supply chain management (planning and control systems) report
TRANSCRIPT
Report Research By:
Maen Aloquili
Twitter: @Aloquili
Linkedin: Maen Aloquili
Planning and Control Systems |
SUPPLY CHAIN MANAGEMENT
PLANNING AND CONTROL SYSTEMS 236 BSS
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Executive Summary
This paper examines and analyses three different manufacturing companies, by describing
proper optimal systems for each company. This allows them to manage their resources to
facilitate them to the end consumer in terms of volume of output, low cost levels, quality and
quantity, and shorter time targets. The suitable systems that we can apply to each company
are the Material Requirement Planning system (MRP), a hybrid system, which is a
combination of the Just-in-Time (JIT), and MRP systems, and the Just-in-Time system (JIT).
Introduction
Supply chain management is concerned with running and monitoring different types of
activities to ensure that all processes and operations are working effectively. This will
include plans, schedules and resources to provide enough materials and equipment to the
operation. According to (Slack et al, 2007) they define the planning and control management
system as:
“Planning and control is the reconciliation of the potential of the operation to supply products
and services, and the demand of its customers on the operation. It is the set of day-day
activities that run the operations on an ongoing basis.”
The control process in some cases, deals with variables to allow the redesign of the process
and to put all resources needed together. In order to make proper adjustments for specific
elements we need to consider equipment and materials. This can bring improvements and
gain extra credibility with the customer in the long term.
As a result, we have three different kinds of manufacturing companies that will be explained
in detail in this paper. These three companies are manufacturers of Air Conditioning, lawn
mowers and food products. For each company it is required to describe an appropriate
planning and control system that can fit its operations, and to explain the reasons of why we
implement these specific systems in terms of customer needs, variation in demand over time
and appropriate structure of downstream supply chain moving to the end consumer.
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1- Manufacturing of Air Conditioning
For each manufacturer, there are different highly specialised units (high variety and
low volume). Their customers will issue an invitation to tender document (ITT), giving
them exact specifications of the air conditioning such as cooling capacity, `foot print`
required, operating temperature and when to be fitted. These units will be part of a
building project. The average lead-time from order to delivery and assembly is 7
weeks, but in some cases, the lead-time can be 4 months or longer.
1.1 appropriate planning and control system
An appropriate planning and control system, which is recommended for the
manufacturer of Air Conditioning units for industry, is Material Requirement
Planning (MRP).
According to Jacobs and Chase, 2008, the MRP system is a process using the
push system to predict sales and future demand. This helps companies to specify
the volume of products and time horizon, to ensure that all components and
materials are available for production and delivery to the final customer. It also
keeps inventory levels low.
The MRP system provides schedule plans for manufacturing activities to
determine when each product should be order and produce.
The reason that I have chosen the MRP system is to determine how many
products we should produce for the customers in the correct period, and to control
the quantity of components they purchase to meet all the customer needs and at a
competitive price without decreasing customer service.
1.2 Customers’ needs and expectations
To the Air Conditioning manufacturer, customer expectations of quality are high.
When the customer issues an ITT document to upgrade the air conditioning with
new premium levels of brands or units such as cooling capacity or operating
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temperature, they should be able to determine what elements and features they
want to upgrade in their air conditioning. Then the manufacturer for this product
would be able to provide the exact final product that the customer requested.
On the other hand, the team members who are responsible for redesigning the
product for clients should give alternative solutions and outline the goals and the
team members’ tasks. This will reassure the customer demands are being met.
Also by keeping, the customer informed with changes in plans this will increase
the success of the process. (Millett, 2007)
Managing all resources required will lead to increased operational flexibility in to
meet customer. As (Vollmann, et al, 2005) mentioned, “Mass customisation
implies flexibility to produce a variety of products to meet increasing customer
demand... to meet whatever volume is required.”
1. 3 variations in demand over time
Demand management is identifying the customer orders and making accurate
sales forecasts. Response to customer orders should be efficient and effective.
