page 1 agoura hills, ca copyright 2006 paul deis - (818) 706-0160 [email protected] capacity &...

Copyright 2006 Paul Deis - (818) 706-0160 [email protected] 1 Agoura Hills, CA

Capacity & MRPWhat To Do About It

By Paul Deiswww.pauldeis.com (818) 706-0160


Who We Are, What We Do

Background – Worked with over 60 companiesConsultant, VP ManufacturingAuthor – Prentice-Hall textRan ERP software company 5 years

Productivity Improvements:Business processes – work flowSystems – ERP, specializedRecruiting, leadership, people, organization


Agenda – What We’ll Cover

MRP Overview – history, why it’s the way it is – impact on capacity management, ability to schedule productionAlternatives – a look at an “ideal” systemScheduling – issues, aspects, ways of generating valid schedules, “in spite of MRP”Ways that Work – other methods that workQ & A.


Some Key Business Issues With MRP

Very Long Software Development Lead-Time - Decades or years.

Very long Software Business development time – develop, sell customers, support past/existing customers, get model & software debuted, sell new, generate new software?

Fact – backwards compatibility is a HUGE drag on innovation

APICS – no vision at all; “in bed with” software companies – result – status quo, no innovation for decades; “Standard MRP” model = one size fits all.

Lack of a Multi-model Standard - No “standard model” for what has become a wide variety of business models.

Fact – selling new model requires “missionary work” (costly, risky).

Complexifier - Need for MRP to be integrated into other business functions (“ERP”).


Business/Industry Changes

1970 – 1985 1986 to 2003 & Beyond

Long lead time production cycles

Short, market-driven lead times

Mass, high-volume production

Small lot with much variation

Large Corp. dominated Agile Company dominates

Vertical Integration “Virtual Business” with partners

Internal, domestic production

Outsourcing, offshore, contract work

Larger margins (cost + markup = Price)

Tremendous margin pressures

Slow technical, market changes

Rapid technical, market changes

Production centered Customer centered

Inventory Control Focus Customer response, cost focus


Our Orientation

Manufacturing exists to serve the customer (& stockholders).

The cost of coordination is an indirect, non-value added cost. Lower is better.

Complex systems INCREASE this cost.

Simpler systems DECREASE this cost.

Software is not the (whole) answer.


What IS the Problem? – MRP:

Not built for rapid changes

Costly to run – manual entry, “control points, steps in cycles.

Complex, bureaucratic “feel”

Major (costly) education required

Assumes a stable organization over time

No “crunch zone” support (inside lead time).


MRP II Business Model - Overview

SalesForecast (or

Orders)

Gross MaterialPlan

Detailed MaterialPlan

Material ToStock

ManufacturingExecution

Sub-SystemComplete to

Stock

Sales Orders& Shipments

CustomerNeeds

Compare &Revise

- Released WO Scheduling- Work Center Dispatching- WIP Management- Priority control- Work Center Inventory


MRP II Process & Actions

Actions1. Review Demand & Supply data.2. Resched Rel'd Work Order in/out.3. Resched PO's in/out.4. Release New Work Orders, PO's from Planned Order data.

CapacityProcess

MRPProcess

Demand & Supply DataPlanned Order table

Action Messages

MPS

Actions1. Review reports, work loads.2. Change WO dates to correct over/ under work center loads; ignore action messages from MRP for these.3. Change MPS.

ForecastDemand

Released WO's

InventoryReleased WO's

PO's


Major MRP Issues

1. Reverse Sequence - of what is needed

2. NO REAL schedule – Can’t just run MRP/CRP & print it.

3. Base “Plan” - Material only.

4. Material Flow – all material assumed to come from stock only, no “outside” flow, as really occurs.

5. Generates dates in the past – How DOES one use this?

6. Extensive manual work required – worse with frequent, rapid schedule changes; if not done, result is garbage.

7. Plan <> Schedule - Can’t reconcile “material plan” to “production schedule.”

8. Manual Updates - If WO’s not manually updated, WIP material requirement dates are WRONG.

9. False priorities - from wrong WO dates, and from ALL material shown as required on WO Start Date


21st Century Business Needs:

Customer First – focused, recognize, handle frequent changes to schedule, configuration.

