IT 410 - Quiz 1

Key Performance Indicators are determined from what 4 factors?

1 - Equipment utilization 2 - Output results 3 - Costs associated with different departments, products, labor utilization, and project conditions 4 - Measures of customer satisfaction such as late deliveries, product returns, quantity errors, and quality

9 Steps to CPFR

1 - Est. collaborative relationship (process redesign?) 2 - Create joint business plan 3 - Create sales forecast 4 - ID exceptions to the sales forecast 5 - Resolve/collaborate on exception items 6 - Create order forecast 7 - ID exceptions to order forecast 8 - Resolve/collaborate on exception items 9 - Generate order

5 MPC Classification Schema

1 - Flow (continuous production-chemical plants, food, etc.) 2 - Repetitive (longer production cycles-automobiles) 3 - Just-in-Time (shorter production cycles-TVs, personal computers) 4 - MRP (management of complicated parts product-airplanes) 5 - Project (unique, long duration-ships).

MPC System Framework consists of 3 parts:

1) Front End - Activities and systems for overall direction setting 2) Engine - Systems for detailed material and capacity planning 3) Back End - MPC execution systems

3 main Demand Management Elements are:

1. Organization - responsibility for DM activities can be distributed throughout the firm. 2. Monitoring - data must be accurate, timely, and appropriate. 3. Balancing supply and demand - useful data on conditions provide the basis for plan changes

What is CPFR?

Collaborative Planning, Forecasting, and Replenishment Goal = reduce variance between supply and demand through communication Designed to improve competitiveness by facilitating communication between Suppliers and Retailers.

Forecast vs. Plan

FORECAST - are estimates of what might occur in the marketplace; Managers can't be held responsible for forecast errors but should be held responsible for failing to execute the plan PLAN - Plans specify how the firm will respond to these forecasts; The plan may look significantly different from the forecast-because of other considerations (staffing, capacity, etc.)

Engineer-to-Order

Firm works with the customer to design the product, then produces the product, starting with raw materials (ships, bridges). Primary task of demand management is gathering information about customer needs and coordinating with engineering and manufacturing. Decoupling Point --> late (finished goods)

Benefits of implementing CPFR

- Important business/process improvements for both supplier and customer - Improve customer service, sales, inventory, and margin performance for both supplier and customer

MPC Principles (part 2)

- The MPC should evolve to meet changing requirements in the market, technology, products, and processes. - The MPC should be comprehensive in supporting the management of all manufacturing resources. - An effective MPC can contribute to competitive performance by lowering costs and providing greater responsiveness to the market. - In firms that have an integrated ERP system and database, the MPC system should integrate with and support cross-functional planning through the ERP system.

MPC Principles (part 1)

- The framework for the MPC is general, and all 3 phases must be performed, but specific applications must reflect particular firm conditions and objectives. - In supply chain environments, the MPC must coordinate the planning and control efforts. MPC systems should support the strategy and tactics pursued by the company. - Different Manufacturing processes dictate the need for different MPC designs.

Define Manufacturing Planning and Control System (MPC)

A Manufacturing Planning and Control system provides information and support, which enables managers to efficiently direct the flow of material, manage the utilization of people and equipment, and respond to customer requirements by utilizing the capacity of suppliers, internal facilities, and, in some cases, customers. MPC is often a module in an ERP system.

Define Forecasting

A process not only involving the estimation of future demand, but also considering the intended use of the forecast, methodology for dis/aggregating the forecast, and assumptions about future conditions.

Make-to-Stock

Customer demand is filled from finished goods inventory (cosmetics, grocery items). Key focus of demand management is maintenance of finished goods inventories. Physical distribution is a key concern. Decoupling Point --> early (suppliers)

Assemble-to-Order

Customer requirements are met by a combination of standard options (personal computers, fast food). Primary task of demand management is to define the customer's order in terms of components and options (configuration management). Decoupling Point --> early-mid (raw materials)

How does DM fit in with the MPC Environment?

DM must conform to the MPC Environment. This includes: - the strategy of the firm - capabilities of manufacturing - customer needs

Key areas of influence on MPC System Design are:

Degree of supply chain integration Customer roles and expectations Needs of management

How does DM fit into Planning and Control?

Demand management coordinates demand quantities and timing with the planning and control activities of the company. Planning occurs mainly in the SOP module. Control determines how capacity will be converted into products.

Independent vs. Dependent Demand

INDEPENDENT - source is customer demand that is not directly influenced by the actions of the firm. DEPENDENT - Demand that is driven by the plans and activities of the firm.

What are the Key DM Tasks for Assemble-to-Order?

INFORMATION - configuration management PLANNING - determine delivery dates CONTROL - meet delivery dates

What are the Key DM Tasks for Make-to-Order & Engineer-to-Order?

INFORMATION - product specifications PLANNING - provide engineering capacity CONTROL - adjust capacity to customer needs

What are the Key DM Tasks for Make-to-Stock?

INFORMATION - provide forecasts PLANNING - project inventory levels CONTROL - assure customer service levels

Make-to-Order

Items built to customer specifications, starting with raw materials (airplanes). Primary task of demand management is gathering information about customer needs and coordinating with manufacturing. Decoupling Point --> mid-late (work-in-process)

Name the 4 main MPC environments

Make-to-Stock Assemble-to-Order Make-to-Order Engineer-to-Order

Data is needed in what 2 categories?

Overall market data, for sales and operation planning. Detailed product mix, for MPS and customer order promising. It is important to capture actual data wherever possible.

Define Demand Management

The Demand Management (DM) process determines how a firm integrates information from customers (both internal and external) into the MPC system. Activities include demand determination, converting customer orders into delivery promises, and balancing supply with demand.

How does DM fit into Execution?

The company executes the plan as actual demand information becomes available. The control function determines how the plans will be modified to accommodate forecast errors and other changes in assumptions. Most control functions are located in the MPS module.

MPC System support activities in the Intermediate Term

The fundamental issue is matching supply and demand in terms of both volume and product mix. Planning for the right logistics. Maintaining appropriate inventory levels. Providing delivery information to customers. Communicating requirements to suppliers. Planning capacity to determine employment levels, budgets, overtime and subcontracting needs, etc.

Define the Customer Order Decoupling Point

The point where demand changes from independent to dependent. Also known as the Order Penetration Point

MPC System support activities in the Long Term

The system is responsible for providing information to determine: The appropriate amount of capacity (including supplier capacity) to meet the market demands of the future. Provide the appropriate mix of human resource capabilities, technology, and geographic locations.

MPC System support activities in the Short Term

There is a need for detailed scheduling of resources to meet production requirements. Key Point - People working on the right things The MPC system must track the use of resources, monitor execution results, and provide information to managers, customers, and suppliers

How/why do MPC Systems evolve?

They must adapt to consumer needs. Must audit responses to changing requirements in the market, technology, products, and processes. i.e. Apple and Starbucks logo

What phase is DM part of in the MPC System?

front end

DM functions include:

information gathering, communicating with customers, identifying all sources of demand

MPC Environment is defined by what?

the customer order decoupling point, the firm's strategy, manufacturing capabilities, and customer needs

DM provides a link to:

the marketplace, sister plants, warehouses, other internal and external customers