production planning industrial engineering management e-book
TRANSCRIPT
Industrial Engineering Management Systems Approach to the Enterprise Vision
L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS ….
_____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….
Industrial Engineering Management E-Book
INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS
January 2015
Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management
Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management
Chapter IV PRODUCTION PLANNING
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Demand and Production Planning are directly related, and both affect each other; when the demand is planned in excess of the production process in place, or when it is planed short; materials or stocks on hand available will be in excess or in shortage
Planning inventories both of raw materials and finished goods is complex, as it depends on the production facility process in place
The ideal facility process should have zero breakdowns and or production interruptions, which is almost impossible, that is why it is called ideal. Some people will call it Excellence Operations; another word for ideal, but certainly impossible to achieve in this century. Perhaps when Factories reach the level of full automation
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
In the example below, it illustrates how over a period of time, there are different production performances. See material in, material processed, material left over from production, material wasted, and material available for the next production cycle or working shift
The difference between material available and material in, is the excess stocks on hand, or shortage, when the material left over from production is zero
Notice that the plant facilities production process is the main contributor to the production yields and performance rates
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
This includes all installed production machinery and equipment; the level of reliability and technical skill of the maintenance engineering team and technicians; the continuous and prompt response to a maintenance or repair request, including materials supply, tools and spares required to keep the machinery and equipment running in continuous operation.
Supply Chain Management plays a major role in the procurement, and can also be a major bottleneck. Resulting in long production time down and continuous machinery and equipment breakdowns due to lack of spare parts, and other tools and equipment required
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING Another variable that plays an important role in the demand and production
planning is the finished goods demand seasonality, shipping lead time, market positioning and competitiveness
That is why it is so important to understand the full production process cycle, and all its related operational and support areas
See the following example that illustrates the above points
Material Quantity In
Material qty difference
Week ofMaterial Available
Process Raw Material
Finished Goods
Material waste
Material left over
360,187 27,181 23 to 26 July 375,187 348,006 221,457 13,481 13,700
437,888 45,345 28 Jul 02 Aug 451,588 406,243 242,209 45,345 0
556,225 57,919 04 to 09 Aug 556,225 498,306 366,682 57,919 0
402,592 22,278 11 to 16 Aug 402,592 380,314 245,261 22,278 -
713,734 42,870 18 to 23 Aug 713,734 670,864 439,074 12,870 30,000
749,905 51,969 25 to 30 Aug 779,905 727,936 482,416 13,470 38,500
769,297 67,922 01 to 06 Sep 807,797 739,875 492,196 30,922 37,000
747,859 54,334 08 to 13 Sep 784,859 730,525 479,480 29,334 25,000
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Material Quantity In
Material qtydifference
Week ofMaterial Available
Process Raw Material
Finished Goods
Material waste
Material left over
833,945 15,476 15 to 20 Sep
858,945 843,469 551,723 15,476 -
901,647 31,011 22 to 27 Sep
901,647 870,636 643,334 23,012 7,999
925,117 11,126 29 Sep 04 Oct
933,116 921,990 614,936 11,127 -
1,092,540 46,487 06 to 11 Oct
1,092,540 1,046,053 522,584 38,487 8,000
1,080,009 67,698 13 to 18 Oct
1,088,009 1,020,311 770,186 22,698 45,000
882,400 143,449 20 to 25 Oct
927,400 783,951 705,401 80,449 63,000
1,104,100 99,508 27 Oct 01 Nov
1,167,100 1,067,592 533,345 66,508 33,000
1,000,632 48,375 03 to 08 Nov
1,033,632 985,257 492,212 48,375 -
Material Quantity In
Material qtydifference
Week ofMaterial Available
Process Raw Material
Finished Goods
Material waste
Material left over
833,945 15,476 15 to 20 Sep
858,945 843,469 551,723 15,476 -
901,647 31,011 22 to 27 Sep
901,647 870,636 643,334 23,012 7,999
925,117 11,126 29 Sep 04 Oct
933,116 921,990 614,936 11,127 -
1,092,540 46,487 06 to 11 Oct
1,092,540 1,046,053 522,584 38,487 8,000
1,080,009 67,698 13 to 18 Oct
1,088,009 1,020,311 770,186 22,698 45,000
882,400 143,449 20 to 25 Oct
927,400 783,951 705,401 80,449 63,000
1,104,100 99,508 27 Oct 01 Nov
1,167,100 1,067,592 533,345 66,508 33,000
1,000,632 48,375 03 to 08 Nov
1,033,632 985,257 492,212 48,375 -
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
When we study the process, we focus on the weighted moving average, weighted moving standard deviation, weighted moving upper and lower limits, as well as the weighted moving maximum and minimum value figures. Calculating the weighted moving process
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
