D 0854

Supply Chain : Manufacturing and Warehousing

Session 12 Production Planning and Control Pull systems and the Just-in-Time Philosophy .

Pull systems and the Just-in-Time Philosophy

Bina Nusantara University

Push and Pull Control System

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Push System Once production is completed in one stage, produced units are pushed to the next stage.
Pull System Only when production is requested by the next stage, production is started in the stage.

Push and Pull Control System

MRP (Materials Requirements Planning) MRP is the basic process of translating a production schedule for an end product (MPS or Master Production Schedule) to a set of requirements for all of the subassemblies and parts needed to make that item. MRP is the classic push system. The MRP system computes production schedules for all levels based on forecasts of sales of end items. Once produced, subassemblies are pushed to next level whether needed or not.
JIT (Just-In-Time) Derived from the original Japanese Kanban system developed at Toyota. JIT seeks to deliver the right amount of product at the right time. The goal is to reduce WIP (workin-process) inventories to an absolute minimum. JIT is the classic pull system. The basic mechanism is that production at one level only happens when initiated by a request at the higher level. That is, units are pulled through the system by request.

Push and Pull Control System

MRP (Materials Requirements Planning)
Terminologies

Master Production Schedule (MPS) : Planned production quantities by time period out into the future for every end item. Bill of Materials (BOM) : A bill of materials for a particular inventory items (parent) shows all of its immediate components and their numbers per unit of the parent. Level Coding : To provide a systematic framework for exploding back the implications on all components of a given schedule for final assembly operations. Lead Times (Offsetting) : The time that elapses from when the purchase order is issued until the moment when the material is physically present ready for the operation.

Push and Pull Control System

Information Required for MRP Implementation Master Production Schedule out to the planning horizon Inventory status of each item including possible backorders Timing of and quantities involved in any outstanding or planned replenishment orders Forecasts (which can be partially or entirely firm customer orders) of demand for each component, subject to direct customer demand, by time period out to the planning horizon All relevant bills of materials and associated level codes Production or procurement lead times (offsets) for each operation Possible scrap allowances for some operations

Push and Pull Control System

Explosion Calculus The explosion calculus is a set of rules for converting the master production schedule to a requirements schedule for all subassemblies, components, and raw materials necessary to produce the end item. There are two basic operations comprising the explosion calculus. Time phasing : requirements for lower level items must be shifted backwards by the lead time required to produce the items Multiplication : a multiplicative factor must be applied when more than one subassembly is required for each higher level item.

Push and Pull Control System

Product Structure Diagram The product structure diagram is a graphical representation of the relationship between the various levels of the productive system. It incorporates all of the information necessary to implement the explosion calculus.

Push and Pull Control System

Example

Trumpet

Valve Casing Assembly Valves Slide Assemblies

Bell Assembly

Example
Week Demand Scheduled Receipts On-hand Inventory Net Reqt Time-phased Net Reqt Planned Order Release 42 42 23 42 42 42 42 32 32 32 12 12 12 26 26 26 112 112 4 5 6 7 8 77 12 9 42 10 32 6 11 12 9 12 26

Trumpet (Lead Time : 1 week)

13 112 14 45 15 14 16 76 17 38

112 45 45

45 14 14

14 76 76

76 38 38

38

Valve Casing Assembly (Lead Time : 4 weeks)

Week Gross Reqt Scheduled Receipts On-hand Inventory Net Reqt Time-phased Net Reqt Planned Order Release 16 54 12 50 0 26 0 112 112 16 45 59 12 14 26 76 76 112 38 38 45 14 76 38 20 30 4 5 6 7 42 8 42 9 32 10 12 11 26 12 112 13 45 14 14 15 76 16 38 17

Valve Casing Assembly (Lead Time : 4 weeks)

Week Gross Reqt Scheduled Receipts On-hand Inventory Net Reqt Time-phased Net Reqt Planned Order Release 16 54 12 50 0 26 0 112 112 16 45 59 12 14 26 76 76 112 38 38 45 14 76 38 20 30 4 5 6 7 42 8 42 9 32 10 12 11 26 12 112 13 45 14 14 15 76 16 38 17

