Table of Contents

Table of Contents
Instructor Guide
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Table of Contents
Participant Workbook Page
Table of Contents
Session 1—Introduction to Supply Chain Management
Introduction to Manufacturing..............................................................................
1-9
Role of Manufacturing.................................................................................................................
1-9
Global Citizenship.......................................................................................................................
1-11
Manufacturing Business Model...................................................................................................
1-15
Business Environment.................................................................................................................
1-23
Manufacturing Environment and Process Choices............................................
1-27
Manufacturing Environments.......................................................................................................
1-27
Product Life Cycle and Manufacturing Environments.................................................................
1-33
Choice of Processes and Layouts...............................................................................................
1-35
The Manufacturing Supply Chain.........................................................................
1-45
The Supply Chain Concept.........................................................................................................
1-45
Views of the Supply Chain..........................................................................................................
1-47
Supply Chain Organizational Issues...........................................................................................
1-51
Performance Measures...............................................................................................................
1-53
Role of Materials Management...................................................................................................
1-55
Manufacturing Planning and Control...................................................................
1-57
Objectives of Manufacturing........................................................................................................
1-57
Priority and Capacity Planning....................................................................................................
1-57
Manufacturing Planning and Control Hierarchy...........................................................................
1-59
From MRP TO ERP.................................................................................................
1-61
From MRP to ERP.......................................................................................................................
1-61
From MRP to MRP II...................................................................................................................
1-61
From MRP II to ERP....................................................................................................................
1-63
Impact of New Systems and Philosophies..........................................................
1-65
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Basics of Supply Chain Management
Session 2—Demand Management
Demand Management Processes.........................................................................
2-7
Marketing Management...............................................................................................................
2-7
Customer Relationship Management..........................................................................................
2-11
Demand Planning........................................................................................................................
2-11
Characteristics of Demand...................................................................................
2-13
Independent Versus Dependent Demand..................................................................................
2-13
Sources of Demand.....................................................................................................................
2-13
Demand Patterns and Stability....................................................................................................
2-15
Forecasting.............................................................................................................
2-19
Purposes and Uses of the Forecast............................................................................................
2-19
Principles of Forecasting.............................................................................................................
2-21
Data Collection and Preparation Principles.................................................................................
2-23
Forecasting Techniques........................................................................................
2-25
Qualitative Techniques................................................................................................................
2-25
Quantitative Techniques: Extrinsic..............................................................................................
2-25
Quantitative Techniques: Intrinsic...............................................................................................
2-27
Moving Average Forecast...........................................................................................................
2-27
Exponential Smoothing...............................................................................................................
2-35
Seasonal Forecast......................................................................................................................
2-39
Tracking the Forecast............................................................................................
2-43
Bias.............................................................................................................................................
2-43
Random Variation (Error)............................................................................................................
2-43
Measuring Forecast Error............................................................................................................
2-45
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Session 3—Master Planning
Purpose and Scope of Master Planning.............................................................
3-7
Priority Planning.........................................................................................................................
Planning Horizon and Level of Detail.........................................................................................
3-7
3-7
S&OP and Production Planning ..........................................................................
3-9
Sales and Operations Planning.................................................................................................
Production Planning...................................................................................................................
3-9
3-11
Master Scheduling and Master Production Schedule.......................................
3-37
Purpose.....................................................................................................................................
Resolving Differences and Publishing the MPS.........................................................................
3-37
3-37
3-39
3-39
3-41
3-41
3-43
3-47
3-49
3-49
3-51
3-51
Master Scheduling and Sales..............................................................................
3-53
MPS and Delivery Promises......................................................................................................
3-53
Objectives..................................................................................................................................
Inputs.........................................................................................................................................
Relationship to the Production Plan...........................................................................................
Developing a Master Schedule..................................................................................................
Projected Available Balance......................................................................................................
Preliminary MPS........................................................................................................................
Planning Horizon........................................................................................................................
Time Fences and Zones............................................................................................................
Aggregating the Master Schedules............................................................................................
Rough-Cut Capacity Planning....................................................................................................
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Basics of Supply Chain Management
Session 4—Material Requirements Planning (MRP)
Material Requirements Planning Environment..................................................
4-7
Nature of Demand......................................................................................................................
4-7
Linkages with Other Manufacturing Planning and Control Functions........................................
4-7
Objectives of MRP.....................................................................................................................
4-9
MRP Process Inputs and Outputs..............................................................................................
4-11
Planning Software......................................................................................................................
4-13
Bill of Material.......................................................................................................
