My Apics im Mpr Notes 1v424d
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Definitions 16 марта 2012 г. 7:23
Term
Definition
Comments
Planning horizon
The amount of time a plan extends into For a master schedule, this is normally set to the future cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity. See: cumulative lead time, planning time fence.
Customer lead time
The time span between customer ordering and customer receipt
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Questions 4 февраля 2012 г. 21:58
Question
Answer
Comments
A forecasting system is required for • End-item demand which of the following elements of total • Dependent demand • Replacement-part demand demand of an item?
All independent demand items
2.1. Forecasts for products that are subject to promotional demand are most useful if they are based on
• • • •
Market research is generally used to product development and promotions. It can provide insights into the likely sales of a product, but it should be used with other techniques.
2.6. Seasonal Index =
1
Quantitative factors only Qualitative factors only ??? Both Neither
Stick to the formula Seasonal index = Period avg demand / Avg demand for all periods
2.7. Response to the new item added to Evaluate effect of sales promotion MTS product line of the new item on sales of existing products 3.6. All of the following are characteristics of customer leadership EXCEPT
• Defining a vision of service excellence - WRONG (needed) • Teaching customer service leader behavior only - RIGHT (needed, but not sufficient) • Being proactive with customers - WRONG (needed) • Creating and maintaining high standards - WRONG (needed)
3.8. Which of the following components All of should be addressed by a world-class Customer concerns customer service strategy? Employee concerns Shareholder concerns Supplier concerns 3.10. Which activity of order management uses technical details (line item fill rate, shipments by due dates, stockouts, cycle times)
Order entry Order processing Order allocation Order monitoring
4.4. Small, standard-sized containers
• Facilitate handling • Protect from damage during transportation • Easier to count and keep exact inventory records • Can be used as a kanban (return of the containers may be a signal for resupply)
6.3. Which of the following provides detailed supply and demand information for individual items and s both purchased and manufactured products in all manufacturing strategies.
a. Sales and operations planning b. Master production schedule c. Capacity planning d. Marketing planning
a. not detailed to ind. items b. c. not detailed to ind. items, deals with resources d. there is no such a term
In a MTO environment, which of the following is the LEAST important reason for managing orders through all phases of company activities?
A.To determine the impact of (product) specifications on customer promise dates B.To determine the impact of engineering resources on customer orders C.To manage overall lead time and maintain a satisfactory level of customer service D.To maintain a sufficient backlog of customer orders
A, B, C are all important D is not a goal In a MTO environment the backlog is much longer and the company does not need to plan demand using a forecast to nearly the same extent as in MTS. References: Wallace, Sales & operations Planning: The HowTo Handbook, 2nd ed., p, 23 Proud, Master scheduling, 2nd ed., ch. 11
The minimum record accuracy required 99% for successful MRP is approximately In job shop (make-to-order) operations, a. end-items the master production schedule is b. modules usually expressed in of c. kits
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Order processing - between customer and supplier Order promising - the activity of committing delivery dates to the customer based on the availability of product or capacity
usually expressed in of
c. kits d. customer orders
One way to facilitate production scheduling and production in firms making a large number of different final products is to use
a. planning bills b. modular bills c. phantom bills d. overdue bills
The production forecast
is used in two-level master scheduling to help determine the MPS quantities
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ATP of end products becomes production forecast. However total requirement at the 2nd level of planning also includes orders.
S1: MPR Overview 21 января 2012 г. 17:16
Master Planning of Resources (MRP) includes [1-5]: Strategic Planning
The plan for how to marshal and determine actions to the mission, goals, and objectives of an organization
Business Planning The nature of firm Locations Organization Technology Capital required Stakeholders interests Market Business environment
A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement. The business plan is translated into tactical functional plans through the S&OP process.
Demand Management
Forecasting Distribution channels planning Order servicing
S&OP
Output: A process to develop tactical plans • approved production plan • sales plan • inventory/backlog plan
Master Scheduling Material Requirements Planning
P:D Ratio [1-25] P
manufacturing lead time
D
customer required lead time
P:D>1
• customer's order will be delayed, OR • production will start as a result of a forecast
Manufacturing Environment and Supply Process Strategy [1-25] Manufacturing Environment Strategy
Supply Process
ETO
Project
MTO
Discrete batch
ATO
Intermittent batch
MTS
Continuous Flow or Repeatative
MC
Flexible high volume
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The Planning Process 21 января 2012 г. 17:41
The planning process involves a balancing act between demand and supply [1-9].
Product volume
Product mix
The big picture
The details
How much?
Which ones?
Product family level
Individual products
S&OP process
Master Scheduling
S&OP is a business process that helps to keep demand and supply in balance. [1-35] Product Families [1-37, 5-27] Logical groupings based on similar sales and manufacturing requirements. Should be meaningful in of volume of sales From forecasting point of view family may consist of items that have common product life cycles and sales characteristics, or how the product is presented to the market. No more than 6-12 per business unit New products may be temporarily placed in a separate Family in order to provide maximum exposure. Resource Planning is the process of establishing, measuring, and adjusting limits or levels of long-range capacity. Calculated load can be compared with the total resources available. Resource
Anything that adds value to a product or service in its creation, production, or delivery.
Bill of resources
list of the required capacity and key resources needed to manufacture one unit of a typical item of family [1-39, 5-63]. Used in RP & RC process.
Product hierarchy
Total Company
Total company Business Unit
Business Unit
Product Family
Product Family
Product Subfamily Product Subfamily
Model/Brand Package size
Model / Brand
(End item)
Package size
SKU SKU
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S2: Demand Planning 25 января 2012 г. 17:47
Why Forecast? (The Goal of forecasting) A forecast is an attempt to reduce the amount of uncertainty a company encounters. [2-7] The intent of forecasting is to give managers information on which to base decisions. [3-5] A forecast facilitates a company in taking control of its own destiny. A forecast is also useful in creating, anticipating, and managing change within an organization. A forecast can also be used to anticipate inventory levels and capacity demands, and to manage lead time. The length of a forecast horizon is determined primarily by the purpose of the forecast (13 months horizon is recommended here).
• • • • •
Accuracy of sales forecast influences: Investment and capital equipment decisions Inventory planning in MTS environment (inventory level is managed to deliver a desired level of customer service and safety stocks are used to compensate errors in forecast) Capacity planning Operations budgets Lead-time management (the longer the lead-time, the more chance of forecasts of being inaccurate). Seasonality [2-21] Seasonal Index - measures degree of seasonal variation
where Deseasonalized demand = Average demand for all periods It is best to get more than 1 year data. Pyramid Forecasting [2-22] Combines Quantitative (Roll Up) and Qualitative (Force Down) approaches. Forecasting at the lower level of hierarchy provides details for Operations (location, SKU), however this level contains the higher level of error. At top aggregate level management takes Qualitative decision to adjust volume in total.
Order date vs. ship date [2-51] In case there's a significant lead time from requirement to delivery the organization need to develop two forecasts. Outlier - A data point that differs significantly from other data for a similar phenomenon. [2-59] In order to understand whether an outlier should be removed from the data set or not, it is important to record circumstances associated with it. The removal of outliers from demand data in order to provide a reasonable historical base from which to MPR Page 7
The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called filtering. Decomposition - a method of forecasting where data is separated into several components, such as: trend, seasonal, cyclical, and random error. [2-61]
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Forecasting Techniques 25 января 2012 г. 17:55
Quantitative Techniques QT rely on historical data. Technique
Description
Usage
Moving Average
Doesn't work well with seasonal demand, doesn't react to trends
Exponential Smoothing
New forecast = α * actual demand + (1-α) * old forecast The closer α to 1.0 the more responsive the forecast will be to the latest actual demand. Example: Jan SF = 100, Jan SA = 50, α = 0.2, Feb SF = 50 * 0.2 + 100 * 0.8 = 90
Regression Analysis
statistical model based on actual data to project to the future
Adaptive Smoothing
is a form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.
Graphical methods
The use of visual information to predict demand patterns typically involves plotting information in a graphical form.
Econometric modeling
The use of a set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated.
Life-cycle modeling
A quantitative forecasting technique based on applying past patterns of demand data (covering introduction, growth, maturity, saturation, and decline) of similar products to a new product family.
Good for short-range forecasting, however lags the trend Low cost and flexible in of application.
Qualitative Techniques • subjective (based on judgment, intuition, informed opinion) • essential when no history is available (f.i. new products) • used to forecast general business trends, potential demand for large groups of products over an extended period of time - mid-/long-term planning • used mainly by senior management • not applicable for production and inventory forecasting (demand for particular items) Expert opinion
Experts give their views on current trends and likely future developments that may have an impact on the general economy or a specific industry or market.
Market research
is generally used to product development and promotions. It can provide insights into the likely sales of a product, but it should be used with other techniques. Customer surveys must be constructed carefully to ensure that the questions elicit the kind of responses that are useful. It is also important to establish a sufficient sample size of target customers to ensure the reliability of survey results.
Focus groups
consist of s of customers who are asked to provide their opinions about a product or service.
Historical analogy
is a method that compares the sales of a new product or service with the sales of a previous similar product or service. The assumption is that the sales patterns associated with the previous product or service can be transferred to the new product or service.
Delphi method
is based on the knowledge and judgment of a small group of experts. Responses are collected from all the respondents and then compiled into a prediction of the future, according to the experts.
Here a group of people provides opinions about the future, and a facilitator brings the MPR Page 9
consensus
Here a group of people provides opinions about the future, and a facilitator brings the group to a consensus. The idea is that the group as a whole would make better decisions than would each member individually.
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Data Sources 4 февраля 2012 г. 18:51
Internal (Intrinsic) Factors Product life-cycle The introductory, growth, maturity, and decline phases. management
Planned price changes
Forecasts for future sales can often be influenced by planned price changes.
Changes in the sales forces
can influence the sales of a product or service. In many companies, there is a direct correlation between the size of the sales force and the level of sales revenue.
Resource constraints
can have a large impact on predictions of future sales. If a company has historically faced resource constraints, then the sales history reflects only what was capable of being delivered, not the true level of actual demand from the customers.
Marketing and sales promotion
is a primary source of demand variation. The purpose of the special promotion is to try to gain market share from the competition and become a more dominant supplier to the market. Often, however, the promotion creates artificial demand that is transitory at best.
Advertising
is another driver of sales revenue.
Introductory: no sales history is available, so qualitative methods are often used Growth: both Q&Q methods Maturity: stable demand, quantitative methods used (adj. for seasonality of applicable)
External (Extrinsic) Factors Competition
With market becoming global competition is as likely to be in another country as across town
New customers Plans of major customers Government policies Regulatory concerns Economic conditions Environmental issues Weather conditions Global trends
Leading Indicators
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S3: Demand Management and Customer Service 4 февраля 2012 г. 22:01
Order backlog future commitments and obligations from the customer= actual demand (for the future). Forecast Error
= Actual Demand - Forecast Demand
Forecast Accuracy [%]
= 100% - Forecast Error [%]
Absolute Percentage of Error (APE)
=| A - F | / A * 100%
Running Sum of Forecast Errors (RSFE) a.k.a. Cumulative sum of error
= Sum (A - F)
Mean Absolute Deviation (MAD)
= Sum (| A - F |) / n, where n - number of observations
Mean Absolute Percentage of Error (MAPE) = Sum (| A - F | / A ) / n * 100%, where n - number of observations Standard Deviation = (Sum (Actual - Forecast)2 / n )1/2
in case of small data population (<30 periods) n-1 should be used as a denominator in order to adjust the smaller range for a more accurate distribution of the curve.
