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Note on the use of these slides
• These slides provide the basic theory that I would like you to know. There are many more techniques on the slides that came with the textbook, which are also available on eFundi. As I talk you through this slide show, please stop where you don't understand, go to either the textbook (Heizer and Render) or the Heizer & Render slides and make sure you understand them. If you still do not understand, on the first page that you have to submit is space for you to tell me what you do not understand so that I can cover it in class.
• Once you have gone through the slides, go to the template on eFundiand prepare your submissions for the next contact session.
Operations &
productivity (1)
Topics covered: Contact 6
Global envi-
ronment &
strategy (2)
Managing
projects (3)
Forecasting
demand (4)
Product
design (5)
Quality
management
(6)
Process
design (7)
Location
decisions (8)
Layout
decisions(9)
Job design &
work mea-
surement (10)
Supply chain
management
(11)
Inventory
management
(12)
Scheduling
(13 & 15)
MRP & ERP
(14)
JIT & Lean
operations
(16)
Maintenance
& reliability
(17)
Study school
Contact 1
Contact 2
Contact 3
Contact 4
Contact 5
Contact 6
Contact 7
Outcomes for today's contact
OUTCOMES OF THEME M
• Practically apply scheduling concepts in optimising production
• Systematically integrate knowledge of budgeting and demand planning to optimise operations
• Demonstrate a thorough understanding of the concepts by applying the theory to a real-life organisation.
OUTCOMES OF THEME N
• Coherently present their understanding of inventory management principles demonstrating that they can set up a manual ERP system
• Integrate knowledge of inventory, demand and MRP systems into an ERP system design
• Demonstrate a thorough understanding of the concepts by applying the theory to a real-life community organisation
The Planning Process
Figure 13.1
Long-range plans (over one year)Research and DevelopmentNew product plansCapital investmentsFacility location/expansion
Intermediate-range plans (3 to 18 months)Sales planningProduction planning and budgetingSetting employment, inventory,
subcontracting levelsAnalyzing operating plans
Short-range plans (up to 3 months)Job assignmentsOrderingJob schedulingDispatchingOvertimePart-time help
Top executives
Operations managers
Operations managers, supervisors, foremen
Responsibility Planning tasks and horizon
Demand Options
Influencing demand
Use advertising or promotion to increase demand in low periods
Attempt to shift demand to slow periods
May not be sufficient to balance demand and capacity
Aggregate Planning in Services
Controlling the cost of labor is critical
1. Accurate scheduling of labor-hours to assure quick response to customer demand
2. An on-call labor resource to cover unexpected demand
3. Flexibility of individual worker skills
4. Flexibility in rate of output or hours of work
Operations ManagementChapter 14 –Material Requirements Planning (MRP) and ERP
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
Dependent Demand
1. Master production schedule
2. Specifications or bill of material
3. Inventory availability
4. Purchase orders outstanding
5. Lead times
Effective use of dependent demand inventory models requires the following
The Planning Process
Figure 14.1
Change production
plan?Master production schedule
ManagementReturn oninvestmentCapital
EngineeringDesigncompletion
Aggregate production
plan
ProcurementSupplierperformance
Human resourcesManpowerplanning
ProductionCapacityInventory
MarketingCustomerdemand
FinanceCash flow
Accurate Records
Accurate inventory records are absolutely required for MRP (or any dependent demand system) to operate correctly
Generally MRP systems require 99% accuracy
Outstanding purchase orders must accurately reflect quantities and scheduled receipts
MRP Structure
Figure 14.5
Output Reports
MRP by period report
MRP by date report
Planned order report
Purchase advice
Exception reports
Order early or late or not needed
Order quantity too small or too large
Data Files
Purchasing data
BOM
Lead times
(Item master file)
Inventory data
Masterproduction schedule
Material requirement
planning programs
(computer and software)
MRP Management
MRP is a dynamic system
Facilitates replanning when changes occur
System nervousness can result from too many changes
Time fences put limits on replanning
Pegging links each item to its parent allowing effective analysis of changes
MRP and JIT
MRP is a planning system that does not do detailed scheduling
MRP requires fixed lead times which might actually vary with batch size
JIT excels at rapidly moving small batches of material through the system
Finite Capacity Scheduling
MRP systems do not consider capacity during normal planning cycles
Finite capacity scheduling (FCS) recognizes actual capacity limits
By merging MRP and FCS, a finite schedule is created with feasible capacities which facilitates rapid material movement
Material Requirements Planning II
Once an MRP system is in place, inventory data can be augmented by other useful information Labor hours
Material costs
Capital costs
Virtually any resource
System is generally called MRP II or Material Resource Planning
MRP in Services