4-15
Introduction................................................................................................................................
4-15
Summarized Bill of Material and the Indented Bill.....................................................................
4-15
Single-Level Bill of Material........................................................................................................
4-17
Multilevel Bill of Material............................................................................................................
4-17
Parent-Component Relationship................................................................................................
4-17
Bill of Material: Summary...........................................................................................................
4-19
Planning Bill...............................................................................................................................
4-23
Where-Used and Pegging Data.................................................................................................
4-25
Uses of the Bill of Material.........................................................................................................
4-27
Material Requirements Planning Logic..............................................................
4-29
Approach to this Section............................................................................................................
4-29
MRP Logic Overview.................................................................................................................
4-29
Lead-Time Offsetting and Exploding..........................................................................................
4-31
Gross and Net Requirements....................................................................................................
4-37
Basic MRP Record.....................................................................................................................
4-41
Capacity Requirements Planning..............................................................................................
4-47
Using and Managing the Priority Plan................................................................
4-49
Role of MRP Software...............................................................................................................
4-49
Order Control.............................................................................................................................
4-51
Releasing Planned Orders.........................................................................................................
4-53
Maintaining Priorities and Replanning.......................................................................................
4-55
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Session 5—Capacity Management and Production Activity Control
Introduction.........................................................................................................
5-7
Manufacturing Planning and Control Hierarchy.......................................................................
Transition from MRP to CRP and PAC...................... ............................................................
5-7
5-7
Capacity Management........................................................................................
5-9
Phases of Capacity Management...........................................................................................
Definition of Capacity..............................................................................................................
Capacity Planning Process.....................................................................................................
Determining Capacity Available..............................................................................................
Rated Capacity........................................................................................................................
Demonstrated Capacity...........................................................................................................
5-9
5-11
5-11
5-13
5-21
5-25
Capacity Requirements Planning.....................................................................
5-27
Introduction..............................................................................................................................
Key Inputs...............................................................................................................................
CRP Process...........................................................................................................................
5-27
5-27
5-33
Production Activity Control...............................................................................
5-41
Objectives................................................................................................................................
Functions.................................................................................................................................
Information Requirements.......................................................................................................
Data Requirements.................................................................................................................
5-41
5-43
5-45
5-47
Scheduling..........................................................................................................
5-49
Introduction..............................................................................................................................
Scheduling and Loading Techniques......................................................................................
Bottleneck Scheduling.............................................................................................................
5-49
5-49
5-53
Implementation...................................................................................................
5-55
Shop Order Packet..................................................................................................................
Order Release Process...........................................................................................................
5-55
5-55
Control.................................................................................................................
5-57
Goals, Objectives, and Control Levers....................................................................................
Priority Control.........................................................................................................................
Input/Output Control................................................................................................................
Flow Control……….................................................................................................................
5-57
5-59
5-61
5-67
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Session 6—Aggregate Inventory Management
Introduction to Inventory...................................................................................
6-7
What is Inventory?...................................................................................................................
6-7
Aggregate and Item Inventory Management...........................................................................
6-9
Aggregate Inventory Management....................................................................
6-11
Inventory and the Flow of Materials........................................................................................
6-11
Reasons for Carrying Inventory...............................................................................................
6-13
Functions of Inventory.............................................................................................................
6-15
Inventory Objectives................................................................................................................
6-17
Inventory Costs..................................................................................................
6-21
Item Costs...............................................................................................................................
6-21
Carrying Costs.........................................................................................................................
6-23
Ordering Costs........................................................................................................................
6-25
Stockout Costs........................................................................................................................
6-29
Capacity-Related Costs...........................................................................................................
6-29
Financial Statements and Inventory.................................................................
6-33
Balance Sheet and Income Statement Accounts....................................................................
6-33
Balance Sheet.........................................................................................................................
6-35
Income Statement...................................................................................................................
6-37
Aggregate Inventory Management and Financial Statements................................................
6-39
Cash Flow Analysis.................................................................................................................
6-43
Inventory Valuation..................................................................................................................
6-45
Financial Inventory Performance Measures............................................................................
6-47
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Session 7—Item Inventory Management
Order Quantities.................................................................................................
7-7
How Much to Order.................................................................................................................
7-7
Lot-Size Decision Rules..........................................................................................................
7-9
Economic Order Quantity (EOQ).............................................................................................
7-13
Economic Order Quantity Formula..........................................................................................
7-21
Validity of EOQ Assumptions..................................................................................................
7-25
Independent Demand Ordering Systems.........................................................