Standard Deviation (σ) ≈ MAD * 1.25 1.25 - empirical relationship MAD ≈ σ / 1.25 Tracking signals are used to measure forecast bias. Tracking signals is a way to determine that a forecasting technique for an item need to be reviewed. [8-29] Bias
= Sum (A - F) / n, where n - number of periods
Tracking signal = Mean Deviation / MAD
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Customer Order Management 11 февраля 2012 г. 2:26
Order processing cycle [3-31] Order entry
Data required: • Inventory availability • ATP - to identify possible delivery date (for available products) or promise date (for not avialable)
Order allocation
inventory reservation for specific sales order
Processing shipment transactions
Generating invoice taking from inventory entering sales history
Order management is the planning, directing, monitoring, and controlling of the processes related to customer order, manufacturing orders, and purchasing orders . [3-33] Order service - specific function of working with customers (incl. checking products availability).
Order promising [3-41] Available-to-promise (ATP)
scheduled production that is unconsumed or uncommitted after known customer orders are covered
Capacity-to-promise
committing customer orders vs. inventory and the capacity available using finite scheduling
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Demand Filters 4 февраля 2012 г. 22:31
Demand filter
A standard that is set to monitor sales data for individual items in forecasting models. It is usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.
Demand filter is a quantity limit setting. Filter if tripped when the order exceeds certain limit. It allows to filter out: • very large order that could consume capacity • catches data entry errors • flagged order are dealt out to develop an even weekly/monthly schedule
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Tracking signal (wiki) 16 сентября 2011 г. 11:51
Tracking signal monitors any forecasts that have been made in comparison with actuals, and warns when there are unexpected departures of the outcomes from the forecasts. Forecasts can relates to sales, inventory, or anything pertaining to an organization’s future demand. The tracking signal is a simple indicator that forecast bias is present in the forecast model. It is most often used when the validity of the forecasting model might be in doubt. One form of tracking signal is the ratio of the cumulative sum of forecast errors (the deviations between the estimated forecasts and the actual values) to the mean absolute deviation.[1] The formula for this tracking signal is: Tracking signal = Σ (at − ft) / MAD where at is the actual value of the quantity being forecast, and ft is the forecast. MAD is the mean absolute deviation. The formula for the MAD is: MAD = Σ|at − ft| / n where n is the number of periods. Plugging this in, the entire formula for tracking signal is: Tracking signal = Σ(at − ft) / Σ|at − ft| / n Another proposed tracking signal was developed by Trigg (1964). In this model, et is the observed error in period t and |et| is the absolute value of the observed error. The smoothed values of the error and the absolute error are given by: Et = βet + (1 − β)Et−1 Mt = β|et| + (1 − β)Mt−1 Then the tracking signal is the ratio: Tt = |Et / Mt| If no significant bias is present in the forecast, then the smoothed error Et should be small compared to the smoothed absolute error Mt. Therefore, a large tracking signal value indicates a bias in the forecast. For example, with a β of 0.1, a value of Tt greater than .51 indicates nonrandom errors. The tracking signal also can be used directly as a variable smoothing constant.[2] There have also been proposed methods for adjusting the smoothing constants used in forecasting methods based on some measure of prior performance of the forecasting model. One such approach is suggested by Trigg and Leach (1967), which requires the calculation of the tracking signal. The tracking signal is then used as the value of the smoothing constant for the next forecast. The idea is that when the tracking signal is large, it suggests that the time series has undergone a shift; a larger value of the smoothing constant should be more responsive to a sudden shift in the underlying signal. Pasted from
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Forecast Process 9 февраля 2012 г. 8:27
Developing a Forecast Process [3-23] Forecasting Team Forecasting Policy
Who, What, When, How provided to master planning How SFA is measured and communicated
Group items into families Identify demand characteristics
Trends, seasonality, etc.
Stage of life cycle ABC by revenue Forecasting software Use 24-36 month sales history Purge sales history
All obvious irregularities to be removed
Run forecasting module
Accept forecasting model where error is acceptable
Generate forecast by family & item
Analyze and reduce forecast error
Develop Planning BOM Generate rolling forecast for at least 13 months Use indicator to control forecast quality
Bias check, tracking signals, demand filters
the system
Work with the forecasting system, not against it
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Quick Response (QR) 11 февраля 2012 г. 1:24
Quick response - ability to respond rapidly to the customer with the proper product, quantity, price, and location at a minimal cost [3-35]. Technological Elements of QR [3-37] Forecasting/planning systems
Inventory forecasting and planning systems must be integrated with all the processes (marketing, sales, logistics, finance)
Automatic replenishment
Ability to respond quickly while minimizing inventory investment. Shared business planning with suppliers.
Inventory management systems
Accurate inventory control software integrated with forecasting and planning functions
Streamlined distribution center processing
Automated order processing functions (f.i. EDI, e-mail)
e-Commerce Shipping container marking Bar coding to allow automatically transact inventory Automated point of sales data
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Customer Service 11 февраля 2012 г. 1:36
Customer Service Elements [3-43] Reliability
living up to the standards stated and the promises made
Responsiveness Competence
perception that the personnel are capable and knowledgeable
Courtesy
respect and professionalism
Credibility
honesty
Security Access
ease of , speed of delivery, convenience
Lead time
competitive
Communication Understanding Customer Service Leadership [3-45] Principles based on strategic and financial considerations: • Focus on the need of the customer • Quality of products and services leads to competitive advantage • Customer service must exceed customer expectations
Customer and Supplier Oriented System [Indira Gandi pg. 25] Organizational systems will need to be directly related to the issues of how to bind the customer more tightly to the organization and how effectively integrate suppliers into the overall supply chain with the objective of enhancing customer service. The systems installed by organizations will need the capability to formally link the customer in a form that benefits both parties. Systems will also be required to link with suppliers in a manner that gives meaning to the concept of strategic alliances. In a strategic alliance the supplier and the manufacturer agree to a relationship that goes beyond the normal commercial relationship such that each obtains synergistic benefits similar to that obtained by forward/backward integration but with least associated risks and negative attributes.
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7 steps to developing a customer service strategy 11 февраля 2012 г. 2:04
1. Customer Service Vision The first step in creating a customer service strategy is communicating the customer service vision to employees. Employees need to understand what the vision and goal for customer service is and understand their responsibility to help achieve that vision. For example, ministries that shares a customer service vision and teaches customer service skills is very different than churches that leaves the front-line employees untrained and unprepared for dealing with customer issues.
2. Assessment of Customer Needs Organizations can’t meet the needs of their customers without a good understanding of what the customer needs and expectations are. An assessment is done by soliciting customer through customer focus groups, satisfaction surveys, or customer comment cards, and developing a comprehensive plan to meet and exceed the customer needs that fall within the scope of the mission and vision of the church. The first step in any customer improvement initiative is to talk to the customers to find out their perception of the services and programs being provided and what their needs and expectations are. Organizations often fail because they put together services and programs that they thought the customer would value, only to find out it was not what the customer wanted. Time and money are wasted on developing programs and services that do not meet customer expectations. The trick is to find out what it is the customer wants and put together plans to meet those needs. Keep in mind that customer needs and expectations are a moving target. What a customer wants today will be very different from what the customer wants a year or five years down the road. As things change, expectations and needs change also.
3. Hire the Right Employees Hiring with the customer in mind is another step in an overall strategy for strong customer service. Screening employees and ensuring that they possess the disposition and skill set to help a strong customer service environment is important. Skills can be taught but attitude and personality cannot. It’s a fact-of-life that not everyone has the skill set to represent the ministry and interact with customers.
4. Customer Service Goals Once customer needs and expectations are identified and customer satisfaction is measured, it is time to create goals for achieving customer satisfaction. Employees need to understand what the target is so they can help the organization reach their strategic objectives.
5. Training Good customer service skills are innate with some people, but we can all benefit from practical teaching on the organization’s approach to customer service. Much of the training should be practical teaching for how the organization would like the employee to behave in every situation. Things like how to respond to customer complaints, how to be responsive to customers, how to meet customer needs, being empowered to perform service recovery, how to answer the phone and customer service standards are all pieces to a customer service training curriculum.
6. ability Employees need to be held able for achieving customer satisfaction goals. This is part of a comprehensive performance management system and should be culturally expected. Employees should have a good understanding of how their service to the customer affects the organization’s overall performance. For example, the person over the information technology function of a church should understand that addressing the issues of the secretary’s computer is important and that he/she will be help able for doing so.
7. Reward and Recognition There should be a well thought out system for acknowledging and rewarding employees for good customer service. Employees need positive reinforcement when they demonstrate the desired behaviors of a strong customer service culture. Having a strong vision and strategy for customer service is a critical component to the success of any organization. Organizations need to identify who their customers are, what they want and develop strategies to achieve those customer requirements. A strong customer service strategy is what separates the successful organizations from the rest. MPR Page 19
separates the successful organizations from the rest. Does your organization have a customer service strategy? Pasted from
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S4: Distribution Planning 11 февраля 2012 г. 2:43
Distribution System Objectives [4-7] • High levels of customer service • High levels of distribution efficiency • Minimize inventory investment ○ Minimize necessary Safety Stock ○ Optimize order quantities to control excessive cycle stock
Efficient, timely service with minimal inventory investments
Distribution channel
defined by: • transfer of ownership • flow of products through the distribution pipeline[4-9]
Marketing channel
That set of organizations through which a good or service es in going from a raw state to the final consumer. [APICS dictionary]
Forecasting by Aggregation
Down -> top
Estimating demand at each final DC (f.i., based on historical demand), then summing up the total
Forecasting by Allocation
Top -> down
Large volume is more predictable A second forecast is necessary to split total volume by territorial units.
Site selection considerations [4-17] Quantitative Inbound/outbound delivery costs Building/land costs Taxes Local labor costs Operating costs Qualitative considerations add to the quantitative optimization models due to their limitations/assumptions Customer base Supply of workers Labor relationship Government regulations Availability of transportation systems & infrastructure Climate On order to process Qualitative factors weighted ratings could be calculated. Total system cost change with increasing number of warehouses
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Safety Stock 11 февраля 2012 г. 2:49
Safety Stock with changing number of WHs/DCs Total SS Required = Current Total SS * (# new WH / # old WH)1/2 Example 1: WH
SS per WH
SS Total
Now
8
500
4000
New
2
2000/2 = 1000 4000 * (2/8)1/2 = 4000 * 1/2 = 2000
Example 2: WH
SS per WH
SS Total
Now
2
500
1000
New
8
2000/8 = 250 1000 * (8/2)1/2 = 1000 * 2 = 2000
TL
Truckload
CL
Rail carload
LTL
Less than truckload
Safety stock in Push/Pull systems Demand uncertainty and variations are treated differently in these two systems. In a push system, safety stock is used to manage demand variability; while in a pull system, flexible capacity is required to meet the demand variability. Both inventory and capacity represent financial expenditure. Therefore, developing effective supply chains is crucial to achieve the cost-effective goal as well as delivering what the customer needs at the right time, right place, and in the right quantity. Therefore Safety Stock in a push system (especially multilevel) is likely to be higher that in a pull system. Explanation: Push
Pull
MTS
MTO
relies on excessive stock relies on excessive capacity
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Distribution Planning Systems 14 февраля 2012 г. 18:01
[4-21] Reorder Point
reactive system when Supply Point reacts to the demand, placing order once the stock is below reorder point. Reorder point is set taking into consideration lead-time and safety stock.
