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ERP AND APPLICATION

ERP AND APPLICATION. Lesson 2 By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK. INDEPENDENT DEMAND. Distribution inventories comprising of final or finished products Retails, wholesales finished goods, service & replacement parts

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ERP AND APPLICATION

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  1. ERP AND APPLICATION Lesson 2 By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  2. INDEPENDENT DEMAND • Distribution inventories comprising of final or finished products • Retails, wholesales finished goods, service & replacement parts • Not a function of, or dependent upon, the demand of any other item or upon internal production activities By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  3. INDEPENDENT DEMAND • End result of productions • External, based on market needs • Random • Need to be forecast • Inventories consideration is a trade-off between shipping, warehousing, and carrying cost By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  4. DEPENDENT DEMAND • Manufacturing inventories • Sub-assemblies, components or raw material • Depends on the demand for another item By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  5. DEPENDENT DEMAND • Satisfy production requirements • Internal, based on production schedules • Depends on how the components are used • Geared to the quantities of parent items • Inventories determined by the manufacturing consideration, setup times and costs By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  6. LOT SIZING • A specification of order quantity • Principle of economy of scale • Balance of ordering, transportation, warehousing and carrying costs • Due to constraints inherent in the production process By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  7. LOT-SIZING • Fixed order quantity (FOQ) • Lot-for-lot (L4L) • Period order quantity (POQ) By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  8. LOT-SIZING • L4L planning in MRP • Consistent with just-in-time (JIT) and zero inventories • Emphasizing minimal lot-sizes and minimal safety stocks • Problems • Optimal lot-sizes for parent items will result in non-optimal lot-sizes for components and vice versa • Need to balance of setup & holding costs with other costs (queues of WIP, customers services, handling, etc.) By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  9. Manufacturing Calendar • Consecutively numbers just for those days that production are planned • 1000-day scheduling ‘year’ Order Release Day = Delivery Day – Lead times By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  10. PLANNING HORIZON • The number of future periods for which plans are made • Include the total lead time of the product to be produced By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  11. Demand time face Firm planned time face Planning Production Preparation Order released Order delivery Forecast Order received PERIODS By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  12. LEAD TIME & BACKWARD SCHEDULING • Lead time • The elapsed time from release of an order until its receipt • Backward scheduling • Schedule to start as late as possible • Advantages: Reduce WIP, postpone commitment of raw materials, reduce the expenditures By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  13. Total Lead Time Development Purchase Testing Setting Up Production Assembly Delivery Delivery Date Release Date Cumulative lead time Manufacturing lead time LEAD TIME By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  14. MANUFACTURING LEAD TIME • Queuing (non-value added service) • Preparation (value added service) • Assembly (value added service) • Waiting for dispatch (non-value added service) • Moving (non-value added service) By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  15. Manufacturing Lead time Start date Completion date Log size Queuing Assemble Moving Preparation Waiting Manufacturing Lead Time Shop floor control Non value added service Industrial engineer Value added services MANUFACTURING LEAD TIME By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  16. PROBLEMS OF LEAD TIME • Extremely volatile • Temptation to intentionally overstate By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  17. ROUTING • The path that work follows from work centre to work centre, a series of works to be completed for an item • Operations to be performed • Sequence of operations • Work centres to be passed through • Possible alternate work centres • Tooling required • Standard items, set up times and run times • Operator skill level • Inspection and testing requirements By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  18. WORK CENTRE • Specific production area, consisting of one or more people and/or machines with identical capabilities, that can be considered as one unit for purposes of capacity requirements planning and detailed scheduling By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  19. COMPUTER PLANNED ORDERS • Automatically scheduled and controlled by the system • Will be recalculated and deleted whenever the system is regenerated • Recommends to release By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  20. FIRM PLANNED ORDERS • Plans released by planner • Will not be changed when the system is regenerated • Can only be alter by the planner before release By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  21. SCRAP, SHRINKAGE OR YIELD • Scrap • Outside specification • Fixed scrap – lost in setting up and/or startup of equipments • Scrap ration/factor • Percentage factor used to increase gross requirements to account for anticipated loss within manufacturing of particular product By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  22. SCRAP, SHRINKAGE OR YIELD • Shrinkage • Reduction in quantities by theft, deterioration, • Shrinkage rate/factor • Percentage factor used in compensate for expected loss during the manufacturing of an item • Affect all components By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  23. SCRAP, SHRINKAGE OR YIELD • Yield • Ratio of usable output from a process to its input • Inverse to the scrap or shrinkage factor • Formulas used for adjusting planned quantity Quantity Planned = Quantity Needed / Yield Percentage = Quantity Needed / ( 1 – shrinkage factor) By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  24. GENERAL USED METHODS IN MRP • Apply shrinkage during BOM explosion process