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Excellence Learning Center 1

Production Planning & Control

IArvind Navadikar

Excellence Learning Centerwww.excellencelearningcenter.com

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AGENDA

Role and importance of manufacturing

Conflicts in traditional systems

Role, objectives, and responsibilities of

materials management Differences among manufacturing processes

Importance of planning

Planning and control system Planning hierarchy

Lean V/s Mass Production

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A Typical Manufacturing

Organization

C.E.O.

Mktg & Sales Engineering HumanResources

InformationSystems

Finance Manufacturing Quality

Research

& Dev

Prod.Design

ProductionInd.Engg. Mat.Mgmt. Manuf.Engg.

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Importance of Materials

Management

INDUSTRY COST OF MATERIALS %

WOOLEN TEXTILES 71.00

SUGAR 68.50

JUTE 66.00PHARMACEUTICALS 60.00

COTTON TEXTILES 59.20

GENERAL ENGINEERING 51.10

PAPER 52.80

CHEMICALS 50.40

STEEL 40.20

CEMENT 38.90

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Traditional Silo Organizations

EN

G

I

N

E

E

RI

N

G

M

AR

K

E

T

I

N

G

S

A

L

E

S

I

FI

N

A

N

C

E

Q

U

A

L

I

TY

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Evolution of Materials Management

M.D.

PURCHASE PLANNING STORES MAT.HANDLING

LOGISTICS

FUNCTIONAL MATERIALS MANAGEMENT

MATERIALS

MANAGER.

PURCHASE PLANNING STORES

MAT.

HANDLING LOGISTICS

M.D.INTEGRATED MATERIALS

MANAGERMENT

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SCOR Reference Model

ReturnReturn

Plan

MakeSource Deliver

www.supply-chain.org

Enable

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Car Mfg

CompanyEngine Mfg

Company

Crank Shaft

Mfg Company

Steel MillScrap

Suppliers

Each Basic Supply Chain is a Chain of

Source, Make , Deliver Execution Processes

Source Make Deliver Deliver Source

Customer & Supplier Customer & Supplier Customer & Supplier

Plan Plan Plan PlanConfigurability

Supplier Customer

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SCOR Reference ModelDemand / Supply Planning

Management. Balance Resources with Requirements ,

establish / Communicate Plans for thewhole Supply Chain including

Return.Execution Processes of Source,Make Deliver.

Management of Business Rules , SupplyChain Performance,Data Collection ,Inventory , Capital Assets ,

Transportation,Planning Configuration,Regulatory Requirements andCompliance.

Align the Supply Chain Unit Plan with the

Financial Plan.

Plan

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SCOR Reference Model

Sourcing Stocked , Make-to-Order,

and Engineer-to Order Products. Schedule Deliveries,Receive,Verify,and

Transfer Product , Authorize Supplierpayments.

Identify and Select supply sourceswhen not predetermined.

Manage Business Rules , assesssupplier performance , and maintaindata.

Manage Inventory , capital assets,incoming product,supplier network,import/export requirements and supplieragreements

Source

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SCOR Reference ModelMake to-Stock,Make-to-Order,

Engineer-to-Order Production

Execution. Schedule Production Activities,issue

product,produce andtest,package,stage product and releaseproduct to deliver.

Finalize Engineering for Engineer-to-Order product.

Manage Rules,Performance data,in-process product(WIP),equipment andfacilities, transportation , productionnetwork,and regulatory compliance forproduction.

Make

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SCOR Reference Model Order,Warehouse, Transportation and

Installation management forStocked,Make-to-Order,Engineer-to-Order and Retail Product.

All Order management steps fromprocessing customer enquiries , quotes to

routing shipments and selecting carriers. Warehouse management from receiving

and picking product to load and shipproduct.

Receive and verify products at customer

site and install , if necessary. Invoice Customer.

Manage Deliver Business Rules,performance,Information, finished productsinventories,import/export requirements.

Deliver

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SCOR Reference ModelReturn of Goods to Suppliers and

Return of Finished Goods from

Customer including Defective Products

MRO items,and Excess Products

All return defective product steps.Scheduling Product return, receiving,

verifying and disposition of defectiveproducts,return replacement or credit.

Return of MRO items steps.

Return of Excess Product steps.

Manage Return BusinessRules,performance, data collection,Return Inventory. Transportation , networkconfiguration,and return regulatoryrequirements and compliance.

Return

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What is the Goal of a Company?

Better Customer Service?

Larger Market Share?

Lower Cost?

High Quality?

Survival?

