Development of Efficient Manufacturing Planning and Control System - Essay Example

Lecturer: Supply chain Management in Business and Manufacturing        Supply chain management is very important in any businessas it plays an important role in demand planning, supply control and planning, as well as exception monitoring and control, among other vital facets of business, which are vital for effective and efficient performance. Manufacturing and distribution networks involve several organizational elements like plants and distribution centers in addition to suppliers and customers, where every network consisting of different components like materials, resources and operations. Manufacturing planning and control (MPC) aims at planning and monitoring every feature in manufacturing like scheduling human resources and machineries, handling material and organizing clients and contractors. Thus, supply network necessitates several levels of integration with the first being the integration of separate components in organizational structures to create individual networks and secondly, integrating the networks. The first level integration results in manufacturing and distribution networks, because individual networks link to a central warehouse that receives stocks from plants when products are manufactured and distributes them to customers through field warehouses. Thus, two networks with the possible routes for manufacturing and distribution form the supply chain network that involve planning, execution and control of components. Managing flow time is crucial in providing effective customer service in the supply chain; therefore, integration is the basis of supply chain management strategy                   Development of efficient MPC system is crucial to the success of all companies that produce goods; since it coordinates supply chain efforts across company boundaries (Jacobs 1). Inventory is a valuable asset in companies; however, benchmark results indicate that most organizations fail to manage inventory efficiently. Many manufacturers and distributors depend on overly localized inventory policies; thus, companies tie working capital which can result in hurting shareholders. Properly managed inventory acts as a lifeline for supply chain since it propels revenue and competence in companies. In IBM, supply chain inventory practices involve managing flow and positioning of inventory across different stages within the supply chain even in suppliers and downstream partners. The company adopts the opportunity of combining proven supply chain inventory practices, which reduce inventory levels across the organization while improving service levels as well as productivity. The company is does not push back inventory to its suppliers; however, IBM helps its suppliers to reduce their inventory.                    Rather than monitor and manage inventory at local level, IBM is increasingly adopting supply chain-wide inventory practices. Companies attempt to decrease amount of inventory in their supply chain management, which in turn reduces inventory carrying costs. The company aims at being responsive and reliable to customers, since it is crucial for the company to increase service levels without increasing inventory investment. Since inventory necessary to attain service levels relates to lead time, reducing lead time as well as supply chain unpredictability is crucial to the company. Moreover, IBM aims at improving financial performance, because it is crucial for the company inventory management success to maximize profit contribution and net margin; thus, reducing distribution and manufacturing costs is essential. In some cases the company institutes lean processes for low inventory; however, it is not too low to drain financial performance of the company, which increases manufacturing re-scheduling and lost sales from uncompetitive flow times. Best companies attain high improvement rate from better inventory management practices, which are augmented when they apply technology to practices like supplier collaboration technology. IBM is a technology enabled company that achieves 20%-30% improvements from its inventory management initiatives.                    Development of supply chain management in the company is driven by internal motives and external factors; thus, supply chain needs to manage and control flow in its operations. Flow control is linked to inventory management and scheduling of activities concerning assets and time constraints; therefore, control is essential in customer needs and supply chain performance since supply chain performance can change with time. Supplementing flow control attempts to achieve extensive competitive and planned goals of speed, quality, reliability, cost and flexibility. For companies to attain their goals, output of processes facilitated by supply chain management have to measure and compare to set standards.                   Planning and controlling supply chain facilitates management of supply, demand as well as control of material flow. Companies use automated operations like demand forecast and manual planning in managing company resources (Jacobs 78). Various businesses elements are associated with supply chain planning and control and they include demand planning, exception monitoring and control, demand management and order confirmation, supply control and planning, as well as logistics control. Flexible control of internal and external supply chain prioritizes execution of plans in accordance with production needs, incoming and existing supplies. Full integration of a production model between manufacturing and supply planning provides on-time production and timely delivery. Planning estimates capacity needed within a given time frame and makes provisions for additional capacity in order to meet the requirements. Companies employ interactive load leveling from single-level to multilevel material planning and scheduling of networks to maintain consistency in multilevel material plans.    Measuring estimates for the future demand and suing fulfillment strategies generate accurate demand forecast by automation planning functions and interactive planning. The forecasts trigger supply chain planning processes anticipating actual demand; moreover, the use of fulfillment strategies helps meet requirements through customer demand. Demand planning facilitates prediction of demand, which consequently is released to supply chain planning and control at the level of production. Demand supply is crucial to chain planning, since the more transparent and accurate they tend to be, the more efficient a company can plan future demand. Demand planning offer firms with several benefits like predefined plan options, decreased setup and update effort, since planning demand uses settings within supply planning with regard to forecast consumption. Demand planning plays the role of contributing to a forecast-driven supply planning; thus, evading late delivery and in mitigating the costs or expenses during the time of procurement and production. Demand planning considers closed loop planning, which incorporates customer requirement processing, matching of supply and demand and execution of manufacturing. Demand planning enable forecasts and uses statistical models to come up with demand plans useful in planning for future product demand; since, demand plans are essential in supply chain planning.   