Material requirement.

Operational issues include:

1. Daily worker scheduling, 2. Jobs & equipment,

3. Process management, 4. Inventory management

Administrative process

Operational Level

Strategic – Level

Tactical or Translators

Level

FeedBack

SlackOr

Information

Trends Affecting Operations Strategy

1. Globalization: new opportunities and hyper-competition

2. Technology: connectivity, speed, and intangibility.

Time Line for Operations Strategies

competitive

priority

cost

1950’s 1960’s 1970’s 1980’s 1990’s

quality

delivery

flexibility

Service

cost min. value max.

Manufacturing based Technology info. based

technology

Order-Qualifiers: Minimum characteristics of a firm or its products to be considered as a source of purchase.

Order-Winners: Characteristics of a firm that distinguish it from its competition so that it is selected as the source of purchase.

Customer Activity Cycle (CAC)

1. Prepurchase: here activities focus on being responsive to customer inquires and the ability to demonstrate technical expertise,

2. Purchase: here activities center around the actual sale and delivery of the product and collecting payment,

3. Postpurchase: here activities include after sales support and product warranties.

New Product and Service Development, and Process Selection

Categories of new products:

1. Incremental or Derivative Products: products with least amount of innovation. These products are often cost-reduced versions of existing products or with some added minor features, e.g. waterproof Walkman CD player.

2. Next Generation or Platform Products: these products provide a broad base for a product family that can be leveraged over several years requiring more resource than incremental products, e.g. major model changeovers in the auto industry.

3. Breakthrough or Radical Products: these products require substantial product design and process change, e.g. first TV, cellular phone, etc.

The New Product Development Process

1. Idea generation

2. Concept Development or initial design & analysis of customer requirements and market demand.

3. Quality function Deployment (QFD) translating customer requirements into engineering specifications. E.g. House of Quality on page 60.

4. Design for Manufacturability: material choices, process selection, efficiency, quality and safety consideration all needed to mass produce the product.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 3–19

Completed House of Quality Matrix

for a Car Door

Completed Completed House of House of Quality Quality MatrixMatrix

for a Car for a Car DoorDoor

Exhibit 3.5Exhibit 3.5

Types of Processes in Manufacturing1. Project: process that focuses on making one-of-a-kind

products, e.g. producing a movie

2. Intermittent: process that produces products in small lot sizes: a) Job Shop – process where a specific quantity, generally small, of a product is produced only once, e.g. printing programs for a concert, b) Batch – a process that produces the same item again and again, usually in specified lot sizes, e.g. McDonald’s making hamburgers, lot size 12.

3. Line - Flow: continuous process that produces high volume, highly standardized products: a) Assembly Line: manufacture individual discrete products such as cars, b) Continuous: operates 24 hours/day, e.g. refining sugar or oil. See Exhibit 3.9 page 58.

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 3–26

Matching Major Stages of Product and Process Life Cycles

Matching Major Stages of Matching Major Stages of Product and Process Life CyclesProduct and Process Life Cycles

Exhibit 3.8Exhibit 3.8Source: Adapted from Robert Hay and Steven Wheelwright, Restoring Competitive Edge: Competing through Manufacturing (New York: John Wiley & Sons, 1984).

Categories of New Service

1. Window Dressing Services: low degree of content and delivery changes.

2. Breadth-of-offering Services: high content change, low delivery change.

3. Revolutionary Services: high content and delivery changes.

4. Channel Development Services: low content change, high delivery change

Customer Contact Approach

Service processes are distinguished by the degree of customer contact with the service system during the rendering of the service; thus we have high contact systems such as healthcare and low contact systems such as mailing a letter to someone. See service System Design Matrix on page 73

Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 3–40

Service-System Design MatrixServiceService--System Design MatrixSystem Design Matrix

Exhibit 3.14Exhibit 3.14

Types of Service organization

1. Facilities-based Services: services that require the customer to go to the service facility,

2. Field-based Services: services that can be performed at the customer’s location.

Delivery Approaches

1. The Production Line Approach

2. The Customer Involvement Approach

3. The Personal Attention Approach

Supplement

PROJECT MANAGEMENT

Supplement to Chp. 3: Project Management

• A project is a statement or proposal of something to be done. Projects have a series of related jobs directed towards the achievement of a goal and requiring a significant amount of time to perform.

• Project management involves planning, directing and controlling resources: people, capital, equipment, and material to meet the technical, cost, and time constraints of the project.