Pull systems using Reorder Point
each DC acts individually placing order basing on its inventories and stock keeping parameters
Push systems concepts Time-Phased Order Point (TPOP)
places orders basing on projection of inventory into the future - thus it is not reactive but predictive system
Sales replacement / Base stock systems
Sales/Stock data (not orders) of final distributors is supplier up the supply chain. Then shipments are initiated by higher level distributors/factories.
Fair Share Allocation
Centrally defines qty of product which is in short supply basing on stocks, sales of receiving points
MRP
Material requirements planning system
MRP II
MRP + other resource variables (such as labor hours and machine hours)
ERP
MRP II + order entry, purchasing, and interface with customers and suppliers
Distribution Requirements Planning (DRP)
employs the same logic as MRP system
DRP II • • • •
= DRP + planning of key resources: WH capacity work force shipping capacity financial results
Vendor-Managed Inventory (VMI) [4-35]
The vendor is responsible for maintaining customer's inventory level: • basing on Service Level target • have access to all customer's data • Ownership of material may vary (usually the supplier doesn't own the inventory)
Vendor-Owned Inventory (VOI) [4-35]
= Consignment stock FG that is in possession of customers (dealers, etc.), but remain the property of the manufacturer
Collaborative Planning, Forecasting, and Replenishment (FR) [4-37]
t process whereby supply chain partners tly plan key activities: from RM to final delivery of FG. It is a way to handle the bull-whip effect through visibility across all SC
In a fully integrated production-distribution system that uses distribution requirements planning with no shipments to customers from the factories the following items are considered dependent demand items: • Raw materials inventories • Component-parts inventories • Plant finished-goods inventory - used to replenish field WH FG inventories
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Systems integration
MRP
BOM
MPS
BOD
DRP
16 февраля 2012 г. 7:27
The connection not only integrates process but also provides Capacity Link.
Legend RW - regional warehouse
[4-39] Bill of Distribution (BOD) = Distribution Network Structure
The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system. SAP: transportation lanes, PIR Also called the inversion of BOM.
DRP / JIT integration DRP and JIT approaches do not contradict but complement each other. Area
DRP
Lean/JIT
Characteristic
Forecast driven
Demand driven - reactive
Material Handling
Manages forecast, tactical and strategic plans
Manages actual orders, everyday operations plan. Orders should closely resemble forecast.
Capacity Handling
Proper planning financial and capacity requirements ensures that sufficient resources will exist for lean/JIT in short-term range.
Distribution Process Control
Provides timely reporting for effective KBI measurement.
Cross Functional Part of enterprise integrative process
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Linked to the Planning system via DRP
of Sales 16 февраля 2012 г. 8:22
[4-53] EXW
ex works at the seller's dock Title es to the purchaser at the seller's facility.
FCA
free carrier at …
Sale is completed at specific point.
FRC
free carrier
Delivery to the buyer
CFR
Cost and freight
CIF
Cost, insurance and freight
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S5: S&OP (The Sales And Operations Planning Process) 17 февраля 2012 г. 9:42
The Balancing Act [5-7] Demand > Supply -> Shortage Demand < Supply -> Excessive Inventory S&OP is a business process that helps to keep demand and supply in balance. [1-35, 5-11] Steps of S&OP process [5-11] Data Gathering
Actual Sales, Inventory, etc.
The Demand Planning Phase
To update SF
The Supply Planning Phase
To reconcile operations plans and possibilities to adjust them vs. new SF
The Pre-Sales and Operations Plan Meeting
In case issues arise, develop alternate courses of action and evaluate financial implications
The Executive S&OP Meeting
To make decisions where was not agreement from the pre-S&OP team To authorize major changes To review KBIs
The owner of S&OP process should be able to deal with trade-offs between supply and demand but have ownership of neither.
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Production methods 17 февраля 2012 г. 17:50
Method
MTS
MTO
Difference of Supply vs. Demand create
Inventory (which is supply item)
Backlog (which is demand item)
Calculation
Iending = Ibeginning + Supply - Demand
Bending = Bbeginning - Supply + Demand
Targets • • • •
Inventory targets: Max inventory Min inventory Inventory turns Days of coverage (DOS)
• • • •
Backlog targets: Max backlog Min backlog Planned order times Max customer waiting time
Both Inventory and Backlog measure how customers demands are met [5-53]. Backlog
All customer orders received but not yet shipped
Backorde Unfilled customer order or commitment. r Immediate (or past due) demand when inventory or capacity is insufficient to satisfy the demand. Backcludes all backorders. Resource Planning steps
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Resource Planning 17 февраля 2012 г. 19:49
1. 2. 3. 4. 5. 6.
The Resource planning process [5-61] Determine the bill of potentially constraining resources for each product family in the production plan Determine the UOM for each resource Determine the resource capacity availability for each resource in each period Calculate the load on each resource in each period Compare the load to the available capacity Take action to revise the production plan, or adjust capacity where loading problems occur Planned Changes in Resources [5-69] Acquisitions Facility Start-up/Shutdown Hiring, Layoffs, Shift Changes Adding/Removing Tooling and Equipment Maintenance Outsourcing/Subcontracting
Keeps headcount stable
Education and Training Facility Issues Handled by Maintenance
At opening/reopening or deactivation of facilities
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S6: The Master Scheduling Process 23 февраля 2012 г. 15:48
The Goals of Master Scheduling [8-47] To balance supply and demand priorities To develop practical solutions to supply constraints To prioritize and allocate supply to customer demands To establish a strategy to avoid overloaded schedules and unbalanced conditions To create a schedule with attainable completion dates that satisfy customer needs Item
S&OP
Master Scheduling
Objective
Supply Rate by Product Family
Anticipated Build Schedule
Item Planned
Product Family
End Item or Planning BOM
Planning Horizon
Longest Lead Time Resource Plant and Equipment
Longest Cumulative Lead Time for End Items
Constraints
Resource Capacity
Critical Workcenters
Time Periods
monthly
weekly or daily
Planning Focus
Product volume
Product mix
Process Output Production Plan
• • • •
Master Production Schedule
All potential elements of independent demand need to be taken into , such as: Market forecasts Customer orders Interplant orders Engineering requirements Master scheduling: detailing of Production Plan to anticipated build schedules for specific products = MPS. Master Production Schedule: anticipated build schedule (1 line in Master Production Grid). MPS takes into : Sales Forecast, customers orders, Production Plan, backlog, availability of material & capacity, policies/goals (such as, target inventory levels, time fences). Workcenter Definition [6-57] WC
• • • • • • • •
machine/person of group of machines/persons that are capable of performing interchangeable work.
Master Scheduler Responsibilities [6-62] Understand the forecasting process (strengths and limitations) Participate in S&OP Manage the constraints of supply capacity Generate/maintain realistic MPS Monitor consistency with the production plan Execute master scheduling policies (time fences, SS, lot sizing, etc.) Maintain (planning) BOMs Identify and resolve conflicts
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PAB & ATP 23 февраля 2012 г. 16:09
Time Fences [6-17] Time Fence - A policy or guideline established to note where various restrictions or changes in operating procedures take place. Demand Time Fence (DTF)
Before DTF: Total Demand = Actual Customer Orders + Sales Forecast In SAP W2: there seems to be no DTF. All known orders are used for consumption (Sales Forecast consumption). Starting from DTF: Total Demand = MAX(Actual Customer Orders; Sales Forecast)
Planning Time Fence (PTF) • • • •
Before PTF changes to the production schedule may adversely affect: Component schedules Capacity plans Customer deliveries Costs
Forecast consumption - the process by which forecast and actual demand may be compared and coordinated in the master schedule. Projected Available Balance (PAB) [6-23] 1st period PAB =
prior to the DTF
after DTF
Current on-hand qty + MPS - Prior period PAB + MPS Customer orders Customer Orders
Prior period PAB + MPS Max(Forecast; Customer Orders)
Available-to-Promise (ATP) [6-25] ATP
• uncommitted portion of the current inventory or planned supply • s order promising
Methods of calculating ATP [6-25] ATP Non-Cumulative (Discrete) no inventory or planned production is carried forward 1st period ATP =
Period with MPS receipt
Period with no MPS receipts
Oh-hand qty + MPS receipt qty - Sum of MPS receipt qty- Sum of not calculated or Customer order before next MPS Customer order before next MPS 0 receipt receipt
ATP Cumulative Inventory can be carried forward Calculated only for periods with MPS receipts (same formulae as non-cumulative). Then, ATP Cumulative = Running Sum of ATP Non-Cumulative Demand Time Fence 3 Safety Stock
0
Lot Size
40
Period
1
2
3
4
5
Forecast
20
20
20
20
20
Customer Orders 18
15
25
10
10
PAB = 20
2
27
2
22
2
MPS Receipts
-
40
-
40
-
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MPS Receipts
-
40
-
40
-
ATP Non-Cumulative
2
0
-
20
-
ATP Cumulative
2
2
2
22
22
Look Ahead (Backward ATP) large order of future period can borrow from previous periods Period
1
2
3
4
5
Forecast
20
20
20
20
20
Customer Orders
18
15
25+2
10
10
PAB = 20
2
27
2
22
2
MPS Receipts
-
40
-
40
-
ATP Non-Cumulative
2
-2
-
20
-
= -2 + 2 = 0
-
20
-
ATP Cumulative looking backwards = 2 - 2 = 0 Questions 9/10 Demand Time Fence 2 Planning Time Fence 2 Safety Stock
8
Lot Size
45
not relevant
Period
1
2
3
4
5
6
7
Forecast
20
20
20 (after DTF)
20
20
20
20
Customer Orders
18 (within DTF)
15 (within DTF)
27 (greater than 10 forecast)
10
8
6
PAB = 15
42
27
45
50
30
10
MPS Receipts
45
ATP Non-Cumulative
15+ 45-18-15= 27
-
Period
1
2
3
4
5
6
7
Forecast
20
20
20 (after DTF)
20
20
20
20
Customer Orders
18 (within DTF)
15 (within DTF)
27 (greater than 10+12= forecast) 22
10
8
6
PAB = 15
42
27
45
50
30
10
MPS Receipts
45
ATP Non-Cumulative
15+ 45-18-15= 27
-
45-27-22=-4
-
ATP Cumulative
27-4=23
-
0
-
25
45
45
45-27-10=8
-
45-10-8-6= 21
ATP Cumulative looking backwards
25
45
looking backwards
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45 45-10-8-6 =21
BOM 3 марта 2012 г. 8:29
BOM types [6-39] Single-Level Enhanced Single-Level
additionally has information on: • revision number • dates of effectivity
Multi-Level
Show components in tree-structure where each part/subassembly has a unique number.