Supply planning aims at balancing demand with supply in a company's supply chain, this enables creation of feasible production and procurement plans that cover demand before the request date and in correct quantity. Supply planning is closely integrated with production and purchasing since it facilitates seamless production and purchasing; however, the details in planning differ considerable like in manufacturing which creates detailed resource schedule. Effective supply planning enables companies to optimize their inventory levels as well as the levels of resource utilization to satisfy customer requirements with timely delivery of orders. Supply planning incorporates material planning, exception-based planning and capacity planning, which are useful in performing supply planning. Material planning ensures guaranteed availability of a product, which in return ensures timely production or procurement of requested products. Capacity building involves motoring of resources and adjusting capabilities in order to meet demand in a timely manner and in the right quantities by in-house production. In material planning, the load on relevant resources is calculated and updated regularly, which allows easy analysis of capacity load for resources in a certain time frame like shift. This is crucial in estimating the capacity necessary in a certain time frame in order to meet the demand; moreover, functions like interactive load leveling enables reaction to capacity issues that arise. Exception-based planning increases critical planning using information and options essential in solving the issue. Moreover, the exceptions do not rely on planning and are given low, medium, or high priority to enable efficient organization of daily work.   Demand management in conjunction with forecast consumption facilitate forecasting of demand as well as actual demand in supply planning. For any given demand, several kinds of actual demand exist, which include sales order, dependent demand and stock transfer across different planning areas. Once products are standardized and the market demands short delivery time, to remain competitive, companies preempt demand before actual demand arises. However, inherent risk abounds in demand forecast since it does not prove complete accuracy when compared to incoming actual demand. Thus, companies use demand management for every product and planning areas and customizes the demand management procedure to specific business scenarios and considers the perception of demand for a product.  Forecasting is an essential activity in logistics' inventory forecasting, since accurate preemption of inventory requirements and materials is crucial in inventory control, efficiency of manufacturing as well as customer satisfaction. This is essential in companies that employ material requirement planning (MRP) in controlling inventories. Companies control inventories in warehouses and manufacturing facilities in two dimensions that include ensuring adequate inventory levels as well as certifying inventory accuracy. As companies like IBM distribute products in line with the order requirements, the current levels of inventory become depleted and upon reaching a certain point, it necessitates placement of replenishing order to bring the inventory level to acceptable levels. Production planning closely relates to forecasting in terms of efficiency in inventory control since once a forecast is made, the current inventory and rate of usage are determined which help production managers calculate the units to be manufactured for adequate market coverage. Nevertheless, companies that manufacture many products, the manufacturing process timing and certain product line relations necessitate close coordination with logistics.   In companies, master production schedule (MPS) is a plan that lists the exact end item produced within a certain period (Jacobs 183). Thus, MPS defines production quantity necessary to attain demands of customers and provides a baseline for computing requirements in time-phased end products. Moreover, MPS serves as input for material requirement plan that computes component as well as subassembly requirements; thus, effective execution of MPS aid in avoiding shortages, last-minute scheduling, expensive expediting and inefficient allocation of resources. MPS offer vital information about availability of production, which help in efficient utilization of capacity.   Capacity management considers the trade-off between minimizing capacity in order to reduce cost and providing extra capacity to maintain responsiveness to unpredictable fluctuation in demand. The ability for a supply chain to compete on the basis of costs, time flexibility, quality and fresh product is under the control of strategic members in the supply chain. a company's competitive priority is determined by four long-term structural decisions that include facility, capacity, technology and its vertical integration; moreover, a company's competitive priority bases on its infrastructural decisions such as quality, production planning and control, workforce and organization. The total impact of infrastructural decisions on a company's competitiveness is essential like the long-term structural decisions. In manufacturing companies, the manufacturing strategy aims at setting competitive priorities like quality, time, cost and fresh product introduction. The strategy categorizes production procedures into 5 major types that include project, batch, job shop, line and continuous flow.  "Make-to-stock" is a manufacturing strategy that addresses priority in order to compete in the market; the strategy involves having products in the inventory ready for immediate delivery in order to reduce customer delivery time. Another strategy is “assemble-to-order” strategy, which manages various end-item settings and is crucial in mass-customization. Nevertheless, build-to-order items are normally in small volumes and they need high technical competency and effective due date management. Engineer-to-order products is another strategy used in manufacturing of products that have unique parts for the customers and the products volume is small and usually of one kind. Engineer-to-order has long cycle time from order to delivery because of the unique customization nature and MRP is essential in this strategy. One cause of supply chain failure does not understand the nature of demand, which leads to mismatched design of the supply chain.   