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| Term | Definition |
|---|---|
| Supply Chain Planning | try to balance supply and demand to satisfy financial and service objectives Aggregate Production Planning (APP) Master Production Scheduling (MPS) Materials Requirement Planning (MRP) Distribution Requirements Planning (DRP) Capacity Planning |
| Supply chain planning is usually | hierarchical and can be divide into three broad categories: -long range -intermediate range -short range |
| Long-Range | involves planning for actions like construction of facilities and equipment purchase (ref., Aggregate Production Plan - APP) . >Executive level - Ford Motor Company wants to grow their market share by 5% over the next 1 - 3 years |
| Intermediate-Range | Shows the quantity and timing of end items (ref., Master Production Schedule - MPS) >Mid-level - Ford Motor Company wants to make 1,000 F-150 pick up trucks/week for the next 3-18 months. |
| Short-Range | planning process for components/materials to support the master production schedule (ref., Materials Requirement Planning - MRP) >Planner, 1st line Supervisor - 1,000 engines, 1,000 transmissions, seats, windows, etc. each week over the next 1-12 weeks. |
| Top Management | Long Range |
| Operations Middle Management | Intermediate Range |
| Operations Managers, Supervisor, Foremen, etc | Short-Range |
| Closed Loop MRP (ALL ABOUT MATERIALS AND HOW THEY ARE INTEGRATED) | plans getting materials with the master production schedule (MPS) System feeds back info about materials on hand into MRP system, so plans can be adjusted according to capacity The system is called a closed loop MRP because of its feedback feature. |
| Manufacturing Resource Planning (MRP II) hint production schedules and materials | computer-based system creates production schedules using realtime data Coordinates new materials with availability of machine and labor MRP II is used widely by itself, but also as a module of more extensive enterprise resource planning (ERP) systems." |
| Enterprise Requirements Planning (ERP) | -ERP determines the need to replenish finished product inventory at branch warehouses, when there are multiple warehouses in the network. |
| Business Planning | long-term focus, provides objectives for 2-10 years Management gathers input from the functions to develop the Business Plan. The plan states the company's objectives typically reevaluated annually -a starting point for forming Production Plan or APP |
| Sales & Operations Planning (S&OP) | demand and supply plans together to provide managemen to plan how the business will achieve competitive advantage strategic plans and execution is performed at least once a month and is reviewed by management at product family level. |
| Aggregate Production Plan (APP) | Hierarchical planning process that takes annual business, marketing plans, and demand forecasts into a production plan for a product family* in a plant or facility. -at least one year -usually rolled forward by three months every quarter |
| Aggregate Planning - Purpose | to decide production rates that will achieve goal of satisfying customer demand done by adjusting inventories, while keeping workforce relatively same |
| Aggregate Planning - Goals | Meet demand Use capacity well Meet inventory policy Minimize cost: >Labor >Inventory >Plant and >Equipment >Subcontract |
| Developing the Aggregate Production Plan | 1) know the demand for each period 2) know the available capacity 3) any constraints? 4) what is the labor and material costs and the indirect manufacturing costs 5) form potential plans to handle the market 6) Agree on a plan |
| Aggregate Planning Strategies - Demand Options | Influencing demand - so it matches available capacity Advertising Backorder during high demand accept demand greater than supply capabilities. Counter seasonal product mixing |
| Aggregate Planning Strategies - Supply Options | 1) Change inventory levels 2) change capacity |
| Change inventory levels | > Increase inventories - to have stuff on hand > Decrease inventories - reduce inventory below safety stock levels during peak demand periods to meet customer requirements |
| Change capactiy | > Vary output > Adjust work force size > Use part-time workers >Subcontracting |
| Master Production Schedule (MPS) | detailed breakdown of (APP), list end items to be made by easier to plan planning horizon shorter than APP but longer than the lead time to produce the item |
| Available-to-Promise (ATP) | A calculation to provide a response to customer order inquiries, based on product availability. >It represents the uncommitted portion of a company's expected available inventory to support customer order promising. |
| Methods of calculating the Available-to-Promise quantities: | 1) Discrete Available-to-Promise = (on hand + supply - ordered) per period 2) Cumulative Available-to-Promise |
| Time Fencing | -MPS drives the business. Small changes can cause major changes in production schedule and material plan, creating nervousness and instability To minimize impact in MPS, time fencing splits planning horizon into >firmed time period >planned time period |
| Firmed Time Period | From current date out several weeks into future. |
| Firm Time Fence | established at the outer limit to signify when changes can't be made automatically anymore by the planning system. |
| Planned Time Period | -The planning system can create/make changes to orders during this based on data and planning logic the company determines |
| Three basic production strategies: LCM | 1) Level Production Strategy 2) Chase Production Strategy 3) Mixed Production Strategy |
| Level Production Strategy ..relies on.. and what firms is it good for? | constant output rate with varying inventory and backlog due to fluctuating demand. Firm relies on fluctuating goods and backlogs to meet demand. |
| Chase Production Strategy what is affected? | capacity equals demand. Work force adjusted to output demand. inventory constant. make-to-order firms |