Work Breakdown Structure

• Program is made up of interrelated projects, each is often contracted by another organization. It is the highest order of complexity and may take years to complete.

• Project is similar to a program but is less complex and shorter in duration.

• Task is a subdivision of a project, and usually is completed in several months and performed by one organization.

• Subtask is subdivision of a task.

• Work package is a group of activities combined to be assignable to a single organizational unit.

Organizational Considerations in Project Management

• Role of the project manager: multidisciplinary, wide variety of skills, collaborative culture, social, and technical skills.

• High Performance project teams: the necessary factors for the creation of a successful project team are: 1. People-related factors—good communications, involvement, resolve conflict, mutual trust and commitment to project objectives, 2. Leadership factors—ability to organize, direct, facilitate group decision making, and resolve problems, 3. Task related factors—ability to produce results within budget and on time, ability to innovate and to change, 4. Organizational factors—climate, authority structure, policies, procedures, regulations,values and economic conditions.

ACTIVITIES OF OM• The overall manufacturing system.• Production engineering.• Computerized design, process planning, production

planning and control and prove the efficiency and effectiveness of production engineering and manufacturing methods which in many high-technology and large-scale mass-production or processing plants have largely replaced traditional and mainly manual techniques.

• Manufacturing.• Quality management.• Planned maintenance.• Inventory control.• Distribution.

An itegrated operations system

The overall management system

The overall manufacturing system is the process of transforming materials and information into goods for the satisfaction of human needs.

PRODUCTION ENGINEERING

Production engineering is the generic term which covers all activities concerned with specifying, planning and controlling manufacturing processes. The main production engineering activities are:

Process planning

Process planning determines how the product or part should be manufactured by referring to component and assembly drawings and manufacturing reference data, and specifications produced at the design stage.

Production planning.

Production planning analyses sales forecasts and orders and decides on the manufacturing resources (capacity, materials and labor) required to meet the current and anticipated demand. Production planning involves capacity and aggregate planning, which aim to match the level of production to the level of demand.

Aggregate planning

Aggregate planning aims to ensure that capacity is available to meet demand at minimum cost.

Production control

Production control schedules production, loads the shops and monitors progress to ensure that production programs are achieved.

Scheduling

Scheduling involves:• Sequencing – determining the order in

which jobs will be completed at each stage in the program;

• Allocating the start and finishing time for each order;

• Resource allocation – assessing labour and material requirements and their availability.

Scheduling

The approach adopted will be influences by the extend to which the company is making to order (responding to customer orders) or making to stock (anticipating future orders).

Scheduling techniques

• Material requirements planning, in which the known customer requirement for the final product is exploded to produce lists of parts and components required to make it. These known requirements are compared with available inventories to determine net requirements, which are then scheduled within available capacity.

• Forward scheduling, which involves setting out activity timings from a given start date to achieve a defined completion date. This is usually computerized, although bar or Gantt charts are still maintained manually in some organizations.

Scheduling techniques

• Reverse scheduling, as used in make-to-order situations, involves subtracting activity timings from the due date for delivery and representing them on computerized schedules or Gantt charts.

• Network analysis, which is used in complex projects to schedule various interrelated and interdependent activities

• Line of balance, a technique used in batch production to calculate the quantities of the parts or components of the final product which must be completed by an intermediate date to ensure the final delivery schedule is met.

Scheduling

The output of the scheduling process is a master production schedule which sets out when the major operations required for each expected item of demand are to be undertaken. Master production scheduling aims to balance production possibilities with sales requirements.

Shop loading.

Shop loading takes the master schedule and verifies labor availability, prepares detailed programs and assigns the work to a machine or an operator. Shop loading will be related to the capacity available.

Progress control.

Progress control monitors the progress of orders through the shops against the master production schedule and delivery requirements so that corrective action can be taken to overcome delays, shortages and bottlenecks.

Material control.

Material control works from the master production schedule and, using materials requirements (MRP) and inventory control techniques, it:

• Verifies material requirements• Requisition materials from buying and stores;• Receives and stores materials and bought in parts;• Identifies surplus stock and takes action to reduce

it.

The Role of Technology in Operations

Technology impacts operational performance. It makes possible for the company to compete and excel on several dimensions simultaneously. Technology in Manufacturing includes the following:

1. Automation, 2. Machining Centers, 3. Numerically Controlled Machines(NC), 4. Industrial Robots, 5. CAD/CAM, 6. FMS, 7. CIM, 8. Islands of automation, 9. Information Technology, 10. ERP, 11. SCM, 12. NPD, 13. CRM

MANUFACTURING SYSTEMS.

