Manufacturing Strategy for Window Fabricators 2 - The systems

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Production management is never easy but the right systems help. An overview of the contenders for managing the factory by Robin Kent of Tangram Technology.

Introduction

In general terms, everybody understands 'production lines'. The production line cranks along and tasks are allocated to each worker according to machine rates. This model requires direct labour to be visibly working at all times and the scheduling of the line is largely based on direct labour activity and machine utilisation. The traditional production line is generally a 'push' system, i.e. a schedule exists and the continuous flow of the production line supports the schedule. This may have worked in the 'any colour as long as it's black' days but the world has changed. Fabricators must deliver an infinite range and variety of products from the same production line and production management systems must change to recognise that product variety is a key competitive weapon.

The systems - an overview

The three main systems for production management are:

For manufacturers of complex items MRP/MRPII is a powerful tool, it is inherently a 'push' system. A forecast for sales of standard items is generated by Marketing/Sales and a manufacturing plan is created from this. The forecast demand is used to push the production line in advance of the actual demand.
JIT is a 'pull' system and the actual orders for the products pulls the system along. In JIT, the phrase 'sell daily - make daily' encapsulates the concept. JIT requires reduced inventories and improved system responsiveness at all stages because of the short time scales involved. JIT assumes other parallel improvements and change to both the working practices and the culture of the company.

OPT is new in terms of production management systems and is an overall philosophy for running the complete business rather than just production. OPT assumes that manufacturing is all about making money and optimises the complete system rather than individual operations. OPT is a proprietary system but is excellent for the identification and management of production bottlenecks.

As systems, the three basic systems are complementary in some areas and can be mixed and matched. It is important not to regard them as mutually exclusive, you could use MRPII for the rough-cut prediction of purchase requirements, JIT to run the basic production and OPT to cope with bottlenecks and system optimisation.

Production management systems
The systems used vary but are essentially one of the four models, they are very different in terms of what they expect the production management system to deliver and the degree of changes they require in order to function correctly. They are not mutually exclusive and can be 'mixed and matched' to give a system that meets the strategic needs.

MRP /MRP II / ERP systems

MRP (and the later extensions) are the most widely used production management system in the world. MRP started out as Materials Requirements Planning (MRP) for ordering and scheduling materials. Computer technology extended MRP into Manufacturing Resource Planning (MRPII) for the whole manufacturing environment. The latest extension is Enterprise Resource Planning that takes the concept even further. 

The basic MRP type of system is:

  1. The Sales Department calculates and forecasts the production requirements.
  2. The forecast requirements are used to create the Bill of Materials files, which break a product down into the parts.
  3. The inventory is deducted from the forecast requirements to generate the actual production requirements.
  4. The production requirements are used to generate Works Orders for internal production or Purchase Orders for bought-in items.
  5. The schedule 'pushes' the system and products are available in the forecast volumes at the forecast dates.

MRP is essentially a database of parts, components, work-in-progress (WIP), finished inventory and forecast requirements, which are linked by lead and production times. The database calculates how to meet the forecast requirements and produces the production schedule. The database is based on historical data and in many companies is rarely updated. This leads to high lead times even if improvements are made in production and sometimes forces a 30 day lead-time for an article that may only takes 30 minutes to make.

MRPII is excellent for companies making discrete multi-component items and accurately tells management what is going on in the factory but does not change quality control, relationships with suppliers or levels of stock. It also enables management to make accurate predictions and highlights problems. 
MRP is excellent as a planning tool but it tends to computerise everything and change little. It must be operated by a competent and committed management if it is to make a positive impact, e.g. inventory or lead times are only reduced by improved management control.

The basic MRPII flow chart for production planning and control.
The process is highly computerised and is sometimes too inflexible for the production of custom items such as windows. The system is excellent for items made up of many discrete parts (such as engines) but can fail if inventory accuracy is not adequate.

Replanning

MRPII plans must be regularly reviewed if they are to remain valid as customer demands change. If, in Week 1, the Sales Department forecasts a demand in Week 6 of 20 off Item A, 10 off Item B, and 30 off Item C then this is what the system will schedule and prepare to produce. If in Week 3 the actual orders for Week 6 change then it is difficult for the system to produce these, even if the components are physically in stock, without substantial replanning. MRPII is designed primarily for markets which can be accurately predicted and rapidly changing customized products such as windows can lead to continual time consuming replanning.

For and against MRPII

For

  1. Long term planning tool.
  2. Gives accurate completion date.
  3. Fits in with conventional accounting.
  4. Production progress always available.
  5. Inventory size available at all times.
  6. Control of Work Orders and changes.
  7. Many types of software available.

Against

  1. Files and database must be accurate.
  2. Inventory accuracy is vital to prevent system collapse - 99% accuracy is a typical requirement.
  3. Highly computer based.
  4. Does not affect other production management issues.
  5. Inflexible and relies on forecast.
  6. Temptation exists to over-ride and go manual.

Summary

MRPII is excellent for 'stock' products where many parts have to come together in predetermined numbers and variants. For window fabrication, where products are always 'made to order', MRP/MRPII has a limited applicability. It is possible to allocate each type of window an Article Number and then explode produce a general Bill of Materials. This gives a rough estimate of part usage to enable control of raw materials stocks and purchase orders.

'Manufacturing Strategy' Series.

The 'Manufacturing Strategy' series is designed to give window fabricators a set of ideas for managing production. The series is being published in Fenestra on a monthly basis and published here after the Fenestra publication. The series is:

Part 1: The Essential Part 
Part 2: The Systems
 
Part 3: Just-in-Time

Part 4: Optimised Production Technology

Part 5: Work Cells

Part 6: Machines
Part 7: Machines (2)

Part 8: Scheduling

Part 9: Waste (Methods)

Part 10: Waste (Materials)

Part 11: Supply Chain

Part 12: Measurement
Part 13: Things to do NOW!
Part 14: The Cost of Quality

Part 15: The Hidden costs of inventory

Part 16: Environmental management

Part 17: Continuous Improvement

 

Last edited: 11/03/10

© Tangram Technology Ltd. 2003

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