Planning and Control of Manufacturing Operations

John Kenworthy

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781134209255
• Topic: Business
• Subtopic: Business General
• Index: Business

Effective planning and control of manufacturing operations allows businesses to achieve maximum profitability by reducing uncertainty at all stages of the manufacturing process. In this book, John Kenworthy offers an easy to follow overview of the principles and practice of manufacturing control, with the emphasis throughout on practical approaches and techniques rather than on theoretical discussion. The author demonstrates that many problems are common to different types of manufacturing enterprises and offers practical solutions which can lead to a dramatic increase in overall performance. Sales forecasting, distribution planning, capacity planning, scheduling, and continuous improvement policies are among the subject areas covered. Exercises at the end of each chapter help readers assimilate important points. This book will be an invaluable aid not only for industrial managers who are responsible for manufacturing planning and control, but also students, trainers and anyone wishing to increase their understanding of manufacturing control systems.

1

---

The manufacturing control problem

1.1 Background

1.1.1 Mass production

It is almost a century since Henry Ford started to manufacture Model Ts on a production line. As long as he made the same number of cars each day, week or month, his manufacturing control was relatively simple. If he was making 100 cars per day, he needed 100 engines per day, 400 wheels, 100 radiators, 200 headlamps, etc. It was easy to tell the supplying operations how much to make. Provided that the assembly line schedule did not change, both the internal and external suppliers made the same this week as they did last and could confidently predict that it would be the same next week.

Of course, as in any successful business, the rate of production had to increase from time to time. Increased supplies of components had to be synchronised with the change in line rate and no doubt temporary problems arose but if the new rate following a step change remained constant, problems could be quickly sorted out.

If Henry had given his customers a choice of colour, trim or engine size, the rate and model of production would have had to respond to customer preferences. Although it is claimed that Henry's famous dictum, ‘They can have any colour they like as long as it's black,’ was to take advantage of the fact that black paint dried faster than other colours, it is difficult to believe that he was not also aware that limiting customer choice minimised his production control problem.

1.1.2 Batch production

Control of the manufacture of one-off products, or of small batches of items does not appear to have been a major problem during the first four decades of the century. In general businesses were not as large as they are now and it was possible for one experienced man, supported by simple mechanical techniques such as Order Point (see Chapter 2) or a simple scheduling board, to plan most things in his head. In the 1930s even the building of a complex product such as an ocean liner was largely controlled by one person. Such a person would spend much of his time on site observing progress at first hand and would schedule the delivery of the large number of different items required for fitting out, using little more than his own experience and common sense. It is possible that standards of control were less demanding then than they are now. Interest rates were in general lower so holding stock or accepting early delivery cost less than now. Also, in an environment where not having a job often meant serious deprivation, workers were more flexible and would accept short time when work was scarce or unreasonable levels of overtime when needed, in a way which, fortunately, employers do not now expect.

1.1.3 Developments in Europe and the USA

Techniques for controlling mass production continued to develop and were given a boost by the Second World War when equipment and munitions were produced in vast quantities. Operations Research – the use of mathematical analysis to aid decision taking – became recognised as a discipline. Outside the mass production environment, devices such as new airborne radar, navigation aids and electronic counter measures were designed, developed and manufactured with remarkably short lead times and often in quantities much too small for mass production techniques. Production controllers used product knowledge, experience and common sense to plan their way around material shortages, bombed factories and sunken supply ships. Achieving production volumes was more important than productivity.

After the war, outside the USA, almost everything was in short supply. Customers were glad to have what was available and in general did not complain about late delivery or poor quality. A plant manager's main objective was to keep the plant working in order to achieve the maximum possible production. Again production volume was more important than productivity and the production planner's position in most factories was a lowly one. Senior management knew little about planning and control and, more seriously, often did not recognise that there was more to be known. It is not surprising that in many cases they established a ‘hands-off’ approach, monitoring carefully the output but often leaving to junior employees the important decisions on what to make or buy. Clerks who were not authorised to sign for pencils from stores, were allowed to initiate manufacturing and purchase orders worth tens of thousands of pounds.

1.1 4 The advent of computers

During the 1950s and 1960s the manufacturing environment changed. Competition increased as new factories were built or were switched from armaments manufacture to civil production. Management recognised that customers were looking for better service and quality but were not sure how to meet these demands. In the USA and Europe, computers were being used successfully to automate routine tasks such as payroll and accounting and, as a logical development, some companies attempted to use them to assist production planning and control. Success can most kindly be described as ‘mixed’. The computers operated only in batch mode. Transaction records, such as movements in or out of stores had to be written on to punching sheets, which were accumulated and then once or twice a day passed to a keyboard operator who produced a punched card for each transaction. The cards were then verified by a second operator re-keying all the data into a machine which compared the second input with the cards. Any discrepancies had to be resolved before the cards could be used to update the computer.

Since in many cases the punching facilities were remote from the manufacturing site, completing the update within 24 hours was not always possible. Data within the computer could not be accessed directly, and planners and controllers worked from print-outs produced after the previous update. These had limited use for planning and control because they were out of date as soon as the first new transaction took place and a planner could not, for example, assume that stock shown on the report was still available. It could have been issued to another job since the previous update.

