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Planning and Control in Pull Production

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					Chapter 18




             Planning and Control
              in Pull Production
Chapter 18                                                Planning and Control in Pull Production



      THE WHOLE ENCHILADA
               Centralized System

               Decentralized System

      CENTRALIZED PLANNING AND CONTROL SYSTEM
               Monthly Planning
               Daily Scheduling

               Material Procurement Forecast

      THE DECENTRALIZED PLANNING AND CONTROL SYSTEM
               Detailed Capacity Planning

               Shop-Floor Control


      ADAPTING MRP-BASED PPC SYSTEMS TO PULL PRODUCTION
               Simplified BOMs
               Stock Areas and Point-of-Use
Chapter 18                                                               Planning and Control in Pull Production




                                             Centralized System


     The centralized part of the system comprises staff personnel and systems that perform order-entry,
     demand forecasting, rough-cut capacity planning, master production scheduling, and MRP.


     The role of this part of the PPC system is to accumulate demand information and formulate
     production plans and schedules. In a multiplant company, it divides demand information into
     product categories and prepares master schedules for every plant.


     The centralized system creates daily schedules by incorporating the most recent customer order
     information into the level schedule.
Chapter 18   Planning and Control in Pull Production
Chapter 18                                                                 Planning and Control in Pull Production




                                             Decentralized System


     The role of the decentralized part of the system is to oblige the production requirements specified
     in the MPSs and daily schedules.


     The decentralized part is comprised of departmental managers, shop-floor supervisors. and teams
     of workers, it is primarily a shop-floor based system.


     Plant and department managers receive MPS pre-plans from the central system, which they use to
     determine how to produce products in the mix and volume specified by the plans. If a plan is difficult
     or impossible to meet, the centralized system is notified and the plan revised.
Chapter 18                                                               Planning and Control in Pull Production




                          Centralized Planning and Control System



      The centralized system anticipates demand, then sets in motion the actions for procurement,
      organization, and utilization of resources necessary to meet demand.

      The three main functions of the centralized system are:


       Monthly planning of the MPS

       Daily scheduling of the final production stage

       Materials forecasting and procurement
Chapter 18                                                             Planning and Control in Pull Production




                                            Monthly Planning



      The centralized system prepares monthly demand forecasts for each product, product group,
      or other end-items, and then creates the MPSs for each.
Chapter 18                                                             Planning and Control in Pull Production




                                            Daily Scheduling



      The MPS for the current month is broken down into weekly schedules, then into daily schedules.
Chapter 18                                                                 Planning and Control in Pull Production




    Every week the centralized system receives customer order information for a 10-day period.
    This order information includes firm customer orders and the most recent sales forecasts from
    sources such as dealers, sales people, and distributors.

    The total demand for three successive 10-day orders (i.e., 30 days demand) must fall within
    the planned production volume of the level production schedule for the month.


   The central system receives the 10-day demand information at least 1 week prior to the 2-week
   time block that the information represents. For example, customer orders to be filled in the first 10 days of
   May should be received 1 week prior to that, or by April 24. Note that although the system requires 10-day
   order information a week before production much of the information might still be forecasted
Chapter 18                                                               Planning and Control in Pull Production




    At companies like Toyota and Nissan, the centralized system performs one additional step in
    setting the daily production schedules. Besides information on 10-day demand, the system incorporates
    information received every day from sales sources about order alterations. Alterations include new orders
    canceled orders, and other changes to orders affecting the most recent 10-day period.


     At Toyota the daily final assembly schedule is prepared 4 days in advance of the production day
     (shown in Figure 18.4).
Chapter 18                                                                 Planning and Control in Pull Production




     While setting the final daily schedule, the system also sets the requirements for all materials,
     parts, and assemblies for the day of production. 4 days later. Three days before production,
     the centralized system transmits the finalized daily schedule to the plant. Two days before production,
     the plant determines the MMP sequence for the schedule. On the day of production, the MMP
     sequence is displayed at the final stage of the process, where it is executed.

     For large products like automobiles, major components such as engines and transmissions are each
     assembled on their own production lines. Each of these lines also has a level daily production schedule
     and MMP sequence, which is derived from the daily FAS for the automobile assembly line.


     Some manufacturers allow salespeople access to the daily production schedule. Since some of the
     models produced in the MMP sequence are for forecasted demand (not firm orders), these are available
     for immediate sale. The salesperson can inform customers about these models
     (the ones available for quick delivery) and also how long they will have to wait for other models not
     on the current daily schedule.
Chapter 18                                                               Planning and Control in Pull Production




                                     Material Procurement Forecast




      The quantity of materials and parts for all products is estimated from the monthly MPS and
      the bill of materials (BOM).


     At the start of each month, information about the anticipated daily material requirements for that
     month is sent to suppliers. Forecasted material requirements for the following month or two are also
     sent to allow the suppliers time to adjust to changes in requirement levels.


      Many pull production companies have direct Kanban links to their suppliers. Supplier Kanban systems
      work very much like internal pull systems, except the upstream operations to which replenishment orders
      and empty containers are sent are external suppliers.
Chapter 18                                                               Planning and Control in Pull Production




      Daily production schedules, which are set a week in advance (at Toyota, 4 days), are used to determine
      daily material requirements. Every week the parameters of the supplier Kanban system are reviewed
      and adjusted as necessary to reflect demand for the upcoming week.