Exploded requirement = Actual exploded requirements / ( 1 – Scrap factor) • Applying shrinkage to the planned order receipts Planned order released = Planned order receipt / (1 – shrinkage factor) By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  25. MRP PROGRAM HEALTH MONITORS • Data omissions and errors • Transaction errors • Record errors By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  26. BASIC RESPONSIBILITIES OF PLANNER • Making detailed decisions that keep the material moving through the plant • Launch (release) purchasing or production orders • Change order or requisition timings By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  27. BASIC RESPONSIBILITIES OF PLANNER • Reschedule due dates of open (released) orders as required • Solve critical material shortages by expedition and planning • Find key problem areas By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  28. BASIC RESPONSIBILITIES OF PLANNER • Coordinate with other planners, shop floor control, customers services and purchasing to resolve problems • Approve requests for unplanned stock disbursements • Use the system to solve problem • Indicate further system enhancement By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  29. System Sales AR MPS Production Data GL MRP Inventory Resources FA Production Purchase AP Costing MRP II MODULES By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  30. BILL OF MATERIAL (BOM) • A listing of all the sub-assemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly (APICS Dictionary) • Show the parent-component relationship By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  31. BILL OF MATERIAL (BOM) • Show the parent-component relationship • Basic framework of the entire material requirement plan • Master Bill of Material • Only real BOM • Others are build on it, such as Customize BOM, Working BOM By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  32. BILL OF MATERIAL STRUCTURING • Not a part list • Shows the assembly and sub-assembly breakdowns of a products; i.e. how the product is built By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  33. BILL OF MATERIAL STRUCTURING • Product structure • The sequence of operations that components follow during production or assembly • Raw material  fabricated components  sub-assemblies  assemblies  finished goods • A product or assembly at one level is referred to as the parent, with its component parts at the next level down referred to as the children of that parent By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  34. Level 0 Level -1 Level -2 Level -3 Level -4 BILL OF MATERIAL STRUCTURING By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  35. LOW LEVEL CODING • Accumulate the gross requirements down to the lowest level in any BOM of a particular component in the MPS • It is a number that identifies the lowest level in any BOM at which a particular component appear By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  36. PRODUCT STRUCTURE By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  37. ITEMS OF BOM • Packaging material • Printed material • Instruction sheets • Raw materials • Manufacturing sub-assemblies By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  38. ITEMS OF BOM • Hardware • Semi-finished materials • Intermediates • Expendable tooling • Reference material and drawings By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  39. PRINCIPLES OF BOM STRUCTURING • Data in the part number and BOM records should be complete enough to satisfy the needs of every internal customer in the company • Part numbers should be unique • BOM should consist of part numbers, not drawing number By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  40. PRINCIPLES OF BOM STRUCTURING • BOM should identify material, not labor • All parts in the BOM should be additive • The BOM must include all items to be scheduled and indicate relationships between them By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  41. PRINCIPLES OF BOM STRUCTURING • BOM must indicate levels of manufacture to generate Low-level Codes; and the number of levels in the BOM should be minimized – should be as shallow as possible • Requests to change BOM should be approved by every user of the BOM; and be control by ECN By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  42. PHANTOM BILLS/ITEMS • Item physically built but not stock • Logical exist • A group of similar child components By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  43. Products with similar parts (X、Y、Z) ： X Y Z A B C D E F G Q R A B C D E F G S T A B C D E F G U V • Use phantom item to simplified structure: P A B C D E F G • After simplified： Z X Y P Q R P S T P U V PHANTOM ITEM By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  44. PHANTOM BILLS/ITEMS • Needs for phantom items • Overruns of the assembly or block log at downstream production • Disassembled customer return • Services or repair parts manufacture By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  45. BLOWING THROUGH • When the parent is planned, the system will check the stock of phantom items. If exist, the system will used the phantom items. If not exist, the system will skip the phantom items and directly explore the phantom items’ child components. By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  46. PRODUCT CONFIGURATOR • ATO production • Information about all the available options • Customer can selected the options of the product through the configurator By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  47. FUNCTIONS OF BOM • Product definition • Engineering Chang Control • Lends itself to options forecast • Basis for configuration control during order entry By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  48. FUNCTIONS OF BOM • Basis for stating the MPS in fewest numbers • Basis for MRP explosion logic • Used for material availabilities checking • Basis for preparing routing and capacity planning By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  49. FUNCTIONS OF BOM • Basis for product costing • Used for planning and schedule • Facilitates efficient computer file storage and file maintenance By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

  50. FUNCTIONS OF BOM • Facilitates spare parts planning • Forms part of documentation for review • Can be used to trace significant escalation of reduction in warranty claims to a particular engineering change By David Pun, MPA, MEC, MBA, BSc, ACEA, ATIHK

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