“Crunch” support – explicitly handle inside lead time changes of everything w/o disruptions.

Operation Complexity – mixed mode, styles

Production Complexity – mixed mode production.Extensive Outsourcing – contract manufacturersLower indirect costs – Effective operations with fewer, lower skilled people

“Soft” company walls – seamless information flow between supply chain elements, companies, partners.


21st Century Business Model Customer

NeedsMPS

(Re-) ScheduleProduction- Internal- Extera

(Re-) SchedulePurchased Material &

Services

Receive Material - Stock - WIP - Drop Shipped

Production - Internal - External

Ship


Key Points - 21st Century Business Fluid, fast moving – no fixed cycles, lead timesConstant “Tweaking” – continuous stream of changes flow into schedule, daily needsNo “Firm Plan” – there is only a single schedule that changes constantly. Few or no “time fences” Rapid, short cycles - for response times, product changes.Products - Highly variable, configurable, customized, project oriented, all MIXED in same business.Need – continuous schedule updating & status info.


What IS a Schedule?

Schedule – Definition: “Document that relates work to time and resources required to accomplish it.” Schedule – to be useful, MUST be:

No dates in the pastAccurately predict when & what will happenGuide corrective actions when things don’t go as scheduledAccurate enough to support ancillary activities

Current - Be up to date virtually ALL the time.Synchronizes - ALL related activities “mesh”Reliable - Not confuse precision with accuracyFlexible - Handles “sloppiness” in real world.


MRP – What It SHOULD Do!

Customer/Production schedule orientedSynchronize & integrate ALL activities “Release-less” work ordersMaterial Tied to Production ScheduleIdentify Where needed – incl. VendorsForward Scheduling“Crunch” zone supportWO to WO Validity


MRP – What It SHOULD Do (cont’d)

WIP Activity Updates Material NeedsWIP can be anywhere in the worldEffective purchasing support–

Identify actions by how urgentWork most urgent actions FIRST!Scheduled vendor support (“PO-less”)Beside what is required – WHERE it’s needed (work center or vendor).Drop ship – off-site material req’d


One “Ideal” System - Background

AIMS/ERP – built 1993 to 1995 for Alesis corporationPrevious efforts (Relevant, QAD, Camlan) failed due to fit issues.Almost all production was outside and offshore, but not “turnkey.”Full ERP system – 950 windows, 6,000 data fields.For details: http://www.essexoakpark.com/AIMSERPOverview.PDF Core – Powerful scheduling tools – “beyond MRP” – synchronized all activitiesSold by AIMS Software, Inc. for several yearsClosed the company in 2000.


AIMS/ERP - Overview

Cutting Detail Lists - DImensionable Materials - Pieces don't have part numbers - From Drawing data - Part of work order data

Copyright 2000 AIMS Software, Inc.

Quote/Estimate- Estimate Work orders define Product Structures forDeliverables:: - Routing - Material - Estimated CostMaster Production Schedule

Drives Scheduling Process- End Items- Dates- Quantity

Sales Orders/Jobs- Job/Project or sell from Stock- Deliverables, sales prices- Requested Ship Dates

Sales ForecastMake to Stock Production

- Manual Control or- Auto Generate from: - Sales History or - Demand History

Bills of ManufactureDefine Standard Products

- Product Definition- Routing/Operations- Material Required- Engineering Effectivity

Work OrdersJobs = Work Orders Linked to Job No.

- Actual product definitions- Operation start/complete dates- Estimated, Budget & Actual Cost if Job Function in use- Defines all production schedules, material needed- Substitute, change operations, material anytime as needed.- Scheduling - back, back compressed, forward compressed, forward up product structure methods

Purchasing Processes- Required dates from work order operation scheduling- 3 types of Demand/Supply- 7 PO Types- Auto PO Request & Change Generation- Buyers WorkBenches - quick handling of new PO & changes- Electronic Signature- "Paper-less" purchasing

Job/ProjectDrawing Detail Function

- Handles, calculates dimensionable material requirements & displays- Eliminates Part Numbers for pieces- Linking controls Job/Project Work Orders directly from drawing data- Updates budget cost data- Creates cutting detail lists

