BY

KEVIN

MRP

MRP-II

JIT

MRP OBJECTIVES

INPUTS AND OUTPUTS

BENEFITS

DRAWBACKS

MRP-II INTRODUCTION

STRUCTURE

BENEFITS

DRAWBACKS

JIT MANUFACTURING AIMS

TYPES OF WASTE

BUILDING BLOCKS

KANBAN SYSTEM

CASE STUDIES

CONTENTS

MRP stands for Material requirement planning.

Basic definition:

It is a planning technique which converts master production schedule of end products into detailed schedule for raw materials and parts used in those end products.

MRP is a means for determining the number of parts, components, and materials needed to produce a product

MRP

Inventory reduction:

Determines how many components are needed and when in

order to meet MASTER PRODUCTION SCHEDULE.

Reduction in production and delivery lead times.

It helps to meet delivery deadlines by coordinating inventories,

procurement and production decision

Realistic commitments

Improves customer satisfaction.

OBJECTIVES OF MRP

Independent demand:

Demand for the product is not directly related to demand for

other items

Is the demand for finished product.

It needs to be forecasted.

Dependent demands:

Demand for the product is directly related to demand for some

other product.

Is the demand derived from finished product.

Components required for finished product.

FUNDAMENTAL CONCEPTS OF MRP

INPUTS TO MRP SYSTEM

Based on actual customer orders and predicted demand.

Indicates when each ordered item will be produced in coming

weeks, and in how much quantity.

It is a plan specifying timing and quantity of production for

each end item.

MPS inputs come from sales and marketing .

MASTER PRODUCTION SCHEDULE(MPS)

MPS-EXAMPLE

A listing of all of the raw materials, parts, subassemblies, and

assemblies needed to produce one unit of a product .

BOM Shows way a finished product or parent item is put

together from individual components.

Parent item shown at highest level or level zero , Parts that go

into parent item are called level 1 components and so on.

BILL OF MATERIALS (BOM)

BOM EXAMPLE

A(2) B(1)

D(5)C(2)

X

C(3)

BOM EXAMPLE - CYCLE

Detailed information regarding the quantity of each item,

available in hand, on order to be released, for use in various time

periods.

MRP system using inventory master fi le is used to determine the

quantity of material available for use in a given period.

If sufficient items not available , the system includes the item on

the planned order release report.

INVENTORY STATUS FILE

MRP STRUCTURE

Primary reports

1. Work orders / Planned orders - schedule indicating the

amount and timing of future orders.

2. Order Release - Authorization for the execution of planned

orders.

3. Action Notices or Rescheduling Notices - which orders are

to be released, revised and canceled during the current time

period.

MRP OUTPUTS

Secondary Reports

1. Performance control Reports – evaluate system operations .

They aid in measuring deviations from plans, and also provide

information to assess cost performance.

2. Planning Reports – are useful to forecast future inventory

requirements.

3. Exception Reports – these help to find the major

discrepancies such as late and overdue orders, excessive scrap

rates, reporting errors, etc.

MRP OUTPUTS

Keep inventory levels to a minimum.

Keeps track of inventory that is used.

Tracks the amount of material that is required.

Set safety stock levels for emergencies.

Set up production times among the separate manufacturing

stages.

Plan for future needs of raw materials or components.

BENEFITS

Inaccurate information can result in mis-planning , overstock,

under-stock, or lack of appropriate resources.

The inaccurate master schedule will provide wrong lengths of

time for production . Hence affecting planning.

MRP systems can be costly and time-consuming to set up

DRAWBACKS

Manufacturing resource planning (MRPII) is defined as a

method for the effective planning of all resources of a

manufacturing company.

. MRP II serves as an extension of MRP(closed loop

manufacturing resource planning, also abbreviated as

CLMRP).

MANUFACTURING RESOURCE PLANNING

STRUCTURE OF MRP-II

More efficient use of resources

Reduced inventories

Less idle time

Fewer bottlenecks

Better priority planning

Quicker production starts

Schedule flexibility

BENEFITS

Improved customer service

Meet delivery dates

Improved quality

Lower price possibility

Improved employee moral

Better management information

Error Due To Poor OR incorrect Information

Can be used only manufacturing operations of firm.

