Operations 7 Tuesday

8/8/2019 Operations 7 Tuesday

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Enterprise ResourceEnterprise Resource

Planning (ERP)Planning (ERP)Organizes and manages aOrganizes and manages a

companys business processes bycompanys business processes bysharing information across functionalsharing information across functional

areasareas

Connects with supply-chain andConnects with supply-chain andcustomer management applicationscustomer management applications

Largest ERP provider SAPLargest ERP provider SAP


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ERP ModulesERP Modules


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ERPs Central DatabaseERPs Central DatabaseFinance &Accounting

Sales& Marketing

HumanResources

Production &Materials

ManagementERP DataRepository


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ERP ImplementationERP Implementation First step is to analyze businessFirst step is to analyze business

processesprocesses

Which processes have the biggestWhich processes have the biggest

impact on customer relations?impact on customer relations? Which process would benefit the mostWhich process would benefit the most

from integration?from integration?

Which processes should beWhich processes should be

standardized?standardized?


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Customer RelationshipCustomer Relationship

Management (CRM)Management (CRM) Plans and executes businessPlans and executes business

processes that involve customerprocesses that involve customerinteractioninteraction Changes focus from managingChanges focus from managing

products to managing customersproducts to managing customers

Point-of-sale data is analyzed forPoint-of-sale data is analyzed forpatterns used to predict futurepatterns used to predict future

behaviorbehavior


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Supply Chain ManagementSupply Chain Management

Supply chain planningSupply chain planning

Supply chain executionSupply chain executionSupplier relationshipsSupplier relationshipsDistinctions between ERP and SCMDistinctions between ERP and SCM

are becoming increasingly blurredare becoming increasingly blurred


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Material RequirementsMaterial Requirements

PlanningPlanning

Computerized inventory control &Computerized inventory control &

production planning systemproduction planning system

Schedules component items whenSchedules component items when

they are needed - no earlier and nothey are needed - no earlier and no

laterlater


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When to Use MRPWhen to Use MRPDependent and discrete itemsDependent and discrete items

Complex productsComplex products Job shop productionJob shop productionAssemble-to-order environmentsAssemble-to-order environments


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MaterialMaterial

RequirementsRequirementsPlanningPlanning

Materialrequirements

planning

Plannedorder

releases

Workorders

Purchaseorders

Reschedulingnotices

Itemmaster

file

Productstructure

file

Masterproductionschedule


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Master ProductionMaster Production

ScheduleSchedule Drives MRP process with a schedule ofDrives MRP process with a schedule of

finished productsfinished products

Quantities represent production not demandQuantities represent production not demand

Quantities may consist of a combination ofQuantities may consist of a combination of

customer orders & demand forecastscustomer orders & demand forecasts

Quantities represent what needs to beQuantities represent what needs to beproduced, not what can be producedproduced, not what can be produced


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Basic MRPBasic MRPProcessesProcesses

1.1. Exploding the bill of materialExploding the bill of material

2.2. Netting out inventoryNetting out inventory

3.3. Lot sizingLot sizing

4.4. Time-phasing requirementsTime-phasing requirements


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MRP OutputsMRP Outputs

Planned ordersPlanned ordersWork ordersWork orders

Purchase ordersPurchase orders

Changes to previous plans orChanges to previous plans or

existing schedulesexisting schedulesAction noticesAction notices

Rescheduling noticesRescheduling notices


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Capacity TermsCapacity Terms

Load profileLoad profileCompares released and planned ordersCompares released and planned orders

with work center capacitywith work center capacity

CapacityCapacityProductive capability; includes utilizationProductive capability; includes utilization

and efficiencyand efficiency

UtilizationUtilization% of available working time spent% of available working time spent

workingworking


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More Capacity TermsMore Capacity Terms

Efficiency how well the machineEfficiency how well the machine

or worker performs compared toor worker performs compared to

a standard outputa standard outputLoadLoad

The standard hours of workThe standard hours of work

assigned to a facilityassigned to a facilityLoad percentLoad percent

The ratio of load to capacityThe ratio of load to capacity

Load % =Load % = ((load/capacityload/capacity)x100%)x100%


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Capacity RequirementsCapacity Requirements

PlanningPlanningMRP plannedorder

releases

Routingfile

Capacityrequirements

planning

Openorders

file

Load profile foreach machine center


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Initial Load ProfileInitial Load Profile

