Resource Planning

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Chapter 14

• Resource Planning

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Enterprise Resource Planning (ERP)

• Organizes and manages a companys business
  processes by sharing information across
  functional areas
• Connects with supply-chain and customer
  management applications
• Largest ERP provider SAP

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ERP Modules
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ERP Implementation

• First step is to analyze business processes
• Which processes have the biggest impact on
  customer relations?
• Which process would benefit the most from
  integration?
• Which processes should be standardized?

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Customer Relationship Management (CRM)

• Plans and executes business processes that
  involve customer interaction
• Changes focus from managing products to managing
  customers
• Point-of-sale data is analyzed for patterns used
  to predict future behavior

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Supply Chain Management

• Supply chain planning
• Supply chain execution
• Supplier relationships
• Distinctions between ERP and SCM are becoming
  increasingly blurred

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ERP and MRP

• MRP (material requirements planning) was the
  precursor to ERP
• Primarily a production planning and control
  system
• MRP evolved to MRP II (manufacturing resource
  planning)
• ERP and ERP II continue to extend the links
  through all business processes

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Material Requirements Planning

• Computerized inventory control production
  planning system
• Schedules component items when they are needed -
  no earlier and no later

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When to Use MRP

• Dependent and discrete items
• Complex products
• Job shop production
• Assemble-to-order environments

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Material Requirements Planning
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Master Production Schedule

• Drives MRP process with a schedule of finished
  products
• Quantities represent production not demand
• Quantities may consist of a combination of
  customer orders demand forecasts
• Quantities represent what needs to be produced,
  not what can be produced

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Basic MRP Processes

1. Exploding the bill of material
2. Netting out inventory
3. Lot sizing
4. Time-phasing requirements

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MRP Outputs

• Planned orders
• Work orders
• Purchase orders
• Changes to previous plans or existing schedules
• Action notices
• Rescheduling notices

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Capacity Requirements Planning (CRP)

• Computerized system that projects load from
  material plan
• Creates load profile
• Identifies underloads and overloads

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Capacity Terms

• Load profile
• Compares released and planned orders with work
  center capacity
• Capacity
• Productive capability includes utilization and
  efficiency
• Utilization
• of available working time spent working

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More Capacity Terms

• Efficiency how well the machine or worker
  performs compared to a standard output
• Load
• The standard hours of work assigned to a facility
• Load percent
• The ratio of load to capacityLoad
  (load/capacity)x100

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Capacity Requirements Planning
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Initial Load Profile
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Remedies for Underloads

1. Acquire more work
2. Pull work ahead that is scheduled for later time
   periods
3. Reduce normal capacity

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Remedies for Overloads

1. Eliminate unnecessary requirements
2. Reroute jobs to alternative machines or work
   centers
3. Split lots between two or more machines
4. Increase normal capacity
5. Subcontract
6. Increase the efficiency of the operation
7. Push work back to later time periods
8. Revise master schedule

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Adjusted Load Profile
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Chapter 16

• Scheduling

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Scheduling

• Specifies when labor, equipment, facilities are
  needed to produce a product or provide a service
• Last stage of planning before production occurs

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Scheduling by Process Type

• Process Industry
• Linear programming
• EOQ with noninstantaneous replenishment
• Mass Production
• Assembly line balancing
• Project
• Project -scheduling techniques (PERT, CPM)

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Objectives in Scheduling

• Meet customer due dates
• Minimize job lateness
• Minimize response time
• Minimize completion time
• Minimize time in the system
• Minimize overtime
• Maximize machine or labor utilization
• Minimize idle time
• Minimize work-in-process inventory
• Efficiency

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Shop Floor Control
Scheduling and monitoring day to day production
of a job

1. Loading - Check availability of material,
   machines labor
2. Sequencing - Release work orders to shop issue
   dispatch lists for individual machines
3. Monitoring - Maintain progress reports on each
   job until it is complete

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Loading

• Allocate work to machines (resources)
• Perform work on most efficient resources
• Use assignment method of linear programming to
  determine allocation

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Sequencing

• Prioritize jobs assigned to a resource
• If no order specified use first-come first-served
  (FCFS)
• Many other sequencing rules exist
• Each attempts to achieve to an objective

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Sequencing Rules

• FCFS - first-come, first-served
• LCFS - last come, first served
• DDATE - earliest due date
• CUSTPR - highest customer priority
• SETUP - similar required setups
• SLACK - smallest slack
• CR - critical ratio
• SPT - shortest processing time
• LPT - longest processing time

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Critical Ratio Rule
Ties scheduling to Gantt Chart or PERT/CPM and
project crashing
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Sequencing Jobs Through Many Machines/Processes

• Facility is dynamic, new jobs added
• Develop global sequencing rules
• First-in-system, first-served (FISFS)
• Work-in-next-queue (WINQ)
• Fewest remaining operations (NOPN)
• Slack per remaining operation (S/OPN)
• Remaining work (RWK)
• Study system via simulation

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Monitoring

• Gantt Chart
• Shows both planned and completed activities
  against a time scale
• Input / Output Control
• Monitors the input and output from each work
  center

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Advanced Planning and Scheduling Systems

• Infinite - assumes infinite capacity
• Loads without regard to capacity
• Then levels the load and sequences jobs
• Finite - assumes finite (limited) capacity
• Sequences jobs as part of the loading decision
• Resources are never loaded beyond capacity

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Advanced Planning and Scheduling Systems

• Advanced planning and scheduling (APS)
• Add-ins to ERP systems
• Constraint-based programming (CBP) identifies a
  solution space and evaluates alternatives
• Genetic algorithms based on natural selection
  properties of genetics
• Manufacturing execution system (MES) monitors
  status, usage, availability, quality

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Theory of Constraints

• Not all resources are used evenly
• Concentrate on the bottleneck resource
• Synchronize flow through the bottleneck
• Use process and transfer batch sizes to move
  product through facility

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Theory of Constraints

• What to Change
• What to Change to
• How to cause the change

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• Quality Management

Quality is a measure of goodness that is
inherent to a product or service. Bottom line
perspective has to be from the Customer fitness
for use
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What Is Quality?