| Mixed Production Strategy | stable workforce while using other short-term means, such as overtime, subcontracting and part time helpers to manage short-term demand. |
| Bill of Materials (BOM) | document of inclusive listing of all component parts and assemblies making up the final product. |
| Two types of BOM | 1) Single Level 2) Multilevel |
| Single Level Bill of Materials | Displays components directly used in a parent item, together with the quantity required of each component (i.e., the planning factor). Shows only the relationships one level down |
| Multilevel Bill of Materials | displays all components in a parent, together with the quantity required of each component If a component is a subassembly, blend, intermediate, all its components and all their components also will be exhibited, down to purchased parts and raw materials |
| Planning Bill of Materials | grouping of items (e.g., a product family) in BOM format, used to facilitate master scheduling and material planning. |
| Two Types of Single Level Bill of Materials | 1) Independent Demand 2) Dependent Demand |
| Independent Demand Single Level BOM | external demand for an item unrelated to the demand for other items (e.g., finished product). Demand for these are forecasted and can be affected by trends, seasonal patterns, and market conditions. |
| Dependent Demand Single Level BOM | internal demand for items combined to make up the final product (e.g., component parts). Demand calculated based on demand of the final product where the parts are used, by using the planning factor. |
| Material Requirements Planning (MRP) | computer-based materials management system that calculates exact quantities, dates, and planned order releases for subassemblies, component parts and materials needed to make a final product |
| MRP requires | 1) independent demand info, i.e., finished product forecast 2) Parent-component relationships from BOM 3) Inventory status of final product and the components 4) Planned order releases (output of MRP) |
| Advantage of MRP | provides planning info |
| Disadvantage of MRP | loss of visibility ignores capacity ignores shop floor conditions. |
| Terms Used in MRP | -Gross requirement -Net requirement -Projected On-Hand Inventory -Planned Order Release -Firmed Planned Order -Schedule Receipt -Time Bucket -Parent -Components -Planning Factor -MRP Explosion -Pegging -Lot Size -Safety Stock |
| Gross Requirement | time-phased requirement prior to netting out on-hand inventory and lead-time |
| Net Requirement | unsatisfied item requirement for a period. Gross requirement - current on-hand inventory. |
| Projected On-Hand Inventory | Projected closing inventory at end of a period. Beginning inventory - gross requirements + scheduled receipts + planned receipts from planned order releases |
| Planned Order Release | order for an item and quantity to be released to the shop/supplier. |
| Firmed Planned Order | planned order frozen in quantity and time so that the MRP computer logic cannot automatically change when conditions change. Established by the Planner or Supply Chain Manager to prevent nervousness. |
| Scheduled Receipt | committed order awaiting delivery for a period. |
| Time Bucket | Unit of time / time period used in MRP, e.g., days, weeks, months |
| Parent | Item generating demand for lower-level components |
| Components | parts demanded by a parent. |
| Planning factor | number of each component needed to one unit of the parent item |
| MRP Explosion | planned order releases of parent turns into component gross requirements |
| Pegging | Relates gross requirements planned order releases, to identify the source gross requirements. |
| Lot Size | order size for MRP logic |
| Safety Stock | a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. Over planning supply versus demand can be used to create safety stock. |
| Capacity Planning | Determining capacity needed to produce a good or service in the future. |
| Major Capacity Planning Tools | -Resource Requirement Planning (RRP) -Rough-Cut Capacity Planning (RCCP) -Capacity Requirement Planning (CRP) |
| Resource Requirement Planning (RRP) | long-range module can aggregate resources like labor satisfy APP? |
| Rough-Cut Capacity Planning (RCCP) | medium-range module checks feasibility of MPS. Converts MPS into to capacity required, then compares to capacity available. |
| Capacity Requirement Planning (CRP) | short-range module checks feasibility of MRP |
| Distribution Requirements Planning (DRP) | time-phased finished inventory replenishment plan in a distribution network |
| Key elements necessary for DRP | -Forecast demands -inventory levels -Target safety stock -Recommended replenishment quantities -Replenishment lead times |
| Enterprise Requirements Planning Systems (ERP) | info system connecting all functional areas suppliers and customers, via common software infrastructure and database It provides for supply chain members to share information so scarce resources can be fully utilized to meet demand minimizing inventories |
| Two Types of Implementation for ERP Systems | 1) Best-of-breed 2) Single integrator solution |
| Best-of-breed | pick best application for each function. Disadvantage - software may not integrate well |
| Single integrator solution | pick all desired applications from one vendor |
| Implementation Problems | -Lack of top management commitment -Lack of resources -Lack of training -Lack of communication -Incompatible environment |
| Advantages of ERP Systems | -Added visibility = smaller inventories -standardizes manufacturing processes -Measure performance and communicate via method |
| Disadvantages of ERP Systems | -a lot of time and capital investment -complex -Firms adapt processes to meet ERP system |
| Major ERP applications include: | -Accounting and Finance -Customer Relationship Management -Human Resource Management -Manufacturing -Supplier Relationship Management -Supply Chain Management |
| The 3 major ERP providers are: | -SAP -Oracle -Microsoft |
Created by:
ak1798