Planning BOM • • • • • •
Artificial grouping of items used in Master Scheduling and Material Planning Advantages More accurate forecasting: Planning BOM permits forecasting at a higher product family level (not each individual SKU) More accurate scheduling and planning process: more accurate forecast to component level, then FAS (final assembly schedule) based on actual demand Reduced number of end items: items not assembled until demanded Facilitates order entry: modular/configuration codes can be even given to customers (not only for internal usage) Two-level scheduling: 1 schedule for components, another - FAS or RM More efficient and flexible computer processing: due to reduced # of BOMs
Planning BOM [6-43] Planning BOM's can be used in all types of production environments. Modular BOM
indicates what options (and their variations) are available for each listed item (material). Applicable in ATO environment.
Number of options is available for each feature. Each option is defined as single-level BOM. Instead of having BOMs for 1 * 3 * 2 * 2 = 12 variants (see pic.) there would be 1 + 3 + 2 + 2 = 8 modular BOMs Common parts BOM (Kit BOM)
group common components for a product/family into one BOM (or one section of BOM)
• enhances forecast accuracy because more aggregate data is used for Common Parts. • reduces the number of end items planned Super BOM
Combines all variations of modular BOMs into 1 structure.
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Super BOM
Combines all variations of modular BOMs into 1 structure.
Most widely used. Proportions could be taken from order history. Facilitates order taking: products can be names by options in Super BOM (f.i. F53SMR-WC-TY). Super BOM is also marketing tool = adaptation of mix. Volume is planned at S&OP; then mix is applied at this stage. Phantom BOM Syn: blowthrough, transient bill of material.
A BOM coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-forlot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for engineering and manufacturing.
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S7: Managing the Master Scheduling Process 3 марта 2012 г. 14:56
Change management [7-21] Necessary? Feasible? Resources available? Cost, risks, and benefits? Reducing system nervousness [IMM] Sometimes requirements change rapidly and by small amounts, causing the material requirements plan to change back and forth. The planner must judge whether the changes are important enough to react to and whether an order should be released. One method of reducing system nervousness is firm planned orders.
Tradeoffs in Master Scheduling [7-23] Customer service
vs.
Inventory Investment
Backlog
vs.
Resource Availability
Customer service
vs.
Profitability
Production savings
vs.
Inventory Investment
Purchasing savings
vs.
Inventory Investment
Mixed-model production
Making all needed products each day in lot sizes proportional to demand [7-37] Works well when setup times have been reduced to the point that they are no longer a constraint on production sequence.
Multilevel master scheduling [7-51] ...is master planning of several levels in end item BOM Top level: assembly Lower levels: components and sub-assemblies or RM Environmen MPS t
FAS
MTO
RM purchasing to stock
capacity assign to customer orders
ATO
options (sub-assemblies) made to stock
by customers orders
MTS
FG made to stock RM purchased based on the MPS
none
1. Customers orders are shown are they are at all level. 2. ATP from Top level is multiplied by Expected consumption % to form Production Forecast of Lower levels. Consumption %: • either forecast or based on historical records; • sum of split can exceed 100% to cover for actual demand variances. Final Assembly Schedule vs. Master Production Schedule in MTO/ATO/ETO environments [7-59] FAS
MPS MPR Page 35
Time span
FAS
MPS
Planning (short)
Planning time fence (long)
Demand source Customer orders
Forecast
Product level
Finished end items Semi-finished assemblies and components
Constraints
MPS
Production plan
Period
Days or shifts
Weeks of months
FAS allocates and assigns capacity and material to customer assembly orders as they are received.
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MPS Time Zones 3 марта 2012 г. 15:42
Planned Order
generated automatically by planning software when it encounters net requirements (when PAB falls below SS ).
Firm Planned Planned order that has been frozen Order in quantity and time. Released Orders
A firm commitment: production or purchase order.
MPS Time Zones [7-26] Frozen
Flexible
Free
Emergency changes only
Tradeoff changes only
Constrained by Production Plan
Released orders for customer orders + Risk (if capacity not enough for forecast)
Released Planned Orders Orders + Fixed based on Orders Forecast + Planned Orders based on Forecast
Rush order
An order that for some reason must be fulfilled in less than normal lead time.
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Safety Factors 3 марта 2012 г. 15:33
Hedge is a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to Safety Stock, except that a hedge has the dimension of timing as well as amount. [7-34] 2 types of Hedges : • volume • mix Safety Factors for Master Scheduling [7-35] Safety Stock
covers fluctuations in demand or supply
Volume Hedge
are held in the event that the demand is greater than the forecast or that the timing of demands is earlier than predicted by the forecast.
Mix Hedge
…that demand mix for components varies from the forecast.
Safety Lead Times
ensure against delivery delays
Safety Capacity
reserve capacity at key WC
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RC 3 марта 2012 г. 15:47
Rough-Cut Capacity Planning
The process of converting the master production schedule into requirements for key resources [7-39].
Lead times are normally offset in RC. RC is run at SKU level. Product load profile
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family.
• • • •
Benefits of RC detailed routings for each planned part are not needed relatively quick and easy performed before execution of MPS simple simulation tool to assess the impact of proposed changes
• • • •
Limitations of RC [7-41] it only considers critical WCs may not take into consideration setup (changeover) times may ignore WIP because of its limitations not applicable as a long-term planning tool Possible Solutions [7-45] Overloading
Under Loading
Overtime
Reduce overtime
Extra shifts
Reduce shifts Shortened work days/weeks
Transfer or personnel from underloaded WC Transfer people Reroute work to an alternate WC
Reroute work
Subcontracting
Reduce subcontracting
Hire temporary help
Lay off temporary help
Install more equipment Use time for maintenance Use time for training Other solutions: • communicate with the customers to move the orders • split lots over more periods of time See also: Balancing Capacity and Load [DSP] Resource Planning vs. Rough-Cut Capacity Planning [7-48] RP
RC
Validates… Production Plan
Production Schedule
Time basis monthly
daily/weekly
Controls
all potentially constraining resources for identified critical workcenters
Horizon
medium- to long-term
short- to medium-term
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S8: Customer Service Measurements 10 марта 2012 г. 16:53
Total Customer Service: Meeting of exceeding a customer's expectations Customer acquisition is more expensive than Customer retention Customer Service Measurements [8-15] Number of customers retained Amount of repeat purchases Total number of customers Growth of customer base Quality • • • • • • • • •
Internal: Defects per million Cost of quality: prevention, appraisal, and internal failures Hours of employee quality training Hours of unscheduled machine downtime External Cost of quality: external failures Mean time between failures (MTBF; наработка на отказ) Mean time to repair (MTTR) Number of customer complaints, warranty claims, and product recalls Number of unscheduled service calls
Delivery Different OTIF metrics Off-the-shelf availability: % of items capable of being delivered directly from stock Service
Number of requests for improving delivery and number complied with Number of requests for delivering small lots more frequently Number of inquiries on order status and time to respond to such inquiries Overall level of customer satisfaction
Value
Value = Quality + Delivery + Service / Price
Difference in measurements [8-25] Piece fill rate = Item fill rate # of pieces delivered vs. ordered Revenue fill rate
amount of product delivered vs. ordered
Line item fill rate
number of order line items (order lines) delivered vs. ordered
Order complete fill rate
number of order delivered in completely vs. the number of orders received
Examples of Customer Service Level measurements [8-35a] % of orders completely satisfied from stock % units required filled from stock % of units required delivered on time % of items stockout % of stock cycles without shortages % of months without stockout
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Validating the Production Plan and MPS 10 марта 2012 г. 17:22
Production plan is the output of the S&OP process. [8-31]
• • • • •
Validating the Production Plan Is production plan achievable? Are resources over/underloaded? By how much and when? How will changes impact resource loads? What is the financial impact on sales, production, inventory? Should changes be accepted?
Validating the Master Production Schedule [8-41] MPS must be consistent with Production Plan MPS focuses on customer satisfaction and resource optimization MPS must be realistic and achievable Regular review and revision is needed Master scheduler need to use tools such as ○ Time fences ○ Safety stock • RC used to validate the MPS • • • • •
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S&OP Planning Performance 10 марта 2012 г. 17:48
Measuring S&OP Planning Performance [8-33] Ensure consistency with previous plans
Review historical performance
Set targets for future performance
Identify causes for variation from plan
Review Historical Performance Each area of responsibility should be reviewed: • Sales • Operations • Inventory / Backlog Actual sales vs. planned sales ___ production ___ ___ inventory/backlog ___
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Distribution System Performance 10 марта 2012 г. 17:48
• • • • •
The goal is to minimize the total of all distribution resources: [8-35b] transportation wages physical infrastructure overhead inventory Warehouse Management Measure
Description
Throughput %
volume of product storage and retrieval per given unit of time against planned
Order filling % Shipping accuracy Inventory records accuracy Storage utilization Transportation Management Shipping cost factors
cost per ton time % LTL and TL vs. plan
Mix of transport modes actual % spent by transport modes Equipment utilization Routing efficiency Labor efficiency Other costs
changes over time for: • total vehicle operating costs • fuel costs mile • cargo insurance
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Master Scheduling performance measurements [8-37] 10 марта 2012 г. 17:58
Customer Service
On-time delivery Line item fill rate
% of work orders completed each week % of weekly changes to MPS Production floor interruptions
Due to: • Scheduling • Supply concerns
Number of time fence violations
vs. total # of orders placed
Number of past due orders Backlog level Lead time reduction
This goal s delivering products/services better, quicker, and cheaper than the best competition
Inventory turns
= COGS / Average Inventory Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Days of supply Excess/obsolete inventory
Though not all the elements are in control of the master scheduler, but this role does have an initial view of changes in the inventory position
Effective Schedule [8-47] Manufacturing efficiency Inventory levels
Customer service
Production System Tradeoffs
Symptoms of Poor Master Scheduling [8-49] Unreliable delivery promises Persistent past due orders Excess inventory Constantly expediting orders Excessive schedule changes
result of a lack of a master scheduling time fence policy
Upper management scheduling intervention
when upper management feels the need to get involved
Excessive overtime or idle time End-of-month shipping surge
is a symptom of a planning system that is unduly driven by artificial time periods. MPR Page 44
time periods. Front-loaded schedule
is when the 1st week of a future month is overloaded in comparison to later weeks in the month
Lack of ability
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Term
Definition
Comments
Planning horizon
The amount of time a plan extends into For a master schedule, this is normally set to the future cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers or of key suppliers. For longer term plans the planning horizon must be long enough to permit any needed additions to capacity. See: cumulative lead time, planning time fence.