Hourso

fcap

ac

ity

Hourso

fcapac

ity

11 22 33 44 55 66

Time (weeks)Time (weeks)

NormalNormalcapacitycapacity

120120

110110

100100

9090

8080 7070

6060

5050

4040

3030

2020

1010

00


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Remedies for UnderloadsRemedies for Underloads

1.1. Acquire more workAcquire more work

2.2. Pull work ahead that is scheduled forPull work ahead that is scheduled forlater time periodslater time periods

3.3. Reduce normal capacityReduce normal capacity


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Remedies for OverloadsRemedies for Overloads

1.1. Eliminate unnecessary requirementsEliminate unnecessary requirements

2.2. Reroute jobs to alternative machines or workReroute jobs to alternative machines or work

centerscenters

3.3. Split lots between two or more machinesSplit lots between two or more machines

4.4. Increase normal capacityIncrease normal capacity

5.5. SubcontractSubcontract

6.6. Increase the efficiency of the operationIncrease the efficiency of the operation

7.7. Push work back to later time periodsPush work back to later time periods

8.8. Revise master scheduleRevise master schedule


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Adjusted Load ProfileAdjusted Load Profile

Hoursofcap

ac

ity

Hoursofcapac

ity

11 22 33 44 55 66

Time (weeks)Time (weeks)

NormalNormalcapacitycapacity

120120

110110

100100

9090

8080 7070

6060

5050

4040

3030

2020

1010

00

Pull aheadPull aheadPush backPush back

Push backPush backOvertime

Workan

extrashift


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ManufacturingManufacturing

ResourceResourcePlanningPlanning(MRP II)(MRP II)

Forecast Aggregateproduction

plan

Customerorders

Feasible?

Master productionschedule

Material requirementsplanning

Capacity requirementsplanning

Feasible?

Purchaseorders

Workorders

InventoryShop floor

control

Manufacture

NoNo

YesYes

FeedbackFeedback

NoNo

YesYes


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Chapter 16Chapter 16

SchedulingScheduling


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SchedulingScheduling

Specifies when labor, equipment,Specifies when labor, equipment,facilities are needed to produce afacilities are needed to produce a

product or provide a serviceproduct or provide a service

Last stage of planning beforeLast stage of planning before

production occursproduction occurs


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Scheduling byScheduling by

Process TypeProcess Type Process IndustryProcess Industry

Linear programmingLinear programming

EOQ with noninstantaneous replenishmentEOQ with noninstantaneous replenishment

Mass ProductionMass ProductionAssembly line balancingAssembly line balancing

ProjectProject Project -scheduling techniques (PERT, CPM)Project -scheduling techniques (PERT, CPM)


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Objectives in SchedulingObjectives in Scheduling

Meet customer due datesMeet customer due dates Minimize job latenessMinimize job lateness

Minimize response timeMinimize response time Minimize completion timeMinimize completion time Minimize time in the systemMinimize time in the system

Minimize overtimeMinimize overtime

Maximize machine or labor utilizationMaximize machine or labor utilization Minimize idle timeMinimize idle time

Minimize work-in-process inventoryMinimize work-in-process inventory

EfficiencyEfficiency


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Shop Floor ControlShop Floor Control

1.1. Loading - Check availability ofLoading - Check availability ofmaterial, machines & labormaterial, machines & labor

2.2. Sequencing - Release work orders toSequencing - Release work orders toshop & issue dispatch lists forshop & issue dispatch lists forindividual machinesindividual machines

3.3. Monitoring - Maintain progress reportsMonitoring - Maintain progress reportson each job until it is completeon each job until it is complete

Scheduling and monitoring day to day production of a jobScheduling and monitoring day to day production of a job


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LoadingLoading

Allocate work to machinesAllocate work to machines

(resources)(resources)

Perform work on most efficientPerform work on most efficientresourcesresources

Use assignment method of linearUse assignment method of linear

programming to determine allocationprogramming to determine allocation


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SequencingSequencing

Prioritize jobs assigned to a resourcePrioritize jobs assigned to a resource

If no order specified use first-comeIf no order specified use first-come

first-served (FCFS)first-served (FCFS)

Many other sequencing rules existMany other sequencing rules exist

Each attempts to achieve to anEach attempts to achieve to an

objectiveobjective


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Sequencing RulesSequencing Rules

