Managing Internal Manufacturing Priorities

Article #10 in a series by Jim Correll and Jim Bentzley

Introduction

In this article we will describe how to take the “valid” (accurate and doable/executable) plan from Material Requirements Planning (MRP) and convert it into “valid” schedules for internal manufacturing. “Valid” schedules enable manufacturing to meet the MRP due dates at least 95% of the time while increasing productivity significantly and also yielding quality improvements. Perhaps the most rewarding result is that manufacturing can end every day saying, “I’ve done an excellent job today”. 

Planning Tree

Before we get into the techniques we need to understand the three basic environments manufacturing companies operate. The first one is the oldest yet very common in manufacturing today – the Job Shop. As show in the example below the layout of the shop is arranging like machines or skill sets (we will call them machines through the article even though it could easily be skills) together and then have the product move from one group of machines to the next in a lot size that is typically determined by an Economic Order Quantity (EOQ) of the constraining group of machines. Our example shows the machines grouped together but in many companies the machines can be scattered around often wherever there is an opening. Typically, Job Shops are very flexible and can make a wide variety of products. The Job Shop however has a restrictive draw back – the total production lead times are much longer because each operation is completed before it moves to the next operation and sits in queue. This adds both move and queue time between each operation. In the example below product A might start in Machine Group (MG) 2 and then move to MG 3 then to MG 1. Product B might go from MG 4 to MG 3 to MG and then MG 1. C might go from MG 4 to MG 5 to MG 3. Each step is identified in the Routing as an operation (See Routing Article). In some companies it is not uncommon to have 20+ operations.

Work Flow – Job Shop Environment

Some companies started to take machines out of like groupings and putting them together to create a Flow Cell. In the example below, we took a machine out of the job shop MG 2 and paired it with a machine out of MG 3 and a machine from MG 4. The Industrial or Process Engineers have designed it so the run time on each machine is about the same. Now the first piece goes from 2 to 3 immediately and a new piece is started in machine 2. The same thing happens to from 3 to 4 with no move or queue time between them. An order simply flows through this group of machines reducing the lead time significantly versus the time it would take in a Job Shop environment. We call this a Flow Cell. As shown in the example below we have created another Flow Cell by moving machines 1, 4 and 5 into a new cell. A Flow Cell is one operation on the routing – first step starts and last step finishes.

Work Flow – Cellular Environment

The advantage is a huge reduction in production lead time but the disadvantage is that only a limited number of product types can be made in this cell. Creating flow cells in this manner is a great way to get the reduced the lead time significantly with little cost (move machines). Other advantages are that often one person can operate the cell while in the Job Shop it took at least three. Additionally, quality is also improved. If there is a problem in machine 2 that impacts machine 4 it is caught after only a couple of pieces whereas in the Job Shop the whole order would have been run through machines 2 and 3.

The third basic environment is the Flow. This is where a product family is started on a line and is finished completely. Of course, the inventor of this was Henry Ford. This isn’t just assembly lines; it can be machine centers that complete a product. The advantage of the Flow is again huge reductions in lead time. The disadvantage is that they cost a lot of money to create and are restricted in what they can make (little flexibility).

Work Flow – Flow Environment

Internal Manufacturing Priorities

MRP tells when to start an order and when to complete it which works fine in the Flow environment because the time from start to finish is short. But in the Job Shop were numerous operations can be required and in a Flow Cell environment where additional operations are often required before and after the Flow Cell portion, manufacturing needs more information to ensure that the orders move through the process in a timely manner. Each of the operations need to know what job to work on next and when it is needed. Most MRP software has an operation scheduling program that uses the routing to schedule each operation.

Operation Scheduling

Let’s examine how operation scheduling works. We start with the routing. As we discussed in an earlier article, the routing needs to be accurate.  In the example below, we have laid horizontally a two-step routing – operation 05 and 10. In order to reflect what is really happening in manufacturing a time to release the order and a time to pick from the store room is required. At each operation a queue time, set-up time, run time and the move time to the next operation is required. We then can determine when an operation starts and when it is to be completed.

Operation Scheduling Elements

Some advice on the use of each of these.

·      Order release – time for the MRP Planner to review the order before release (1-2 days).

·      Pick – a realistic time for the stores people to pick the material (1-2 days).

