Читать книгу Demand Driven Material Requirements Planning (DDMRP), Version 2 - Carol Ptak - Страница 18
ОглавлениеStrategic Inventory Positioning
At the risk of oversimplifying the everyday tasks of buyers and planners, we should understand that they are constantly dealing with two questions of supply order management. The two questions are these: How much and when? Hundreds if not thousands of books have been written about a wide variety of techniques and tricks to attempt to answer these questions.
The question of how much is a question concerning quantity. Planners and buyers are continually validating, verifying, and supplementing how much they really need versus what MRP is telling them. The question of when is simply a question of timing. Planners and buyers are continually validating, verifying, and supplementing when they really need things versus what MRP is telling them. This is a constantly changing series of wrong answers as system nervousness and the bullwhip impact the environment.
Thus their daily objective degenerates to simply being less wrong. They are constantly challenged about how they historically answered these questions and why things are not available in the time or quantity that they are needed. A common practice is for the planners or buyers to save screenshots of the MRP system in order to create a defense for why they did what they did and when they did it. A frustrating situation indeed.
Perhaps all this activity and series of constantly dissatisfactory answers is not related to the questions, how much and when? Perhaps it is first and foremost related to our failure to ask a more fundamental question.
As discussed earlier, the key to protecting and promoting the flow of relevant information requires the use of decoupling points. Decoupling enables a bidirectional benefit—it mitigates the demand signal distortion (relevant information) and supply continuity variability (relevant materials) inherent in the bullwhip effect. But this raises a question—where should these decoupling points be placed within a supply chain or organization to maximize effectiveness?
Most organizations are completely unprepared to deal with this question. First, they lack the knowledge, comprehension, or even capability to even ask the simple question, “Where?” Even if they do ask the right question, they lack the ability to effectively answer that question.
Thus the first component of Demand Driven Material Requirements Planning is determining where the decoupling points and their respective buffers should be placed. This component becomes the cornerstone of the Demand Driven Operating Model discussed in Chapter 5. The selection of these points is a strategic decision that impacts the performance of the supply-demand network in many regards: service, working capital, expedite-related expenses, cash flow, and ultimately return on investment.
Chapters 1 to 4 created the in-depth case about why the question of “where” must be asked. This chapter focuses on how to properly answer this question through the consideration of six key factors.
This is the time the typical customer is willing to wait before seeking an alternative source. Customer tolerance time also can be referred to as demand lead time. According to APICS, demand lead time is:
The amount of time potential customers are willing to wait for the delivery of a good or a service. Syn: customer tolerance time. (p. 45)
Determining this lead time often takes the active involvement of sales and customer service.
This lead time will allow an increase of price or the capture of additional business through either existing or new customer channels. Determining this lead time takes the active involvement of sales and customer service. Be aware that there could be different stratifications of market potential lead time. For example, a one-week reduction in lead time may only result in an increase in orders, whereas a two-week reduction in lead time could result in both an increase in orders and a potential price increase on some of those orders. Properly segmenting the market will maximize the possible revenue potential for the company and provide excellent revenue growth control. This is a consideration in Demand Driven Sales and Operations Planning, covered in Chapter 13.
Sales Order Visibility Horizon
The sales order visibility horizon is the time frame in which we typically become aware of sales orders or actual dependent demand. In retail situations, customers do not issue a sales order to a shop in advance of going to the shop. Thus the sales order visibility horizon in this situation is zero. In most manufacturing scenarios, however, there are sales orders conveyed in advance of expecting receipt of the item. Often the sales order visibility either matches or exceeds customer tolerance time. The longer the visibility to sales orders, the better the capability of the environment to see potential spikes and derive relevant demand signal information. In many cases relevant requirements are obscured from planners because all demand (including planned orders based on forecast and safety stock requirements) is aggregated together for aggregate planning purposes.
External variability considers both demand and supply variability.
Variable Rate of Demand
This refers to the potential for swings and spikes in demand that could overwhelm resources (capacity, stock, cash, etc.). This variability can be calculated by a variety of equations or determined heuristically by experienced planning personnel. As noted in the APICS Dictionary,
“Mathematically, demand variability or uncertainty can be calculated through standard deviation, mean absolute deviation (MAD) or variance of forecast errors.” If the data required for mathematical calculation do not exist, companies can also use the following criteria:
High-demand variability. Products and parts that are subject to frequent spikes within the customer tolerance time.
Medium-demand variability. Products and parts that are subject to occasional spikes within the customer tolerance time.
Low-demand variability. Products and parts that have little to no spike activity. The demand is stable within the customer tolerance time.
Variable Rate of Supply
This is the potential for and severity of disruptions in sources of supply or specific suppliers. This can also be referred to as supply continuity variability. It can be calculated by examining the variance of promise dates versus actual receipt dates. When first considering the variable rate of supply, the initial variances can be caused by critical inherent flaws in the MRP system. Additionally, those dates often shift due to other shortcomings associated with the way MRP is employed rather than because of the supplier capability. Any critical supplier of a major manufacturer will know exactly which day its customer regenerates its MRP. These suppliers will see a flurry of additional orders, canceled orders, and changes to orders (quantity, specification, and request date).
If the data required for mathematical calculation do not exist, the following heuristics can be used:
High supply variability. Frequent supply disruptions
Medium supply variability. Occasional supply disruptions
Low supply variability. Reliable supply
Inventory Leverage and Flexibility
There are places in the integrated bill of material (BOM) structure (matrix bill of material) or the distribution network that provide a company with the most available options as well as the best lead time compression to meet the business needs. Within manufacturing, these places are typically represented by key purchased materials, subassemblies, and intermediate components. This becomes more critical in environments with BOMs that are deeper and more complex (broader) and have more shared components and materials. This concept will be explored in detail later in this chapter.
Similar to how variability can impact a bill of material, the longer and more complex the routing structure and dependent chain of events (including interplant transfers), the more important it can be to protect identified key areas. These types of operations include areas where there is limited capacity, or where quality can be compromised by disruptions, or where variability tends to be accumulated or amplified. In Lean, these areas might be referred to as pacesetters. In the Theory of Constraints, they can be referred to as drums. Whatever manufacturing or operational methodology a company ascribes to, these resources typically represent control points that have a huge impact on the total flow or velocity that a particular plant, resource, or area can maintain or achieve.
The preceding six factors must be applied systematically across the entire BOM, routing structure, manufacturing facilities, and supply-demand network to determine the best decoupling positions for purchased, manufactured, and finished items (including service parts) in order to protect and promote the flow of relevant information and drive return on investment performance.
Applying the Positioning Criteria
As an example, let us apply these six factors to a relatively simple environment. In our example, only two finished products are made. Figure 6-1 shows the bill of material for the two products: FPE and FPF.
The numbers in the circles represent the manufacturing or purchasing lead time in days for each discrete part number. For instance, FPE takes 2 days to make when all components are available, and 204P has a purchasing lead time of 20 days.
For each part number in this example, there are three relevant lead times. These are described in the APICS Dictionary as:
Manufacturing lead time (MLT): The total time required to manufacture an item, exclusive of lower level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included here are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time. (p. 98)
FIGURE 6-1 Product structures for FPE and FPF
Cumulative lead time (CLT): The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill of material path below the item; whichever path adds up to the greatest number defines cumulative lead time. (p. 38)
Purchasing lead time (PLT): The total lead time required to obtain a purchased item. Included here are order preparation and release time; supplier lead time; transportation time; and receiving, inspection, and put-away time. (p. 142)
Considering these definitions, for FPE the manufacturing lead time is 2 days, while the cumulative lead time is 26 days (20-day purchasing lead time + 4 days manufacturing lead time for 101 + 2 days manufacturing lead time for FPE). In the case of FPF, the manufacturing lead time is 3 days, while the cumulative lead time is 27 (20-day purchasing lead time + 4 days manufacturing lead time for 101 + 3 days manufacturing lead time for FPF).
To properly apply the six factors, we will need additional information about the environment. Figure 6-2 shows the product and routing structure of both FPE and FPF together. A “routing,” as defined by APICS, is “information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standards for setup and run.” Together, the BOM and the routing paint a relatively complete picture of the view needed to consider positioning for this scenario. Note that no run rates and setup times have been defined, as these will not be relevant for this simple example.
Once a part 205P is introduced to the manufacturing process, it is run through a series of resources (A > B > C > D) and combined with a converted 204P at resource Z. Part 204P is run through a series of resources (B > C > E > F). Resource Z is an assembly operation and the final step in producing intermediate part 101. This conversion process (from 204P and 205P to 101), assuming concurrent activity across paths, takes four days on average. Thus 101’s manufacturing lead time is four days.
FIGURE 6-2 Product and routing structure for FPE and FPF
Resource Z is a “convergent point.” A convergent point is any place where routing legs come together. As discussed in Chapter 3, these points of integration occur most often where significant delays accumulate because all parts must be present for the resource to perform its operation. Resource Z requires a converted 204P from resource F and a converted 205P from resource D at the same time and quantity. This make resource Z a candidate for a resource that we would like to protect as much as possible—a critical operation.
Part 101 is a “point of divergence.” A divergent point means that part 101 can be directed into different manufacturing paths culminating in various end items. A divergent point represents a commitment that cannot be practically or cost-effectively reversed. An example would be the introduction of a sheet of steel into a fabrication process. Once the sheet is cut, the options available to use it are narrowed significantly. Thus the decision to cut it precludes it from being used in many other ways.
For this example, part 101 is directed to resources S and T to either begin the process to convert it to FPE or be combined with the purchased part 102P to be finished into an FPF. The conversion into FPE takes two days, and the conversion to FPF, a more complicated build, takes three days. Thus the manufacturing lead time is two days for FPE and three days for FPF.
When checking with sales and customer service, we find that the customer tolerance time for both products is at three days. FPF has lower volumes, as it is a higher-end product, but the market expects it within the same time frame as the lower-end product FPE. Additionally, sales has indicated that there are frequent opportunities in the market for FPE to win quick-turn business. Customers are not inclined to pay more for the items, but the volume would definitely increase with the capability to offer same-day fulfillment. Finally, with the exception of quickturn requests, this company typically receives sales orders at least three days in advance for both products. Occasionally there can be large orders, but those larger orders tend to have at least two weeks of sales order visibility.
When checking with purchasing, we discover that the suppliers for 204P and 205P have decent reliability. Occasional disruptions do happen, but overall both have performed well over the last year. The supplier for 102P, however, is a different story. This supplier is notorious for late deliveries and even routinely produces suspect quality. Figure 6-3 summarizes the positioning criteria information for this example.
FIGURE 6-3 Example decoupling point positioning answers
Based on these answers, how should decoupling point positioning be approached in this environment? The impact of each of the criteria on the model is considered:
Customer tolerance time. Three days makes it a requirement to consider decoupling at the end item or 101 and 102P levels. To do anything less will require making product to some sort of anticipated signal or forecast and incur the negatives associated with that.
Market potential lead time. The opportunity for FPE suggests a benefit for decoupling and stocking at FPE. The additional volume or customers could provide profitable revenue growth.
Sale order visibility horizon. Decoupling at the finished goods or 101 and 102P levels would allow the environment to pace to actual sales orders. This is the most relevant demand signal assuring the alignment of our resources to actual requirements.
External variability. Demand variability does not seem to be a huge issue—large orders are typically known in advance. Supply variability is an issue for 102P. Stocking at 102P would seem prudent.
Inventory leverage and flexibility. Decoupling and stocking at 101 would allow the common component to flow to the end items as required.
Critical operation protection. While the suppliers for 204P and 205P are reliable, decoupling those positions would provide as much protection to resource Z as possible from a product structure perspective.
In consideration of these answers to the positioning criteria, Figure 6-4 shows a model for this environment.
FIGURE 6-4 Decoupling positions based on positioning factor answers
The key elements and benefits of this model include:
The FPE stock position allows for quick-turn business to be satisfied. This allows for an increase in sales revenue.
The FPE stock position is minimized due to the short lead time from the decoupling point at 101.
FPF can move to an assemble-to-order strategy as the lead time (three days) and customer tolerance times (three days) are compatible. Achieving this lead time reliably should be possible for three reasons. First, 101 and 102P are available as needed, decoupling lead time from the front part of the manufacturing process and supplier, respectively. Second, demand variability is not an issue with this product, as large orders are typically known in advance. And third, the buffer at FPE minimizes short-range capacity contention in resources S and T that could affect the ability to consistently achieve the three-day lead time for FPF.
The decoupling points at 204P and 205P allow supplier variability to be isolated from the concurrent manufacturing processes in front of resource Z, thus minimizing as much as possible from a product structure perspective the variability experienced at resource Z as an assembly operation. More can be done to protect resource Z, but those options are outside the scope of decoupling point considerations. For example, a time buffer can be used in advance of resource Z in order to allow for components to be synchronized effectively. This, however, is at the scheduling and execution level of the Demand Driven Operating Model.