Valves (Lead Time : 3 weeks)

Week Gross Reqt Scheduled Receipts On-Hand Inventory Net Reqt Time-phased Net Reqt Planned Order Release 92 92 20 92 336 336 178 178 336 228 228 178 114 114 228 114 20 30 2 3 4 5 162 6 7 8 336 9 178 10 11 228 12 114 13 14

Push and Pull Control System

Lot Sizing for MRP Lot-for-Lot EOQ Lot Sizing Silver-Meal Heuristics Least Unit Cost Part Period Balancing Dynamic Programming

Push and Pull Control System

Shortcomings of MRP Uncertainty Capacity Planning Rolling Horizons and System Nervousness Additional Considerations Lead Times Dependent on Lot Sizes. MRP II : Manufacturing Resource Planning Imperfect Production Processes Data Integrity Order Pegging

Push and Pull Control System

Just-In-Time (JIT) JIT, Lean Production, and Zero Inventories is a system of moving material through a plant that requires a minimum of inventory. JIT is a philosophy. JIT is an outgrowth of the Kanban system developed by Toyota. (Refer Figure 7-8) Kanban system is a manual information system that is used to control the flow of production. Development of JIT is closely tied to the development of SMED (Single Minute Exchange of Dies) that allows model changeovers to take place in minutes rather than hours. Setup time and setup cost reduction result in smaller lot sizes. Smaller lot sizes require increased efficiency and reliability of the production process, but considerably less investment in raw materials, work-inprocess inventories, and finished goods inventories.

Push and Pull Control System

Fundamental Ideas behind JIT

WIP inventory is reduced to a bare minimum. JIT is a pull system. JIT extends beyond the plant boundaries. The benefits of JIT extend beyond saving of inventory-related costs. The JIT approach requires a serious commitment from top management and workers alike.

Push and Pull Control System

Advantages and Disadvantages Advantages Decreases inventory costs. Improves production efficiency. Points out quality problems quickly. Improves coordination of different systems. Improves relationships with vendors.
Disadvantages May result in increased worker idle time. May decrease production rate. May not response quickly for varying demands over time. May result longer idle time when breakdowns occur. Slow reacts to changes in demand. Decreases opportunity for multiple sourcing.

Push and Pull Control System

The Machine That Changed the World by Womack et al. (1990) At GM, JIT, Next we looked at the line itself. Next to each work station were piles in some cases weeks worth inventory. Littered about were discarded boxes and other temporary wrapping material. On the line itself the work was unevenly distributed with some workers running madly to keep up and others finding to smoke and even read a newspaper At the end of the line we found what is perhaps the best evidence of old-fashioned mass production: an enormous work area fill of finished cars riddled with defects. All these cars needed further repair before shipment, a task that can prove enormously time-consuming and often fails to fix fully the problems now buried under layers of parts and upholstery.

Push and Pull Control System

At Toyota, The differences between Takaoka and Framingham are striking to anyone who understands the logic of lean production. For a start hardly anyone was in the aisles. The armies of indirect workers so visible at GM were missing, and practically every worker in sight was actually adding value to the car... The final assembly line revealed further differences. Less than an hours worth of inventory was next to each worker at Takaoka. The part went on more smoothly and the work tasks were better balanced, so that every worker worked at about the same pace At the end of the line, the difference between lean and mass production was even more striking. At Takaoka we observed almost no rework area at all. Almost every car was driven directly from the line to the boat or the trucks taking cars to the buyer.

Comparison of MRP and JIT

MRP and JIT have advantages and disadvantages, suggesting that both methods could be useful in the same organization. Main Advantage of MRP over JIT: When substantial variation of sales are anticipated, MRP has a substantial advantage. Main Advantage of JIT over MRP: JIT reduces inventories to a minimum, and there are substantial side benefits, such as improvement in quality and plant efficiency.