Production Planning Industrial Engineering Management E-Book

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



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



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


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




Material qtydifference



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 qtydifference



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 -



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



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



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 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 Available

Material Processed

Finished Goods

Material wasted

Material left over

21% process range 21% 19% 18% 21% 40% 78%



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



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



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



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



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%



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



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



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



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



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]



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



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



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



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



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



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



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



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



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



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



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



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



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



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

Production Planning Industrial Engineering Management E-Book

Engineering

Transcript of Production Planning Industrial Engineering Management E-Book