Make MONEY in the present as well asin the future

Win the Race

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The Goal: To Make Money

WHAT IS THE BRIDGE

Bottom Line Measurements

NET PROFIT

(Absolute)

RETURN ON INVESTMENT

(Relative)

CASH FLOW

(Survival)

ACTIONS

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GOBAL OPERATIONAL MEASURES

THROUGHPUT- The rate at which the system generates

money through sales

INVENTORY- All the money the system invests in

purchasing things the system intends tosell

OPERATING EXPENSE-

All the money the system spends inturning inventory into throughput

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DIRECT IMPACT:Operational Measurements & The Bottom Line

NET PROFIT RETURN ON

INVESTMENT

CASH FLOW

THROUGHPUT INVENTORY OPERATING

EXPENSE

PRODUCTION PLANNING & CONTROL HAS GREAT ROLE TO PLAY

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Customer Expectations

Characteristics that provide value to the

customer

Price

Quality

Delivery

Pre- and post-sale service

Flexibility (product and volume)

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Order qualifiers

Competitive characteristics needed to be a

viable competitor

Order winners

Competitive characteristics that cause

customers to choose firms products and

services

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Meeting customer expectations requires

good communications

Understanding customer needs

Two-way communication

Working with customers to solve design and

production problems

Freeness and openness

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Business Strategy

To meet customer expectations, a company

must be market oriented.

All functions in a business must support this

concept. Operations must be tuned to meet the needs of

the marketplace.

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Lead Time

A span of time required to perform a processAPICS Dictionary

Delivery lead time

The time from the receipt of a customer order to the delivery of the

product

APICS Dictionary

Cumulative lead time

The longest planned length of time to accomplish the activity in

question

APICS Dictionary

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Manufacturing Strategies

Make-to-

Stock

Design

Inventory Manufacture Assemble Ship

Delivery Lead Time

Manufacture Inventory Assemble Ship

Manufacture Assemble Inventory Ship

Purchase Manufacture Assemble Ship Engineer-to-Order

Make-to-

Order

Assemble-

to-Order

Delivery Lead Time

Delivery Lead Time

Delivery Lead Time

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Physical Supply/Distribution

Movement of goods from suppliers to the beginning of theproduction process and from the end of the production

process to consumers

Activities Transportation

Distribution inventory

Warehousing

Packaging

Materials handling

Order entry

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Manufacturing Planning and

ControlInvolves

Production planning

Implementation and control

Inventory management

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Manufacturing Processes

Continuous

Production

Repetitive

Production

Product Layout

Intermittent Production

(Job Shop)

Process Layout Project Layout

Manufacturing Processes

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Product Layout

Workstations in sequence needed to make product

Work flows at a nearly constant rate

Little work-in-process inventory

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Characteristics of Product

Layout Limited range of similar products

Dedicated workstations

Sufficient demand

Capital intensive

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Advantages of Product Layout

Little work-in-process inventory

Short throughput time and manufacturing lead

times

Lower unit cost

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Process Layout

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Characteristics of Process Layout

Intermittent lot production

Many different parts processed at workstations

General-purpose machinery

Similar types of skills and equipment in each

department

Work moves only to required stations

Relatively easy to change product or volume

Complex and expensive production andinventory control

High work-in-process inventory levels

Longer lead times

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Characteristics of Project

Layout Used for large, complex projects

Project remains in one location for assembly

Avoids cost of moving the product

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Why Plan?

To satisfy customer demand and ensure

the availability of resources

Material

Capacity

Demand Resources

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These are questions of priority and capacity.

A Good Planning and Control

System

What must

we get

andwhen?

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Capacity Management

Techniques

Capacity

Requirements

Planning (CRP)

Priority Management

Techniques

Resource

Planning(RP)

ProductionPlan

Rough-Cut

Capacity

Planning (RCCP)

Master

Production

Schedule

Material

Requirements

Planning (MRP)

Production

Activity Control

(PAC) Operation

Sequencing

Input/Output

Control

Planning and Control Hierarchy

At each level, there are

three questions:

What are the

priorities? What capacity is

available?

How can differences

be resolved?

