WIP Management
Transcript of WIP Management
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Management of
Work In Progress
Detail + Logic » Flexibility
天下難事,必作于易天下大事,必作於細
Dick Lam Aug 2015
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I am always a junior manager
Detail + Logic » Flexibility
I only focus on figures which is related to daily operation
I don’t have any strategic thinking; rather, just deal with reporting of expenses, staff turnover, absenteeism, canteen, dorm, daily sales, daily scrap & all trivial stuffs; above all, asking people do what they should do
To certain extent, my work is rather lame to senior management; I don’t say anything presentable!
I am just summarizing/restating something you have ever heard before
知人者智,自知者明
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This is me…
BBA in Accountancy (HKBU)
Master of Arts in E-Business (CityU)
Fellow of ACCA
Worked in various MNC and industries, mainly manufacturing in mainland China, focus on management accounting, business strategy, tax planning, supply chain management and new business setup in PRC
2010~2011, Consultant in a US consulting company for a countrywide supply chain project
Now, Director of Business Process of a US mfg co.
Detail + Logic » Flexibility勝人者力,自勝者強
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Contact Details
Mr. Dick Lam Chor Ki
http://dicklam128 .wordpress.com
http://www.box.net/dicklam128
Detail + Logic » Flexibility
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Disclaimer
1. We only serve SME
2. We are not big enough to do JIT
3. We are small enough to use Excel for all reports and planning modules
4. We are diligent to work on every single detail of materials related stuff
5. We need more Excel/VBA talents
Detail + Logic » Flexibility
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What is the Optimum WIP level?
1. Average of Max/Min of the historical amount
But why?
2. X% of the Raw Materials Warehouse Again why?
3. Annual Cost of Goods Sold / 360 * Average Production Lead Time +/- x%
Detail + Logic » Flexibility
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Copyright © Wondershare SoftwareDetail + Logic » Flexibility
Why bother with WIP?
Holding of money
Distortion of production effectiveness Hiding of scrap Correctness of BOM Incorrect evaluation of operators performance and
improper performance bonus to them Finally, incorrect costing for proper product pricing
Incorrect inventory availability will impact production of other job orders
Leading to production inefficiency
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Other issues with WIP?
So many items in WIP while records not match with physical inventory
Job orders can be finished without issuance of sufficient materials, why?
It is claimed that WIP is a must and it is almost impossible to clear up everything until year end while there is stock take of the whole factory
Shocked! So many write off!!
Line stopped because of materials lost while PMC claims that the ERP shows that the missing items does exist
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Above all,
What products to produce and how many can be produced?
Detail + Logic » Flexibility
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Copyright © Wondershare SoftwareDetail + Logic » Flexibility
Learning Path
1Excel BasicsSelective functions and command to form the fundamentals of problem solving techniques (algorithm)
4 With materials receipt plan, it is still necessary to update the production plan by actual/latest materials receipt schedule for each shift of schedule within the week
PMP by Shift
2 Master Production Schedule – schedule of finished goods production, central to materials planning
MPS Basics
3 Production Materials Plan – what and how many to produce subject to materials availability for coming weeks based on existing materials receipt plan
PMP by Weeks
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Excel Basics
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Simplify the complication
Range NameOperator: &min, maxvlookup(key, range, column,
true/false) Index(range, row, column)sumif, sumproduct Indirect(cell.address)Offset
Excel Basics
Detail + Logic » Flexibility
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Workshop
Detail + Logic » Flexibility
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Master Production Schedule - MPS
Detail + Logic » Flexibility
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What critical?
?MPS
Demand/Orders
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Capacity Constraint
Materials Availability
Safety Stock Requirement
1
2
3
Detail + Logic » Flexibility
The demand is real only after production4
There is always Why
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Workshop
Detail + Logic » Flexibility
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PMP by Weeks
Detail + Logic » Flexibility
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Mechanism - TOC
The less inventory of the BOM items determine the maximum quantity to produce for the particular product
“What ought to produce then what can produce” release unusable materials for production of other products
“What can produce then what minimum to produce” help balance the order fulfillment
As a result, low hang fruit to maximize production/order fulfillment – any single materials which the availability can help improve production volume
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Output of PMP by Weeks
Detail + Logic » Flexibility
Besides possible output of products: What products short and no short? Materials Shortage – how many and when? Flexibility to determine the pull-in effort Inventory excessiveness – if unable to produce, why
incoming so much? Probable inventory holding If not able to produce, then when to produce
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Workshop
Detail + Logic » Flexibility
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PMP by Shifts
Detail + Logic » Flexibility
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Production Materials Plan by Shift
7 x 2 = 14 shifts of immediate production materials plan
Detail + Logic » Flexibility
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Issues with PMP by Shift
Partial materials being fed to Shop Floor while some materials are over-issued due to SPQ
Over-issued RM to be available to other work orders
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Materials Scrap
X = Issued – Used – Transfer - Returned – Scrap
What is X?
What is missing?
What is needed?
Why WIP alw
ays
a problem?
Detail + Logic » Flexibility
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Materials Handling
Enquiry the Materials Status by Job Order
What have been Issued Returned Scrapped Transfer (which job orders can use this RM?)
What & how many left to issue?
Program to transfer RM between orders
Users: Line LeadersDetail + Logic » Flexibility
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If your photographs aren’t good enough, you are not close enough!
Detail + Logic » Flexibility
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Thank you !
Detail + Logic » Flexibility