Strategies in Production and Operations Management David Bolton, CFPIM, C.P.M. Materials Manager, Rotek, Inc. Past President, APICS Past Education Director, APICS

Semester Expectations  Two tests  mid-term, final  Two projects  Project 1…OM Mentoring  Project 2…Advanced OM research  Homework  Participation  APICS / Plant tours  Final preparations for graduation

Changes in World Manufacturing  Prior to 2000  enormous investment in software, hardware, ancillary systems  much were in response to 2000 concerns  this prompted elimination of many ‘home- grown’ systems  Major ERP system companies responded  SAP, Oracle, J.D. Edwards, PeopleSoft

Changes in World Manufacturing  ERP system development  based on MRP logic  replaced older versions of MPC  added MPC as a baseline to ERP systems  Change was required on factory floor  need to respond to world changes  floor level teams, decentralized decisions  floor level problem solving  this required better information reporting

Changes in World Manufacturing  Customer expectations remain the driving force in Manufacturing development  more demands  faster information  faster product  shortened product cycles

Changes in World Manufacturing  Globalization  even small enterprises have business interests in other countries  could be manufacturing  could be procurement  increases the need for information reach  This causes the need for greater integration and management of the supply chain

APICS: The Association for Operations Management

APICS Certification  CPIM: Certified in Production and Inventory Management  CFPIM: Certified Fellow in Production and Inventory Management  CIRM: Certified in Integrated Resource Management  Chapters 8, 11, 17 and 19

The CPIM Curriculum  The APICS Dictionary  Basics of Supply Chain Management  Master Planning of Resources  Detailed Scheduling and Planning  Execution and Control of Operations  Strategic Management of Resources

The CPIM Curriculum  The APICS Dictionary  important reference document for all five areas of certification  good desk reference

The CPIM Curriculum  Basics of Supply Chain Management  Elements of supply chain  Just-in-time (JIT)  Total quality management (TQM)  Manufacturing Resource Planning (MRPII)  Demand planning  Capacity planning

The CPIM Curriculum  Master Planning of Resources  Demand Management  Sales and operations planning  Master scheduling  Measuring the business plan

The CPIM Curriculum  Detailed Scheduling and Planning  techniques and practices of inventory management  mechanics of material planning process  planning operations to support priority plan  planning procurement and external sources of supply

The CPIM Curriculum  Execution and Control of Operations  prioritization and sequencing of work  executing plans and implementing controls  authorizing and reporting activities for push and pull systems  evaluating performance and providing feedback

The CPIM Curriculum  Strategic Management of Resources  competitive market issues  choices affecting facilities, supply chain, information technology, organizational design  configuring and integrating internal design  evaluating and managing projects

Student APICS  Attend Akron APICS meetings on 2 nd Tuesday of the month  Speakers  Student paper competition  Region III meetings  Whatever you make it

Strategies in Production & Operations Management Chapter 1 Manufacturing Planning and Control

MPC provides information  Efficient management of materials  Effective utilization of people and equipment  Coordination of internal activities with external suppliers  Communication with the customer about market requirements

MPC Managerial Concerns  The context for MPC  The MPC system defined  An MPC system framework  Matching the MPC system with the needs of the firm  Evolution of the MPC system

The Context for MPC  Continual change in the competitive environment is key  Three key areas influence this change:  internationalization  the role of the customer  increasing use of information technology

Internationalization  International reach of manufacturing companies  Nike  global supply chain network for ‘hollow corporation’  Some firms are manufacturing only  Flextronics  high levels of flexibility

The Role of the Customer  Customer expectations:  product flexibility  process flexibility  responsiveness  lower transaction costs  lower inventories  MPC systems must be able to determine, transmit, revise and coordinate requirements globally...

Increasing Use of I.T.  Global response, coordination, and communication require rapid deployment of Information Technology

The MPC System Defined  The MPC system efficiently manages...  the flow of material  the utilization of people and equipment  The MPC system responds to customers by…  utilizing the capacity of our suppliers  utilizing our internal capacity  …to meet customer demands

Typical MPC Support Activities The activities are contained within 3 horizons:  Long term  Medium term  Short term

Typical MPC Support Activities  Long term  provides information to make decisions regarding capacity  equipment, buildings, suppliers, etc.  important when the enterprise is responding to short-term demands  is necessary to provide the right mix of human resources, technology and geographical locations to meet the firms future needs

Typical MPC Support Activities  Medium term  the fundamental issue is matching supply and demand  volume must be considered  mix must be considerted (GE Bearings)  focus is the exact mix of production, capacity and material needs  raw materials  work in process  finished goods

Typical MPC Support Activities  Short term  detailed scheduling required to meet the production requirements  time  people  materials  equipment  facilities  MPC system must track and report plan v. actuals

Costs and Benefits of MPC Systems  Initial costs are substantial  operational costs are significant  imagine a small machine shop of your own  achieving the benefits of the MPC system can be elusive  they must be recognized to be competitive

Costs and Benefits of MPC Systems  Symptoms of a poorly operating MPC system:  poor customer service  excessive inventory  inappropriate assignment of materials, workers, and equipment  large numbers of expediters!

Costs and Benefits of MPC Systems  Symptoms can cause a firm…  to go bankrupt  miss opportunities

Costs and Benefits of MPC Systems  Benefits of a properly operating system…  Timken Bearing Division in N.C.  controlled WIP  smooth production flows  short and consistent delivery lead times  rapid response to new orders  efficient production lot sizes  labor productivity increases

Costs and Benefits of MPC Systems  Benefits of a properly operating system…  Nortel Networks streamlining of their supply chain  reduction in manufacturing and distribution overhead  reduced throughput times  focus on core competencies

Costs and Benefits of MPC Systems  Benefits of a properly operating system…  Korean Heavy Industries  reduction in lead time by 40 percent  reduction in inventories by 50 percent  direct labor productivity increase of 40 percent

An MPC System Framework  Now typical to have an MPC system imbedded in our ERP systems  More activities of these MPC systems have evolved with global need for change

MPC System Activities  The general MPC system

General Information Flow

Matching the MPC System with the Needs of the Firm  The specific needs depend on the nature of the production process  These needs cannot remain static  competitive conditions  customer expectations  design changes  supplier capabilities  internal needs

Matching the MPC System with the Needs of the Firm  MPC technology will also change with time  changes to increased speed of computers will change the MPC  planning cycles can be speeded up  information can be analyzed real time  inventories can be shared real time  MPC system must reflect factory floor conditions

MPC Classification Schema  Figure 1.2

Evolution of the MPC System  The key is keeping the MPC system matched to the company’s attributes at a particular point in time.  This means the strategy of the firm must be reviewed and compared with the system from time to time

The Changing Competitive World  Figure 1.3  New technology, products, processes, systems, techniques permit new competitive initiatives  Marketplace dictates drive revisions in company strategies  All change our look at the MPC

Reacting to the Changes  If the MPC system is not reviewed periodically to compare it with company needs, it may become ineffective.  JIT moves items so quickly that floor schedules are not needed

Homework for Chapter 1  Discussion questions 1, 2, 3, 4, and 5  Short answers, typewritten for executive review  Think about your answers, role-play a key production staff member