Sales and operation scheduling is indispensable in supply chain management, since supply chain would not function well if various members never have plans to begin with, and if they are slow in responding to changes in plans. Therefore, sales and operations is considered a lubricant between partners within the supply chain, since it enables the entire chain to work harmoniously with minimal disruption. Supply chain extends in two directions, first toward customers and backward toward suppliers with the firm being the center of the chain. With regard to customer service, sales and operation planning (SOP) advances customer service performance; thus, SOP aids in the provision of better customer service (Jacobs 117). in addition, SOP offers benefits which are similar to both suppliers and the company's internal production processes; the benefits include increased and stable production, immediate changes which are economical and increased ability to respond to changes since volume is controlled. SOP supports manufacturing since it involves decision making regarding future demand and supply rates, it integrates financial plans to operational plans and offers a window into the future (Jacobs 5). Important aspect of SOP is the ability to aim at customer service and its interplay with inventories (Jacobs 175).   Strategic management concept involves strategic management of operations linking companies to suppliers in areas like distribution, purchasing, transportation and manufacturing. Purchasing of raw material and components   parts has great significance in the current industrial economy. Inventory being the life blood of businesses, many companies including IBM store various assets like office supplies, component parts, raw materials and finished products. To manage several inventories, features of assets have to be examined with regard to lead time, cost and nature of demand, and the type of demand is either dependent or independent. Independent demand does not relate to demand of other items; therefore, an independent item has to be forested independently. Inventory management is of great concern to purchasing managers, since in many companies, investment in inventories has a substantial share of a company's assets. Inventory items that are essential to a company are those that account for the highest dollar value. Companies analyze the products that are most sold and those that cost the most and they emerge with a predictable pattern in many distribution inventories. The pattern shows certain items demanded by majority of customers, majority of items demanded by certain customers and some items demanded by few customers.   In independent demand, there are five functions of inventories that include pipeline inventory; supply pipeline of entire system needs considerable investment in inventory. For instance, the volume of s system is 1000 units in a week and it takes a day to move from the supplier to the plant, then there are 1/7 x 1000 close to143 units transported on average. In seasonal inventories, inventories are accumulated in low sales period and exhausted in high usage periods to evade problems associated with adjusting capacity (Jacobs 286). The design of safety stocks is to make sure they absorb random demand uncertainties; moreover, decoupling of stock inventories in major stocking points in the system ensure each activity is carried out independently. Thus, the presence of inventories permits each work center to initiate ate the same time. The objective of inventory system is to minimize total operating costs; even though, there are unavoidable operating costs like ordering, stock out, and holding costs. Economic lot size model (EOQ) obtains optimal lot size in purchasing through minimizing the costs components involved in ordering and holding costs (Jacobs 255). Once the highest economical order quantity gets established, then other measures can follow. In the EOQ model, the total expected orders in a year, NO = AV/Q, with the expected time interval of TBO = 1/NO = Q/A; thus, the reorder point, R =(A/12)*L with L being I months; however, if L is expressed in terms of weeks, R =(A/52)*L. The EOQ model assumes constant demand, lead time and unit price, fixed order cost in each order, instantaneous replenishment, no demand uncertainty and there are no stock outs allowed. MRP concepts provide basis for projecting potential inventories in a manufacturing job (Jacobs 6). MRP helps improve conventional non-time-phased order-point system, because it offers an operating manager the opportunity to plan for necessities essential in meeting the absolute assembly schedule. Therefore, MRP offers a plan for component and subassembly availability that permits scheduling of certain end products for assembling in the future (Jacobs 236). However, there is a problem with the general lot-sizing in time-phased requirements for component since it involves conversion of requirements over planning horizon into planned order through batching requirements into lots. General lot-sizing problem involves batching of requirements to reduce the amount of ordering and carrying out cost every time an order is made. Safety stock can be set in order to attain a specified level, which enables fair comparison of the alternative lot-sizing procedure. Service level in safety stock S can be defines as S=(number of units necessary and that were in the inventory)/(number of units necessary) If a discount is made, the price different for ordering high amount of units; however, if discounts are unavailable, price per units remains constant regardless of the units ordered. In conclusion, supply chain management in manufacturing uses demand plan to forecast the future, and history to update the actual data. Therefore, supply chain management helps in planning and consolidating procurement requirements in production plans and determines and confirms delivery date of the products. Supply chain management helps in choosing product specification in order to define and maintain customer requirements as well as product variants. Companies combine automated operations like demand forecast and manual planning to manage resource load and specify resource groups. Works cited Coyle, John J, and John J. Coyle. Supply Chain Management: A Logistics Perspective. Mason, OH: South-Western Cengage Learning, 2009. Print. Jacobs, F R. Manufacturing Planning and Control for Supply Chain Management. New York: McGraw-Hill, 2011. Internet resource. Mangan, John, Chandra Lalwani, and Tim Butcher. Global Logistics and Supply Chain Management. Chichester, England: John Wiley & Sons, 2008. Print. Samaranayake, Premaratne, Tritos Laosirihongthong, and Felix T. S. Chan. "Integration Of Manufacturing And Distribution Networks In A Global Car Company - Network Models And Numerical Simulation." International Journal Of Production Research 49.11 (2011): 3127-3149. Business Source Complete. Web. 17 Apr. 2013 Schermerhorn, John R. Introduction to Management. Hoboken, N.J: Wiley, 2011. Print. Read More