     Not all pull production manufacturers use Kanban for daily procurement of materials. At Nissan, for
     example, daily ordering of materials is done by a centralized MRP system that uses daily time buckets.
     The order process combines the finalized daily production schedule for 4 days later with the BOMs for
     the products that will be assembled. To meet daily requirements, suppliers make eight deliveries each
     day. Eighty percent of supplied parts are ordered in this way. For common, standardized parts, orders
     are placed less frequently, typically about every 2 weeks using the 10-day order information. For
     specialized parts for low-volume products, orders are placed only monthly.
Chapter 18                                                                Planning and Control in Pull Production




                     The Decentralized Planning and Control System




       The most significant difference between pull systems and traditional push systems is that in the
       former the functions of detailed planning, scheduling, and control are decentralized, while in
       the latter they are centralized. In pull production, shop-floor supervisors and worker teams
       assume much of the responsibility for detailed capacity planning, scheduling, and work control.
       In many instances, they also handle procurement of purchased materials.

       Each month the production output of workcells and independent workstations might have to be
       altered to meet changes in the monthly MPS. This requires production capacity flexibility, which
       is achieved through adjustable work hours, flexible workcells and machine configurations, short
       changeover times, crosstrained workers, and so on
Chapter 18                                                                Planning and Control in Pull Production




       The worker team at each cell or department has its own personal computer for performing
       capacity planning, quality analysis, inventory control, and reporting. Information about the MPS
       and BOMs is retrieved from the centralized PPC system. Information about current capacity
       and inventory is sent to the centralized system


       In traditional companies the sole purpose of collecting data about the shop floor is to provide the
       centralized PPC system with information for accounting and planning. But that must change if a
       company wants to achieve global competitive status. The purpose of gathering data about the shop
       floor must include providing shop-floor people with information for scheduling and controlling work
Chapter 18                                                                Planning and Control in Pull Production




        In JIT companies, much of the information that worker teams rely on for daily scheduling and
        control is generated and displayed by the visual-management system, visual because people
        know the status of the system and how much and when to produce simply by looking at kanban
        cards and containers in the workplace.

        Part of the role of worker teams in the decentralized control system is to track performance
        measures such as production rates, production lead times, setup times, product quality, and
        equipment availability and effectiveness. Daily, hourly, and by event, workers update charts
        about defects, breakdowns, setups, etc. Supervisors prepare summaries of this information
        and send it (say, via PC network) to the cen-tralized system, which uses it for updating
        estimates of production capacity levels and setting MPSs and daily production schedules.
        Up-to-date information from the shop floor keeps the centralized planning staff in touch with
        reality and helps ensure that MPSs and daily schedules are realistic.
Chapter 18                                                                 Planning and Control in Pull Production




                  Adapting MRP-Based PPC System to Pull Production




        A primary goal of JIT companies is to manufacture products with the least amount of waste.
        Associated with this goal is the principle of simplification: accomplish the same ends, but in a less
        complex, more basic way and with fewer steps. In manufacturing that translates into producing
        products that have fewer parts and using processes that require fewer steps.
        In reducing the number of steps in a process, non-value-added steps such as storage are
        eliminated first. In pull production, WIP levels are progressively reduced

        Pull production can thus simplify a manufacturing process just by eliminating steps that involve
        administrative procedures, even if no processing steps are eliminated


         One of the first things a company must do when converting from push production to pull
         production is to simplify the BOM for each end-item.
Chapter 18                                                                Planning and Control in Pull Production




      The BOM in Figure 18.5 shows that item R consists of items S and Y, both which must be individually
      manufactured and then combined. In traditional push manufacturing, the MRP system maintains
      inventory records for every item at every stage of the production process for purposes of tracking
      inventory levels and production status. In reference to the BOM in Figure 18.5, inventory records are
      thus maintained for the finished product (the top level, item R), all raw materials and purchased parts
      (bottom level, items T, V, D, C). and all WIP (the nodes at intermediate levels, items S and Y)—a total
      of seven records. Each record corresponds to a place somewhere in the plant (a shop-floor location, a
      stock room, etc.)
Chapter 18                                                                   Planning and Control in Pull Production




       An MRP system ordinarily maintains records for every location where material is stocked. If instead of
       being held in stock, a material is moved directly from one stage of a process to the next, or if it is held
       relatively briefly at a stage and in a small quantity (as in pull production), then there is no need to
       keep track of it at that stage. Lack of need to keep track of an item corresponds to removing the item
       from the BOM and to removing the inventory record for it from the MRP system. Hence, by just
       smoothing production flow and eliminating places where items are stored, the BOM can be flattened,
       even though the number of component parts in the product and the stages in the process remain the
       same.
Chapter 18   Planning and Control in Pull Production
Chapter 18   Planning and Control in Pull Production
Chapter 18                                                                Planning and Control in Pull Production




                                        Stock Areas and Point-of-Use


        Corresponding to each MRP record is a stock area, a physical location where material is held for
        use by a workcenter, workcell, or workstation. The stock area is the place where items
        represented by MRP records are located. To minimize handling time and cost, the stock area is
        ideally located at the place where the material is used—the point of use. Material at the point of
        use is ordinarily within close reach of workers.
Chapter 18                                             Planning and Control in Pull Production




             PPC - Production Planning and Control
             MRP – Material Requirements Planning
             MPS – Master Production Schedule
             FAS – Final Assembly Schedule
             BOM – Bill of Materials
             CRP – Capacity and Requirement Planning
             JIT – Just in Time

				
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