In spite of their limitations, batch input systems revolutionised management information. Stock and production figures for the end of an accounting period could be sorted, summarised, aggregated, reported by value, work content, volume and weight, etc. The value of such information can only really be appreciated by someone who has tried to manage a large business without it. Previously, an army of clerks would have been required to produce similar information, and even if completed before the next period end, the incidence of arithmetic errors remained unknown but was probably high.

Although the computer systems were vulnerable to errors in the data input, they did not in general make arithmetic errors. For the first time, managers of large or complex manufacturing businesses could base some, but not all, control decisions on real information rather than intuition.

1.1.5 Integrated on-line computer systems

The real benefits of using computers for manufacturing control came with the development of on-line systems using integrated data bases during the 1970s. A transaction such as recording the partial completion of a manufacturing order could be entered through a terminal on or close to the shop floor or the stores. Both the stock record of the item made and the quantity still expected from the order would be updated simultaneously and a subsequent enquiry from any terminal on the network would see the latest information.

In the ideal arrangement, any data item would be entered onto the system only once. It would then be accessed by who ever needed it, provided that they were suitably authorised. Disputes about whose data were correct, between planners and accountants for example, became a thing of the past but there was no guarantee that the common information was correct.

1.1.6 The development of MRPII

During the 1970s a basic logic for manufacturing control was developed primarily in the USA by control experts such as Joseph Orlicky, George Plossl and Oliver Wight who promoted and developed their ideas by working with the American Production and Inventory Control Society (APICS). Initially the approach was named ‘Material Requirements Planning’ or MRP and later, as the logic became more comprehensive, ‘Manufacturing Resources Planning’ or MRPII (see Chapter 2). Successful use of such systems became limited not by the functionality of the computer systems, but by the training and discipline of the human users.

Early MRPII enthusiasts believed that it was suitable for almost all kinds of production, and certainly with a few bespoke additions, it has been successfully implemented in almost all types of industry. However, the fact that it can be used does not mean that it should be used. MRPII is complicated to install and maintain and the expenditure on education and training needed to create the right culture for MRPII is considerable. During the late 1980s, it was recognised that if simpler approaches were adequate for a particular environment, they should be used in preference to MRPII.

1.1.7 Japanese developments

Japanese manufacturers developed an interest in using computers for manufacturing much later than western manufacturers. This may have been partly because until the early 1980s, computers using Japanese script were not readily available, but it may also be because, shortly after the Second World War the Japanese, faced with very limited resources, including space for factories or warehouses, recognised with the help of American consultants, that if businesses could be sufficiently simplified, simple control systems were adequate. The most widely publicised system was ‘Kanban’, which is a form of mechanical Order Point.

When Japanese motor cars were first marketed in the West, many features such as sun-roofs, heated mirrors and fog-lamps, regarded as extras by European producers, were standard on Japanese models. This was seen as a marketing exercise, but in reality it was an update of Henry Ford's view on car colour: the more standard the product, the higher the productivity and the easier the planning and control of manufacture.

The Japanese regarded computers as products to be made for export to the West. It is at least theoretically possible that a product, planned and controlled in the West using a Japanese computer, was out-sold by a Japanese product with lower overheads because production was controlled by Kanban.

Interestingly, however, Japanese manufacturers are starting to install MRPII, just as western companies are realising that Kanban can replace MRPII in some environments or, more commonly, be used alongside MRPII.

1.2 Types of manufacturing business

1.2.1 The planning compromises

Planning any manufacturing business involves a series of compromises. A salesman who is trying to meet his customer's requirements immediately and in full, will be in favour of having as many different products as possible on the company's range and of keeping generous stocks of all of them.

No doubt Henry Ford's salesmen honestly believed that they could increase sales if they could offer models in dark blue or green. However, as Henry understood, a large range increases stock levels and decreases productivity.

Production managers favour long runs of the same product, since this saves machine set ups and gives them the opportunity to tune the

1.1 The three-cornered planning compromise.

equipment to its highest output rate. Accountants, however, frown on long production runs because they increase total stocks. Holding stocks costs money both in terms of original investment and additional costs of insurance, pilferage, storage, counting and obsolescence.

Long production runs can also decrease customer service, because to a shop floor supervisor whose performance is measured by volume of output, it does not seem worth interrupting a machine which is running superbly on one item, just because another one is out of stock and a customer wants one immediately. High machine utilisation contributes to productivity, but reduces flexibility.

None of these views is incorrect or totally valid. It is the job of management, and in particular the production planners, to find the correct compromise between the three extremes. This is illustrated in Fig. 1.1 and 1.2.

All businesses face this same compromise, but obviously the chosen operating position will depend on the pressures on the business. For example, for a pharmaceutical company with a life saving drug, failure to supply could literally be a matter of life and death for a patient. The high level of customer service required may well be achieved in part by accepting higher stocks and lower productivity than some other businesses.

1.2 The planning compromises.

Commodities such as sugar, salt, soda-ash, nuts and bo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• 1 The manufacturing control problem
• 2 Achieving control of the business
• 3 Master Production Scheduling
• 4 Manufacturing orders
• 5 Order policies
• 6 Lead times and safety stocks
• 7 Bills of materials
• 8 Sales forecasting and Distribution Requirements Planning
• 9 Capacity planning and short term scheduling
• 10 Optimised Production Technology
• 11 Just in Time and Continuous Improvement
• 12 Implementing manufacturing control systems
• Answers to exercises
• Index