However, because some customers change their mind over time, after ordering a
product, this can lead to changes in delivery time and schedule plans in process.
The volume of sales is also affected by the time of year. During the summer
months, because of increase demand, delivery times can be longer.
In this section, we can use Master Production Schedule (MPS), which includes
main entry to the MRP system and relates time and volume to the specific
products. This drives to know what is assembled, what is manufactured in
process (Slack et al, 2007, p 439-441).
For the Air Conditioning industry, the varieties in demand are hard to identify in
advance and are unpredictable. However, we can assume that the forecast sales
for their product are high in summer and low in winter. This can tell us that
customer demand can vary from year to year and from season to season. As a
result, we cannot use historical data in planning and control process. We should
bear in mind that the product is expected to be in stock and that the lead-time
could be approximately from three to four months in the air conditioning industry.
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1.4 An appropriate structure for the downstream supply chain activities
moving the product to the end consumer
For this product to reach to the final user, the supplier should give proper raw
materials such as metals wires, aluminium’s to the manufacturer. Then these
components can be transferred to different stores to make them ready to
distribute to the retailer, in order to sell them to the customers (see Figure1&2). In
some circumstances, the retailer waits customer orders to know exactly what the
specification they would like to have in their Air Conditioning.
Figure (1)
Figure (2)
Source: (C&G international, 2008) http://www.ceeandgee.com
2- Manufacturer of Lawn mowers
This manufacturer has two products electric power and petrol engine power. These
two products are sold to the public with 20 different product lines. The selling season
is from April to October. The retailer outlet will expect to be out of stock at the end of
selling season.
Supplier Manufacturer Distirbutor Retailer End
Customer
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2.1 Appropriate planning and control system
A suitable planning and control system for lawn mowers manufacture is a hybrid
system, which is a combination of the JIT and MRP systems.
The hybrid system is a dynamic system. This means that the process to produce
these two products can be employed during the operation to reduce inventory level
and eliminate the waste of space and time (Slack et al, 2007).
We have chosen this approach because it can achieve the desired results and
outcomes. It can produce goods effectively according to the complexity of the
operation and levels of control. With low variety and high volume, this can increase
inventory levels and support lead-time.
2.2 Customer needs and expectation
In lawn mower manufacture, by having two different products, electric power and
petrol power and having 20 different product lines, the customers can choose from
variety of products to suit their needs. Customers expect from lawn mower
manufacturers to maintain their lawn, give them guidelines for how to use these
machines properly, speed in delivery and they expect the vendor to manage and to
check the availability of products in stock to meet customers’ expectations.
2.3 Variations in demand over time
In the lawn mower industry, the main selling season is from April to the end of
October; these products should be released before October in order to sell them to
the public.
Sales of lawn mowers can be high with low variation in demand from year to year.
However, within the year there is considerable variation with sales peaking in the
springtime and very low in winter.
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According to the (Productivity Press 2006 : 55-56) “70% of company’s lawn mowers
are sold in spring, during a period of less than 4 months, typically, they can produce
lawn mowers in a minutes or in hour, once they have the raw materials. Moreover,
ErIcksen note that, when customer looking for specific mowers in the spring and the
grass is growing and we don’t have them, they’re going to go to the competitor.”
In order to fulfil the process they needs to set schedules to determine availability of
spare parts and to ensure they have flexible in plant systems.
2.4 An appropriate structure for the downstream supply chain activities
moving the product to the end consumer
Raw materials need to be supplied by the extractor in exact amounts to the
manufacturer. The manufacturer produces different types of lawn mowers and
moves them to the distributor who delivers them to the retailer. When they reach the
retailer, his job is to organise and present products in order to sell them to the final
customer.(see Figure 3)
Figure (3)
Extractor
Manufacturer
Dstributor
Retailer
Final Customer
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3- Manufacturer of a brand name food product
Different food products sell minimal variance in volume per month during the year.