DRAWBACKS

RECENT DEVELOPMENTS

JIT MANUFACTURING

“A philosophy of manufacturing based on planned elimination of waste and continuous improvement of productivity ……”

ZERO INVENTORY

ZERO LEAD TIME

ZERO FAILURE

BASIC AIMS IN JIT

TRADITIONAL PRODUCTION SYSTEM

JUST IN TIME SYSTEM

OVERPRODUCTION

Manufacturing an item before it is needed.

INAPPROPRIATE PROCESIING

Using expensive high precision equipment when simpler

machines would suffice.

WAITING (WIP):

Wasteful time incurred when product is not being

moved or processed.

TRANSPORTATION

Excessive movement and material handling of product

between processes.

EIGHT TYPE OF WASTE

MOTION:

Unnecessary effort related to the ergonomics of reaching, l if ting, and walking.

INVENTORY:

Excess inventory hides problems on the shop floor, consumes space, increases lead times, and inhibits communication.

DEFECTS:

Quality defects result in rework and scrap, and add wasteful costs to the system in the form of lost capacity, rescheduling effort, increased inspection, and loss of customer good will .

UNDERUTILISATION OF EMPLOYEES

Failure of the firm to learn from and capitalize on its employees’ knowledge and creativity impedes long term efforts to eliminate waste.

EXCESS INVENTORY

PRODUCT DESIGN:

Standard parts

Design simplification

PROCESS DESIGN

Setup time reduction

Limited WIP

Reduced inventory storage

PERSONNEL

Worker motivation

Trained workers

MANUFACTURING PLANNING AND CONTROL

Pull systems

Close vendor relationship

BUILDING BLOCKS OF JIT

JIT IS based on pull type production control.

Toyota uses kanban pull system.

Kanban means signal card.

A kanban is a visual signal that lets workers know that a supply of a

material needs to be replenished.

There are two types

production kanban: it authorizes upstream station to produce

parts.

transportation kanban: authorizes transportation of container of

parts to station

PULL TYPE SYSTEM

KANBAN SYSTEM

Storage

Part A

Storage

Part AMachine

CenterAssembly

Line

Material Flow

Card (signal) Flow

Once the Production kanban is received, the Machine Center produces a unit to replace

the one taken by the Assembly Line people in the first place.

The process begins by the Assembly Line people pulling Part A from

Storage

Production kanban

EXAMPLE - KANBAN CARD

Reduced Inventory

Improved quality

Lower costs

Shorter lead-time

Improved vendor relations

Increased capacity

Better util ization of personnel

More product variety

Increased equipment utilization

JIT BENEFITS

Danger of disrupted production due to non-arrival of supplies.

Danger of loss sales.

High dependence on suppliers.

Less time for quality control on arrival of materials.

Increased ordering and admin costs.

May lose bulk-buying discounts.

DISADVANTAGES

IN MCDONALD'S

McDonald’s was opened in 1955.

It was originally known for their hamburgers.

Their business boomed during 1960 to 1980, during that

period more than 1000 restraunts were opened on franchise

basis.

1/4 th of the breakfast in usa came from McDonalds.

During mid 1990 they had opened 23,000 restraunts.

MCDONALDS

During 1990’s, as people wanted more variety of burgers,

their old system of preparing food collapsed.

They needed to make variety of burgers and fast.

The new JUST IN TIME system ‘Made For you’ was applied to

their restraunts.

This changeover costed 25000$ per restraunt. Half of which

McD was ready to pay.

NEED FOR JIT IN MCDONALD'S

JIT system wherein McDonald's doesn't begin to cook its

orders until a customer has placed a specific order.

Sophisticated burger-making technology (including a record-

breaking bun toaster)

McDonald's is able to make food fast enough to wait until it's

been ordered.

Reduction in wastage.

IMPLEMENTATION OF JIT

Improved Quality – The burgers are prepared freshly and

hence the quality has improved.

Customer service – As the burger is made only after the

order is placed, making special orders is not an issue.

Cost Reduction – Due to significant reduction in wastage as

uncooked material has a higher shelf life.

Reduction in waiting – Customer’s waiting time reduce 11

min. to just 1 and half min.

BENEFITS OF JIT

VIDEO-TOYOTA SYSTEMS