• The degree of excellence of a thing (Websters
  Dictionary)
• The totality of features and characteristics
  that satisfy needs (ASQ)
• Fitness for use
• Quality of design

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Quality

• Quality Management not owned by any functional
  area cross functional
• Measure of goodness that is inherent to a product
  or service

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FedEx and Quality

• Digitally Assisted Dispatch System communicate
  with 30K couriers
• 1-10-100 rule ? 1 if caught and fixed as
  soon as it occurs, it costs a certain amount of
  time and money to fix ? 10 if caught later
  in different department or location as much as
  10X cost ? 100 if mistake is caught by
  the customer as much as 100X to fix

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Product Quality Dimensions

• Product Based found in the product attributes
• User Based if customer satisfied
• Manufacturing Based conform to specs
• Value Based perceived as providing good value
  for the price

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Dimensions of Quality (Garvin)

• Performance
• Basic operating characteristics
• Features
• Extra items added to basic features
• Reliability
• Probability product will operate over time

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Dimensions of Quality (Garvin)

• Conformance
• Meeting pre-established standards
• Durability
• Life span before replacement
• Serviceability
• Ease of getting repairs, speed competence of
  repairs

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Dimensions of Quality (Garvin)

• Aesthetics
• Look, feel, sound, smell or taste
• Safety
• Freedom from injury or harm
• Other perceptions
• Subjective perceptions based on brand name,
  advertising, etc

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Service Quality

• Time Timeliness
• Customer waiting time, completed on time
• Completeness
• Customer gets all they asked for
• Courtesy
• Treatment by employees

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Service Quality

• Consistency
• Same level of service for all customers
• Accessibility Convenience
• Ease of obtaining service
• Accuracy
• Performed right every time
• Responsiveness
• Reactions to unusual situations

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Quality of Conformance

• Ensuring product or service produced according to
  design
• Depends on
• Design of production process
• Performance of machinery
• Materials
• Training

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Quality Philosophers

• Walter Shewhart Statistical Process Control
• W. Edwards Deming
• Joseph Juran strategic and planning based
• Armand Fiegenbaum total quality control entire
  business must be involved in quality improvement

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Demings 14 Points

1. Create constancy of purpose
2. Adopt philosophy of prevention
3. Cease mass inspection
4. Select a few suppliers based on quality
5. Constantly improve system and workers
6. Institute worker training

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Demings 14 Points

1. Instill leadership among supervisors
2. Eliminate fear among employees
3. Eliminate barriers between departments
4. Eliminate slogans
5. Remove numerical quotas

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Demings 14 Points

1. Enhance worker pride
2. Institute vigorous training and education
   programs
3. Develop a commitment from top management to
   implement these 13 points

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The Deming Wheel(or PDCA Cycle)
Also known as the Shewart Cycle
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Six Sigma

• Quality management program that measures and
  improves the operational performance of a company
  by identifying and correcting defects in the
  companys processes and products

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Six SigmaStarted By Motorola

• Define
• Measure
• Analyze
• Improve
• Control

Made Famous by General Electric 40 of GE
executives bonuses tied to 6 sigma implementation

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Malcolm Baldrige National Quality Award

• Category 3 determine requirements,
  expectations, preferences of customers and
  markets
• Category 4 what is important to the customer
  and the company how does company improve

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Total Quality Management

1. Customer defined quality
2. Top management leadership
3. Quality as a strategic issue
4. All employees responsible for quality
5. Continuous improvement
6. Shared problem solving
7. Statistical quality control
8. Training education for all employees

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Strategic Implications of TQM

• Quality is key to effective strategy
• Clear strategic goal, vision, mission
• High quality goals
• Operational plans policies
• Feedback mechanism
• Strong leadership

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TQM in Service Companies

• Inputs similar to manufacturing
• Processes outputs are different
• Services tend to be labor intensive
• Quality measurement is harder
• Timeliness is important measure
• TQM principles apply to services

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Cost of Quality

• Cost of achieving good quality
• Prevention
• Planning, Product design, Process, Training,
  Information
• Appraisal
• Inspection and testing, Test equipment, Operator

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Cost of Quality

• Cost of poor quality
• Internal failure costs
• Scrap, Rework, Process failure, Process downtime,
  Price-downgrading
• External failure costs
• Customer complaints, Product return, Warranty,
  Product liability, Lost sales

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Employees and Quality Improvement

• Employee involvement
• Quality circles
• Process improvement teams
• Employee suggestions

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Cause-and-Effect Diagram
Also known as Ishikawa Diagram or Fish Bone
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Hot House Quality

• Lots of Hoopla and no follow through

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ISO 90002000

• Customer focus
• Leadership
• Involvement of the people
• Process approach
• Systems approach to management
• Continual process improvement GAO
• Factual approach to decision making
• Mutually beneficial supplier relationships

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Implications Of ISO 9000

• Truly international in scope
• Certification required by many foreign firms
• U.S. firms export more than 150 billion
  annually to Europe
• Adopted by U.S. Navy, DuPont, 3M, ATT, and
  others

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ISO Accreditation

• European registration
• 3rd party registrar assesses quality program
• European Conformity (CE) mark authorized
• United States 3rd party registrars
• American National Standards Institute (ANSI)
• American Society for Quality (ASQ)
• Registrar Accreditation Board (RAB)

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Upcoming

• Final Exam
• Harley Paper
• Presentations