Chap 007
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CHAPTER 7 Managing Materials Flow
Materials Management Activities
7-2
• Anticipating materials requirements • Sourcing and obtaining materials • Introducing materials into the organization • Monitoring the status of materials as a current asset
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Objectives of Integrated Materials Management • • • • •
7-3
Low costs High level of service Quality assurance Low level of tied-up capital Support of other functions
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Differences Between Inbound and Outbound Transportation
7-4
• Market demand that generates the need for outbound movement is more uncertain and fluctuating • Inbound transportation tends to involve bulk raw materials, supplies, or parts • Firms exercise less control over inbound transportation due to total delivered pricing programs McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Forecasts • Demand forecast • Supply forecast • Price forecast
McGraw-Hill/Irwin
7-5
• Long-term • Midrange • Short-term
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Total Quality Management (TQM)
7-6
the application of quantitative and human resources to improve the material services supplied to an organization, all the processes within the organization, and the degree to which the needs of customers are met - now and in the future.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Administration and Control of Materials Flow
7-7
• Kanban/Just-in-time systems » Kanban (Toyota Production System) » JIT & JIT II
• MRP systems » Materials requirements planning (MRP I) » Manufacturing resource planning (MRP II)
• DRP systems » Distribution requirements planning (DRP I) » Distribution resource planning (DRP II) McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Benefits Resulting from Implementing Just-in-Time • Improved inventory turns. • Improved customer service. • Decreased warehouse space. • Improved response time. • Reduced logistics costs.
McGraw-Hill/Irwin
7-8
• Reduced transportation costs. • Improved quality of vendor products. • Reduced number of vendors. • Reduced number of transportation carriers.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Elements of an MRP I System Inventory transactions
Inventory status file (finished items, work in progress, planned orders)
Customers’ orders
Forecasts
Master production schedule (which products to produce, in what quantity, and when)
7-9
Engineering changes
Bill-of-materials file (product structure and routing)
MRP I system Planned schedules and various other reports McGraw-Hill/Irwin
Source: MCB University Press Ltd., Amrik Sohal, and Keith Howard, "Trends in Materials Management," © 2001 by McGraw-Hill Companies, Inc. p.11. All rights reserved. International Journal ofCopyright Physical Distribution andThe Materials Management 17, no. 5 (1987),
Elements of an MRP II System Order (production plan)
Order (production plan)
7-10
Inventory records
Materials requirements planning (MRP) Capacity requirements planning (CRP)
No Realistic ?
Yes
Execute capacity plans Execute material plans McGraw-Hill/Irwin
© 2001 by Deal The about McGraw-Hill Companies, Inc. All5,rights reserved. Source:Karl Copyright A. Hatt, ‘What’s the Big MRP II?” Winning Manufacturing no. 2 (1994), p. 2.
Elements of a DRP II System
7-11a 7-11
Customers Distribution center
Distribution center
Distribution center
Distribution center
Regional warehouse
Distribution resource planning
McGraw-Hill/Irwin
Distribution center
Distribution center
Regional warehouse Plant warehouse
Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Copyright 2001 by The McGraw-Hill Inc.Holdings. All rights reserved. Modern Materials Handling, copyright 1984©by Cahners Publishing Company,Companies, Division of Reed
Elements of a DRP II System (cont.)
7-12b 7-11
Plant warehouse
Material requirements planning
Final assembly (manufacturing)
Subassembly B
Subassembly A
Part A
Part C
Part C
Subassembly C
Part D
Part E
Part B
Raw materials
McGraw-Hill/Irwin
Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Copyright byPublishing The McGraw-Hill Companies, All rights reserved. Modern Materials Handling, copyright 1984 © by 2001 Cahners Company, Division of ReedInc. Holdings.
Materials Management Activities
7-2
• Anticipating materials requirements • Sourcing and obtaining materials • Introducing materials into the organization • Monitoring the status of materials as a current asset
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Objectives of Integrated Materials Management • • • • •
7-3
Low costs High level of service Quality assurance Low level of tied-up capital Support of other functions
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Differences Between Inbound and Outbound Transportation
7-4
• Market demand that generates the need for outbound movement is more uncertain and fluctuating • Inbound transportation tends to involve bulk raw materials, supplies, or parts • Firms exercise less control over inbound transportation due to total delivered pricing programs McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Forecasts • Demand forecast • Supply forecast • Price forecast
McGraw-Hill/Irwin
7-5
• Long-term • Midrange • Short-term
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Total Quality Management (TQM)
7-6
the application of quantitative and human resources to improve the material services supplied to an organization, all the processes within the organization, and the degree to which the needs of customers are met - now and in the future.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Administration and Control of Materials Flow
7-7
• Kanban/Just-in-time systems » Kanban (Toyota Production System) » JIT & JIT II
• MRP systems » Materials requirements planning (MRP I) » Manufacturing resource planning (MRP II)
• DRP systems » Distribution requirements planning (DRP I) » Distribution resource planning (DRP II) McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Benefits Resulting from Implementing Just-in-Time • Improved inventory turns. • Improved customer service. • Decreased warehouse space. • Improved response time. • Reduced logistics costs.
McGraw-Hill/Irwin
7-8
• Reduced transportation costs. • Improved quality of vendor products. • Reduced number of vendors. • Reduced number of transportation carriers.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Elements of an MRP I System Inventory transactions
Inventory status file (finished items, work in progress, planned orders)
Customers’ orders
Forecasts
Master production schedule (which products to produce, in what quantity, and when)
7-9
Engineering changes
Bill-of-materials file (product structure and routing)
MRP I system Planned schedules and various other reports McGraw-Hill/Irwin
Source: MCB University Press Ltd., Amrik Sohal, and Keith Howard, "Trends in Materials Management," © 2001 by McGraw-Hill Companies, Inc. p.11. All rights reserved. International Journal ofCopyright Physical Distribution andThe Materials Management 17, no. 5 (1987),
Elements of an MRP II System Order (production plan)
Order (production plan)
7-10
Inventory records
Materials requirements planning (MRP) Capacity requirements planning (CRP)
No Realistic ?
Yes
Execute capacity plans Execute material plans McGraw-Hill/Irwin
© 2001 by Deal The about McGraw-Hill Companies, Inc. All5,rights reserved. Source:Karl Copyright A. Hatt, ‘What’s the Big MRP II?” Winning Manufacturing no. 2 (1994), p. 2.
Elements of a DRP II System
7-11a 7-11
Customers Distribution center
Distribution center
Distribution center
Distribution center
Regional warehouse
Distribution resource planning
McGraw-Hill/Irwin
Distribution center
Distribution center
Regional warehouse Plant warehouse
Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Copyright 2001 by The McGraw-Hill Inc.Holdings. All rights reserved. Modern Materials Handling, copyright 1984©by Cahners Publishing Company,Companies, Division of Reed
Elements of a DRP II System (cont.)
7-12b 7-11
Plant warehouse
Material requirements planning
Final assembly (manufacturing)
Subassembly B
Subassembly A
Part A
Part C
Part C
Subassembly C
Part D
Part E
Part B
Raw materials
McGraw-Hill/Irwin
Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Copyright byPublishing The McGraw-Hill Companies, All rights reserved. Modern Materials Handling, copyright 1984 © by 2001 Cahners Company, Division of ReedInc. Holdings.