The value of the process tell us directly what is the %’s utilization of the total capacity installed available; which can go between 60% to as high as 90% and in some very particular installations up to 95%, with and average production process performance between 76% to 86%
To calculate the plant facility production process performance, you need to use a digital simulation model, probably in an excel spreadsheet. The will be the topic for another module of this E-Book
In the meantime, observe the polynomial curve which plot the trend of the production process performance, and the process range in regards to its moving upper and lower process limits
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
18,298,847 Sum
18,700,246 17,269,509 11,117,062 1,044,340 -
173,604 47,733 std
162,981 145,846 139,897 93,847 15,105
Material Quantity In
Material Available
Material Processed
Finished Goods
Material wasted
Material left over
854,916 157,239 UPL
849,132 716,164 523,983 213,881 17,268
717,209 119,376 Wave
719,852 600,476 413,013 139,439 5,286
579,502 81,513 LL
590,571 484,787 302,043 64,997 -
706,675 120,066 process
714,604 609,189 431,349 152,491 9,690
938,317 181,900 max
938,317 844,322 675,734 300,196 37,000
432,900 60,993 min
469,900 408,907 260,309 56,995 -
Material Quantity In
Material Quantity In
Material Available
Material Processed
Finished Goods
Material wasted
Material left over
21% process range 21% 19% 18% 21% 40% 78%
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Coming back to the level of stocks on hand or inventory level, observe the effect of lacking demand and production planning, been reflected in the available stocks vs. the processed stocks
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
You can also see that there is no correlation between wasted or defect materials and left over and available material. It means that the policy of high stocks to protect from waste is not related to the actual production or processing of materials into finished goods
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Another important aspect to consider during your production and demand planning is the current production process yield, as tis is an indicator on how the overall plant facilities and materials are doing, to contribute to the final production of finished goods
In the example below, you can see that the production and target yield moves continuously and that their trend ratio is not uniform; in fact their correlation is not a fit one
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
In the example below, you can see that the production and target yield moves continuously and that their trend ratio is not uniform; in fact their correlation is not a fit one
Sept 2014 Oct-14 Nov-14 Dec-14 Jan-15
Production Yield 0.241 0.236 0.221 0.220 0.200
Target Yield 0.260 0.259 0.252 0.258 0.237
ratio 0.928 0.912 0.876 0.854 0.844
In your analysis, you have to determine the cause of the trend, and understand the changes happening either within your materials, and or in combination with your plant facilities process performance, as both will dictate the process yield or production yield, as well as the production rates.
Both, affecting directly and immediately your demand and production planning
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Below observe the example where materials of various sizes affect your production rates and yield; and its distribution is an indicator of what you can expect to achieve with the available materials in different sizes
frequency measurement %
1 32 0.43%
1 36 0.43%
2 38 0.85%
4 39 1.70%
7 40 2.98%
4 41 1.70%
8 42 3.40%
15 43 6.38%
12 44 5.11%
13 45 5.53%
24 46 10.21%
14 47 5.96%
20 48 8.51%
25 49 10.64%
25 59 10.64%
9 51 3.83%
15 52 6.38%
10 53 4.26%
6 54 2.55%
5 55 2.13%
5 56 2.13%
3 57 1.28%
2 59 0.85%
2 60 0.85%
1 61 0.43%
2 62 0.85%
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
In our example below you can also see that it is required to monitor the trend of your production process yield as frequent as possible; perhaps daily if you have the means and data
Production 200
Jan-15 yield ml
5 207
6 243
7 173
8 199
9 182
10 193
12 198
13 208
14 198
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Below is data regarding the production yield from seven months
LC
Yield
Plant
Yield
std
18
21
average 219
228
max
236
278
min
152
168
t 1.646 1.646
UL 225
235
LL
213
221
process
211
226
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
The next data is a random sampling or “photograph” of the material size. So that we can use it to extrapolate it with the current production yield
sample circumference
std 4.38
average
46.99
max
61.00
min 30.00
t 1.646
UL 47.31
LL 46.67
process
46.49
229.83
ml
substance
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Substance circumference
std 2.91
average 46.64
max 57 min 43
t 1.708
UL 47.64
LL
45.64
process 47.76
236.09
ml
water
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
sample 502 material
circumference
std
4.38
average 46.99
max
61.00
min
30.00 t 1.646
UL
47.31
LL
46.67
process 46.49
229.83
ml substance
Production
Yield
LC
Yield
Plant
Yield
std
18
21
average 219
228
max 236
278
min
152
168
t 1.646 1.646
UL 225
235
LL
213
221
process
211
226
Substance left in material
5600 gr
1.024 density
5468.75 ml
502 material
10.89
ml
substance
229.83 ml - 211 ml - 10.890 = 7.94 ml lost in process …… where ????....
