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 I MISSION

Systems Approach to the Enterprise Vision

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MISSION summary abstract To sustain the continuous materials replenishment from vendor’s to manufacturers and their Finished Goods for distribution across the entire trade channels to the end consumer with maximum inventory turns throughout time with the highest net margin contributions from innovating competitiveness and minimal operational waste

Systems Approach to the Enterprise Vision

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Goal. The Enterprise highest goal is to sustain their ability to keep their manufacturing-distribution supply chain available resources in total utilization. In order to continuously lunch and re-lunch finished goods into consumer markets and, to replenish their inventories at the most efficient-effective cost, with continuous economic growth

Objectives from the Enterprise are normally measured in economic & financial growth; such as market share, nationwide-distribution channels coverage, net margins, facilities and market-industry value

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Strategies vary, from doing all by the Enterprise itself, to sub contracting major operational functions and focus their own concentrated efforts on their major core business activities Strategies includes, from using the lowest management and staff cost across the Enterprise, to a more moderated human resources higher cost value added used in each function, reflecting higher quality and professional performance, with sustained growth The most dangerous-risk strategy is the decision to give the highest positions to family members or closed friends, when both or either one of them, lack professionalism, ethics and totally abuse their political power for self-satisfaction. Soon you will find out that the Enterprise looses competitive edge, eventually looses the business

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Tactics refers to the way the Enterprise chooses to take specific actions and implement their strategies, it requires skills and vision

Programs are the result of selective aggregated functions to carry on specific task to accomplish a major strategic overall impact Projects are individual actions taken to bust up the performance of an operational function Operations are many in each function, but the completion of their cycle closes a business task. Their critical points are their level of performance as per their associated design specification as well as cost, waste and inefficiency levels

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To understand operations better; let’s look at the following concepts:

Operations: The starting point is to have a professional Demand Plan analyst who understands each Finished Goods sku item’s statistical behavior, armed with statistical process control data models and charts to be able to workout demand behaviors, trends, and seasonality analysis forecasts, with maximum

and minimum Finished Goods stocks levels over short weekly rolling periods of one, two, three, four, five, six months sales-marketing demand rolling forecasts, and its different variables’ scenarios simulations

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Most organizations leave this demand plan function and analysis to brand managers, marketing managers or even sales managers. This is their major mistake, as these people are not full time dedicated to understand and analyze paths, trends, seasonal ties and other sku’s market related moves, as well as to simulate its different scenarios Their failure to accurately forecasts demand is always explained by many other reasons related to their buyer’s actions, shortages and sudden changes within their competitor’s activities or about the economy trend, which by the way is never at its best time in history

Systems Approach to the Enterprise Vision

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Their way out of it, is by requesting from the Enterprise to carry inventory levels high enough to overcome unexpected sales order fluctuations. Often described as minimum and maximum holding stocks level and they can go from days, weeks or months’ sales of holding stocks, with high usage of precious financial resources

Unfortunately, although this concept of holding minimum and maximum stocks goes against the Enterprise mission, it always find room in the mind of top management, eating margins from high financial, facilities and operational costs. Demand planning cost is by far more economical that the unnecessary aggregated stocks

Systems Approach to the Enterprise Vision

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However, demand Forecast is the most important piece of information to be produced, analyzed and discussed with all marketing and sales managers before any data is made official and used in production planning, procurement and manpower needs

Another way to look at Demand Plan is to think as an OEM and have within your organization a function such as program management, linking and coordinating information flow between your customer procurement-production planner, your own procurement-production planner and your supplier’s procurement-production planner

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Working together as one team; making use of the latest computer communication technologies available, such as the internet web site network systems, connecting your MRP-I with your customers and suppliers MRP-I systems, talking over the net, and resolving together as a unified team all related planning issues on materials, finished goods, capacity available, production delivery dates, and priorities Simulating integrated Production and transportation costs, inventories levels flow, consumption rates, shortages and over supply of materials and finished goods, affecting all parties, yourself, your customers and your suppliers as one cost unit

Systems Approach to the Enterprise Vision

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There are three major cost components; production and transportation, storage operations including inventories financial costs, marketing advertisement and promotional events costs That is why the major cost savings comes from maximum inventory turns, optimal storage operations, packaging and raw materials; use of credit terms almost as materials on consignments, and transport Urban delivery routes and nation wide deliveries transport planning contribute to optimal delivery service cost saving, reducing stocks Advertisement and promotional material costs are sales components cost, not savings, but if they are effectively directed to targeted customers and achieve its measurable objectives, sales will increase

Systems Approach to the Enterprise Vision

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Demand plan data is the backbone to these major cost or saving components within the Enterprise financial blood flow stream Optimizing materials inventory turns by means of managing stocks on hand, procurement costs and vendors delivery lead timesAchieving higher incoming materials yields by materials quality assurance inspection as per Bill of Materials specifications With efficient QC receiving and warehousing operational process cycles without compromising savings due to higher cost from a “vendor-client” joint partnership efforts to improve their own joint supply chain communication systems Critical mass or break-even point is always necessary to balance the point where investments are placed to have a “vendor-client” joint partnership effort to improve their logistics operations, especially if ERP systems are used at both ends

Systems Approach to the Enterprise Vision

Chapter IEliminate causes for unnecessary operational waste due to materials flows delayed, waiting or moved faster than their operational pace. Manage excess Finished Good’s inventories, apply 5’S techniques to all operations, and avoid incorrect warehouse data processing Find out delayed, inaccurate or unavailable customer’s information as well as wrong sku’s inventory deployment costing structure