·      Queue – the queue is by machine (skill) and should be minimal except for machines that are at or near maximum capacity and then just enough to keep them working if there is a breakdown of previous machines or a lumpy workload.

·      Set-up – comes from the routing (see article on routing accuracy).

·      Run – comes from the routing and is the time to run one-piece times the number of pieces on the order.

·      Move – the time it takes to move from one work center to another. This varies because if the next operation is in the same machine it should be zero, if the next operation is in the same department, another department, another site these will vary and realistic time should be established.

·      Store – the time to put in the store room.

Establishing these times can be somewhat of a challenge. Remember back to one of our principals “Tell the Truth” - one would think it quite easy but it’s not. For instance, at one site where we were the MRP Project Manager, we asked the supervisors to establish the queue time and asked them to be realistic. It should be noted that every time we put time in one of these elements, the total lead time goes by that amount. For instance, if we added only 1 day of queue for a routing that has 10 operations the lead time is increased by 10 days. When the supervisors finished putting in the queue times the lead time doubled from the original lead time – not what we were looking for! We came back with a guide line that no queue could be more than a day unless we approved it. We sent the supervisor back to work and in only a few cases did they ask for more.

Operation Scheduling Example

Using the example below we have filled in the times. We have used days for simplicity of explaining the process, but the software should allow something more definitive, preferably hours or minutes. In our example we have gone to the group handling the MRP planning and determined 1 day for order release. We went to the stores people to establish 2 days for pick and 1 day to put in stores. We went to the material handlers and established the rules for move. In this case we have used 1 day for the move from Work Center (WRKCTR) 24 to WRKCTR 19 because they are in the same department and 2 days to stores because the storage facility is a distance from WRKCTR 19. The queue time for WRKCTR 24 is at 1 day and 2 days for WRKCTR 19 – it is a very expensive piece of equipment and is running near maximum capacity. The set-up and run times have been combined.

 Operation Scheduling with Times

Now that the information is loaded we can calculate the operation start and complete dates. In the example below, we have used back scheduling logic (see later explanation). We have also used a manufacturing day calendar (has only scheduled work days) for ease of calculation. For the Order Due Date we go to MRP for that order. The completion date in MRP is manufacturing day 412. It takes 1 day to store and 2 days to move so the operation due date for WRKCTR 19 is 412 – 3 = 409. The last operation has to be done 3 days prior to the MRP due date. It takes 2 days to set-up and run so it has start date is 407. Minus 2 days for queue and 1 day for move the completion date for WRKCTR 24 is 404. Minus 2 days set-up and run the start date for WRKCTR 24 is 402. 1 day of queue, 2 days pick and 1 day for order release we have Order State date of 398.

Operation Scheduling with Dates

This is simple logic that we use every day when determining when we have to start in order to arrive some place on time.

Manufacturing Priority Schedule

Once the operation scheduling has been completed, the computer can lift that information and sort it by work center. An example of a Priority Schedule is below for WRKCTR 24.

Priority Schedule

Most of the heading information is self-explanatory but we would like to expand on a couple of items. 

·      Operation Start and Operation Due Dates - set the priority. Some argue that due date is what is important because it is what has to be accomplished and others argue the start date is more it important because it tells you when you need to start. We see both points of view and so including both is easily done and then the argument is over. We have encountered codes used in some schedule reports that are supposed to set the priority but due and start dates are clear and what all supervisor/operators understand. Use them.

·      Order Due Date – Sometimes the question is asked why have the due date if the operation date is available. See below under Scheduling Rules for the answer.

·      Jobs Currently at Work Center vs. Job Coming – you can separate the “jobs currently at the work center” from the “jobs coming to the work center or list them in order by due or start date with a code such as an asterisk (*) to show which ones are at the work center. We had one encounter where separating them was a huge advantage. It was at a company where we were the machine shop manager and we had just implemented MRP. When we asked the MRP project manager if the MRP system was ready to use (all the items were loaded) he replied that it was up but, he wasn’t so sure we should use the data yet. Our response was anything is better than what we have, which was just a shortage list that made us solely reactive (and late). One of the items we manufactured was gears that started out as a bar of steel and then went through 12+ operations before becoming a finished gear. The first operation was to saw a bar of steel in half, which was done in the plate shop - a different department. We were always late on gears but, never understood what the real problems area was because there were always at different stages of completion when they were identified as a shortage. When we ran the Priority Report with the Jobs Coming to the Work Center view, we were astounded. All the gear manufacturing work centers (lots of them) showed a long list of jobs at the saw. When we went to the daily shortage meeting that day and a gear showed up on the shortage list we gave a completion date but then went on to say there will be lots of shortages in the future because one work center was hopelessly behind schedule and threw the Priority List on the table. What an eye-opening experience. The plate shop manager (considered the best) suddenly had egg all over his face. From then on, we got our bars on time and eventually ended up with no shortages because of adhering to the schedule and doing Detail Capacity Planning (our next article).