FCFS - first-come, first-servedFCFS - first-come, first-served LCFS - last come, first servedLCFS - last come, first served DDATE - earliest due dateDDATE - earliest due date CUSTPR - highest customer priorityCUSTPR - highest customer priority SETUP - similar required setupsSETUP - similar required setups SLACK - smallest slackSLACK - smallest slack

CR - critical ratioCR - critical ratio SPT - shortest processing timeSPT - shortest processing time LPT - longest processing timeLPT - longest processing time


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Critical Ratio RuleCritical Ratio Rule

CR considers both time and work remainingCR considers both time and work remaining

CR = =CR = =

If CR > 1, job ahead of scheduleIf CR > 1, job ahead of schedule

If CR < 1, job behind scheduleIf CR < 1, job behind scheduleIf CR = 1, job on scheduleIf CR = 1, job on schedule

time remainingtime remaining due date - todays datedue date - todays datework remainingwork remaining remaining processing timeremaining processing time

Ties scheduling to Gantt Chart or PERT/CPMTies scheduling to Gantt Chart or PERT/CPM

and project crashingand project crashing


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Sequencing Jobs ThroughSequencing Jobs Through

Many Machines/ProcessesMany Machines/ProcessesFacility is dynamic, new jobs addedFacility is dynamic, new jobs added

Develop global sequencing rulesDevelop global sequencing rulesFirst-in-system, first-served (FISFS)First-in-system, first-served (FISFS)

Work-in-next-queue (WINQ)Work-in-next-queue (WINQ)

Fewest # remaining operations (NOPN)Fewest # remaining operations (NOPN)

Slack per remaining operation (S/OPN)Slack per remaining operation (S/OPN)Remaining work (RWK)Remaining work (RWK)

Study system via simulationStudy system via simulation


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MonitoringMonitoring

Gantt ChartGantt ChartShows both planned and completedShows both planned and completed

activities against a time scaleactivities against a time scale

Input / Output ControlInput / Output Control

Monitors the input and output fromMonitors the input and output fromeach work centereach work center


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Advanced Planning andAdvanced Planning and

Scheduling SystemsScheduling Systems Infinite - assumes infinite capacityInfinite - assumes infinite capacity

Loads without regard to capacityLoads without regard to capacity

Then levels the load and sequences jobsThen levels the load and sequences jobs

Finite - assumes finite (limited) capacityFinite - assumes finite (limited) capacity Sequences jobs as part of the loadingSequences jobs as part of the loading

decisiondecisionResources are never loaded beyond capacityResources are never loaded beyond capacity


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Advanced Planning andAdvanced Planning and

Scheduling SystemsScheduling SystemsAdvanced planning and scheduling (APS)Advanced planning and scheduling (APS)

Add-ins to ERP systemsAdd-ins to ERP systems

Constraint-based programming (CBP) identifies aConstraint-based programming (CBP) identifies a

solution space and evaluates alternativessolution space and evaluates alternatives

Genetic algorithms based on natural selectionGenetic algorithms based on natural selection

properties of geneticsproperties of geneticsManufacturing execution system (MES) monitorsManufacturing execution system (MES) monitors

status, usage, availability, qualitystatus, usage, availability, quality


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Theory of ConstraintsTheory of Constraints

Not all resources are used evenlyNot all resources are used evenly

Concentrate on the bottleneckConcentrate on the bottleneck

resourceresource

Synchronize flow through theSynchronize flow through the

bottleneckbottleneck

Use process and transfer batch sizes toUse process and transfer batch sizes to

move product through facilitymove product through facility


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Theory of ConstraintsTheory of Constraints

What to Change

What to Change to

How to cause the change


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Chapter 4Chapter 4

QualityQuality

ManagementManagementQuality 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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Out of the CrisisOut of the Crisis

Failure of management to plan for

the future and to foresee problems

has brought about waste ofmanpower, of materials, and of

machine-time, all of which raise the

manufacturers cost and price thatthe purchaser must pay.


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More DemingMore Deming

The consumer is not always willing to subsidize this

waste. The inevitable result is loss of market. Loss

of market begets unemployment. Performance of

management should be measured by potential tostay in business, to protect investment, to ensure

future dividends and jobs through improvement of

product and service for the future, not by the

quarterly dividend.


