ERP: Tools, Techniques, and Applications for Integrating the Supply Chain, Second Edition (Resource Management)

432 Pages·2003·16.439 MB·English

by  Carol A Ptak, Eli Schragenheim

ERP
Tools,Techniques,
and Applications
for
Integrating the
Supply Chain
Second Edition
by
Carol A. Ptak
CFPIM, CIRM, Jonah, PMP
with Simulation CD ROM by
Eli Schragenheim
Elyakim Management Systems Ltd.
The St. Lucie Press Series on Resource Management
ST. LUCIE PRESS
A CRC Press Company
Boca Raton London New York Washington, D.C.
Copyright © 2004 CRC Press, LLC
SL3585_C00a.fm Page iv Thursday, September 4, 2003 12:53 PM
Library of Congress Cataloging-in-Publication Data
Ptak, Carol A.
ERP : tools, techniques, and applications for integrating the supply chain / Carol A. Ptak
with Simulation CD ROM by Eli Schragenheim.—2nd ed.
p. cm.
Includes bibliographical references and index.
ISBN 1-57444-358-5 (alk. paper)
1. Production management. 2. Business logistics. 3. Theory of constraints (Management)
I. Schragenheim, Eli. Simulation CD ROM. II. Title.
TS155.P798 2003
658.5—dc22
2003047228
This book contains information obtained from authentic and highly regarded sources. Reprinted material
is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable
efforts have been made to publish reliable data and information, but the author and the publisher cannot
assume responsibility for the validity of all materials or for the consequences of their use.
Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic
or mechanical, including photocopying, microfilming, and recording, or by any information storage or
retrieval system, without prior permission in writing from the publisher.
The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, for
creating new works, or for resale. Specific permission must be obtained in writing from CRC Press LLC
for such copying.
Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431.
Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation, without intent to infringe.
Visit the CRC Press Web site at www.crcpress.com
© 2004 by CRC Press LLC
St. Lucie Press is an imprint of CRC Press LLC
No claim to original U.S. Government works
International Standard Book Number 0-57444-358-5
Library of Congress Card Number 2003047228
Printed in the United States of America 1 2 3 4 5 6 7 8 9 0
Printed on acid-free paper
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page v Wednesday, September 3, 2003 12:42 PM
DEDICATION
Many friends supported, encouraged, and aided the writing of this book.
One person in particular continues to be my best friend, inspiration, and
source of strength. Over 20 years ago we made the promise to share good
times and bad, richer and poorer, in sickness and in health. Little did we
know what adventures those promises would bring during the subsequent
2 decades. Looking back, we have been there and done that and more.
Your quiet strong faith always helped pull me through those really hard
times and continues to inspire me to become a better person. Your great
sense of humor made the bad times seem more like the good times. This
book is dedicated to my very best friend and husband, Jim.
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
Aristotle
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page vii Wednesday, September 3, 2003 12:42 PM
CONTENTS
Forewords
Preface
About the Author and Simulation Team
Acknowledgments
MICSS Program
How to Use This Book
Introduction
SECTION I ENTERPRISE MANAGEMENT
1 History of Enterprise Resource Planning
Requirements Generation to Material Requirements Planning
Closing the MRP Loop
Manufacturing Resource Planning
Just in Time to Lean Manufacturing
Enterprise Resource Planning (ERP)
Internet’s Impact on ERP
Supply Chain Management
Summary
General ERP Resources
2 The Theory of Constraints and ERP
Management Philosophies and Information Technology
What Is the Value of the New ERP Technology?
What Is the Main Power of the New Technology?
What Limitation Does the New Technology Diminish?
What Rules Helped Us to Accommodate the Limitation?
What Rules Should We Use Now?
Do the New Rules Require Any Change in the Way We Use
the Technology?
How Do We Cause the Change?
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page viii Wednesday, September 3, 2003 12:42 PM
The Theory of Constraints — A Brief Overview
Specific TOC Techniques
The DBR Technique
What Should Dictate the Pace of Production?
Buffer Management — A Unique, Simple, and Effective
Control Mechanism
Project Management — The TOC Way
Throughput and Constraints Accounting
Defining the Requirements for ERP According to the TOC Generic
Thinking
Managing the Implementation Project
Summary
3 Sales and Operations Planning
Why Sales and Operations Planning?
Impact of Change
Elements of Sales and Operations Planning
Inputs to S&OP Planning — The TOC Way
Sales and Operations Planning Implementation
Phase I
Demand Planning
Supply Planning
Financial Planning
Senior Management Business Review
The Sales and Operations Planning Process
Phase II
Phase III
S&OP — TOC Focus
Global Sales and Operations Planning
Summary
Sales and Operations Planning Resources
4 Buffer Resource Strategy
Inventory Buffers
Volume/Variety Matrix
Project Manufacturing Company — Position 1
Make-to-Stock — Positions 3 and 4
Make-to-Order — Position 2
Assemble-to-Order — Position 3
Make-to-Stock/Assemble-to-Order
VATI — Which Plant Are You?
The Use of Stock Buffers — a TOC Perspective
Determining the Stock Level
Summary
Buffer Resource Strategy Resources