• job, batch and flow production systems• the use of computer numerically controlled

machine tools• flexible manufacturing systems (FMS)• the use of group technology• cellular manufacturing• the use of robots• computer-integrated manufacturing

QUALITY MANAGEMENT

Quality management activities aim to ensure that the high standards of product quality and service expected by customers are created and maintained. Quality management activities comprise:

• quality control, quality assurance and total quality control systems

• total quality management (TQM) systems

INVENTORY CONTROL ACTIVITIES

Inventory control activities aim to ensure that the optimum amount of inventory or stock is held by a company so that its internal and external demand requirements are met economically. Included are:

• overall approaches to inventory control• the use of materials requirement planning (MRPI)

and manufacturing resource planning (MRPII) systems

• make or buy decisions.

PLANNED MAINTENANCE ACTIVITIES

• Planned maintenance draws up in advance and implement plant, equipment and building maintenance programs to ensure that they operate or remain trouble free for a predetermined period.

DISTRIBUTION ACTIVITIES

Distribution activities are concerned with storing completed products in warehouses, depots and stores and the dispatching and delivery of products to customers. Those concerned with physical distribution management and distribution planning.

PROJECT MANAGEMENT ACTIVITIES.

Project management activities are concerned with the planning, supervision and control of large-scale engineering or construction projects.

Manufacturing Systems

Manufacturing is the process of transforming materials and information into goods for the satisfaction of human needs.

MANUFACTURING AS A PROCESS

Manufacturing can be subdivided into:• • manufacturing processes, which alter the form, shape

and/or physical properties of a given material;• • manufacturing equipment, which is used to perform

manufacturing processes;• • manufacturing systems, which are combinations of

manufacturing equip ment and humans bound by a common material and information flow;

• • design and manufacturing interfaces, which are the links between the draw ing, sketch, computer-assisted design (CAD) file or other ways of communi cating the features and characteristics of the product or sub-assembly to be manufactured.

MANUFACTURING DECISIONS

Manufacturing decisions are concerned with the following four attributes:

• 1. Cost

• 2. Time

• 3. Flexibility

• 4. Quality

Cost

• Equipment

• Materials

• Labour

• Energy

• Maintenance

• Training

• Over head and capital

Time

The speed with which a manufacturing system can respond to change and how quickly a product can be produced by the system (the production rate).

Flexibility

The ability to meet the demands of a diversified and changing customer base in a global market. Flexibility is required in the following areas.

Flexibility

• Machine flexibility. The ease of making changes required to produce a given set of part types.

• Process flexibility. The ability to produce a given set of part types, possibly using different materials in different ways.

• Product flexibility. The ability to change over to produce new products economically and quickly.

• Routing flexibility. The ability to handle breakdowns and to continue producing a given set of part types.

Flexibility

• Volume flexibility. The ability to operate profitably at different production volumes.

• Expansion flexibility. The ability to expand the system easily and in a modular fashion.

• Operation flexibility. The ability to interchange ordering of several operations for each part type.

• Production flexibility. The universe of part types the manufacturing system can produce.

Quality

How well the production process meets the design specifications related to the different features and properties of the product.

Production Planning and Control Systems (PPCS)

Production planning and control systems (PPCS) use computers to determine the optimum levels of manufacturing resources required to meet demand fore casts, prepare production program, schedule production to meet those program and monitor operational activities to ensure that customer demand is satisfied while resources are used effectively.

THE BASIC PPCS MODEL

PPCS ACTIVITIES

• process planning

• demand forecasting

• aggregate planning, which includes capacity planning

• master production scheduling

• scheduling

• monitoring and control.

Process planning determines

• the manufacturing processes involved;• the machine tools required to execute these processes;• the tools and fixture required at each stage of processing;• the number and depth of passes in a machining operation;• the feeds and speeds appropriate to each operation; • the type of finishing processes necessary to achieve the

specified tolerances and surface quality.

Demand forecasting

Demand forecasting leads to the planning of demand for a particular product. The planning is done in terms of specific modes, styles and sizes of the product range. A variety of forecasting methods are used and the result is input into the medium-term planning stage known as aggregate planning.

Aggregate planning

Aggregate planning Is therefore largely concerned with capacity planning - deciding the capacity required in the system and developing and implementing a strategy for the use of given resources to meet demand fluctuations

Rough-cut capacity planning (RCCP)

Rough-cut capacity planning (RCCP) analyze the feasibility of fulfilling a particular production program as required by the demand forecast. RCCP provides a basis for producing the master production schedule.