3.1 Appropriate planning and control system
An appropriate system that is applicable to food manufacturer is Just in Time (JIT)
philosophy.
JIT is a “pull” technique system that aims to have the right resources and material at
minimum levels, at the right time, at the right place. This means providing products
and services exactly when they are needed in order to achieve cost effective
production (Slack et al, 2007).
JIT is the ideal system for the food industry. This is because JIT reduces waste of
lead-time in warehouses, increases flexibility in process, and provides a good quality
to the customers. We use historical data to predict future demand predictable when
deciding the amount of the stocks we need. Any sudden increase in demand can
cause customer services problems.
3. 2 Customers’ needs and expectations
Customers’ needs may change over time this due to variations in the quality of
product, price preferences, and quality of staff service to the customers (Johnson et
al, 2008).
Mass customisation can satisfy personal needs and wants for the customers;
therefore, customers’ expect on time delivery, high speed and good performance in
process, in order to enable them to satisfy their requirements (Boland, 2008).
Customers can require food instantly with low prices and which meets health and
safety standards. If these are achieved customers’ loyalty will increase.
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3. 3 Variations in demand over time
In food manufacture, demand can be predicted, and there is a stable demand
throughout the year with minimal variations between seasons. This demonstrates
that food manufacture can be a continuous process. For example, in KFC demand
for products is continuous and measurable. Then the workers in product line will
have all requirements ready to use, in order to serve the customer on time. This will
lead to the establishment of effective schedules which will minimise the time needed
for each unit.
3.4 An appropriate structure for the downstream supply chain activities
moving the product to the end consumer
When we determine the quantity of products we need to produce, we can order them
locally from different markets or even externally. Then these products are transferred
to the specific processes for packaging to put them in a huge warehouse, in order to
distribute them to the retailers (see Figure 4). Then the retailer will decide how to
manage these goods. At the final step, any customer can order his meal from any
restaurant shop such as KFC.
Figure (4)
Extractor Manufacturer Warehouse Distributor Retailer Final
Customer
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Conclusion
This report aims to address proper planning and control system for different types of
business companies to increase competitive advantage between the organisations and to
maximise profitability and inventory levels. To reach this, this required to analyise historical
data separately to know how the organisations perform.
Therefore, supply chain management is dynamic system that integrates each process
effectively to fulfil the company objectives and drive the organisation to reach perfect
performance in future. As a result, MRP, Just-In-Time, and hybrid system can run the
business easily without interrupting the whole operation.
Therefore, those systems can plan and control different stages in the manufacturing process
and make proper adjustments when required in each company, for example, in reducing
costs of distribution, helping to reduce lead-time consumptions and reaching high quality in
production.
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List of References
1. Slack, N., Chambers, S., and Johnston, R. (2007) operations management. 5th edn.
London: Prentice Hall
2. Jacobs, F., and Chase R. (2008) operation and supply management: The Core. New
York: McGraw- Hill
3. Millett, T (2007) Meeting Customer Needs and Wants [online] available from:<http://ezinearticles.com/?Meeting-Customer-Needs-And-Wants&id=795990> [23 October 2007]
4. Vollmann, T.E., Berry, W.L., Clay Whybark, D. (2005) Manufacturing Planning &Control System for Supply Chain Management. 5th edn. New York: McGraw-Hill Companies
5. Productivity, P (2005) lean supply chain: Collected practices and Cases. New York: productivity Press
6. Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy. 8 edn. London: Prentice Hall
7. C&G International,Inc (2008) supply chain management. Ceeandgee [online]. [Accessed 19 January 2010]. Available at: <http://www.ceeandgee.com/service-supply.php>.
8. Boland, M. (2008) Innovation in food industry. Personalised Nutrition and Mass Customisation [online]. Available from:< http://www.entrepreneur.com/tradejournals/article/182614578.html>. [19 January 2010]