Course Objectives

Provide a knowledge of the fundamentals of materials management Provide a basis for further study leading to APICS certification

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Basics of Supply Chain Management

Course Outline
Session 1: Session 2: Session 3: Session 4: Session 5: Session 6: Session 7: Session 8: Session 9: Session 10: Introduction to Materials Management Forecasting Master Planning Material Requirements Planning Capacity Management and Production Activity Control Inventory Fundamentals Inventory Management Physical Distribution Quality Management and Purchasing Just-in-Time Manufacturing

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Basics of Supply Chain Management

Session 1
Role and importance of manufacturing Conflicts in traditional systems Role, objectives, and responsibilities of materials management Differences among manufacturing processes

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Basics of Supply Chain Management

Session 1Continued
Importance of planning Planning and control system Planning hierarchy Manufacturing resource planning (MRP II) Material requirements planning (MRP) Enterprise resource planning (ERP)

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Basics of Supply Chain Management

Wealth Creation
What is wealth? Where does wealth come from? How can we increase our wealth? How can we add value?

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Basics of Supply Chain Management

External Environment
World competition Quality Customer expectations

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Customer Expectations
Characteristics that provide value to the customer Price Quality Delivery Pre- and post-sale service Flexibility (product and volume) Other ________________________

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Basics of Supply Chain Management

Customer Expectations
Order qualifiers Competitive characteristics needed to be a viable competitor

Order winners

Competitive characteristics that cause customers to choose that firms products and services

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Basics of Supply Chain Management

Customer Expectations
Meeting customer expectations requires good communications
Understanding customer needs Two-way communication Working with customers to solve design and production problems Freeness and openness

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Basics of Supply Chain Management

Business Strategy
To meet customer expectations, a company must be market-oriented All functions in a business must support this concept Operations must be tuned to meet the needs of the marketplace

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Basics of Supply Chain Management

Lead Time
A span of time required to perform a process
APICS Dictionary

Delivery lead time The time from the receipt of a customer order to the delivery of the product
APICS Dictionary

Cumulative lead time The longest planned length of time to accomplish the activity in question
APICS Dictionary
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Manufacturing Strategies
Delivery Lead Time Cumulative Lead Time Purchase Manufacture Delivery Lead Time Manufacture Assemble Inventory Delivery Lead Time Inventory Manufacture Assemble Ship
Make-toOrder

Assemble

Ship

Ship

Make-toStock

Delivery Lead Time Manufacture Inventory Assemble Ship

Assembleto-Order

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A Typical Manufacturing Organization

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Basics of Supply Chain Management

Traditional Silo Organizations

E N G I N E E R I N G

M A R K E T I N G

S A L E S

P R O D U C T I O N

F I N A N C E

Q U A L I T Y

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Basic Supply Chain

Dominant flow of products and services Dominant flow of demand and design information

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Basics of Supply Chain Management

Physical Supply/Distribution
Movement of goods from suppliers to the beginning of the production process and from the end of the production process to consumers Activities: Transportation Distribution inventory Warehousing Packaging Materials handling Order entry

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Company Objectives
Profit = Revenue Expense
Best customer service Lowest production costs Lowest inventory investment Lowest distribution costs

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Basics of Supply Chain Management

Conflicts in Traditional Systems

Marketing Objective Implications Customer service Production efficiency Inventories (investment) Production Finance

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Basics of Supply Chain Management

Role of Materials Management

Demand Resources

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Basics of Supply Chain Management

Manufacturing Planning and Control

Involves Production planning Implementation and control Inventory management

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Manufacturing Processes

M an ufac turing P ro ce s se s P rod uc t L ay ou t C on tin uo us P rod uc tio n R e pe titive P rod uc tio n P ro ce ss L ay o ut Interm itten t P ro du ction (Jo b S h op ) P ro je c t L ay ou t

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Product Layout

Workstations in sequence needed to make product Work flows at a nearly constant rate Little work-in-process inventory

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Characteristics of Product Layout

Limited range of similar products Dedicated workstations Sufficient demand Capital-intensive

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Advantages of Product Layout

Little work-in-process inventory Short throughput and manufacturing lead times Lower unit cost

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Process Layout

Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, second edition, Prentice-Hall, 1996

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Basics of Supply Chain Management

Characteristics of Process Layout

Intermittent lot production Many different parts processed at workstations General-purpose machinery Similar types of skills and equipment in each department Work moves only to required stations

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Basics of Supply Chain Management

Characteristics of Process Layout

Relatively easy to change product or volume Complex and expensive production and inventory control High work-in-process inventory levels Longer lead times

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Product Layout vs. Process Layout

Product Process

Capital cost Flexibility Annual setup cost Run cost Work-in-process inventory Production and inventory control costs Lead time
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Characteristics of Project Layout

Used for large, complex projects Project remains in one location for assembly Avoids cost of moving the product

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Why Plan?
To satisfy customer demand, ensure the availability of resources Material Capacity
Demand Resources

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A Good Planning and Control System

These are questions of priority and capacity.

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Planning and Control Hierarchy

At each level, there are three questions:
What are the priorities? What capacity is available? How can differences be resolved?

Figure adapted from CPIM Exam Content Manual, APICS, 1997

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Manufacturing Resource Planning

A method for the effective planning of all resources of a manufacturing company. APICS Dictionary

Objective: To integrate the resources of an organization

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Session 1: Objectives
Describe the role and importance of manufacturing in our economy Understand the conflicts in traditional systems Understand the role, objectives, and responsibilities of materials management Understand the differences among the various manufacturing processes Recognize the importance of planning Describe a planning and control system Understand the planning hierarchy Define manufacturing resource planning (MRP II)

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Basics of Supply Chain Management