Master production scheduling

It is a breakdown of the aggregate plan showing when the major operations required for each expected item of demand are to be undertaken. Master production scheduling aims to balance production possibilities with sales requirements.

Scheduling

The detailed scheduling of work and the allocation of labour and material re quirements is carried out by one or other of the following computer-based techniques:

• Material requirement planning• Manufacturing resource planning• Optimized production technology• Just-in-time (JIT)

Monitoring and control

Production monitoring can be carried out by means of computer control systems, the aim being to keep machines as fully utilized as possible.

BENEFITS

• better planning of shop and purchase orders resulting in on-time deliveries, reduced manufacturing lead times and fewer shortages;

• improved control of shop orders resulting in shorter queues, reduced work-in-progress, less idle time and fewer bottlenecks; and

• monitoring and control of machine tools and production processes resulting in better utilization, improved quality and reduced costs.

Process Measurement & Analysis

Process analysis is conducted to identify and select the best or most efficient process, i.e. process at lowest cost possible. In order to accomplish this measurement of process performance is needed.

Types of Performance: 1. Productivity, 2. Capacity,

Capacity Utilization, 3. Quality, 4. Speed of Delivery,

5. Process Velocity, 6. Flexibility 7. Benchmarking.

Commonly Used Terms in Process Analysis

• Hybrid Process: Multistage process that consists of more

than one type of process.

•Make-to-Stock System: process for making highly

standardized products for finished goods inventory.

*Make –to-Order System: process for making customized

products based on customer’s order.

•Modularization: use of standard components and

subassemblies to produce customized products

Tightness, Dependence & BottlenecksThese conditions occur as a result of the relationship between the various stages in a process.

Tightness: it results from a high degree of dependence between stages as is the case in assembly line production, lack of buffer inventory causes that. The more buffer the less the dependence among stages and hence less tightness in the production line.

Bottlenecks: it is caused by capacity variation in multistage operations. The stage with lowest capacity is referred to as the bottleneck in the entire operation.

Productivity

Definition: It is the efficient use of resources: labor, capital, land, materials, energy, information, etc. in the production of goods and services.

It can also be defined as the relationship between results and the time it takes to accomplish them.

Common Misunderstandings About Productivity

1. It is not only labor efficiency,

2. It is not possible to judge performance simply by output,

3. Confusion about productivity and profitability,

4. The belief that cost-cutting always improves productivity,

5. That it can only be applied to production.

Examples of Productivity Measurement

1. Partial measure (single factor)

Output / Labor, Output / Capital

2. Multi-factor measure

Output

Capital + Labor

3. Total measure

Output

All inputs

Examples of Partial MeasuresBusiness Measure

Restaurant……………..Customers / labor hour

Retail Store…………….Sales / square foot

Chicken Farm…………..lb. Of meat / lb of feed

Utility Plant…………….Kw / ton of coal

Paper Mill………………tons of paper / cord of wood

Capacity

Capacity: is the output capability of a process in a specified period of time. Design Capacity is the output the plant is designed to achieve and Actual Capacity or Output is the actual amount the plant is producing.

Capacity Utilization: is the percent capacity used:

Actual Output

Design Capacity

Quality, Speed of Delivery, and Process Velocity

Quality: quality can be measured by: defective rate, number and frequency of kudos/ or complaints (customer satisfaction), or by amount of toxic waste the company is releasing into the environment.

Speed of Delivery: is measured from the time an order is placed to the time it is shipped to the customer.The shorter the time the better. Also variability of the speed of delivery is an important measure of performance.

Process Velocity: Total Throughput time

Value-added time

COMPUTERIZED DESIGN, PROCESS PLANNING, PRODUCTION PLANNING AND CONTROL, AND

MANUFACTURING SYSTEMS.

• Computer-aided design (CAD)• Computer-aided design (CAD), uses computers to

assist in the production of designs, drawings and data for use in manufacture.

• Computer-aided manufacture (CAM)• Computer-aided manufacture uses computers to

support manufacturing processes, especially those consisting of computer numerically controlled (CNC) machines, robots and automated material handling systems.

CADCAM

• CADCAM, also known as computer-aided engineering (CAE), links product design and manufacturing through integrated CAD and CAM computer systems. For example, a CADCAM system in the electronic industry, where it is most often found, might consist of CAD work stations, in which integrated circuits and printed circuit boards are designed, which are linked to a processor with a database that provides output to drive computer numerically controlled (CNC) machines.