Customer lead time
The time span between customer ordering and customer receipt
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Questions 4 февраля 2012 г. 21:58
Question
Answer
Comments
A forecasting system is required for • End-item demand which of the following elements of total • Dependent demand • Replacement-part demand demand of an item?
All independent demand items
2.1. Forecasts for products that are subject to promotional demand are most useful if they are based on
• • • •
Market research is generally used to product development and promotions. It can provide insights into the likely sales of a product, but it should be used with other techniques.
2.6. Seasonal Index =
1
Quantitative factors only Qualitative factors only ??? Both Neither
Stick to the formula Seasonal index = Period avg demand / Avg demand for all periods
2.7. Response to the new item added to Evaluate effect of sales promotion MTS product line of the new item on sales of existing products 3.6. All of the following are characteristics of customer leadership EXCEPT
• Defining a vision of service excellence - WRONG (needed) • Teaching customer service leader behavior only - RIGHT (needed, but not sufficient) • Being proactive with customers - WRONG (needed) • Creating and maintaining high standards - WRONG (needed)
3.8. Which of the following components All of should be addressed by a world-class Customer concerns customer service strategy? Employee concerns Shareholder concerns Supplier concerns 3.10. Which activity of order management uses technical details (line item fill rate, shipments by due dates, stockouts, cycle times)
Order entry Order processing Order allocation Order monitoring
4.4. Small, standard-sized containers
• Facilitate handling • Protect from damage during transportation • Easier to count and keep exact inventory records • Can be used as a kanban (return of the containers may be a signal for resupply)
6.3. Which of the following provides detailed supply and demand information for individual items and s both purchased and manufactured products in all manufacturing strategies.
a. Sales and operations planning b. Master production schedule c. Capacity planning d. Marketing planning
a. not detailed to ind. items b. c. not detailed to ind. items, deals with resources d. there is no such a term
In a MTO environment, which of the following is the LEAST important reason for managing orders through all phases of company activities?
A.To determine the impact of (product) specifications on customer promise dates B.To determine the impact of engineering resources on customer orders C.To manage overall lead time and maintain a satisfactory level of customer service D.To maintain a sufficient backlog of customer orders
A, B, C are all important D is not a goal In a MTO environment the backlog is much longer and the company does not need to plan demand using a forecast to nearly the same extent as in MTS. References: Wallace, Sales & operations Planning: The HowTo Handbook, 2nd ed., p, 23 Proud, Master scheduling, 2nd ed., ch. 11
The minimum record accuracy required 99% for successful MRP is approximately In job shop (make-to-order) operations, a. end-items the master production schedule is b. modules usually expressed in of c. kits
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Order processing - between customer and supplier Order promising - the activity of committing delivery dates to the customer based on the availability of product or capacity
usually expressed in of
c. kits d. customer orders
One way to facilitate production scheduling and production in firms making a large number of different final products is to use
a. planning bills b. modular bills c. phantom bills d. overdue bills
The production forecast
is used in two-level master scheduling to help determine the MPS quantities
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ATP of end products becomes production forecast. However total requirement at the 2nd level of planning also includes orders.
S1: MPR Overview 21 января 2012 г. 17:16
Master Planning of Resources (MRP) includes [1-5]: Strategic Planning
The plan for how to marshal and determine actions to the mission, goals, and objectives of an organization
Business Planning The nature of firm Locations Organization Technology Capital required Stakeholders interests Market Business environment
A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement. The business plan is translated into tactical functional plans through the S&OP process.
Demand Management
Forecasting Distribution channels planning Order servicing
S&OP
Output: A process to develop tactical plans • approved production plan • sales plan • inventory/backlog plan
Master Scheduling Material Requirements Planning
P:D Ratio [1-25] P
manufacturing lead time
D
customer required lead time
P:D>1
• customer's order will be delayed, OR • production will start as a result of a forecast
Manufacturing Environment and Supply Process Strategy [1-25] Manufacturing Environment Strategy
Supply Process
ETO
Project
MTO
Discrete batch
ATO
Intermittent batch
MTS
Continuous Flow or Repeatative
MC
Flexible high volume
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The Planning Process 21 января 2012 г. 17:41
The planning process involves a balancing act between demand and supply [1-9].
Product volume
Product mix
The big picture
The details
How much?
Which ones?
Product family level
Individual products
S&OP process
Master Scheduling
S&OP is a business process that helps to keep demand and supply in balance. [1-35] Product Families [1-37, 5-27] Logical groupings based on similar sales and manufacturing requirements. Should be meaningful in of volume of sales From forecasting point of view family may consist of items that have common product life cycles and sales characteristics, or how the product is presented to the market. No more than 6-12 per business unit New products may be temporarily placed in a separate Family in order to provide maximum exposure. Resource Planning is the process of establishing, measuring, and adjusting limits or levels of long-range capacity. Calculated load can be compared with the total resources available. Resource
Anything that adds value to a product or service in its creation, production, or delivery.
Bill of resources
list of the required capacity and key resources needed to manufacture one unit of a typical item of family [1-39, 5-63]. Used in RP & RC process.
Product hierarchy
Total Company
Total company Business Unit
Business Unit
Product Family
Product Family
Product Subfamily Product Subfamily
Model/Brand Package size
Model / Brand
(End item)
Package size
SKU SKU
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S2: Demand Planning 25 января 2012 г. 17:47
Why Forecast? (The Goal of forecasting) A forecast is an attempt to reduce the amount of uncertainty a company encounters. [2-7] The intent of forecasting is to give managers information on which to base decisions. [3-5] A forecast facilitates a company in taking control of its own destiny. A forecast is also useful in creating, anticipating, and managing change within an organization. A forecast can also be used to anticipate inventory levels and capacity demands, and to manage lead time. The length of a forecast horizon is determined primarily by the purpose of the forecast (13 months horizon is recommended here).
• • • • •
Accuracy of sales forecast influences: Investment and capital equipment decisions Inventory planning in MTS environment (inventory level is managed to deliver a desired level of customer service and safety stocks are used to compensate errors in forecast) Capacity planning Operations budgets Lead-time management (the longer the lead-time, the more chance of forecasts of being inaccurate). Seasonality [2-21] Seasonal Index - measures degree of seasonal variation
where Deseasonalized demand = Average demand for all periods It is best to get more than 1 year data. Pyramid Forecasting [2-22] Combines Quantitative (Roll Up) and Qualitative (Force Down) approaches. Forecasting at the lower level of hierarchy provides details for Operations (location, SKU), however this level contains the higher level of error. At top aggregate level management takes Qualitative decision to adjust volume in total.
Order date vs. ship date [2-51] In case there's a significant lead time from requirement to delivery the organization need to develop two forecasts. Outlier - A data point that differs significantly from other data for a similar phenomenon. [2-59] In order to understand whether an outlier should be removed from the data set or not, it is important to record circumstances associated with it. The removal of outliers from demand data in order to provide a reasonable historical base from which to MPR Page 7
The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called filtering. Decomposition - a method of forecasting where data is separated into several components, such as: trend, seasonal, cyclical, and random error. [2-61]
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Forecasting Techniques 25 января 2012 г. 17:55
Quantitative Techniques QT rely on historical data. Technique
Description
Usage
Moving Average
Doesn't work well with seasonal demand, doesn't react to trends
Exponential Smoothing
New forecast = α * actual demand + (1-α) * old forecast The closer α to 1.0 the more responsive the forecast will be to the latest actual demand. Example: Jan SF = 100, Jan SA = 50, α = 0.2, Feb SF = 50 * 0.2 + 100 * 0.8 = 90
Regression Analysis
statistical model based on actual data to project to the future
Adaptive Smoothing
is a form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.
Graphical methods
The use of visual information to predict demand patterns typically involves plotting information in a graphical form.
Econometric modeling
The use of a set of equations intended to be used simultaneously to capture the way in which dependent and independent variables are interrelated.
Life-cycle modeling
A quantitative forecasting technique based on applying past patterns of demand data (covering introduction, growth, maturity, saturation, and decline) of similar products to a new product family.
Good for short-range forecasting, however lags the trend Low cost and flexible in of application.
Qualitative Techniques • subjective (based on judgment, intuition, informed opinion) • essential when no history is available (f.i. new products) • used to forecast general business trends, potential demand for large groups of products over an extended period of time - mid-/long-term planning • used mainly by senior management • not applicable for production and inventory forecasting (demand for particular items) Expert opinion
Experts give their views on current trends and likely future developments that may have an impact on the general economy or a specific industry or market.
Market research
is generally used to product development and promotions. It can provide insights into the likely sales of a product, but it should be used with other techniques. Customer surveys must be constructed carefully to ensure that the questions elicit the kind of responses that are useful. It is also important to establish a sufficient sample size of target customers to ensure the reliability of survey results.
Focus groups
consist of s of customers who are asked to provide their opinions about a product or service.
Historical analogy
is a method that compares the sales of a new product or service with the sales of a previous similar product or service. The assumption is that the sales patterns associated with the previous product or service can be transferred to the new product or service.
Delphi method
is based on the knowledge and judgment of a small group of experts. Responses are collected from all the respondents and then compiled into a prediction of the future, according to the experts.
Here a group of people provides opinions about the future, and a facilitator brings the MPR Page 9
consensus
Here a group of people provides opinions about the future, and a facilitator brings the group to a consensus. The idea is that the group as a whole would make better decisions than would each member individually.
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Data Sources 4 февраля 2012 г. 18:51
Internal (Intrinsic) Factors Product life-cycle The introductory, growth, maturity, and decline phases. management
Planned price changes
Forecasts for future sales can often be influenced by planned price changes.
Changes in the sales forces
can influence the sales of a product or service. In many companies, there is a direct correlation between the size of the sales force and the level of sales revenue.
Resource constraints
can have a large impact on predictions of future sales. If a company has historically faced resource constraints, then the sales history reflects only what was capable of being delivered, not the true level of actual demand from the customers.
Marketing and sales promotion
is a primary source of demand variation. The purpose of the special promotion is to try to gain market share from the competition and become a more dominant supplier to the market. Often, however, the promotion creates artificial demand that is transitory at best.
Advertising
is another driver of sales revenue.
Introductory: no sales history is available, so qualitative methods are often used Growth: both Q&Q methods Maturity: stable demand, quantitative methods used (adj. for seasonality of applicable)
External (Extrinsic) Factors Competition
With market becoming global competition is as likely to be in another country as across town
New customers Plans of major customers Government policies Regulatory concerns Economic conditions Environmental issues Weather conditions Global trends
Leading Indicators
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S3: Demand Management and Customer Service 4 февраля 2012 г. 22:01
Order backlog future commitments and obligations from the customer= actual demand (for the future). Forecast Error
= Actual Demand - Forecast Demand
Forecast Accuracy [%]
= 100% - Forecast Error [%]
Absolute Percentage of Error (APE)
=| A - F | / A * 100%
Running Sum of Forecast Errors (RSFE) a.k.a. Cumulative sum of error
= Sum (A - F)
Mean Absolute Deviation (MAD)
= Sum (| A - F |) / n, where n - number of observations
Mean Absolute Percentage of Error (MAPE) = Sum (| A - F | / A ) / n * 100%, where n - number of observations Standard Deviation = (Sum (Actual - Forecast)2 / n )1/2
in case of small data population (<30 periods) n-1 should be used as a denominator in order to adjust the smaller range for a more accurate distribution of the curve.