Priority Scheduling Rules

Once the Priority Schedule has been made available to manufacturing, there are some rules that must be followed. A few critical ones are:

1.      Honor no “hot list,” “shortage report,” no personal expedites or “do me a favor” changes. 

2.      If the work center is behind schedule, prioritize the open orders by the operation due dates.

3.      If the work center is on or ahead of schedule, work the orders in the most productive sequence without missing any operation due dates.

4.      If a work center is going to miss its operation due date communicate to downstream work center to see if they can make up the time.

5.      If an order is going to miss its order due date communicate to the MRP Planner with the anticipated order due date.

6.      Do Management by Walking Around.

A personal experience we had while serving as the project manager might help emphasize these rules. We encouraged the GM to do “Management by Walking Around with a Purpose”. We suggested that when visiting a work center that he ask to see the Priority Schedule and look to see if the work center was on schedule. If it wasn’t he was to ask what was being done about it (rules 4 & 5). The GM liked the idea and started immediately. One afternoon right after the second shift started he wandered into Maria’s subassembly area and to look at the Priority List. He asked Maria if she was going to make all of her operation due dates. She responded that yes except for one order which was missing a component because of an inventory accuracy problem. The GM then asked what she was doing about the shortage. She responded that she had been to the Shear Supervisor and the Press Supervisor to see if they could rush some through. They refused citing rule #1 (no personal expedite). The GM was a man of action and he would solve the problem so he headed for the Shear department. He asked the supervisor (Anna) if Maria had been to see her about a shortage. The answer was yes but she was not going tear down the machine to make the item to which the GM responded why not. Anna responded citing the rules and then pulled the policy out with the GMs signature glowing brightly as the first one. The GMs face turned red as he grabbed the policy and ripped it in half and said “Sometimes you have to make things happen around here.” Anna was a quick learner and raced over to the operator and ordered him to start to tear down one of the shears.

The Supervisor of the presses had been walking by and overheard the conversation between Anna and the GM. When the GM came to the presses the Supervisor informed him that he was already tearing down one of the presses. He was no dummy.

The GM went back to Maria to inform her that he had solved the problem (ego). She was singing his praises when the MRP Planner showed up with the brackets and handed them to Maria. With a dumbfounded look Maria asked what happened. The MRP Planner explained that the day shift manager had informed her that they were short the bracket so she had gone to the spares organization to see if they had any. Spare was glad to give them to her because they had an excess because they double ordered all parts from us never expecting that we would deliver on-time. Sure enough Maria looked at her desk and saw the note from the day shift supervisor informing her of the problem and solution. In the meantime the shear and the press were torn down and starting the setups of the short parts. The presses lost valuable manufacturing time because they were constraint machines. The GM disappeared quietly and headed back to his office.

The next morning the story was floating around the whole facility. When we heard it we immediately headed for the GMs office. Before we could say a word he said “I’ll never do it again.” We must say the GM was the key to our success. He was a great supporter of the process and readily reacted to our suggestions like “Management by Walking Around with a Purpose”. Yes, he occasionally did something like the above example but, he was quick to admit his mistakes and proceeded full steam ahead supporting the process. We were the first of 18 divisions to be Class A, a great achievement, even though we were among the 12 to start the process at the same time and he deserves all the credit.