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Demings solutionDemings solution

The basic cause of sickness in American

industry and resulting unemployment is

failure to top management to manage.He that sells not can buy not.

The job of management is inseparable

from the welfare of the company.


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The degree of excellence of a thingThe degree of excellence of a thing

(Websters Dictionary)(Websters Dictionary)

The totality of features andThe totality of features andcharacteristics that satisfy needscharacteristics that satisfy needs

(ASQ)(ASQ)

Fitness for useFitness for useQuality of designQuality of design

What Is Quality?What Is Quality?


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QualityQuality

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 QualityFedEx and Quality

Digitally Assisted Dispatch System communicate with 30K couriers

1-10-100 rule

1 if caught and fixed as soon as itoccurs, it costs a certain amount of timeand money to fix 10 if caught later in different

department or location = as much as 10Xcost 100 if mistake is caught by the

customer = as much as 100X to fix


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Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)

1.1. PerformancePerformance

Basic operating characteristicsBasic operating characteristics1.1. FeaturesFeatures Extra items added to basic featuresExtra items added to basic features

1.1. ReliabilityReliability Probability product will operate over timeProbability product will operate over time


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4.4. ConformanceConformance Meeting pre-established standardsMeeting pre-established standards

4.4. DurabilityDurability Life span before replacementLife span before replacement

4.4. ServiceabilityServiceability Ease of getting repairs, speed &Ease of getting repairs, speed &

competence of repairscompetence of repairs


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7.7.AestheticsAesthetics Look, feel, sound, smell or tasteLook, feel, sound, smell or taste

7.7. SafetySafety Freedom from injury or harmFreedom from injury or harm

7.7. Other perceptionsOther perceptions Subjective perceptions based onSubjective perceptions based on

brand name, advertising, etcbrand name, advertising, etc


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1.1. Time & TimelinessTime & Timeliness Customer waiting time, completed onCustomer waiting time, completed on

timetime

1.1. CompletenessCompleteness Customer gets all they asked forCustomer gets all they asked for

1.1. CourtesyCourtesy Treatment by employeesTreatment by employees

Service QualityService Quality


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Quality ofQuality of

ConformanceConformanceEnsuring product or serviceEnsuring product or service

produced according to designproduced according to design

Depends onDepends onDesign of production processDesign of production process

Performance of machineryPerformance of machineryMaterialsMaterials

TrainingTraining


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Quality PhilosophersQuality Philosophers

Walter Shewhart Statistical Process ControlWalter Shewhart Statistical Process Control

W. Edwards DemingW. Edwards Deming

Joseph Juran strategic and planning basedJoseph Juran strategic and planning basedArmand Fiegenbaum total quality controlArmand Fiegenbaum total quality control

entire business must be involved in qualityentire business must be involved in quality

improvementimprovement


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Demings 14 PointsDemings 14 Points1.1. Create constancy of purposeCreate constancy of purpose

2.2. Adopt philosophy of preventionAdopt philosophy of prevention

3.3. Cease mass inspectionCease mass inspection4.4. Select a few suppliers based onSelect a few suppliers based on

qualityquality

5.5. Constantly improve system andConstantly improve system andworkersworkers

6.6. Institute worker trainingInstitute worker training


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Demings 14 PointsDemings 14 Points

7.7. Instill leadership among supervisorsInstill leadership among supervisors

8.8. Eliminate fear among employeesEliminate fear among employees9.9. Eliminate barriers betweenEliminate barriers between

departmentsdepartments

10.10. Eliminate slogansEliminate slogans

11.11. Remove numerical quotasRemove numerical quotas


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Demings 14 PointsDemings 14 Points

12.12. Enhance worker prideEnhance worker pride

13.13. Institute vigorous training andInstitute vigorous training andeducation programseducation programs

14.14. Develop a commitment from topDevelop a commitment from top

management to implement these 13management to implement these 13pointspoints


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Six SigmaSix Sigma

Quality management program that

measures and improves the

operational performance of acompany by identifying and

correcting defects in the companys

processes and products


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Malcolm BaldrigeMalcolm Baldrige

National Quality AwardNational Quality Award Category 3 determine

requirements, expectations,

preferences of customers andmarkets

Category 4 what is important to the

customer and the company; howdoes company improve


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Total Quality ManagementTotal Quality Management