7-27
Order Point System.................................................................................................................
7-29
Safety Stock............................................................................................................................
7-35
Determining When the Order Point is Reached......................................................................
7-43
Periodic Review System..........................................................................................................
7-47
ABC Inventory Control.......................................................................................
7-55
ABC Principles........................................................................................................................
7-55
ABC Classification...................................................................................................................
7-57
ABC Process...........................................................................................................................
7-57
Sample Calculation.................................................................................................................
7-59
Control Based on ABC Classification......................................................................................
7-63
Auditing Inventory Records..............................................................................
7-65
Periodic Inventory Audit..........................................................................................................
7-65
Cycle Counting........................................................................................................................
7-67
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Basics of Supply Chain Management
Session 8—Purchasing and Physical Distribution
Purchasing..........................................................................................................
8-7
Types of Purchased Items.....................................................................................................
8-7
8-9
Purchasing Objectives...........................................................................................................
Purchasing Activities and Participants............................................................
8-11
Purchasing Activities..............................................................................................................
8-11
Physical Distribution..........................................................................................
8-29
Scope and Value.....................................................................................................................
Scope of Physical Distribution Factors....................................................................................
8-29
8-29
8-31
8-33
8-37
8-37
Distribution Inventory ........................................................................................
8-39
Purpose of Distribution Inventory............................................................................................
Distribution Requirements Planning (DRP).............................................................................
8-39
8-41
8-43
8-45
8-45
Transportation....................................................................................................
8-49
Introduction..............................................................................................................................
Costs of Moving Goods...........................................................................................................
8-49
8-55
8-55
8-65
Warehousing.......................................................................................................
8-71
Purpose of Warehousing.........................................................................................................
8-71
8-71
8-73
8-75
Global Distribution...................................................................................................................
Influence of Marketing.............................................................................................................
Interface with Production and Finance....................................................................................
Other Factors: Distribution Channels ......................................................................................
Objectives................................................................................................................................
Distribution Inventory Planning Systems.................................................................................
Push System...........................................................................................................................
Reverse Logistics…………......................................................................................................
Basic Transportation Modes....................................................................................................
Warehousing Process and Activities.......................................................................................
Stock Location Systems..........................................................................................................
Public Versus Private Warehousing........................................................................................
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Session 9—Lean and Quality Systems
Product and Quality Systems............................................................................
9-7
Product and Quality Cycle.......................................................................................................
9-7
Objectives................................................................................................................................
9-7
Systems and Methodologies...................................................................................................
9-9
Principles, Practices, and Tools..............................................................................................
9-11
Focus on the Customer......................................................................................
9-13
Value of a Product to the Customer........................................................................................
9-15
Quality Functional Deployment...............................................................................................
9-15
Lean………………................................................................................................
9-17
House of Toyota......................................................................................................................
9-17
Why Implement Lean?............................................................................................................
9-17
Waste......................................................................................................................................
9-19
Continuous Flow Production...................................................................................................
9-21
Pull Systems............................................................................................................................
9-21
Work Layouts..........................................................................................................................
9-23
Process Flexibility....................................................................................................................
9-25
Total Productive Maintenance.................................................................................................
9-27
Process and Continuous Improvement...................................................................................
9-29
Employee Involvement and Empowerment.............................................................................
9-31
Lean Tools and Techniques....................................................................................................
9-33
Supplier Partnerships..............................................................................................................
9-35
Total Quality Management…...........................................................................
9-37
Product Quality........................................................................................................................
9-37
Quality-Related Costs.............................................................................................................
9-41
Quality Control Tools...............................................................................................................
9-43
Six Sigma................................................................................................................................
9-57
Summary.................................................................................................................................
9-63
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Session 10—Theory of Constraints
Introduction to Theory of Constraints..............................................................
10-7
Philosophy and Basic Principles.............................................................................................
10-7
Types of Constraints...............................................................................................................
10-9
Problem-Solving Tools............................................................................................................
10-9
General Applications..........................................................................................
10-11
VATI Analysis..........................................................................................................................
10-11
Drum-Buffer-Rope Planning and Scheduling..........................................................................
10-13
Simplified Drum-Buffer-Rope (S-DBR)....................................................................................
10-27
Throughput Accounting...........................................................................................................
10-29
Critical-Chain Method..............................................................................................................
10-31
Distribution..............................................................................................................................
10-33
Appendix
Progress Check Answer Sheet.........................................................................
Bibliography…………………..............................................................................
Course Evaluation..............................................................................................
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