Managing Production across the Supply Chain Chapter 12 Chapter Objectives Be able to: Explain the activities that make up planning and control in a typical manufacturing environment Explain the linkage between sales and operations planning (S&OP) and master scheduling Complete the calculations for the master schedule record and interpret the results Explain the linkage between master scheduling and material requirements planning (MRP) Complete the calculations for the MRP record and interpret the results Discuss the role of production activity control and vendor order management and how these functions differ from higher-level planning activities Explain how distribution requirements planning (DRP) helps synchronize the supply chain and complete the calculations for a simple example Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Planning and Control Planning and control – A set of tactical and execution-level business activities that includes master scheduling, material requirements planning, and some form of production activity control and vendor order management Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Top-Down Model of Manufacturing Planning and Control Systems Figure 12.1 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Master Scheduling Master Scheduling – A detailed planning process that tracks production output and matches this output to actual customer orders Controls the timing and quantity of production for products or product families Serves as the primary interface point for actual customer orders Coordinates forecasted demand and actual orders with production activity Serves as a tool for agreement between marketing and operations (but at a different level than S&OP) Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Link between S&OP and MPS Month: Output: January 200 February 300 March 400 January (weeks) Push Mowers Self-propelled Riding 25 25 35 25 25 40 12 13 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall S&OP MPS 12 - Master Schedule Record Forecasted demand Booked orders Projected inventory levels Production quantities Units still available to meet customer needs (Available to Promise) Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Forecasted Demand vs Booked Orders Forecasted demand – A company’s best estimate of the demand in any period Booked orders – Confirmed demand for products Projected Requirements = Maximum (Forecasted demand, Booked orders) Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Master Production Schedule (MPS) Master Production Schedule (MPS) – The amount of product that will be finished and available for sale at the beginning of each week The MPS quantities drive more detailed planning activities, such as material requirements planning Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Ending Inventory Projected Ending Inventory – Best estimate of what inventory levels will look like at the end of each week based on current information EI t = EI t −1 + MPSt − max( Ft , OBt ) Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 10 Job Sequencing Critical Ratio – One way to determine the order in which jobs should be sequenced Critical Ratio = • Amount of task time equals the amount of time left Critical Ratio < • The job is going to be late unless something changes Jobs with the lowest Critical Ratio are scheduled to go first Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 43 Job Sequencing – Example 12.7 Table 12.1 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 44 Job Sequencing – Example 12.7 First come, first served From Table 12.2 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 45 Job Sequencing – Example 12.7 Earliest Due Date From Table 12.2 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 46 Job Sequencing – Example 12.7 Critical Ratio From Table 12.2 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 47 Distribution Requirements Planning (DRP) Distribution requirements planning (DRP) – A time-phased planning approach similar to MRP that uses planned orders at the point of demand (customer, warehouse, etc.) to determine forecasted demand at the source level (often a plant) Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 48 Synchronized Planning and Control Figure 12.22 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 49 DRP Example (Snowblowers) Figure 12.24 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 50 Downstream Supply Chain Figure 12.23 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 51 DRP Example (Snowblowers) Records are almost identical to MRP records with one exception: Instead of gross requirements, they show forecasted demand • Forecasted demand – the number of snowblowers each center expects to ship to retail customers each week Activities at distribution centers are synchronized when the total weekly planned orders become forecasted demand in the factory’s master schedule Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 52 Impact of Forecast Changes Figure 12.25 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 53 Impact of Forecast Changes When forecasted demand changes, managers will need to increase the master production schedules accordingly DRP quickly translates downstream demand into upstream production decisions Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 54 Synchronizing Plans in the Supply Chain Figure 12.26 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 55 Managing Production Case Study The Realco Breadmaster Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 56 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 57 ... synchronize the supply chain and complete the calculations for a simple example Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - Planning and Control Planning and control... S&OP MPS 12 - Master Schedule Record Forecasted demand Booked orders Projected inventory levels Production quantities Units still available to meet customer needs (Available to Promise)... Prentice Hall 12 - 17 MPS Example (Backpacks) Figure 12. 8 Now Calculate Projected Ending Inventory and Available to Promise Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 12 - 18