1.1. Customer defined qualityCustomer defined quality

2.2. Top management leadershipTop management leadership

3.3. Quality as a strategic issueQuality as a strategic issue4.4. All employees responsible for qualityAll employees responsible for quality

5.5. Continuous improvementContinuous improvement

6.6. Shared problem solvingShared problem solving

7.7. Statistical quality controlStatistical quality control

8.8. Training & education for all employeesTraining & education for all employees


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Strategic Implications ofStrategic Implications of

TQMTQMQuality is key to effective strategyQuality is key to effective strategy

Clear strategic goal, vision, missionClear strategic goal, vision, mission

High quality goalsHigh quality goals

Operational plans & policiesOperational plans & policies

Feedback mechanismFeedback mechanismStrong leadershipStrong leadership


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TQM in Service CompaniesTQM in Service Companies

Inputs similar to manufacturingInputs similar to manufacturing

Processes & outputs are differentProcesses & outputs are differentServices tend to be labor intensiveServices tend to be labor intensiveQuality measurement is harderQuality measurement is harder

Timeliness is important measureTimeliness is important measureTQM principles apply to servicesTQM principles apply to services


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Cost of QualityCost of Quality

Cost of poor qualityCost of poor qualityInternal failure costsInternal failure costs

Scrap, Rework, Process failure,Scrap, Rework, Process failure,

Process downtime, Price-Process downtime, Price-downgradingdowngrading

External failure costsExternal failure costs

Customer complaints,Customer complaints,Product return,Product return,

Warranty, ProductWarranty, Product

liability, Lost salesliability, Lost sales


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Employees andEmployees and

Quality ImprovementQuality ImprovementEmployee involvementEmployee involvement

Quality circlesQuality circlesProcess improvement teamsProcess improvement teams

Employee suggestionsEmployee suggestions

C d Eff DiC d Eff t Di


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Cause-and-Effect DiagramCause-and-Effect Diagram

Quality

Problem

Quality

Problem

Out of adjustmentOut of adjustment

Tooling problemsTooling problems

Old / wornOld / worn

MachinesMachinesFaultyFaulty

testing equipmenttesting equipment

Incorrect specificationsIncorrect specifications

Improper methodsImproper methods

MeasurementMeasurement

Poor supervisionPoor supervision

Lack of concentrationLack of concentration

Inadequate trainingInadequate training

HumanHuman

DeficienciesDeficiencies

in product designin product design

Ineffective qualityIneffective quality

managementmanagement

Poor process designPoor process design

ProcessProcess

InaccurateInaccurate

temperaturetemperature

controlcontrol

Dust and DirtDust and Dirt

EnvironmentEnvironment

Defective from vendorDefective from vendor

Not to specificationsNot to specifications

Material-Material-handling problemshandling problems

MaterialsMaterials

Also known as Ishikawa Diagram or Fish BoneAlso known as Ishikawa Diagram or Fish Bone


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Hot House QualityHot House Quality

Lots of Hoopla and no

follow through


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ISO 9000:2000ISO 9000:2000

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 9000Implications Of ISO 9000

Truly international in scopeTruly international in scope

Certification required by many foreign firmsCertification required by many foreign firms

U.S. firms export more thanU.S. firms export more than

$150 billion annually to Europe$150 billion annually to Europe

Adopted by U.S. Navy,Adopted by U.S. Navy,

DuPont, 3M, AT&T, and othersDuPont, 3M, AT&T, and others


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ISO AccreditationISO Accreditation

European registrationEuropean registration 3rd party registrar assesses quality program3rd party registrar assesses quality program

European Conformity (CE) mark authorizedEuropean Conformity (CE) mark authorized

United States 3rd party registrarsUnited States 3rd party registrarsAmerican National Standards Institute (ANSI)American National Standards Institute (ANSI)

American Society for Quality (ASQ)American Society for Quality (ASQ)

Registrar Accreditation Board (RAB)Registrar Accreditation Board (RAB)


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Upcoming EventsUpcoming Events

Final Exam due by Saturday

Harley/Cabelas Papers by Saturday


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Zen and Operations ManagementZen and Operations Management


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In your next assignmentIn your next assignment

remember the dead fish!remember the dead fish!

Zen and Operations ManagementZen and Operations Management

Even a dead fish canEven a dead fish can

swim down streamswim down stream

and give the illusion ofand give the illusion ofprogress!!!progress!!!

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Operations 7 Tuesday