Standard Deviation (σ) ≈ MAD * 1.25 1.25 - empirical relationship MAD ≈ σ / 1.25 Tracking signals are used to measure forecast bias. Tracking signals is a way to determine that a forecasting technique for an item need to be reviewed. [8-29] Bias
= Sum (A - F) / n, where n - number of periods
Tracking signal = Mean Deviation / MAD
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Customer Order Management 11 февраля 2012 г. 2:26
Order processing cycle [3-31] Order entry
Data required: • Inventory availability • ATP - to identify possible delivery date (for available products) or promise date (for not avialable)
Order allocation
inventory reservation for specific sales order
Processing shipment transactions
Generating invoice taking from inventory entering sales history
Order management is the planning, directing, monitoring, and controlling of the processes related to customer order, manufacturing orders, and purchasing orders . [3-33] Order service - specific function of working with customers (incl. checking products availability).
Order promising [3-41] Available-to-promise (ATP)
scheduled production that is unconsumed or uncommitted after known customer orders are covered
Capacity-to-promise
committing customer orders vs. inventory and the capacity available using finite scheduling
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Demand Filters 4 февраля 2012 г. 22:31
Demand filter
A standard that is set to monitor sales data for individual items in forecasting models. It is usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.
Demand filter is a quantity limit setting. Filter if tripped when the order exceeds certain limit. It allows to filter out: • very large order that could consume capacity • catches data entry errors • flagged order are dealt out to develop an even weekly/monthly schedule
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Tracking signal (wiki) 16 сентября 2011 г. 11:51
Tracking signal monitors any forecasts that have been made in comparison with actuals, and warns when there are unexpected departures of the outcomes from the forecasts. Forecasts can relates to sales, inventory, or anything pertaining to an organization’s future demand. The tracking signal is a simple indicator that forecast bias is present in the forecast model. It is most often used when the validity of the forecasting model might be in doubt. One form of tracking signal is the ratio of the cumulative sum of forecast errors (the deviations between the estimated forecasts and the actual values) to the mean absolute deviation.[1] The formula for this tracking signal is: Tracking signal = Σ (at − ft) / MAD where at is the actual value of the quantity being forecast, and ft is the forecast. MAD is the mean absolute deviation. The formula for the MAD is: MAD = Σ|at − ft| / n where n is the number of periods. Plugging this in, the entire formula for tracking signal is: Tracking signal = Σ(at − ft) / Σ|at − ft| / n Another proposed tracking signal was developed by Trigg (1964). In this model, et is the observed error in period t and |et| is the absolute value of the observed error. The smoothed values of the error and the absolute error are given by: Et = βet + (1 − β)Et−1 Mt = β|et| + (1 − β)Mt−1 Then the tracking signal is the ratio: Tt = |Et / Mt| If no significant bias is present in the forecast, then the smoothed error Et should be small compared to the smoothed absolute error Mt. Therefore, a large tracking signal value indicates a bias in the forecast. For example, with a β of 0.1, a value of Tt greater than .51 indicates nonrandom errors. The tracking signal also can be used directly as a variable smoothing constant.[2] There have also been proposed methods for adjusting the smoothing constants used in forecasting methods based on some measure of prior performance of the forecasting model. One such approach is suggested by Trigg and Leach (1967), which requires the calculation of the tracking signal. The tracking signal is then used as the value of the smoothing constant for the next forecast. The idea is that when the tracking signal is large, it suggests that the time series has undergone a shift; a larger value of the smoothing constant should be more responsive to a sudden shift in the underlying signal. Pasted from
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Forecast Process 9 февраля 2012 г. 8:27
Developing a Forecast Process [3-23] Forecasting Team Forecasting Policy
Who, What, When, How provided to master planning How SFA is measured and communicated
Group items into families Identify demand characteristics
Trends, seasonality, etc.
Stage of life cycle ABC by revenue Forecasting software Use 24-36 month sales history Purge sales history
All obvious irregularities to be removed
Run forecasting module
Accept forecasting model where error is acceptable
Generate forecast by family & item
Analyze and reduce forecast error
Develop Planning BOM Generate rolling forecast for at least 13 months Use indicator to control forecast quality
Bias check, tracking signals, demand filters
the system
Work with the forecasting system, not against it
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Quick Response (QR) 11 февраля 2012 г. 1:24
Quick response - ability to respond rapidly to the customer with the proper product, quantity, price, and location at a minimal cost [3-35]. Technological Elements of QR [3-37] Forecasting/planning systems
Inventory forecasting and planning systems must be integrated with all the processes (marketing, sales, logistics, finance)
Automatic replenishment
Ability to respond quickly while minimizing inventory investment. Shared business planning with suppliers.
Inventory management systems
Accurate inventory control software integrated with forecasting and planning functions
Streamlined distribution center processing
Automated order processing functions (f.i. EDI, e-mail)
e-Commerce Shipping container marking Bar coding to allow automatically transact inventory Automated point of sales data
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Customer Service 11 февраля 2012 г. 1:36
Customer Service Elements [3-43] Reliability
living up to the standards stated and the promises made
Responsiveness Competence
perception that the personnel are capable and knowledgeable
Courtesy
respect and professionalism
Credibility
honesty
Security Access
ease of , speed of delivery, convenience
Lead time
competitive
Communication Understanding Customer Service Leadership [3-45] Principles based on strategic and financial considerations: • Focus on the need of the customer • Quality of products and services leads to competitive advantage • Customer service must exceed customer expectations
Customer and Supplier Oriented System [Indira Gandi pg. 25] Organizational systems will need to be directly related to the issues of how to bind the customer more tightly to the organization and how effectively integrate suppliers into the overall supply chain with the objective of enhancing customer service. The systems installed by organizations will need the capability to formally link the customer in a form that benefits both parties. Systems will also be required to link with suppliers in a manner that gives meaning to the concept of strategic alliances. In a strategic alliance the supplier and the manufacturer agree to a relationship that goes beyond the normal commercial relationship such that each obtains synergistic benefits similar to that obtained by forward/backward integration but with least associated risks and negative attributes.
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7 steps to developing a customer service strategy 11 февраля 2012 г. 2:04
1. Customer Service Vision The first step in creating a customer service strategy is communicating the customer service vision to employees. Employees need to understand what the vision and goal for customer service is and understand their responsibility to help achieve that vision. For example, ministries that shares a customer service vision and teaches customer service skills is very different than churches that leaves the front-line employees untrained and unprepared for dealing with customer issues.
2. Assessment of Customer Needs Organizations can’t meet the needs of their customers without a good understanding of what the customer needs and expectations are. An assessment is done by soliciting customer through customer focus groups, satisfaction surveys, or customer comment cards, and developing a comprehensive plan to meet and exceed the customer needs that fall within the scope of the mission and vision of the church. The first step in any customer improvement initiative is to talk to the customers to find out their perception of the services and programs being provided and what their needs and expectations are. Organizations often fail because they put together services and programs that they thought the customer would value, only to find out it was not what the customer wanted. Time and money are wasted on developing programs and services that do not meet customer expectations. The trick is to find out what it is the customer wants and put together plans to meet those needs. Keep in mind that customer needs and expectations are a moving target. What a customer wants today will be very different from what the customer wants a year or five years down the road. As things change, expectations and needs change also.
3. Hire the Right Employees Hiring with the customer in mind is another step in an overall strategy for strong customer service. Screening employees and ensuring that they possess the disposition and skill set to help a strong customer service environment is important. Skills can be taught but attitude and personality cannot. It’s a fact-of-life that not everyone has the skill set to represent the ministry and interact with customers.
4. Customer Service Goals Once customer needs and expectations are identified and customer satisfaction is measured, it is time to create goals for achieving customer satisfaction. Employees need to understand what the target is so they can help the organization reach their strategic objectives.
5. Training Good customer service skills are innate with some people, but we can all benefit from practical teaching on the organization’s approach to customer service. Much of the training should be practical teaching for how the organization would like the employee to behave in every situation. Things like how to respond to customer complaints, how to be responsive to customers, how to meet customer needs, being empowered to perform service recovery, how to answer the phone and customer service standards are all pieces to a customer service training curriculum.
6. ability Employees need to be held able for achieving customer satisfaction goals. This is part of a comprehensive performance management system and should be culturally expected. Employees should have a good understanding of how their service to the customer affects the organization’s overall performance. For example, the person over the information technology function of a church should understand that addressing the issues of the secretary’s computer is important and that he/she will be help able for doing so.
7. Reward and Recognition There should be a well thought out system for acknowledging and rewarding employees for good customer service. Employees need positive reinforcement when they demonstrate the desired behaviors of a strong customer service culture. Having a strong vision and strategy for customer service is a critical component to the success of any organization. Organizations need to identify who their customers are, what they want and develop strategies to achieve those customer requirements. A strong customer service strategy is what separates the successful organizations from the rest. MPR Page 19
separates the successful organizations from the rest. Does your organization have a customer service strategy? Pasted from
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S4: Distribution Planning 11 февраля 2012 г. 2:43
Distribution System Objectives [4-7] • High levels of customer service • High levels of distribution efficiency • Minimize inventory investment ○ Minimize necessary Safety Stock ○ Optimize order quantities to control excessive cycle stock
Efficient, timely service with minimal inventory investments
Distribution channel
defined by: • transfer of ownership • flow of products through the distribution pipeline[4-9]
Marketing channel
That set of organizations through which a good or service es in going from a raw state to the final consumer. [APICS dictionary]
Forecasting by Aggregation
Down -> top
Estimating demand at each final DC (f.i., based on historical demand), then summing up the total
Forecasting by Allocation
Top -> down
Large volume is more predictable A second forecast is necessary to split total volume by territorial units.
Site selection considerations [4-17] Quantitative Inbound/outbound delivery costs Building/land costs Taxes Local labor costs Operating costs Qualitative considerations add to the quantitative optimization models due to their limitations/assumptions Customer base Supply of workers Labor relationship Government regulations Availability of transportation systems & infrastructure Climate On order to process Qualitative factors weighted ratings could be calculated. Total system cost change with increasing number of warehouses
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Safety Stock 11 февраля 2012 г. 2:49
Safety Stock with changing number of WHs/DCs Total SS Required = Current Total SS * (# new WH / # old WH)1/2 Example 1: WH
SS per WH
SS Total
Now
8
500
4000
New
2
2000/2 = 1000 4000 * (2/8)1/2 = 4000 * 1/2 = 2000
Example 2: WH
SS per WH
SS Total
Now
2
500
1000
New
8
2000/8 = 250 1000 * (8/2)1/2 = 1000 * 2 = 2000
TL
Truckload
CL
Rail carload
LTL
Less than truckload
Safety stock in Push/Pull systems Demand uncertainty and variations are treated differently in these two systems. In a push system, safety stock is used to manage demand variability; while in a pull system, flexible capacity is required to meet the demand variability. Both inventory and capacity represent financial expenditure. Therefore, developing effective supply chains is crucial to achieve the cost-effective goal as well as delivering what the customer needs at the right time, right place, and in the right quantity. Therefore Safety Stock in a push system (especially multilevel) is likely to be higher that in a pull system. Explanation: Push
Pull
MTS
MTO
relies on excessive stock relies on excessive capacity
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Distribution Planning Systems 14 февраля 2012 г. 18:01
[4-21] Reorder Point
reactive system when Supply Point reacts to the demand, placing order once the stock is below reorder point. Reorder point is set taking into consideration lead-time and safety stock.