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page ix Wednesday, September 3, 2003 12:42 PM
5 Enterprise Resource Management
ERM Checklist
ERM Checklist Questions
Summary
6 Integrating the Supply Chain to Reap the Rewards
SCOR Model
Supply Chain Competitiveness
Plossl’s Seven Supply Chain Points
Performance Measurements
Supply Chains — A TOC Perspective
Summary
Supply Chain Management Resources
7 Strategic Sourcing and Procurement
Supplier Partnership Characteristics
Supplier Relationship Management
Supplier Partnership Cautions
Summary
SECTION II OPERATIONS MANAGEMENT
8 Operations Planning (Material and Capacity
Requirements Planning)
Demand Management
Forecast
Balance Supply and Demand
Safety Stock
Material Requirements Planning
Backward Scheduling
Forward Scheduling
MRP System Requirements
Master Production Schedule
Inventory Records
Unique Item Identification
Obtaining Quality Output
Accurate File Data
Realistic Lead-Times
Timely Inventory Transactions
Order Independence
MRP Output
Capacity Requirements Planning
Levels of Capacity Planning
Using Capacity Planning
Requirements for Capacity Planning
Units of Capacity
Routings
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page x Wednesday, September 3, 2003 12:42 PM
Schedule
Shop Calendar
Capacity Management Measures
Available Capacity
Utilization Factor
Efficiency
Rated Capacity
Scheduling Options
Infinite Loading
Input/Output Control
Finite Loading
Capacity Feedback and Control
Input/Output Control
Multiple Constraint Solvers
Rapid Priority Management
Summary
9 Product Life Cycle Management
Product Design and Development
Product Data Management
Expected Benefits of PDM
Market Share
Customer Satisfaction
Profit Margin
Return to Stakeholders
Effective Product Design
Product Lifecycle Management (PLM)
Concurrent Engineering
Gateway Design Management
Configuration Management
Implementation
Connections to Operations
Summary
10 Manufacturing Execution System
Finite Schedulers
Event Based
Job Based
Buffer Management as an Execution Priority Scheme
Throughput Dollar Days as a Performance Measurement
and Priority Guideline
Resource Based
Event-Driven Shop Floor Integration
Factory Floor Information and Communication
Document Control
Data Collection and Acquisition
Labor Management
Quality and Process Management
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page xi Wednesday, September 3, 2003 12:42 PM
Maintenance Management
Product Tracking and Genealogy
Performance Analysis
Summary
11 Distribution
Distribution Networks
Distribution Requirements Planning
Warehousing
Fixed Location Storage
Random Location Storage
Zone Management Storage
“Out and Back” Picking
Route Collection Picking System
Zone Picking System
Lot Tracking
Transportation
Site and Location Analysis
Inventory Control
Forecasting
Simple Moving Average
Weighted Moving Average
Trend Analysis
Seasonality
Selecting a Method
Safety Stock
Distribution Requirements Planning
TOC for Distribution
Material Handling
Order Administration
Summary
Distribution Resources
SECTION III ERP SELECTION AND IMPLEMENTATION
12 ERP System Requirements
Unique Item Identification
Lead-Time
Order Sizing
Lot for Lot
Economic Order Quantity
Order Minimum/Multiple/Maximum
Period of Supply
Demand
Dependent Materials
Supply
Summary
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page xii Wednesday, September 3, 2003 12:42 PM
13 Selecting the Right ERP System
Type of Business
Selection Strategy
Information Technology Infrastructure Selection Strategy
Control
Structure
Database
Customization
Best Practices
Feature/Function Selection Strategy
Brainstorming Session
Solution Providers
Consulting Services
Selecting Software
Summary
14 Data Record Accuracy
Inventory Record Accuracy
Mass Balance
Physical Inventory
Cycle Counting
Cycle Counting Requirements
Cycle Counting — A, B, C
Selecting Parts to Count
Defining Accuracy
Expected Results of Cycle Counting
Bill of Material Record Accuracy
Initial Product Releases
Ongoing Validation
Routing Accuracy
Sales Order Accuracy
Work Order Accuracy
Master Production Schedule Accuracy
Purchase Order Accuracy
Manufacturing Execution System Accuracy
Summary
15 Implementation — Generalized Industry Application
Determine Industry Type
Get Ready
Do-It-Yourself Approach
Hire Outside Resources
Mentor Resource Model
Scope Development
Budget
Get Set
Education
Copyright © 2004 CRC Press, LLC
SL3585_C00b.fm Page xiii Wednesday, September 3, 2003 12:42 PM
Roles and Responsibilities
Change Management
Go
Schedule
Project Resources
Project Plan — Major Milestones
Select Project Team
Size, Install, and Test Hardware
Attend System Training
Complete Conference Room Pilot
Set Up Security and Permissions
Company Specific Pilot
Identify Beginning Pilot
Entering Fixed Data — The System Building Blocks
Entering Variable Data
Document Policies and Procedures
Cutover
Celebrate
Failure Strategies
Summary
16 Repetitive Manufacturing Application
General Repetitive Application
Kanban
Kaizan/5S
Rate-Based Scheduling
Production-Sales-Inventory Analysis
Backflush
Period Costing
High-Volume, Mixed-Model Manufacturing
Configurators
Summary
17 Process Industry Application
Process Industry Overview
Process Flow Scheduling
ERP System Requirements
Summary
Process Industry Application Resource
18 Remanufacturing
Remanufacturing Similarities and Differences
Similarities
Differences
Managing Remanufacturing Material
Remanufacturing Bills of Material
Remanufacturing Routings
Copyright © 2004 CRC Press, LLC