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Effects of Good PPC

Timely Deliveries Quick Feedback on Job Status

Lower Capital Investment

Better Availability

Better Co-Ordination between Production, Sales& Stores

Effective Supervision

Better Job Satisfaction Cost Reduction & Cost Control

Effective Utilization of factors of production

Good Return on Investment

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Involvement of PPC Sales Enquiry

Technical Feasibility Routing & Tentative Delivery Period Cost Estimates Quotation

The follow-Up on Quotation Receipt of Purchase Orders Engineering Drawings Materials Control Routing Tools Control Scheduling Dispatching Progressing

Expediting or Follow-Up

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Functions of PPC

Common Functions

Materials Control

Process Planning

Tools Control

Scheduling

Dispatching

Progressing

Expediting

Optional Functions

Sub-Contract

Work Measurement

Cost Estimation

Capacity Planning

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Planning & ControlPlanning

(Planning the Work) Collection & Maintenance

of Data

Working our

Requirements Preparation of variousPlans & Charts

Preparation of necessaryforms & Paperwork

Designing suitableFeedback system

Forward thinking onremedial actions on

backlogs

Control

(Working the Plan) Dissemination of data,

Reports

Seeing that Requirements

are fulfilled Overseeing that Jobs arestarted & finished as perPlans

Actual Issue of Forms &

Paperwork Tracking Production

Closely

Suggesting Remedial

Actions in case of Backlogs

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Factors Influencing PPC

Type of Production

Project and Jobbing Production

Batch Production

Mass and Flow Production

Continuous or Process Production

Distribution of Work

Degree of Centralization

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Inputs for PPC

Marketing Forecast

Installed Capacity

Production Process Bill of Material

Supplier Lead Times

Production Lead Times Production Layouts

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Fall of Mass Production

Pre 90 Era

Demand more than Supply

License Raj

Mass Production was necessary to beCost Efficient

All Costs could be passed to Customers

Customer has No Choice Price = Cost + Profit

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Rise of Lean Production

Post 90 Era

Competitive Market Forces

Supply more than Demand

Customer has Choice Buyers Market

Smaller Batch Qtys

Single Piece Flow

Cost Reduction got Importance

Profit= Price- Cost

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What is Lean?

Lean production focuses on eliminatingwaste in processes (i.e. the waste of work

in progress and finished good inventories)

Lean production is not about eliminatingpeople

Lean production is about expanding

capacity by reducing costs and shorteningcycle times between order and ship date

Lean is about understanding what is

important to the customer

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What is Lean Production?

The principles of Lean Production include Teamwork Communication

Efficient Use of Resources Elimination of Waste Continuous Improvement

Ref. The Machine That Changed The World

By- James P. Womack, Daniel T. Jones, and Daniel Roos

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Lean Production vs Mass Production

Lean Production vs Mass Production requires

Half the Human Efforts in the factory

Half the Manufacturing Space

Half the Investment Tools

Half the Engineering Hours

Half the time to develop new products

Ref. The Machine That Changed The World

By- James P. Womack, Daniel T. Jones, and Daniel Roos

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Benefits of Lean Manufacturing

Manufacturing Lead Time Reduction of 25-90%

Productivity Increases of 5-50%

Inventory Reduction 15-90%

Floor Space Reduction 5-40% First Pass Yield/Workmanship Quality

Improvement 10-50%

Flexibility to Produce Any Model Any Day

Higher Customer Satisfaction

Increased Market Share and EPS

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Waste

The essence of lean manufacturing is identifyingand eliminating waste.

All processes either add value or waste.

Through waste elimination, opportunities

to create competitive advantages.

Value= what the customer is prepared to pay for

Waste

= what the customer is not prepared to pay for

Th S W t i

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The Seven Wastes in

Manufacturing 1. Overproduction 2. Waiting 3. Transportation 4. Processing

5. Motion 6. Defects 7. Inventory

8. Underutilized People

(After Womack Jones Roos The Machine ThatChanged The World: The Story of Lean Production,

1990; Womack Jones Lean Thinking, 2003)

Individual processes can also be analyzed to

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p yreduce lead time through Value Analysis

Lead Time Reduction Process

1. Identify he Product/Service you provide

2. List all steps required to completeproduct from start to finish

3. Identify time currently required to

complete each step

4. Identify steps that Add Value to the

product

5. Graph the process VA and NVA steps

per the Graphic Tool shown on this

slide

6. Analyze & eliminate time for non-value

added steps

7. Analyze & reduce time for value addedsteps

8. Re-graph the improved process

9. Identify the Ideal Process (Minimum

time for VA steps and no NVA steps)

10. Graph the ideal process & work toachieve it

The Lead Time Reduction Graphic Tool

Make 1 box for each step

Make box height proportional to time required for

each process step

Put value added boxes on left of vertical

Put non-value added boxes on right

Put boxes in correct order

Label boxes (name of step & time required)

1

2

3

4

5

6

7

8

1

2

3

4

6

7

8

1

3

4

6

8

Current Improved Ideal

VA NVA

VA NVA

VA NVA

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Thank You

Documents

EDP-PPC-I