Pull systems using Reorder Point
each DC acts individually placing order basing on its inventories and stock keeping parameters
Push systems concepts Time-Phased Order Point (TPOP)
places orders basing on projection of inventory into the future - thus it is not reactive but predictive system
Sales replacement / Base stock systems
Sales/Stock data (not orders) of final distributors is supplier up the supply chain. Then shipments are initiated by higher level distributors/factories.
Fair Share Allocation
Centrally defines qty of product which is in short supply basing on stocks, sales of receiving points
MRP
Material requirements planning system
MRP II
MRP + other resource variables (such as labor hours and machine hours)
ERP
MRP II + order entry, purchasing, and interface with customers and suppliers
Distribution Requirements Planning (DRP)
employs the same logic as MRP system
DRP II • • • •
= DRP + planning of key resources: WH capacity work force shipping capacity financial results
Vendor-Managed Inventory (VMI) [4-35]
The vendor is responsible for maintaining customer's inventory level: • basing on Service Level target • have access to all customer's data • Ownership of material may vary (usually the supplier doesn't own the inventory)
Vendor-Owned Inventory (VOI) [4-35]
= Consignment stock FG that is in possession of customers (dealers, etc.), but remain the property of the manufacturer
Collaborative Planning, Forecasting, and Replenishment (FR) [4-37]
t process whereby supply chain partners tly plan key activities: from RM to final delivery of FG. It is a way to handle the bull-whip effect through visibility across all SC
In a fully integrated production-distribution system that uses distribution requirements planning with no shipments to customers from the factories the following items are considered dependent demand items: • Raw materials inventories • Component-parts inventories • Plant finished-goods inventory - used to replenish field WH FG inventories
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Systems integration
MRP
BOM
MPS
BOD
DRP
16 февраля 2012 г. 7:27
The connection not only integrates process but also provides Capacity Link.
Legend RW - regional warehouse
[4-39] Bill of Distribution (BOD) = Distribution Network Structure
The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system. SAP: transportation lanes, PIR Also called the inversion of BOM.
DRP / JIT integration DRP and JIT approaches do not contradict but complement each other. Area
DRP
Lean/JIT
Characteristic
Forecast driven
Demand driven - reactive
Material Handling
Manages forecast, tactical and strategic plans
Manages actual orders, everyday operations plan. Orders should closely resemble forecast.
Capacity Handling
Proper planning financial and capacity requirements ensures that sufficient resources will exist for lean/JIT in short-term range.
Distribution Process Control
Provides timely reporting for effective KBI measurement.
Cross Functional Part of enterprise integrative process
MPR Page 25
Linked to the Planning system via DRP
of Sales 16 февраля 2012 г. 8:22
[4-53] EXW
ex works at the seller's dock Title es to the purchaser at the seller's facility.
FCA
free carrier at …
Sale is completed at specific point.
FRC
free carrier
Delivery to the buyer
CFR
Cost and freight
CIF
Cost, insurance and freight
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S5: S&OP (The Sales And Operations Planning Process) 17 февраля 2012 г. 9:42
The Balancing Act [5-7] Demand > Supply -> Shortage Demand < Supply -> Excessive Inventory S&OP is a business process that helps to keep demand and supply in balance. [1-35, 5-11] Steps of S&OP process [5-11] Data Gathering
Actual Sales, Inventory, etc.
The Demand Planning Phase
To update SF
The Supply Planning Phase
To reconcile operations plans and possibilities to adjust them vs. new SF
The Pre-Sales and Operations Plan Meeting
In case issues arise, develop alternate courses of action and evaluate financial implications
The Executive S&OP Meeting
To make decisions where was not agreement from the pre-S&OP team To authorize major changes To review KBIs
The owner of S&OP process should be able to deal with trade-offs between supply and demand but have ownership of neither.
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Production methods 17 февраля 2012 г. 17:50
Method
MTS
MTO
Difference of Supply vs. Demand create
Inventory (which is supply item)
Backlog (which is demand item)
Calculation
Iending = Ibeginning + Supply - Demand
Bending = Bbeginning - Supply + Demand
Targets • • • •
Inventory targets: Max inventory Min inventory Inventory turns Days of coverage (DOS)
• • • •
Backlog targets: Max backlog Min backlog Planned order times Max customer waiting time
Both Inventory and Backlog measure how customers demands are met [5-53]. Backlog
All customer orders received but not yet shipped
Backorde Unfilled customer order or commitment. r Immediate (or past due) demand when inventory or capacity is insufficient to satisfy the demand. Backcludes all backorders. Resource Planning steps
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Resource Planning 17 февраля 2012 г. 19:49
1. 2. 3. 4. 5. 6.
The Resource planning process [5-61] Determine the bill of potentially constraining resources for each product family in the production plan Determine the UOM for each resource Determine the resource capacity availability for each resource in each period Calculate the load on each resource in each period Compare the load to the available capacity Take action to revise the production plan, or adjust capacity where loading problems occur Planned Changes in Resources [5-69] Acquisitions Facility Start-up/Shutdown Hiring, Layoffs, Shift Changes Adding/Removing Tooling and Equipment Maintenance Outsourcing/Subcontracting
Keeps headcount stable
Education and Training Facility Issues Handled by Maintenance
At opening/reopening or deactivation of facilities
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S6: The Master Scheduling Process 23 февраля 2012 г. 15:48
The Goals of Master Scheduling [8-47] To balance supply and demand priorities To develop practical solutions to supply constraints To prioritize and allocate supply to customer demands To establish a strategy to avoid overloaded schedules and unbalanced conditions To create a schedule with attainable completion dates that satisfy customer needs Item
S&OP
Master Scheduling
Objective
Supply Rate by Product Family
Anticipated Build Schedule
Item Planned
Product Family
End Item or Planning BOM
Planning Horizon
Longest Lead Time Resource Plant and Equipment
Longest Cumulative Lead Time for End Items
Constraints
Resource Capacity
Critical Workcenters
Time Periods
monthly
weekly or daily
Planning Focus
Product volume
Product mix
Process Output Production Plan
• • • •
Master Production Schedule
All potential elements of independent demand need to be taken into , such as: Market forecasts Customer orders Interplant orders Engineering requirements Master scheduling: detailing of Production Plan to anticipated build schedules for specific products = MPS. Master Production Schedule: anticipated build schedule (1 line in Master Production Grid). MPS takes into : Sales Forecast, customers orders, Production Plan, backlog, availability of material & capacity, policies/goals (such as, target inventory levels, time fences). Workcenter Definition [6-57] WC
• • • • • • • •
machine/person of group of machines/persons that are capable of performing interchangeable work.
Master Scheduler Responsibilities [6-62] Understand the forecasting process (strengths and limitations) Participate in S&OP Manage the constraints of supply capacity Generate/maintain realistic MPS Monitor consistency with the production plan Execute master scheduling policies (time fences, SS, lot sizing, etc.) Maintain (planning) BOMs Identify and resolve conflicts
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PAB & ATP 23 февраля 2012 г. 16:09
Time Fences [6-17] Time Fence - A policy or guideline established to note where various restrictions or changes in operating procedures take place. Demand Time Fence (DTF)
Before DTF: Total Demand = Actual Customer Orders + Sales Forecast In SAP W2: there seems to be no DTF. All known orders are used for consumption (Sales Forecast consumption). Starting from DTF: Total Demand = MAX(Actual Customer Orders; Sales Forecast)
Planning Time Fence (PTF) • • • •
Before PTF changes to the production schedule may adversely affect: Component schedules Capacity plans Customer deliveries Costs
Forecast consumption - the process by which forecast and actual demand may be compared and coordinated in the master schedule. Projected Available Balance (PAB) [6-23] 1st period PAB =
prior to the DTF
after DTF
Current on-hand qty + MPS - Prior period PAB + MPS Customer orders Customer Orders
Prior period PAB + MPS Max(Forecast; Customer Orders)
Available-to-Promise (ATP) [6-25] ATP
• uncommitted portion of the current inventory or planned supply • s order promising
Methods of calculating ATP [6-25] ATP Non-Cumulative (Discrete) no inventory or planned production is carried forward 1st period ATP =
Period with MPS receipt
Period with no MPS receipts
Oh-hand qty + MPS receipt qty - Sum of MPS receipt qty- Sum of not calculated or Customer order before next MPS Customer order before next MPS 0 receipt receipt
ATP Cumulative Inventory can be carried forward Calculated only for periods with MPS receipts (same formulae as non-cumulative). Then, ATP Cumulative = Running Sum of ATP Non-Cumulative Demand Time Fence 3 Safety Stock
0
Lot Size
40
Period
1
2
3
4
5
Forecast
20
20
20
20
20
Customer Orders 18
15
25
10
10
PAB = 20
2
27
2
22
2
MPS Receipts
-
40
-
40
-
MPR Page 31
MPS Receipts
-
40
-
40
-
ATP Non-Cumulative
2
0
-
20
-
ATP Cumulative
2
2
2
22
22
Look Ahead (Backward ATP) large order of future period can borrow from previous periods Period
1
2
3
4
5
Forecast
20
20
20
20
20
Customer Orders
18
15
25+2
10
10
PAB = 20
2
27
2
22
2
MPS Receipts
-
40
-
40
-
ATP Non-Cumulative
2
-2
-
20
-
= -2 + 2 = 0
-
20
-
ATP Cumulative looking backwards = 2 - 2 = 0 Questions 9/10 Demand Time Fence 2 Planning Time Fence 2 Safety Stock
8
Lot Size
45
not relevant
Period
1
2
3
4
5
6
7
Forecast
20
20
20 (after DTF)
20
20
20
20
Customer Orders
18 (within DTF)
15 (within DTF)
27 (greater than 10 forecast)
10
8
6
PAB = 15
42
27
45
50
30
10
MPS Receipts
45
ATP Non-Cumulative
15+ 45-18-15= 27
-
Period
1
2
3
4
5
6
7
Forecast
20
20
20 (after DTF)
20
20
20
20
Customer Orders
18 (within DTF)
15 (within DTF)
27 (greater than 10+12= forecast) 22
10
8
6
PAB = 15
42
27
45
50
30
10
MPS Receipts
45
ATP Non-Cumulative
15+ 45-18-15= 27
-
45-27-22=-4
-
ATP Cumulative
27-4=23
-
0
-
25
45
45
45-27-10=8
-
45-10-8-6= 21
ATP Cumulative looking backwards
25
45
looking backwards
MPR Page 32
45 45-10-8-6 =21
BOM 3 марта 2012 г. 8:29
BOM types [6-39] Single-Level Enhanced Single-Level
additionally has information on: • revision number • dates of effectivity
Multi-Level
Show components in tree-structure where each part/subassembly has a unique number.
