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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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If the truth be known, at many companies much of the production
management structure consists mostly of people just passing the buck to
someone else. In these firms, marketing often takes no responsibility for
developing any kind of sales forecast, preferring to just pressure
manufacturing into responding to crisis situations with key customers. The
financial function, just as often, "controls" inventory by setting arbitrary
limits on total inventory, shutting off all purchasing when the level gets too
high. Or, alternatively, throwing up their hands and allowing a serious cash
crunch to develop.

In this scenario, design engineering has no communication with
manufacturing engineering because they are elite specialists with clean
hands. Consequently, products that are impossible to produce get designed,
then redesigned in manufacturing. Production control in these companies
often consists of a staff that prepares shop documentation, puts orders "on the
schedule," and simply gives the whole mess to the shop foreman.

Chapter 8 – Executing the Business Plan in the Plant


So where does the buck stop? In the shop, the end of the line. Often a
great deal of time is spent in the shop trying to locate material and expedite
seriously past due orders through the mass of work in process, interrupting
other work as a consequence.
As in any other business situation, proper communication of the right
information to the right people at the right time involves clearly assigning
responsibilities to specific people and structuring their reporting relationships
to facilitate smooth communication. In the manufacturing activity planning
and control area, this is best facilitated by a structure that separates
establishment of priorities from production, planning from execution. In this
scheme of things, a brief list of responsibilities for production planning and
plant operations management would resemble the following:
Production and inventory management are responsible for:
• Setting all priorities, and schedules, from MPS down to the lowest level,
so that all remain in relative balance and consistent with the independent
demand defined in the MPS.
• Ensuring that required material is available for production, since they are
between production and procurement, and establish all material
requirements via the master schedule.
• Providing a steady flow of work to all work centers, or an alternative use
of labor resources when imbalances/under-loads occur.
Production supervisors/foremen are responsible for:
• Actual production, production efficiencies, employee training, and super


• Ensuring that production resources are maintained in the proper state,
machine care, and timely repairs so that disruptions to the schedule will
not result.
• Performance to the schedule, not just total output, including maintaining
fixed, minimum work queues at work centers.
• Providing accurate, prompt input of actual performance data to the plant
information system, so that accurate schedules can be developed,
accurate product costing can be performed, and material usage and
production efficiencies can be tracked effectively.
By assigning responsibilities in this fashion, it separates the two important
functions, performing the work and setting priorities. Inevitably, priorities
end up being changed whenever any line supervisor must decide between the
productivity that he is being measured on and the priority that someone else
said he wanted, but is not held clearly responsible for. By including job
measurements that include more than just simple, raw output (e.g., schedule


Chapter 8 – Executing the Business Plan in the Plant

adherence, data accuracy, work center queues), management can ensure that
the foreman is more integrated into the company as a whole.
Of course, coupled with assigning all priority decisions to the production
and inventory management function is planning the work for the foreman so
that his staff does not run out of work simply due to a planner's whim. And
since the setting of priorities, sequence of work, and planning of material
availability are so closely interlocked, it is entirely appropriate that they be
assigned to the same management function.

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