ERP MRP SYSTEM
What Are ERP Solutions
Schedule-Based (Push) Manufacturing, production is controlled by a computer schedule. Quantities of fabricated parts or sub-assemblies are scheduled and completed based on their consuming (higher-level) products start date. Production is tracked and controlled by the MRP/ERP systems and design tools developed for the 1960’s. Production thru-put is based upon the scheduling lead time and measured in term of days, and days into weeks. Scheduling is common in America and Europe and it is batch quantity production. Single digit inventory turn-over is common in ERP scheduling.
In the 1960s and 70s, the computer companies were creating applications for their proprietary operating systems. These applications would only run on their computers. Similar to the environment we had with the cell phones. They had proprietary operating systems such as Android and Apple. Each had their own apps for their operating system.
To sell their computers, they developed applications for specific industries. The applications they developed for manufacturing were called BOMP for bill of material processing and MRP for material requirements planning. MRP was later expanded to include shop floor control to schedule and track the lots of parts from workstation to workstation. The computer companies created work orders and special shop floor tracking stations where employees could enter their data regarding the number of pieces they produced and where they produced the pieces. These data collection workstations were very profitable and also allowed them to continually update their computer systems to more powerful processors.
Later on, they added the financial systems to the manufacturing system and ERP was born. In all cases they were designed to be very transaction intensive which is the best way to sell computer hardware. All ERP systems are work order and batch/schedule based.
On the other hand, in Flow manufacturing the process design is tied together which allows pieces and assemblies to flow one at at time. This is often referred to as a single piece flow. In Flow Manufacturing there is nothing to track, that is taken care of in the initial line design. The material pull system, Kanban, manages the flow and movement of all parts and once again there is nothing to track. Internally to the Flow process, there is very little to count or track.
The Flow manufacturing company still has a need for a computer system. Financial systems are greatly simplified, without work orders and labor base tracking. The manufacturing system is used for order smoothing, MRP (without workorders and shop floor control), backflush and electronic supplier forecasting. Simpler and much easier to manage. Reference Flow Manufacturing and DFT for management reporting.
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What Are ERP Solutions And How Do They Work?
Pull Vs Push Manufacturing
Pull & Flow Manufacturing vs Push/Batch Scheduled Manufacturing
Flow Production (Pull Manufacturing)
With Flow production manufacturing, the work to produce a product is chained together. By design, work at an operation is determined based upon a Takt time calculation. Takt time is the targeted work for a flow process to achieve its designed capacity.
Simply put, if a manufacturer wanted to produce 24 products per day and they worked 8 hours per day, they would need to produce a product every 20 minutes. The 20 minute target is the Takt time for that process. Takt time defines work in a flow process.
The Flow manufacturer designs the flow and pull process one time.
Quality is designed into each operation for PPM quality. To adjust volume, they would adjust staffing to allow employees to flex from one operation to another. Typically, a Flow line can run anywhere from 50% of capacity up to design capacity, as a minimum, without any changes in the operational work content or machine time.
Once the operations are defined, a Kaban pull technique is used to pull material to each operation. Kaban is sized based upon value, size, quality, fragility etc. Kanban focuses per part, NO KITTING.
Schedule/Batch Production (Push Manufacturing)
Production is planned and controlled by building sub-assemblies, fabricated parts and final products that are defined by hierarchical bills of material. Work is structured by the bill of material which defines what raw material and parts go into each sub-assembly and fabricated part. The bill of material is used to pick kits of parts for each assembly. Corresponding exploded drawings show how the parts are to be put together or machined for each finished sub-assembly or fabricated part. Assemblies and fabricated parts are sent to external inspection for quality. The production scheduler uses an ERP system to control work orders to schedule start dates, due dates and batch quantities (daily, weekly or monthly quantities) for production.
What is the Difference Between Pull vs Push Manufacturing?
The results speak about what the differences are between pull verses push manufacturing.
Flow Pull Results
Products go through the flow process in the minutes and hours it takes to produce a product. Since work can be performed in parallel, the time a product is in production is less than the total work content time. PPM quality is designed into each operation. Any Product-Any Volume-Any Day is now reality!
Scheduled/Batch Push Results
In scheduling/batch production, products go through manufacturing production in lead time days, and days into weeks. In batch production, it is very common to find a product that has 3 hours of work content in it, but it takes 3 weeks to get a product all the way through the various departments and on to the customer or finished goods. Quality defects are exposed to the entire batch/lot…AQL quality results. This pales in comparison to the DFT parts per million (PPM) quality which is designed into the Flow Process.
The Bottom Line Push vs Pull
Since the Flow manufacturer will get the product through the production process in work content time, 3 hours or less, the corresponding inventory is considerably less and the inventory turnover is considerably higher for the flow manufacturer verses the batch scheduler. The higher the inventory turn-over, the more profit the company will make. PPM quality improves profitability and customer satisfaction. Two different methodologies with very different results.
Techniques and tools do make a difference! Demand Flow Technology (DFT) is the Flow Manufacturing Tool to make the transition a reality.
Path to Flow Business Strategy and Manufacturing Excellence
Unfortunately, the batch/scheduling companies skip the training and work associated to transforming to the first two critical design steps and move directly to the third philosophical step. As expected, their results still correspond to their current batch/scheduling production methodologies. That is why the batch/scheduler with 20 black belt waste eliminators, is till turning inventory 3.9 turns after 18 years.
Batch/Scheduling is Not a Process
The quantity scheduled today may have no relationship to the quantity that was scheduled last week or last month. In addition to quantity, the product may be a built in the same work center and potentially a totally different work center with different people, machines and different processes. The people built the products last month and this month they spread the work over five.
For production to even be a process it must have 3 important characteristics:
Taiichi Ohno was one of the architects the Toyota Production System and later on in the Kanban material production pull system. He was one of the few Japanese that got into how they designed the Flow production system and Kanban. He was also very critical of the Western world’s scheduling methodologies, particularly in the amount of waste they inherently created with batch scheduling. He documented his seven wastes model which is a key in any academic approach for Flow Manufacturing.
THE 7 WASTES
Adhering to the traditional "Push" method risks creating any or all of the various forms of profit killing waste
- Overproduction (waste of producing too much product)
- Waiting (waste of idle workers)
- Transportation (waste of moving parts from place to place)
- Over-processing (waste of over-engineering a product beyond what customers are willing to pay for)
- Inventory (waste via excess inventory that must be stored, with the potential that it may need to be scrapped)
- Movement (waste of moving people or goods inefficiently or excessively)
- Waste of making defective products
Often times management will claim to be following the lead of the Japanese or the Toyota production system with their own Lean program. However, their Lean program continues with a scheduling foundation with an added waste elimination, lean or agile philosophy. Manufacturing is still push-based, with ERP production scheduling, picking kits, external inspection and labor tracking to a scheduled quantity?
The bottom line barely changes. These push-methods in Lean scheduled production are contradictory to the Toyota production system, which is a pull-based, FLOW production process.
Western management may not understand the strategically different foundations and techniques required to make the transformation and become globally competitive. JCIT2’s mission is to highlight the differences and to provide management teams with the technology and tools to achieve Flow manufacturing excellence.
DFT is the mathematical tools and foundation for Flow Manufacturing and the Toyota Production System. DFT creates a Flow process that changes volume and product mix on a daily basis. Since it is demand driven, it enables Flow manufacturers to drastically reduce working capital while increasing response to customer demand.