LC Yield calculation
Container ml * No of containers production / [material left from yesterday + quantity In –material left today]
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
In summary, if you do not have a proper demand and production plan in place, the high risk of running high in over stocks or go into shortages of stocks is only the result of lack of planning. The demand planning tools exist and are available at least since the early 1960’s already over 50 year old; nothing new or rocket science
Let’s now focus on the production system.
The brain of the entire production system, focus their activities on total flexibility to pull-in, push-out or cancel materials from vendors in order to respond fast to their non negotiable production changes required by marketing-sales customers
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
The materials procurement planner and buyer analyst skills are based on a back to back order and/or blank order, together with a weekly, daily, per shift, product sequence order demand rolling forecast model
A sound MRP-I covering work in progress stocks from receiving, loading into production lines, finished products, scraps, waste and ready to be loaded;
An MRP-II covering sanitation and engineering maintenance schedules, production lines capacity availability, updated machines break down status and availability status reports
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Together with a sound policy on inventory turns, which will support a high manufacturing planned yield, though great coordination is need to be carried out between Quality Assurance, Quality Control, Sanitation, Engineering, Production and Warehousing management
To be able to produce in full, and on time, with minimum wastes, scraps, at a high level of production efficiency with balanced lines, minimum risk of product contamination, and machines breakdown, it is required that accurate materials usage ratios are calculated and analyzed at all times, as Bill of Materials ratios unexpected changes makes the great difference, generating stocks excess or shortages, the results are unfulfilled delivery orders
Machines production loading and actual production rates available need to be measured continuously to be able to plan accurately on real production yields, setting up realistic production schedules, and furthermore, the planning function needs to coordinate sanitation and maintenance operations very tightly, together with production and procurement planning schedules, or else major breakdown and production available time down, contribute to production shortages
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
These tools are complemented by materials purchase orders status covering Finished Goods demand Bill of Materials kits and computer real time stocks on hand reports
A balance between buffer inventories’ cost of capital Vs transport cost is required to support the continuous replenishment, there are situations where the additional transport cost is less than the excess buffer inventory’s cost of capital and this is the factor to decide quantities and schedule when to ship materials from vendors
The buyer skills to negotiate and communicate directly with vendors is important to get their immediate response and actions to match the Enterprise manufacturing flexibility by implementing effectively purchase orders pull-in, push-out and cancellations without charges or complains at all
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
A major contribution to increase revenue gross margin is to get extended credit terms to equal them as a consignment supply terms, and to continuously seek for additional discounts, materials quality improvements without minimum quantities or any other commercial contractual constraint, and with higher vendor materials quality yields
Also the ability to get materials on consignment without any extra charges from their best price obtained from vendors
Transportation efficiencies from traffic and warehousing operations contribute directly to manufacturing operations and its work in process Finished Goods or WIP
Traffic control assures the in-flow of arriving materials and the out-flow of ready to ship finished goods to warehouse or distribution center, reducing inventories shortages
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Transportation can be planned as a just in time delivery mode, with careful estimation of the delivery window time; milk run transportation mode, where efficiency is achieved in the loading and downloading operation, containers stock control, and transportation time cycle;
there is also the cost per part delivery mode which focus on weight, quantity and trips frequency to get the best utilization of the adequate truck size and engine power
Warehouse efficiency assure the materials loading on time, accuracy and WIP control as well as the stocks custody,
IQA police the in-bound materials quality yields consistency continuously from all vendors as per BOM specifications, minimizing scraps within the manufacturing operation cycle in all the production lines
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
The production planner analyst prepares the MRP-I Demand plan requirements, based on MRP-II production capacity constraints, production lines equipment maintenance engineering schedules and confirmation of on time materials available from vendors and stocks
Working out production plans per working shift, to meet production lines work orders, packaging and raw materials loadings schedules
Maintenance schedules are reported to production planner analyst
Finally the FG warehouse check on storage space constraints, and FG forwarding traffic controller plans all transport requirements and schedules, including transportation costs
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Demand Plan
Process
Integrated Actual
Production Lines
Max/Optimal CAP
Demand
Statistics
Statistical
Forecast
Marketing
Events
schedule
Forecast
Delphi