Accurate Reporting

If you have read all the previous articles you know that MRP needs accurate data. Accurate data includes reporting of operational data. Otherwise the Priority Report and the Detail Capacity Planning (our next article) isn’t worth the paper it is printed on. One supervisor decided how to avoid detection of his missed operation due dates during the “Management by Walking Around with a Purpose” process. He reported operations complete when they weren’t. When that was discovered disciplinary action was installed and the false reporting stopped immediately

Forward Scheduling vs. Backward Scheduling

The controversy always comes up between forward scheduling and backward scheduling. If we backward schedule or forward schedule with full lead time the answer will be the same. Unfortunately, sometimes we receive an order inside of normal lead time. If we backward schedule with a short lead time it will show the initial work center(s) already behind schedule which is not good. If we forward schedule it will show all the work centers on time with their operation schedule dates, but it will be past the MRP (customer) due dates which is unacceptable. We were visiting a company whose management supported forward scheduling. We were out on the floor talking with the supervisors and manufacturing managers who were ecstatic with the new system because whenever they missed an operation due date, it simply moved the downstream due dates out and the MRP due date out. While they were gushing over themselves we moved down a different aisle on the plant floor where a small group of people dressed in suits were having a discussion. We wandered down there and the group consisted of some customers that obviously were not happy. We moseyed over to someone from the company and asked what was going on. He was a salesman and explained that the Sales Director was trying to comfort a customer who’s order they had pushed off numerous times. We asked if that was because of the new system and he responded yes and if they didn’t fix it they wouldn’t have any customers left.

Compressing Lead Time

If one method is not good (backward scheduling) and the other (forward scheduling) is unacceptable what should we do? If we are operating our facility in a Class A manner (95%+ of the orders released at full lead time because lead times have been reduced through realistic scheduling and lean efforts) compressing the move and queue times equally over all operation is an option if the MRP due date isn’t violated. Whenever compressing lead times, we suggest always getting concurrence from the producing areas. At one company the producing departments approved automatically releasing an order if the compression wasn’t more that 60% and the number of inside lead time orders didn’t exceed 5% - they continued to deliver at 98% on time to the MRP due date.

What happens when we have compressed all the move and queue and we still need to shorten the lead time? There are a couple of approaches here. One is to split the order down to only the quantity needed. The reduction in lot size also reduces run time considerably so we can often get the order through on time. The remainder of the order must be rescheduled in MRP to reflect the new need date. Of course the penalty is that two setups are required resulting in a loss of productivity and capacity. The other option is to run a few pieces at an operation and then start setting up the next machine. What we have done is create a flow cell for a one-time use. We can remember running 5 different operations this way and racing through an item with a normal 2-week lead time in a single day. It was rewarding until we looked at the disaster we left behind – lost productivity/capacity and other items delayed. The moral of the story is manufacturing can work wonders occasionally but when they become common place, the productivity goes out the window and meeting commitments (MRP due dates) is a thing of the past.

The Lead-Time Loop

As discussed above we encourage realistic lead times in the system. We also encourage “lean” activities such as creating flow cells to reduce lead times. Unfortunately many people don’t understand lead time and try to use it to solve other issues. Foremost among the misuses of lead times is trying to solve capacity problems (next article) with them. Adding lead time does nothing to help capacity constraints and in fact, only makes them worse. A simple example is trying to increase the flow of water through a hose. Adding another length of hose will not increase the amount of water flowing out but will increase the time to get through the hose. All this does is confuse the priorities.

Other Applications for Priority Planning

We have focused this discussion on manufacturing. Other areas can prosper from the use of Priority Scheduling linked to the MRP system. A client that makes satellites was having problems delivering on time and within budget/cost. The main problem was that engineering was always late or too early and production was always scrambling on most of the items while others were done early, driving up inventory. With our coaching they structured an item number in the MRP system under the purchased parts section of the Bill of Material (BOM) and called it “engineering” with a unique number. They then attached a routing to the “engineering” item number that reflected the steps that engineering had to perform to meet the start date of the purchased item. Now what drove engineering was the master schedule down through MRP, which gave engineering a due date that was in alignment with what manufacturing needed. Using the routing they could detail capacity plan each engineering skill set (next article) and gave each of the engineering steps operation due dates that must be meet to complete the design on time. Bottom line, it was the first government contract they delivered on time and on cost.

Conclusion

This article is a combination of planning and execution. This is where the rubber meets the road. You can ask yourself if this is all worth it. We can go on forever about the results that companies have seen and from that perspective it is a “no brainer.” The real benefit comes from the sense of a job well done instead of someone throwing a bomb in your pants every day and at the end of the day feeling defeated as opposed to triumphant.

It does take a lot of work to change in the way we operate but far less work to operate in a Class A manner. 

To learn more about Operation Scheduling and Class A reveiw the following books:

An Executive’s Guide To Achieving Class A Business Excellence; