CPIM MRP Study Notice.doc

Session1 The Business Planning Process1.Overview of the curriculum: ? Entry module: Basics of Supply Chain Management;? Business process modules: Master Planning of Resources, Detailed Scheduling and Planning, Execution and Control of Operations.? Capstone module: Strategic Management of Resources.2. This module includes the explanation of the business processes required to translate actual and projected demand into realistic and executable production schedules. The module highlights the need for different types of supply plans, how they are constructed in a range of business environments, and alternative approaches to developing and evaluating such plans.Master planning of resources is defined as a grouping of the business processes that includes the following activities:? Demand Management(which includes forecasting,distribution planning,and order servicing)? Sales and Operations Planning(which integrates the plans of business-sales, marketing, development, manufacturing,sourcing and financial-and utilizes resource planning)? Master Scheduling(which includes development of a master production schedule and a final assembly schedules as applicable and which utilizes rough-cut capacity planning)3. The output of this process(SOP) is the approved production plan, the sales plan, and the inventory/backlog plan.4.The planning challenge is to keep the supply side and the demand side in balance.5.The level of product volume establishes the big picture of demand placed on a supply operation.Setup time reduction programs and the adoption of small work cells have enabled some suppliers to respond to variation in product mix with relative ease.6.Key business goals:? Growth;? Profitability;? Return on investment;? Market share;? Customer service;? Reputation;? Company value.7.Selection of scheduling approaches:? A type-Make to Stock;? X type-Assemble to Order;? V type-Make to Order.8.This can also be related to product position within life cycle. In the introductory phase, prototypes may be engineer-to-order, during the growth phase this normally becomes make- or assemble-to-order, and may become make-to-order as a product enters the maturity phase, often returning to make-to-order in the decline phase.9.P:D ratio = the manufacturing lead time/the customer required delivery time.10.Concerns of the different manufacturing environment strategies:? ETO: availability of technical resources, resource availability, flexible facilities;? MTO: production schedule, flexible facilities;? ATO: rapid delivery, customized variations;? MTS: inventory costs, stock distribution.The make-to-order environment is used often with items with many possible product configurations.11.SOP occurs on a monthly cycle and displays information in both units and dollars.12.Product families: Ideally there should be no more than 6 to 12 product groupings per separate business unit; Products that are grouped into families often have the following characteristics: Similar manufacturing requirements; Similar sales requirements; Proportionate cost and revenue effects; Similar function and design. Companies frequently choose to place new products in a separate family.13.Resource planning decisions always require top management approval.A bill of resources determines the amount of resources consumed by the production of one typical unit of a product family.14.Rough-cut capacity planning is the process of converting the master production schedule into requirements for critical resources, often including labor, machinery, warehouse space, suppliers capabilities, and, in some cases, money.-Session2 Forecasting Demand1.Forecasts should be expressed as a value, with a +/- percentage of error associated with the forecast. The key concept about forecasting for business purposes is that it does not have to be 100 percent accurate, but the planning system does need to include information on the level of forecast accuracy. Forecast of 80 percent accuracy are better than no forecast at all.2.A forecast is an attempt to reduce the amount of uncertainty a company encounters.3.Many decisions depend on forecasts. Numerous business examples relate the problem of making purchase decisions on the basis of inadequate forecast information.4.General forecasting techniques:?Qualitative techniques: based on intuitive or judgmental evaluation;?Quantitative techniques: based on computational projection of a numeric relationship.5.General forecasting data sources:? Intrinsic: forecasting data sources are based on historical patterns of the data itself from company data;? Extrinsic: forecasting data sources are based on external patterns from information outside the company. Quantitative techniques are based on the premise that past demand is a good indicator of future demand.6.Sources of demand:?Consumers: the ultimate users of a service or product;?Customers: people who will receive an invoice and pay for a product;?Referrers: people who prescribe or recommend products or services to others;?Dealers and distributors: intermediaries who act on behalf of a supplier;?Intracompany: purchases from affiliated business units of the same company;?Service parts: items subject to independent demand for service reasons.7.Factors influencing demand:?Internal factors: -product promotion; -product substitution.?External factors: -random fluctuation; -seasonality; -trend; -economic cycle; -changing customer preferences and demands.8.It is important to note that the higher the item in the hierarchy, the more accurate the forecast.9.Quantitative techniques:?Moving average;?Exponential smoothing;?Regression analysis;?Adaptive smoothing;?Graphical methods;?Econometric modeling;?Life-cycle modeling. Moving averages do not work well with seasonal demand.10.Qualitative techniques:?Expert opinion;?Market research;?Focus groups;?Historical analogy;?Delphi method;?Panel consensus.11.Product life-cycle management:?Stage1: introductory phase;?Stage2: growth phase;?Stage3: maturity phase;?Stage4: decline phase.12.Most companies develop a business plan on an annual basis, a sales and operations plan on a monthly basis, and a master schedule on a weekly or daily basis.13.It is important to record customer-requested quantities, not merely shipments, in historical records.14.An outlier is defined by the APICS Dictionary as: a data point that differs significantly from other data for a similar phenomenon. For example, if the average sales for some product were 10 units per month, and one moth had sales of 500 units, this sales point might be considered an outlier.15.Decomposition of data:?Purity the data;?Adjust the data;?Take out the baseline and components;?Identify demand components;?Measure the random error;?Project the series;?Recompose-Session3 Demand Management and Customer Service1.The purpose of the forecast is to add some preparation time for the supply operation so that actual orders can be delivered on the requested due date.2.Two basic techniques to do this (monitoring the forecast) involve the use of tracking signals and demand filters.3.Reasons for forecast inaccuracy:?Inappropriate forecasting method;?Lack of participation;?Too difficult to understand;?Lack of compatibility;?Data may be inaccurate;?Some data are inappropriate;?Lack of monitoring.4.Forecast accuracy measurements:?Period forecast error = A F;?APE(absolute percentage of error) = |A - F|/A * 100%;?MAD(mean absolute deviation) = |A - F|/n;?MAPE(mean absolute percentage of error) = (|A - F|/A * 100%)/n;?Standard deviation = 根号-(A F)2/(n 1).5.In a normal distribution, the mean, the median, and the mode are all identical.6.Monitoring the forecast techniques:?Bias = (A F)/n;?Tracking signal = (A F)/MAD;?Demand filters.7.Sources of demand:?Customer orders;?Distributors;?Interplant;?Service and replacement parts;?Repair/overhaul;?Samples;?New product trials.8.For both overall market and product mix, demand data are required.9.Customer relationship management(CRM):?Order processing;?Supplier requested changes;?Substitutions;?Change orders;?Customer returns;?Order entry accuracy.10.A customer-centered perspective is necessary for success.11.Order management is the planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders. Order service is the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Order service is also typically responsible for responding to customer inquiries and interacting with the master scheduler on availability of products.12.Customer, however, measure order lead time as the total elapsed time from the moment they identify a need until the goods are received.13.Technological elements of Quick Response(QR):?Forecasting/planning system;?Automatic replenishment;?Inventory management systems;?Streamlined distribution center processing;?e-Commerce;?Shipping container marking;?Automated point of sale data.14.Order management includes line item fill rate, shipments by due dates, stockouts, cycle times, and other similar process data.15.It is important that forecasting be used only for independent items.16.Quality, value-added service, and speed of delivery have become the means by which the enterprise can meet and exceed the expectations of its customers.17.In the pre-transaction or pre-sale phase, the focus is on customer expectations.18.Being proactive with the customers, anticipating their future needs and developing solutions to their potential future problems.19.Conducting customer surveys about product or service satisfaction, collecting and analyzing the data, and making changes that improve customer service and the level of customer satisfaction.20.In the eyes of customer, service perception is reality. A more serious perception problem-that there are two classes of customer: those who are important and those who are not. Tell the truth, even if it is bad news-Session4 Distribution Planning1.Considerations for distribution: How many levels should be involved in the distribution of goods? How many stocking locations should be provided at each level, and where should they be located geographically? What functions, such as bulk breaking and packaging, should be performed at each level of stocking location? Should distribution stocking locations be owned by the manufacture, or should they be subcontracted to independent companies? What is the best mode of transportation to ship goods from one level of the distribution network to another? Should a company own its own transportation system, or should common carriers be used? How can cost reductions be achieved in the transportation, storage, and handling of goods throughout the distribution network? What processes should be put in place to manage replenishment and supply?2.The overall goal of a distribution system is to provide products and services in an efficient, timely and cost-effective manner to multiple customers. This goal can be linked to the following objectives: High level of customer service; High level of distribution efficiency; Minimize inventory investment.3.These members (interdependent members of a common distribution channel system) not only supply products and services at the right time, place, quality, quantity, and price, but also stimulate demand through marketing and sales activities.4.Distribution relationships: Producing locations regional distribution points area distribution points lowest level distribution points.5.A forecast of demand from the distribution system is another source of requirements.6.Safety stock for DC = SS for 1 DC/根号- # of DCs7.In addition to transportation costs, there are other distribution costs such as: Inventory; Inventory carrying costs; Warehouse lease and utility costs; Packaging equipment and materials; Material handling equipment and personnel.8.Distribution site selection: - Quantitative factors: Inbound transportation cost; Outbound transportation costs; Building and land costs; Local tax structures; Local labor costs; Operating costs. - Qualitative factors: Customer base; A supply of skilled labor necessary to staff the DC is necessary; Labor relations in some communities can be contentious; others not; Government regulations can be minimal or filled with red tape; Availability of transportation systems. Climate may play a part in the ability of the transportation systems to function, as in the case of being snowbound; Schools, medical facilities, and recreation; Infrastructure is another siting consideration.9.Distribution planning systems: Reorder point; Pull system with reorder point; Push system; Distribution requirements planning (DRP); Distribution resource planning (DRPII); Vendor-managed and vendor-owned inventory (VMI and VOI); Collaborative planning, forecasting, and replenishment (CPFR).10.DRPII, the extension of distribution requirements planning into the planning of the key resources contained in a distribution system: warehouse space, workforce, money, trucks, freight cars, etc.11.Bill of distribution, the structure of the BOD, on the other hand, has been designed to facilitate the transfer of requirements from the components (the satellite warehouse) to the parent (the supplying warehouse). This structure, often called an inverted BOM, performs an implosion whereby requirements are passed up the structure rather than down.12.These two systems (DRP/MRP) interfaces at the master production schedule.13.Because some safety stock will usually be needed in intermediate centers, the overall level of safety stock in a push distribution system would probably be more than in a pull system.14.The forecast is managed by DRP, whereas actual customer orders are managed by JIT.15.The JIT attitude shows that products residing in inventories constitute waste, and that direct shipment, cutting out the intermediaries, is the most effective means to eliminate this form of waste.-Session5 The Sales and Operations Planning Process1.The S&OP process relies on demand information obtained from the forecasting and demand management functions.2.The APICS Dictionary defines sales and operations planning as:A process that provides management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate level and tie to the business plan. It is the definitive statement of the company plans for the near to intermediate term covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operations planning process links the strategic plan for the business with its execution and reviews performance measures for continuous improvement.3.The planning challenge is to keep the supply side and the demand side completely in balance all the time. This is not easy, as forecasts always contain some element of error, customers change orders on a random basis, and production and suppliers experience numerous problems.4.The key points of an effective sales and operations planning process:?It is a business process;?It is designed to keep demand and supply in balance;?It is performed at the aggregate level of product families or groups;?It focuses on product volume, not product mix;?It occurs on a monthly cycle;?It displays information in both product units and financial numbers.5.The monthly sales and operations planning process:?Run sales forecast reports;?The demand planning phase;?The supply planning phase;?The pre-sales and operations plan meeting;?The executive S&OP meeing.6.The outputs of the sales and operations planning process include:?The production plan (for manufactured product families) ;?The purchase plan (for purchased product families);?The inventory plan (for make-to-stock product families);?The backlog plan (for make-to-order product families).7.The information that each participant brings to the table in the sales and operations planning meeting:?Engineering ? product development and/or product changes;?Human resources ? workforce availability;?Operations ? production constraints;?General manager ? business plan;?Materials ? supplier constraints;?Finance ? capital and financing information;?Marketing ? product demand;?Sales ? customer interface/concerns.8.The key points about how product groupings should be defined:?Prod