Technique
Production
lines CAP
rates/sku
Related sku’s
Integrated BOM
RequirementsMax/Optimal CAP
Required
Materials
Planning
Inventory
Level
Required
Production
Lines
Layout
Integrated
Capacity
Analysis
Requirements
Schedule
Analysis
Vendor’s Materials
Requirements
Max/Optimal CAP
Commercial
Terms
Strategic
Alliance
Issues
SQA-IQA
Process
& Cost
Safety & JIT
Inventory
Transport
Cost
Analysis
Admin WH &
Transport
Operations
Cost Analysis
Integrated
Cost
strategy
Analysis
Integrated
Production
Master Plan
Optimal
Production
Master Plan
Production
schedule &
Production
Lines Balance
Material’s
BOM
Requirements
Planning
Materials
Inventory
Level
schedule
WH &
Transport
Throughput
Planning
Integrated
Manufacturing
& Materials
Operations
Cost Analysis
Demand Plan
CAP Production
Master Plan
Optimization
Demand
Production
Requirements
Production
Processes
Optimization
Production
Lines
Optimization
Materials
BOM
Requirements
Inventory
Optimization
Warehousing
Transportation
Optimization
Review Strategy for
Production CAP,
Inventories, Vendors,
Warehousing, Transport
Demand Plan
Forecast
Inventory
stock
on hand
Production
Master Plan
at Max/
Optimal CAP
Production
ERP-MRP
system
Outstanding
Inventory
and arriving
schedule
Demand Plan
Production
Master Plan
Vendors
Strategic
Alliance
Optimization
Issues
Simulation
Demand
Plan
variances
Simulation
Production
Master Plan
Variances
Simulation
Production
Schedule
Variances
Simulation
Production
Lines CAP
Variances
Simulation
Materials
Requirements
Plan
Variances
Simulation
Integrated mfg
& materials
operations
cost variances
Materials
ERP-MM
system
Integrated WH’s-DC &
Transport Actual CAP
Simulation
WH’s-DC &
Transoport
variances
About MRP-II and MRP-I
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
Each production batch as in all processes has a start and an end of it,
with several steps to be followed either in parallel or in sequence order.
It all starts with the arrangement of direct bulk and indirect materials, or
components, mixing or assembling them to BOM or bill of materials
specifications accuracy
Followed by the packing of individual finished goods as per SKU’s
specifications
And then becoming WIP or work in process finish goods product, prior
to get them pack arranged in the best way to handle them and put them
away to storage for later delivery
Batch production is accomplished with restrictions based on equipment
CAPACITY or capacity available per batch volume, BOM processing
time, and required man-hours
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
MRP-II or manufacturing resources planning requires an accurate updated data on the CAPACITY of each equipment involved in the batch production process, its objective is to accomplish a production line time balance, with minimum scraps or waste, equipment idle time, sub-inventories waiting time, inventory queues, and minimum required man-hours
It is important that all this standard equipment CAP data are kept as accurate as possible in order to obtain high yield on each production batch plan
When upgrading production line equipment CAP, is required that the BOM processing time is reviewed as well, in order to keep the batch equipment production line balanced
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
MRP-II is the tool used to keep the batch production line cycle time balanced at all times during the production plan
Demand Plan tells the production planner what is required within a pre-determined period of time
Then a master plan is to be elaborated to cover the given demand plan period
The master plan is then the backbone of the production plan to detail, per sku’s volume to be produced per day, per shift, per production line, per sequence almost to the hour
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
MRP-I is the tool used to plan and distribute within a given demand period, the master plan volumes per each sku’s
However, as simple as it is the concept and objectives of this tools; the practical side of producing an MRP-II and MRP-I tool is rather complicated due to the fact that there are 10’s or 100’s if not 1000’s of variables to be considered, its interaction, linkage and multiple combinations available to come up with the most optimal production plan
To make it even more complicated, there are parameters behaving with constant values, but others within ranges still acceptable within the equipment CAP
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
For instance, available over time, working days, manpower, equipment variable production speeds per batch cycle per different sku
On the other hand these can also become the limitations such as no more available over time, working days, production equipment speeds, and an arrange of many other factors affecting the planning of production volumes per sku
MRP-II and MRP-I take for a fact that materials, equipment and manpower requirements are available, including energy, power and water among many other HVAC and Plant Facilities supporting equipment and, another elements required to make the sku’s production plan happen as per schedule
Systems Approach to the Enterprise Vision
Chapter IVPRODUCTION PLANNING
A preliminary step towards the understanding of Enterprise batch production cycles, is the need to study the process and design a dynamic simulation sketch model of the production
In this way, you can shorten the time to go through the pain and judgment of identifying variables and parameters, which are critical to design, and building MRP-II and MRP-I tools
Industrial Engineering Management Systems Approach to the Enterprise Vision
L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS ….
_____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….
Industrial Engineering Management E-Book
INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS
January 2015
Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management
Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management
THANK YOU
Chapter IV PRODUCTION PLANNING