Planning BOM • • • • • •
Artificial grouping of items used in Master Scheduling and Material Planning Advantages More accurate forecasting: Planning BOM permits forecasting at a higher product family level (not each individual SKU) More accurate scheduling and planning process: more accurate forecast to component level, then FAS (final assembly schedule) based on actual demand Reduced number of end items: items not assembled until demanded Facilitates order entry: modular/configuration codes can be even given to customers (not only for internal usage) Two-level scheduling: 1 schedule for components, another - FAS or RM More efficient and flexible computer processing: due to reduced # of BOMs
Planning BOM [6-43] Planning BOM's can be used in all types of production environments. Modular BOM
indicates what options (and their variations) are available for each listed item (material). Applicable in ATO environment.
Number of options is available for each feature. Each option is defined as single-level BOM. Instead of having BOMs for 1 * 3 * 2 * 2 = 12 variants (see pic.) there would be 1 + 3 + 2 + 2 = 8 modular BOMs Common parts BOM (Kit BOM)
group common components for a product/family into one BOM (or one section of BOM)
• enhances forecast accuracy because more aggregate data is used for Common Parts. • reduces the number of end items planned Super BOM
Combines all variations of modular BOMs into 1 structure.
MPR Page 33
Super BOM
Combines all variations of modular BOMs into 1 structure.
Most widely used. Proportions could be taken from order history. Facilitates order taking: products can be names by options in Super BOM (f.i. F53SMR-WC-TY). Super BOM is also marketing tool = adaptation of mix. Volume is planned at S&OP; then mix is applied at this stage. Phantom BOM Syn: blowthrough, transient bill of material.
A BOM coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-forlot. A phantom bill of material represents an item that is physically built, but rarely stocked, before being used in the next step or level of manufacturing. This permits MRP logic to drive requirements straight through the phantom item to its components, but the MRP system usually retains its ability to net against any occasional inventories of the item. This technique also facilitates the use of common bills of material for engineering and manufacturing.
MPR Page 34
S7: Managing the Master Scheduling Process 3 марта 2012 г. 14:56
Change management [7-21] Necessary? Feasible? Resources available? Cost, risks, and benefits? Reducing system nervousness [IMM] Sometimes requirements change rapidly and by small amounts, causing the material requirements plan to change back and forth. The planner must judge whether the changes are important enough to react to and whether an order should be released. One method of reducing system nervousness is firm planned orders.
Tradeoffs in Master Scheduling [7-23] Customer service
vs.
Inventory Investment
Backlog
vs.
Resource Availability
Customer service
vs.
Profitability
Production savings
vs.
Inventory Investment
Purchasing savings
vs.
Inventory Investment
Mixed-model production
Making all needed products each day in lot sizes proportional to demand [7-37] Works well when setup times have been reduced to the point that they are no longer a constraint on production sequence.
Multilevel master scheduling [7-51] ...is master planning of several levels in end item BOM Top level: assembly Lower levels: components and sub-assemblies or RM Environmen MPS t
FAS
MTO
RM purchasing to stock
capacity assign to customer orders
ATO
options (sub-assemblies) made to stock
by customers orders
MTS
FG made to stock RM purchased based on the MPS
none
1. Customers orders are shown are they are at all level. 2. ATP from Top level is multiplied by Expected consumption % to form Production Forecast of Lower levels. Consumption %: • either forecast or based on historical records; • sum of split can exceed 100% to cover for actual demand variances. Final Assembly Schedule vs. Master Production Schedule in MTO/ATO/ETO environments [7-59] FAS
MPS MPR Page 35
Time span
FAS
MPS
Planning (short)
Planning time fence (long)
Demand source Customer orders
Forecast
Product level
Finished end items Semi-finished assemblies and components
Constraints
MPS
Production plan
Period
Days or shifts
Weeks of months
FAS allocates and assigns capacity and material to customer assembly orders as they are received.
MPR Page 36
MPS Time Zones 3 марта 2012 г. 15:42
Planned Order
generated automatically by planning software when it encounters net requirements (when PAB falls below SS ).
Firm Planned Planned order that has been frozen Order in quantity and time. Released Orders
A firm commitment: production or purchase order.
MPS Time Zones [7-26] Frozen
Flexible
Free
Emergency changes only
Tradeoff changes only
Constrained by Production Plan
Released orders for customer orders + Risk (if capacity not enough for forecast)
Released Planned Orders Orders + Fixed based on Orders Forecast + Planned Orders based on Forecast
Rush order
An order that for some reason must be fulfilled in less than normal lead time.
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Safety Factors 3 марта 2012 г. 15:33
Hedge is a scheduled quantity to protect against uncertainty in demand or supply. The hedge is similar to Safety Stock, except that a hedge has the dimension of timing as well as amount. [7-34] 2 types of Hedges : • volume • mix Safety Factors for Master Scheduling [7-35] Safety Stock
covers fluctuations in demand or supply
Volume Hedge
are held in the event that the demand is greater than the forecast or that the timing of demands is earlier than predicted by the forecast.
Mix Hedge
…that demand mix for components varies from the forecast.
Safety Lead Times
ensure against delivery delays
Safety Capacity
reserve capacity at key WC
MPR Page 38
RC 3 марта 2012 г. 15:47
Rough-Cut Capacity Planning
The process of converting the master production schedule into requirements for key resources [7-39].
Lead times are normally offset in RC. RC is run at SKU level. Product load profile
A listing of the required capacity and key resources needed to manufacture one unit of a selected item or family.
• • • •
Benefits of RC detailed routings for each planned part are not needed relatively quick and easy performed before execution of MPS simple simulation tool to assess the impact of proposed changes
• • • •
Limitations of RC [7-41] it only considers critical WCs may not take into consideration setup (changeover) times may ignore WIP because of its limitations not applicable as a long-term planning tool Possible Solutions [7-45] Overloading
Under Loading
Overtime
Reduce overtime
Extra shifts
Reduce shifts Shortened work days/weeks
Transfer or personnel from underloaded WC Transfer people Reroute work to an alternate WC
Reroute work
Subcontracting
Reduce subcontracting
Hire temporary help
Lay off temporary help
Install more equipment Use time for maintenance Use time for training Other solutions: • communicate with the customers to move the orders • split lots over more periods of time See also: Balancing Capacity and Load [DSP] Resource Planning vs. Rough-Cut Capacity Planning [7-48] RP
RC
Validates… Production Plan
Production Schedule
Time basis monthly
daily/weekly
Controls
all potentially constraining resources for identified critical workcenters
Horizon
medium- to long-term
short- to medium-term
MPR Page 39
S8: Customer Service Measurements 10 марта 2012 г. 16:53
Total Customer Service: Meeting of exceeding a customer's expectations Customer acquisition is more expensive than Customer retention Customer Service Measurements [8-15] Number of customers retained Amount of repeat purchases Total number of customers Growth of customer base Quality • • • • • • • • •
Internal: Defects per million Cost of quality: prevention, appraisal, and internal failures Hours of employee quality training Hours of unscheduled machine downtime External Cost of quality: external failures Mean time between failures (MTBF; наработка на отказ) Mean time to repair (MTTR) Number of customer complaints, warranty claims, and product recalls Number of unscheduled service calls
Delivery Different OTIF metrics Off-the-shelf availability: % of items capable of being delivered directly from stock Service
Number of requests for improving delivery and number complied with Number of requests for delivering small lots more frequently Number of inquiries on order status and time to respond to such inquiries Overall level of customer satisfaction
Value
Value = Quality + Delivery + Service / Price
Difference in measurements [8-25] Piece fill rate = Item fill rate # of pieces delivered vs. ordered Revenue fill rate
amount of product delivered vs. ordered
Line item fill rate
number of order line items (order lines) delivered vs. ordered
Order complete fill rate
number of order delivered in completely vs. the number of orders received
Examples of Customer Service Level measurements [8-35a] % of orders completely satisfied from stock % units required filled from stock % of units required delivered on time % of items stockout % of stock cycles without shortages % of months without stockout
MPR Page 40
Validating the Production Plan and MPS 10 марта 2012 г. 17:22
Production plan is the output of the S&OP process. [8-31]
• • • • •
Validating the Production Plan Is production plan achievable? Are resources over/underloaded? By how much and when? How will changes impact resource loads? What is the financial impact on sales, production, inventory? Should changes be accepted?
Validating the Master Production Schedule [8-41] MPS must be consistent with Production Plan MPS focuses on customer satisfaction and resource optimization MPS must be realistic and achievable Regular review and revision is needed Master scheduler need to use tools such as ○ Time fences ○ Safety stock • RC used to validate the MPS • • • • •
MPR Page 41
S&OP Planning Performance 10 марта 2012 г. 17:48
Measuring S&OP Planning Performance [8-33] Ensure consistency with previous plans
Review historical performance
Set targets for future performance
Identify causes for variation from plan
Review Historical Performance Each area of responsibility should be reviewed: • Sales • Operations • Inventory / Backlog Actual sales vs. planned sales ___ production ___ ___ inventory/backlog ___
MPR Page 42
Distribution System Performance 10 марта 2012 г. 17:48
• • • • •
The goal is to minimize the total of all distribution resources: [8-35b] transportation wages physical infrastructure overhead inventory Warehouse Management Measure
Description
Throughput %
volume of product storage and retrieval per given unit of time against planned
Order filling % Shipping accuracy Inventory records accuracy Storage utilization Transportation Management Shipping cost factors
cost per ton time % LTL and TL vs. plan
Mix of transport modes actual % spent by transport modes Equipment utilization Routing efficiency Labor efficiency Other costs
changes over time for: • total vehicle operating costs • fuel costs mile • cargo insurance
MPR Page 43
Master Scheduling performance measurements [8-37] 10 марта 2012 г. 17:58
Customer Service
On-time delivery Line item fill rate
% of work orders completed each week % of weekly changes to MPS Production floor interruptions
Due to: • Scheduling • Supply concerns
Number of time fence violations
vs. total # of orders placed
Number of past due orders Backlog level Lead time reduction
This goal s delivering products/services better, quicker, and cheaper than the best competition
Inventory turns
= COGS / Average Inventory Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Days of supply Excess/obsolete inventory
Though not all the elements are in control of the master scheduler, but this role does have an initial view of changes in the inventory position
Effective Schedule [8-47] Manufacturing efficiency Inventory levels
Customer service
Production System Tradeoffs
Symptoms of Poor Master Scheduling [8-49] Unreliable delivery promises Persistent past due orders Excess inventory Constantly expediting orders Excessive schedule changes
result of a lack of a master scheduling time fence policy
Upper management scheduling intervention
when upper management feels the need to get involved
Excessive overtime or idle time End-of-month shipping surge
is a symptom of a planning system that is unduly driven by artificial time periods. MPR Page 44
time periods. Front-loaded schedule
is when the 1st week of a future month is overloaded in comparison to later weeks in the month
Lack of ability
MPR Page 45
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