Hillary Raya, Ramon Rodriguez, Julius Malone & Nikhil Chandankhede

Winter 2016CSU East Bay

Planning for Siemens Manufacturing:Working Through the MRP Process

PRODUCTSiemens Digital Factory• S7-400 CPUs Product Family of Central Processing Units Part of automation systems• Applications Power generation Water treatment plants Traffic flow automation Airport automation

FORECASTINGAssumptions1.Yearly forecasts do not follow

seasonal pattern2.Monthly forecasts do follow

seasonal pattern3.For 10-year period forecast is

not cyclic

ResultsLinear regression! Lowest MAD.Forecast of 902,600 units.

Methods Used1.Linear Regression2.Exponential Regression3.Moving 3-Year Average4.Moving 4-Year Average

NU

MBE

R O

F U

NIT

S IN

THO

USA

NDS

FORECASTINGActual data 2005-2014 to predict demand in 2016

22,801 orders87,129 orders

Q1

Added seasonality for actual orders per quarter

= 0.26 234,676 units

20,754 orders87,129 orders

Q2 = 0.24 216,624 units

19,858 orders87,129 orders

Q3 = 0.23 207,598 units

23,716 orders87,129 orders

Q4 = 0.27 243,702 units July - September

April - June

January - March

October - December

Recall: Aggregate operations planning main purpose is to specify optimal combination of production rate, workforce level and inventory on hand• Strategies used & why:

-Siemens mainly uses Level Strategy-Subcontracting considered

• Main assumptions: Maintenance cost at 15% of all expenses, % of resources allocated to production line, fixed number of machines, beginning inventory @ 25% of demand forecast• Given more time & access: more specific numbers, capacities effect

on aggregate planning, better understand how ERP software integrates with aggregate planning

AGGREGATE PLANNING

COST & NUMBERS MATRIX

AGGREGATE PLANNING SUMARY

MDS

MRP

ERP

What is Enterprise Resource Planning?

Uses of ERP software●Eliminates duplication of data●Information across departments●Productivity●Inventory management●Material cost●Human resource management●Boosting profit●Customer interaction●Customer service

Different ERP Vendors

●SAP●Oracle●Microsoft

Dynamics

SAP vs Oracle● Average Implementation duration

20 months● Average delays 2 months● Average implementation Cost of

$16.8 Million or 18.6% of the Revenue.

● ERP solution Benefit factor of 72.2%.

● Focuses more on research and design

● Focuses more on Customization as compared to quick development of application.

● Average Implementation duration 18.6 months

● Average delays 4 months● Average Implementation Cost of

$12.6 Million or 10.6% of the Revenue.

● ERP solution benefit factor of 58.0%.

● Focuses more on flexibility and ease to use

● Focuses more on Quick development of application and not on customization.

SUMMARYConsiderations• Lack of information more assumptions• No Capacity Requirements Planning (CRP)

OptimizeTime Speed Quality FlexibilityCost Efficiency