Some services or service items are directly linked to demand for other services
These can be treated as dependent demand services or items
Restaurants
Hospitals
Hotels
Distribution Resource Planning (DRP)
Using dependent demand techniques through the supply chain
Expected demand or sales forecasts become gross requirements
Minimum levels of inventory to meet customer service levels
Accurate lead times
Definition of the distribution structure
Enterprise Resource Planning (ERP)
An extension of the MRP system to tie in customers and suppliers
1. Allows automation and integration of many business processes
2. Shares common data bases and business practices
3. Produces information in real time
Coordinates business from supplier evaluation to customer invoicing
Enterprise Resource Planning (ERP)
ERP modules include
Basic MRP
Finance
Human resources
Supply chain management (SCM)
Customer relationship management (CRM)
Advantages of ERP Systems
1. Provides integration of the supply chain, production, and administration
2. Creates commonality of databases
3. Can incorporate improved best processes
4. Increases communication and collaboration between business units and sites
5. Has an off-the-shelf software database
6. May provide a strategic advantage
Disadvantages of ERP Systems
1. Is very expensive to purchase and even more so to customize
2. Implementation may require major changes in the company and its processes
3. Is so complex that many companies cannot adjust to it
4. Involves an ongoing, possibly never completed, process for implementation
5. Expertise is limited with ongoing staffing problems
ERP in the Service Sector
ERP systems have been developed for health care, government, retail stores, hotels, and financial services
Also called efficient consumer response (ECR) systems
Objective is to tie sales to buying, inventory, logistics, and production
Operations ManagementChapter 15 –Short-Term Scheduling
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
Strategic Importance of Short-Term Scheduling
Effective and efficient scheduling can be a competitive advantage
Faster movement of goods through a facility means better use of assets and lower costs
Additional capacity resulting from faster throughput improves customer service through faster delivery
Good schedules result in more dependable deliveries
Scheduling Issues
Scheduling deals with the timing of operations
The task is the allocation and prioritization of demand
Significant issues are
The type of scheduling, forward or backward
The criteria for priorities
Different Processes/ Different ApproachesProcess-focused facilities
Forward-looking schedulesMRP due datesFinite capacity scheduling
Work cells Forward-looking schedulesMRP due datesDetailed schedule done using work cell priority rules
Repetitive facilities Forward-looking schedule with a balanced linePull techniques for scheduling
Product-focused facilities
Forward-looking schedule with stable demand and fixed capacityCapacity, set-up, and run times knownCapacity limited by long-term capital investmentTable 15.2
Scheduling Services
Service systems differ from manufacturing
Manufacturing Services
Schedules machines and materials
Schedule staff
Inventories used to smooth demand
Seldom maintain inventories
Machine-intensive and demand may be smooth
Labor-intensive and demand may be variable
Scheduling may be bound by union contracts
Legal issues may constrain flexible scheduling
Few social or behavioral issues
Social and behavioral issues may be quite important
Operations elements in ERP systems
• Material management
• Plant maintenance
• Quality management
• Production planning & control
• Project management systems
Your assignment• Step 1: Make sure you understand the concepts that are covered in this slide show. If
necessary, go through it again or study the textbook. The slides by Heizer & Render (available on eFundi) also give valuable extra information.
• Step 2: Prepare a one-page summary of the theory. Make sure it fits into the template in the study guide. Remember to make a note of those issues that you want explained in class.
• Step 3: Find out how planning, scheduling takes place in your organisation and describe its ERP system. Give a one-page summary on the template.
• Step 4: Critique the way planning and scheduling takes place in your organisation. Where necessary, suggest improvements. Also discuss the efficiency of your ERP system and suggest improvements if possible. Give a one-page summary on the template. (If there are diagrams, you are allowed a fourth page for them).
• Step 5: Submit your three-page report on efundi before Thursday night 23:59. This counts towards your individual assignment and your final pass mark!
• Step 6: For your group assignment, prepare a three-slide PowerPoint show: Slide 1: Briefly present the essence of planning, scheduling, MRP and ERP systems to your community organisation. (This could really add value to them, especially if they have no system: You help them with designing one, even on Excel). Slide 2: Explain whether/how their present systems work. Slide 3: Give them advice on how to improve their systems. Use the template that is on eFundi. One group member must submit on efundi before Thursday night 23:59 as well!
• Names of both documents must be as indicated in your study guide.