Which ERP system
module is implemented the least?
It's not
inventory, MRP, purchasing, or product definition- it's capacity
planning. Many organizations that purchase an ERP system
concentrate on
the materials planning function and ignore capacity, while
losing key
capabilities to schedule and promise orders. Many companies
can't
identify their own true production capacity, let alone that of
their vendors,
storage facilities or logistics network. If other system modules
are in
place and functioning well, capacity planning can be one of the
easiest
system areas to implement.
In process
industries capacity is key- facility design determines the timing
and quantity of production, and is integrated into the planning
process from
the beginning. Pipelines and processing tanks are scheduled
based on
capacity, and the material plan follows, which typically
involves a flat bill
of material and fewer components or ingredients than discrete or
repetitive
industries, and less product variation and use of expediting.
In other
manufacturing environments (discrete and repetitive), the material
plan is generated and capacity planning may or may not follow.
The
reasons why it may not include:
A) We
don't need to, we have plenty of capacity
That's
great, but if that's really true your organization is probably not
making the most effective use of your capital. Cyclical
downturns may
create a temporary excess of capacity, but permanent
overcapacity
usually requires examination of the business and product mix.
"Plenty
of capacity" also often means plenty as a whole, but with
shortages of
certain key resources.
B) We can't
measure our true capacity, because...
Our
operators float between production lines as required. Our product
mix varies constantly. We outsource labor-intensive
subassemblies.
None of the above
statements are negatives; neither are they reasons
why an average or rated level of capacity can't be measured.
Also, in
a supply chain trading partners usually need some estimate of
your
capabilities, at least in key areas. If your facility creates a
constraint
on the rest of the chain, your partners deserve to know.
C) We like to
plan capacity on a spreadsheet
Spreadsheets
are easy to change and configure as needed, but require
manually loading or downloading order status and capacity data
from the
base ERP system, and usually can't be uploaded back to an ERP
system
once a plan is developed. The plan is visible only when printed
out, and is
not integrated into the base system for use in promising orders.
D) Our
production order dates and quantities aren't accurate
Yikes. If
they're so bad you can't use them for capacity planning, your
organization's material planning, inventory projections,
purchasing budget
and order promising functions aren't in good shape either.
Generating a
Material Plan is Most of the Battle
Generating a
capacity plan requires two things- demand (in the form of
material requirements) and supply (resource capabilities). To
open
production orders and estimate product costs, you already need a
definition
of which resources are required and the amount of each resource
needed
(even if capacity planning isn't currently done). With a viable
material plan,
the only factor left to develop is an estimate of resource
availability. If you
are currently running MRP, open a production schedule, and have
a
standard costing system, most of the work in generating a
capacity plan
is already done. Even if MRP is not being run, capacity
requirements can
be generated from open production orders and
manually-created
projected orders- firm planned orders (FPO).
Inputs to Capacity
Planning
|
Input |
Source |
- Open production requirements
- Planned production rqmts.
- Production routings/rates
- Resource availability
|
- Shop floor system
- MPS/MRP
- Product definition/costing
- Capacity Planning
|
Capacity Planning
Alternatives
Enterprise
capacity planning breaks down into three basic alternatives:
1) Batch MPS and MRP with infinite capacity planning
In this scenario,
MPS is run as a batch generation to generate a suggested
master schedule based on forecast and customer order
requirements. The
suggested master schedule is then run through Rough Cut Capacity
Planning, which compares the requirements to availability of key
resources
only, and highlights over/under capacity areas, without
suggesting date or
quantity changes. When the MPS is signed off as viable, MRP is
run as a
batch to explode the bill of materials and generate lower level
requirements.
Since MRP only considers material, CRP (Capacity Requirements
Planning) is
then run as a batch to compare MRP suggestions to daily or
shift-by-shift
resource availability and highlights exceptions, without
recommending or
performing schedule changes (assumes infinite capacity). In this
scenario,
four separate batch runs are required; Rough Cut and CRP
typically run
much faster than MPS and MRP. Manual review is required at each
step.
2) Batch MPS and MRP
with finite capacity planning
Similar to
alternative 1, except that after the batch MPS and/or MRP
generations create a material plan, the capacity programs take
the plan
and automatically rearrange proposed dates based on resource
avail-
ability (finite capacity). The rearrangement is done based on
either
backscheduling (take order due date and back into start date
based on
production rates and resource availability) or forward
scheduling (begin
with start date and go as far into future as required based on rates
and
resource availability). Finite scheduling can reduce the amount
of manual
review but requires rules definition (if production line 1 is
over capacity, do
you move proposed orders backwards or forwards to meet capacity,
or can
products A and B but not C be offloaded to other production
lines). Planner
review is still required- backscheduling to stay within capacity
may create
requirements for components in a time frame not viable for the
vendor, and
forward scheduling based on capacity can move proposed orders
far enough
into the future that customer orders must be rescheduled out.
3) Combined Material/Capacity
Planning with finite capacity planning
Advanced
Planning and Scheduling (APS) systems combine material and
capacity planning in real-time calculations that consider order
status,
inventory levels and finite capacity planning. Individual orders
can typically
be inserted into an existing plan to generate a new plan based
on inventory
and resource availability, for a single organization or multiple
trading
partners in a supply chain. Because of the complexity of
defining rules and
alternatives, APS systems are typically used as a short-term
capacity and
order promising tool; traditional MPS/MRP and capacity planning
systems
may still be used for longer-term purchasing requirements and
family-
level capacity planning.
In any scenario,
planning only material requirements and availability tells
only part of the story. Generating the perfect materials plan
without
verifying resource availability usually creates rescheduling,
expediting and
missed customer order dates. Available to Promise (ATP)
calculations
consider current inventory, proposed production and current
order status
when providing availability dates to customers; Capable to
Promise includes
those factors but also includes resource availability to provide
a more
accurate picture. Your material plan takes your organization
most of the
way; the benefits derived from including resource planning are
well
worth the additional effort.
Source: Bridgefield Group Copyrightｩ2002. All rights reserved.
This
article, in part or entirety, is the sole property of the Bridgefield
Group and may
not be copied, transmitted, framed or
otherwise published without the express
permission of the Bridgefield Group Inc.