Analyze and improve low performance delivery routes, forwarding transportation constraints, Finished Goods production defects, and damages from storage materials handling operations

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Design and implement the most cost efficient Urban areas delivery routes and transport specification requirements, re-engineer for all distribution channels customer receiving time schedules, such as hyper-markets, super-markets, catering; modern trade convenient stores and petrol stations mini-marts, for both frozen, chilled, dry foods and others every one every day consumer goods all the way back to delivery trucks loadings, and production real time schedules

Determine the most efficient IT-Warehouse Management System software, warehouse operational layout to service receiving Finished Goods, cross-docking, put away, picking, staging, loading and dispatch, manpower requirements per shift, materials handling equipment, mezzanine shelving, storage pallet racking system

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Identify the most cost efficient depots and cross-docks locations network across the country. Plan their facilities operational and delivery services logistics, plan their in-land transportation cost and schedules, and trucks requirements’ specifications, tonnage, volume

Set standard Finished Goods sku’s production lines rates per hour, and man-hours usage rates required to incorporate them into the production plans and production processes schedules, in order to plan for the loadings of raw and packaging materials into production lines, as well as to balance all production lines as per required line manpower allocation plan

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Check and coordinate your sanitation and maintenance engineering schedules with production and procurement planning, as well as manpower deployment plans Balance the weekly-monthly production capacity available and maximum production possible, under all available resources and constraints, due to production lines breakdowns, and other un-expected manpower staffing problems, and materials out of stock

Systems Approach to the Enterprise Vision

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All products in the production line or at the warehouse-cold rooms have design specifications, named standard product specifications, which cover all aspects from materials dimensions, design layouts, specific material characteristics (physics/chemistry), production process instructions, machine setting parameters, packaging, shipping marks, shipping documents, storage, handling, and shelve life among others related to specific Industries or trade regarding safety, health and contamination risks from bacteria or hazardous pollution and leakages

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Full Accounting systems have standard operational procedures regarding sales order processing, invoicing, delivery notes, credit and debit notes, procurement purchase orders, receiving reports, warehousing movements, physical stock counts and adjustments, inventory assemblies and stock items movements and controls Production machines have also operational parameters setting standards, and acceptable ranges for performance conformance

And so are standards related to the supply of energy regarding steam heat, hot oil, cooling and refrigeration temperatures, electric power, water supply quality processing, waste water processing, compressed air, vacuum

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The environment protection standards are set in accordance with Industry or Trade regulations, regarding the handling of hazardous materials, fire fighting equipment, chemicals, water, drainage for contaminated water, rain water, and other polluted water from the production or facilities plant operations

There are also standards in regards to the workers and technician dressing code in production areas, laboratories and other assigned special locations, including their related hygiene norms

For every operation along the process there are also standard report forms, to record operational data, this documents form the bulk of the standard documents control system, used in many ways to perform traceability of production or logistics operations, or any other activity related to the full accounting system in place

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Quality Control is the application of securing the production of all related activities, within acceptable standard specification parameters as per design and as per document description Quality Assurance is making sure that there is full use of all standard documents by both Quality Control and Production operations, with extension to Suppliers Quality Assurance, Incoming Quality Assurance and Outbound Quality Assurance; it also makes sure all standards are clearly recorded, registered, documented, distributed and with formal document control management

Systems Approach to the Enterprise Vision

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The question in Quality Control is to monitor the process parameters variations, to make sure they are within the standard acceptable process performance range (Upper limit and Lower limit) and to set the alarm and if required, stop the process to get the required people to re-set and correct all deviations in the process before there are collateral damages, Work In Process waste, scraps and spoils, or even risk of contamination due to changes in the physical and environment conditions

Systems Approach to the Enterprise Vision

Chapter I

What is important is to keep the production yield as high as possible with a target of 100%, though there could be additional gains due to process synergies, but also losses due to the physics/chemistry and the environment Standards are the basics to measure the yield of a finished product, once this is understood, then it is important to map the complete process flow of all operational activities, and measure the flow rates of all materials, Work In Process, collateral losses due to waste, scraps, missing, damages, spoils, and other process losses or gains

Quality control is not about registering a data based on a sample, making a chart and producing a report to file to management, and certainly it is not the duty of Quality Assurance to try to correct the incidences, that probably will be the duty of all the people involved in the production or logistics operation, including Engineering, Sanitation and almost everybody in their own operational capacity

Systems Approach to the Enterprise Vision

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Based on the full accounting system, map the complete logistics operation cycle including;

Sales orders, Inventories on Hand, credit control, invoicing, delivery notes, credit-debit notes, bills collection, urban and nation-wide deliveries, in-land transportation, freight forwarding, procurement, delivery-receiving materials, inspection reports, inventories control,

warehousing storage operations, picking, staging, packing and loading for delivery to customers, physical stocks counts, stocks adjustment, suppliers bills payment,

Systems Approach to the Enterprise Vision

Chapter I

Map the integrated operation of procurement and production planning, in coordination with production, process engineering maintenance, production process sanitation, facilities engineering maintenance, environment, industrial safety and hygiene

Map the organization structure based on operations functionality, match function profile specifications versus the people involved in the related function operation and activities, identify skills, strength and weakness, gaps and training opportunities, finally map that QC and QA really cover their function as per operations requirement

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 I MISSION