CIM

• Computer-integrated manufacture (CIM), uses information technology to integrate the various processes which together comprise the total manufacturing process. The computerized systems used in a full CIM system will include CAD and CAM as described previously. A CADCAM system is sometimes regarded as being synonymous with CIM. A full CIM system, however, will also incorporate computer-aided process planning (CAPP) and computerized production planning and control (CPPC).

CAPP

• Computer-aided process planning (CAPP) uses computers to produce process plans for production or parts. It can automatically develop these and routings from the outputs of CAD. It leans heavily on the parts classification and coding aspects of grouping technology (GT).

CAPP

• There are two approaches to CAPP:• Variant process planning, in which process plans are

stored in digital form thus allowing the planner to select and modify appropriate plans as needed

• Generative process planning, in which descriptions of the parts, the manufacturing process, the machine tools and the tooling are entered into the computing system which then develops a new process plan. It makes no reference to prior plans and therefore requires more complex decision sequences than variant process planning.

CPPC

• The overall production planning and control system (PPCS).

• A choice of planning and scheduling systems:

– Material requirements planning (MRPI)– Manufacturing resource planning (MRPII)– Optimized production technology (OPT)– Just-in-time systems (JIT)

CPPC

• Process control systems.• Layout planning which determines the physical

disposition of departments and selection on a site and location plant, machinery and equipment in each area. Much of the work of planning layouts can be computerized although techniques such as cross charts and relationship charts are also used manually.

Materials Requirement Planning (MRPI)

Materials requirement planning (MRPI) is a computerized production scheduling system which takes the forward schedule of final product requirements (the master production schedule) and translates it progressively into the numbers of sub-assemblies, components and raw materials required at each stage of the manufacturing cycle.

AIMS

• determine for final products what should be produced at what time;

• calculate the required production of sub-assemblies;• determine the requirement for materials based on an up-to-

date bill of mate rials (BOM);• calculate inventories, work-in-progress, batch sizes and

manufacturing and packaging lead times; and• generally control inventory by ordering bought-in

components and raw ma terials in relation to the orders received or forecast rather than the more usual practice of ordering from stock-level indicators.

MRPI system provides information

• Gross requirements.

• Scheduled receipts

• Projected available balance

• Planned order release

BENEFITS

The benefits of MRPI are that a detailed forecast of the inventory position is produced period by period which, together with the planned order release entries, enables future production to be planned more accurately and better control to be maintained of inventory.

Manufacturing Resource Planning (MRPII)

MRPII is a computer-based system designed to manage all the resources of a manufacturing organization. It acts as a planning and scheduling system, linking manufacturing with the sales and finance departments and providing tools for joint decision-making among all three departments.

ESSENTIAL ELEMENTS OF MRPII

• The demand forecast• Production planning• Resource planning• Rough-cut capacity planning• The master production schedule• Bills of materials• Detailed material and capacity plans• Shop- and purchase-order release• Shopfloor control• Purchase and inventory control

MRP II

BENEFITS

• MRPII is a demand-driven system which integrates planning and control systems. It takes account of capacity requirements and constraints and enables decisions to be made at each stage of the manufacturing process in a coordinated fashion.

• MRPII also provides a systems capability which can simulate future possibilities by processing multiple sets of data to model alternative manufacturing environments.

ERP

Enterprise Resource Planning Systems : fully integrated software system that links all of the major functional areas in the organization. ERP systems are an outgrowth of Material Requirements Planning (MRP) systems.

Benefits of ERP Systems : Provide competitive advantage—the benefits can take many forms: 1. Reduction of number of errors because a common database is used, 2. Faster customer response times, and 3. Better overall communications within the organization.

Failure of ERP systems is due to: lack of top management commitment, lack of adequate resource, lack of proper training, and lack of communication.

Benchmarking

Defined: is the continuous process of measuring the desired features of products and services, and practices against world class standards or reputable companies considered as tops in that industry. Goods & Services, Business Processes, and Performance Measures can be benchmarked.

Key Steps in Benchmarking1. Planning

2. Analysis

3. Integration

4. Action

5. maturity

Types of Benchmarking

1. Internal

2. Competitive

3. Functional

4. Generic

Reengineering It is the process of rethinking and

restructuring an organization.

Characteristics of a Reengineered Process:

1. Several jobs combined into one

2. Workers make decisions

3. The steps in the process are performed in a natural order

4. Processes have multiple versions

5. Works is performed where it makes most sense