Session 4 Supply Chain Basics Manufacturing

Atanu Ghosh
atanu.ghosh@nevaehtech.com

29-Nov-08

1

Manufacturing
– – – – Planning scenarios in a manufacturing plant MRP concepts Industry specific manufacturing planning process Detailed Scheduling

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Problem between “top floor” and “shop floor”
Planning responsibilities are not clearly defined. Often mill level has too much or too less freedom of decision making even if corporate goals are violated Integration between planning and execution is often only a one way downward integration Processes between top floor and shop floor are not seen as integrated and only separated by aggregation level
Detailed Planning

Production Execution

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Manufacturing planning strategies
• Strategies for make to stock production • Strategies for planning components • Strategies for make to order production

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Planning with final assembly

• Standard make to stock strategy adapted by mass production companies
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Production by lot size

• Particularly used by companies producing for one major customer but needs to cater to other customers as well e.g. auto ancillaries
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Planning without final assembly and without MTO

• This strategy is used when the last process is a high value added one and should be started only after a firm order is received from customer. • The production process without the final process can start in a make to stock mode to quickly react to customer demand.
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Planning with a “planning material” and without MTO

• This strategy is used the final product has multiple variants while the production process before the final stage is more or less standard. • Examples – (a) producing and packaging milk in packs of 1 litre, 2 litre, 1 gallon (b) producing in packs labeled in English, Chinese and Japanese
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Strategies for planning components

• The purpose of this strategy is to procure components to stock in order to react to customer demand as quickly as possible • This strategy is used where there is a variety of finished products with a possible irregular demand pattern but the finished products are sold on consumption basis
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Planning at assembly level

• This planning strategy is particularly useful for manufacturers of products with variants if a more reliable forecast can be produced for certain assemblies rather than multitudes of product variants

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Planning at phantom assembly level

• This planning strategy is useful where a set of products is always manufactured and sold together but does not constitute a real assembly. • In other words, these components are more like a “phantom assembly” e.g. “combo packs”.
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Make to Order (MTO) strategies

• Finished materials and components are produced and allocated to specific sales orders • MTO strategies are applicable in case of close customer-vendor relationships

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Simple MTO scenario

• This is a pure and simple MTO scenario where the finished products and all its components are produced/ procured only after a firm order is received. • Typically used in large engineering companies like turbine manufacturers

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Planning without final assembly

• Assemblies produced/ procured up-to one level below final product • Final product assembly has to wait for firm sales orders • Most widely used MTO strategy
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Basic MRP procedures
Planning Planning Procedures Procedures

Deterministic Deterministic MRP MRP

Consumption-Based Consumption-Based Planning Planning

Forecast-Based Forecast-Based Planning Planning

Reorder Point Reorder Point Planning Planning

Automatic Automatic Reorder Point Reorder Point

Manual Manual Reorder Point Reorder Point

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Key concepts in MRP
• Planning calender • Calender specifying the days of productive operations including holidays, etc which are relevant for planning • Planning horizon • The time period for which the MRP is valid • Planning time fence • The time period between which the production plan cannot be changed and any additional incoming demand needs to be treated specially • Lot size • The various types of lots that can be used for the components based on the lots of the order e.g. “lot for lot”, “fixed lot”, etc • Quota arrangement • Defining various quotas from various sources of production and/or procurement of materials • Net requirement planning and gross requirement planning • In gross requirement planning the stock in hand is not considered, unlike net requirement planning • GRP is typically used in plants which need to be run at full capacity from economics point of view, irrespective of demand 29-Nov-08 16

Industry specific manufacturing planning process - examples

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Block planning – paper industry

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Block planning – paper industry

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Campaign planning

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Shelf-life based planning

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Shelf-life based planning

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Push production

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Push production

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Model mix planning and RPM

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Model mix planning and RPM

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Detailed scheduling

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Production process – cold rolling mill
CRCG Yearly output: 0.16M Ton CRCG dimensions: Width: 900-1850 mm Thick ness: 0.3-2.6 mm CRC Yearly output: 2.1M Ton CRC dimensions: Width: 900-1850 mm Thick ness: 0.8-8.0 mm CRCG CRC

Galvanizing

Coating

CRCC

HRC

Pickling

Cold Rolling Skin Passing

CRCC Yearly output: 0.20M Ton CRCG dimensions: Width: 900-1550 mm Thick ness: 0.3-2.6 mm

Annealing

CRCA

CRCA Yearly output: 1.74M Ton CRCG dimensions: Width: 900-1550 mm Thick ness: 0.3-2.6 mm

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Block scheduling – business requirement
Business Requirements:
In steel industry, for some critical machines, big changeover would not be done frequently because it will decrease the production efficiency and make the quality control difficult. So before the production planning, the planner will define a cycle based on the sales forecast and the machine constraint. The cycle is consists of a group of blocks. The planner needs to define what kind of product can be produced in each block, the duration for each block, and the production sequence of these blocks in one cycle. During production planning, the planned order will be placed into the right block if there’s enough unoccupied capacity, otherwise, the order will be placed to the next right block with enough remaining capacity.

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Block scheduling – example
Requirement: • Grade B • Zinc

Finishing Line

t

cycle

Galvanizing Line

Grade A Zinc

Grade B Zinc

Grade A Zinc-Ferrous

Grade B Zinc-Ferrous

t

Cold roll mill

t

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Optimised scheduling – “trade-off”

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Optimised scheduling – “capacity adjustments”

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Next Session: Supply Chain Basics Procurement

Atanu Ghosh
atanu.ghosh@nevaehtech.com

29-Nov-08

33

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