Quote Release- Creates all job data- Estimate cost

StandardProduct

Definition &Structure

ReferenceData for MPS

Entry

Job - Sched DatesStock - Reference

to MPS'er

Drawingto

WO Link

Repetitive ProductsSummary

- Automatic Work Order creation from Bills of Mfg- 100% MPS driven

Project/Job Summary- Estimate Work Orders or direct manual entry create Work Orders- Sales Order/Job Drives Schedule- Optional Drawing-Based Control- Optional Dimensionable Material

Repetitive/Standard Product Production Project/Job Non-Standard Product Production


AIMS/ERP Scheduling

MPS Controls ALL independent demandBill of Manufacturing basedScheduling Steps –

Back schedule from MPS (demand dates)If today is encountered – compress operations to fitIf compress to fit fails – forward schedule the WOForward schedule UP product structure from lower levels

Synchronizes operations & material flowWork Centers – properties

Where material is requiredInternal or external (vendor)Outside Services PO = labor

Dates – 2 sets: demand & scheduledKey Output – Projected Days Late


AIMS/ERP Schedule Structure

AIMS/ERP Outside/Contract ManufacturingManagement Overview

BasicMaterial

Pick/StageShip

OutsideMfg

Vendor"A"

OutsideMfg

Vendor"B"

FinalAssemblyIn-Plant

Ship Ship

MaterialList for

Operation

MaterialList for

Operation

MaterialList for

Operation

MaterialList for

Operation

AIMS/ERP Production Scheduling Process- Back, BackCompressed, Forward Compressed

Start Date = 1 Start Date = 5

Start Date = 10Start Date = 15

Purchasing Demand & Supply Synchronization Processes- Internal, Drop Ship, O/Manufacturing Services- PO Request & Change Generation- Buyers WorkBenches - Electronic Signature, PO's, PO Changes

Operation Start Dates = Required Dates

PO's- O/Mfg Services for Vendor "A"- Completion Day 14

PO's- O/Mfg Services for Vendor "B"- Completion Day 14

Completion Stock

Copyright 2000 AIMS Software, Inc.

PO's- Drop Ship Directto Vendor "B"- Delivery Day 10

PO's- Drop Ship Direct to Vendor "B"- Delivery Day 5

PO's- Stock Replenishment


AIMS/ERP Scheduling

Start CompleteStart

CompleteStart Complete

MPS

s c s c s c s c s c

s c s c s c s c s c

s c s c s c s c s c

MRP

AIMS/ERP

Today

Projected Days Late

Time

Forward scheduledCompressed operation timesUp the BOM


AIMS/ERP Scheduling - Actions

Copyright AIMS Software, Inc. 2000

AIMS/ERP Production Scheduling & PurchasingSynchronization Overview

Production Scheduling- Updates, creates work orders- Builds Demand/Supply table for Mfg'd Parts- Mix Job with Make to Stock

Production

Master Production Scheduling- Data Entry- Current Desired Dates, Quantities Schedule for FG's- Current Desiried Schedule for Job deliverables

Update Purchased Demand & Supply Data

- Inbound D & S - for internal production- Drop Ship D&S - for use at outsidevendors- Outside Mfg Vendor Services D&S

Vendor Part & Quote Data(reference data)

- U/M Conversions (3)- Vendor P/N's- Vendor Quotes/Prices- Terms- PO Text

Buyer PO Request Work Bench- Review PO Req's- Change as desired- Approve/Electronic Signature

Buyer PO Change Work Bench- Review PO Changes- Change as desired- Approve/Electronic Signature

PO Request to PO- Approved PO Requests- Groups- Creates new PO's

PO Changes to PO- Approved PO Changes- Updates existing PO- New dates, Qty's

Purchase Orders- Auto PO's (OK not req'd)- Approved PO Req's- Approved PO Changes- Manual entry/changes

Printed PO's- Changed, new PO's

PO Request & Change Generation- PO Requests (new buying actions w/prices)- PO Changes (to existing PO's)

Indicates where entry of data, analysis,decisions are required.All other steps are fully automatedsoftware processes.


AIMS/ERP Scheduling Results

Powerful – one person controls THE scheduleSchedule is updated daily or more; no massive “re-plans” – adjust schedule constantly with new information, priorities, customer changes.No manual updates of Work Orders; no releasing.Use Projected Dates Late info to fix problems before they get worse.Print valid production schedule directly from system.Purchased material actions – tightly coupled to work order dates/schedules – result: on time performance w/o constant expeditingSchedule long-lead actions without plan vs. schedule disconnect – all in one data base


Capacity – Key Points & Issues

Without valid schedule – not possible to project capacity accurately

MRP does not produce a valid schedule

Rough-cut – seldom works well enough

Major data accuracy issues – routings, WC, alternatives, WIP status.

Goal - constraint identification


Why MRP II’s CRP Never Has WorkedNo valid schedule upon which to base projections of work load.Inaccurate routings, work center dataAssumes that the “material plan” equals the schedule.APICS – too inbred with software vendors – kept up myth of “MRP II” for 20+ years.Never changed the “model” to accommodate business reality changes.


What To Do About It?

Theory of Constraints – learn basicsRe-think work flow – streamline flow, eliminate buffers, make more visualRepetitively-scheduled job shopIdentify pacing work centers – hand schedule theseLevel-load schedule – wandering constraints are self-caused.Eliminate material constraints in WIP – no shortages in production floor.


What to DO – Theory of Constraints

TOC concepts - critical work centers:Plant-pacing work centers – determine total throughput.Non-pacing operations - minor effect on costInduced bottlenecks – caused by scheduling:

Move around, with fluctuating workload, mixOften caused by over-loaded MPS, fluctuating mix

Identify capacity & work load at plant-pacing work centers – schedule carefully


What to DO – Grouping, Sequencing

Basic Capacity Controls – first level the work load on the critical work centers.Group work into families of similar work flows, impact on these key work centersUse something like Available to Promise to sequence & prioritize work through these key work centers.May need to include outside vendor production work centers


What to DO - Repetitively Scheduled Job Shop

Group products with similar work flows

Establish daily rates for these groupings

Level the schedule (repetitive) for these groups

Remove most buffer stocks

Track output, ahead/behind quantities

Manage like a repetitive production line

Sequence work by Work Order No.

Refer to Raypak paper on my web site for details.

Change daily rates up/down by only 10% in one week.

Visual – work centers with capacity limits will cause “starving” of downstream work quickly


What to DO - Synchronized Work Flow

Independent Flow Continuous Flow

F/A Ship

S/A1

S/A2 S/A3

S/A4

S/A5

A B C

D E F

Sequential, linked flow 1 Schedule, many work centers Queues of work only at start Consistent cycle time from start to

end Minimal inventory, mostly moving.

Random, independent flow 6 work centers = 6 schedules Queues through the cycle Inconsistent, variable cycle time


What to DO – Management Points:Face the Truth – “pressure” doesn’t enlarge capacityConstraints are “where they are”Major constraints pace total output.Easiest alternative to massive data maintenance is visual.Level loaded work makes visual easier.Resist pressure to front-load schedule.


What to DO - Finite Capacity SchedulingWorks well where:

Long, complex operations are involved (machining).Routing information is accurateCostly machines do the workMistakes are costlyMaterial spends a hours or days at the same operation.Detailed data maintenance is not excessive.

A number of good, cost-effective stand-alone tools are available, easy to use, hard to integrate into other systems.


What to DO - Advanced Planning Systems

VERY expensive – to acquire, useNot a lot of Success StoriesEssentially scaled up finite capacity scheduling systemsMust model huge numbers of operations and products relatively accurately.Training may be costlyUse where NO OTHER alternative can be made to work, or where potential inventory savings are HUGE.


Conclusions & Summary

MRP & CRP – Myth of the decade(s)CRP – sold, almost never, ever usedWhat MRP could/should doWhat one alternative that worked well.What to DO - Practical suggestions for managing capacityWhen finite capacity scheduling worksAdvanced planning systems


Paul Deis www.pauldeis.com

(818) 706-0160

page 1 agoura hills, ca copyright 2006 paul deis - (818) 706-0160 [email protected] capacity &...

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