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05/26/2011 09:22 AM
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For some pre-Memorial Day fun - What do you think?:
Weekly Sales volume is about 100,000 per week and can vary from 65,000 to 135,000 on a weekly basis with about 25 - 50 top level parts in the system.
Forecasts are used to drive capacity planning (manpower) and buffer mix.
A monthly rate forecast has about +/- 30% accuracy. Buffers are in place to offset the sales fluctuations and maintain delivery targets. Individual monthly part forecast accuracy is approx +/- 50% at best.
Target lead time to the customer is 3 days to 3 weeks depending upon size and mix of order. OEM accounts for only about 10% of volume. Most customers have a second and or third source of supply (often cheaper) and treat the product as a commodity with larger competitors carrying significantly higher inventory levels.
Manufacturing lead time (not including purchasing lead time) is approx 15 days due to multiple processes involving chemical reactions and curing.
An MRP (ERP) system is used to blow down requirements and calculate the percent of buffers available considering current orders. A backlog of .5 to 2 weeks can be maintained by using the buffers to minimize extending lead time during high sales and maintain production rate stability during low sales.
Daily / weekly orders are prioritized over buffers to drive the production schedule in a "pull" manner for end items and components, with overtime scheduled when buffers drop below approx. 50% and reducing schedules when buffers exceed approx. 150%.
Is this MRP or not seeing that it uses an MRP system to calculate basic information but drives the schedule off actual orders and some kanbans (i.e. empty containers)? If this is MRP and MRP is "bad", what might Lean do to improve the methodology?
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05/27/2011 11:35 AM
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some initial thoughts:
Working more closely with customers to:
1) understand their requirements: in particular, how critical are on time deliveries
(Lean Principle 1, what creates value for the customer)
2) improve the accuracy of the forecast.
(Lean: Principle 4, only deliver/produce what is pulled by the customer just-in-time)
Better forecasts will enable a reduction in buffer stock
(Lean Principle 2, remove waste)
Look at the order mix - can the principle of runners, repeaters, strangers be applied to improve flow
(Lean Principle 3, make those actions that create value flow without interruption, detours, waiting
All the best
Martyn
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05/31/2011 09:59 AM
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Thanks Martyn,
I'll pass this on. Unfortunately increasing forecast accuracy in this situation is a little difficult in that the end product is a medium to high priced MRO item with large orders potentially equaling multiple days / weeks of production. While they can get a good feel for what is quoted, it's up to the end user to pull the trigger and release the order which can often take several months and of course is really hot.
My main concern is why some people tend to view Lean and MRP (ERP) as mutually exclusive in that if you get an ERP system, you can no longer effectively implement Lean.
When we implemented our first MRP II system in the 80's our trainer kept telling us, "this system can do whatever you want it to, you just need to figure out how to ask it to do what you want."
It took us until the mid-90's to figure out how to design a series of queries to develop an electronic pull system, but once we did we elevated our performance to a new level. Even then we kept hearing people who we felt were very knowledgeable about Lean and Production Control claim that ERP was contrary to the fundamentals of Lean and to stay away from it. Unfortunately, requirements of other processes (i.e. accounting) can dictate the necessity of integrated information system.
Have a good week. - Brian
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01/13/2012 11:43 AM
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Hello
I think that MRP and lean can be used for a pull system. We are implementing an internal PFEP due to we do not have MRP abailable. unfortunately our main weakness are material issues and we are betting all for the PEFP instead of MRP.
I would like hear your opinion about it.
See U
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01/16/2012 10:16 AM
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ERP systems are beneficial to most manufacturing companies. However, I have yet to see one that will handle level production schedules without manual intervention. The two largest providers have repeatedly told me that leveled production is not the way to production schedule. ERP systems, to my latest knowledge, cannot provide Kanban as a way to pull schedule. However, electronic pull can be accomplished based on final operation output but not through ERP.
ERP systems as designed by the biggest providers also cannot handle distribution and warehouse management without lots of partner software adds. One size does not fit all.
Ron Turkett
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