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Production and Inventory Management

Production and Inventory Management

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Published by amithakim

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Published by: amithakim on Dec 14, 2010
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In large, complex operations where there is a great deal of work in
process at any one time, detailed operation sequencing chores have been
historically handled by centralized or decentralized dispatchers. The function
was, and often still is, performed by shop foremen, who in effect become the
real schedulers of work in the plant. This is a mistake, since the foreman is as
far as can be from knowing all the relative priorities of work in the plant
and/or to customers.

This function, as traditionally performed, is largely obsolete in a state-of-
the-art system, since the bulk of the decisions are the result of calculations
performed by the scheduling system, creating centralized dispatching, in
effect. There is a tendency, inherent in the manually performed version of the
task, to again assume large queues of work, little sending ahead of completed
quantities, and long, long lead times for work in the plant. The usual final
result is hot lists and expediting of severely past due work that customers are
screaming for.

If one were to deliberately plan for failure, or at least large difficulties in
running the business, the checklist for such a plan would include the
following out-of-control situations in the production area.
• Not ensuring that required materials were committed for production prior
to releasing work to the plant
• Overloading the schedule with more work than could actually be
• Allowing large amounts of work in process to clutter and confuse
operations on the shop floor, resulting in cannibalized assemblies, and
stolen and lost material
• Failing to adjust capacity of resources in sufficient time to enable
production to stay on schedule
• Allowing all priorities within even a large plant to be governed by a
completely informal system run largely by word of mouth, political
connections, and personal favorites
• Creating an information system that functions in name only, since it is
continually sabotaged and not reinforced by even top management

It is a sad commentary on the state of management affairs in many of the
major businesses in the United States that this list is an accurate description
of how the vast majority of manufacturing companies are actually run. At the
time this book is being written, awareness is just beginning in the
manufacturing community that it is mostly better management that has
enabled Japanese and German companies to achieve production efficiencies


Chapter 8 – Executing the Business Plan in the Plant

and business effectiveness that leave the average American manager gasping
in disbelief. And it is precisely at the juncture where work hits the shop floor
that things fall apart the most. The factory has become the stepchild of
American business, and its management has been seen as a less than
honorable profession by a great many ambitious managers.
Even though its mechanism changes dramatically in companies using a
state-of-the-art system, the dispatching function as a point of management
responsibility remains quite workable. Its job is best carried out by releasing
work to the plant at the last possible moment, by scheduling work in the
smallest possible increments, and by continually monitoring actual capacity
closely, making prompt, effective changes to adjust capacity to meeting the
day-to-day work flow in the plant.
Of special interest are the units of scheduling. If a work order can be
completed in a four-hour time span, it makes no sense at all to schedule its
start for just somewhere in a ten-day span, meanwhile tying up all materials
and inflating inventory that much more. State-of-the-art scheduling systems
allow hourly scheduling for short-run jobs. Managing setup techniques so
that they are quick and simple allows frequent changeovers from one part to
another, making shorter production runs possible. The dispatching function,
then, is the key to keeping the entire plant on schedule, by working
effectively at the lowest possible level of detail to control and fix small
problems before they become big ones and cause major disruptions in the
work flow of the plant.

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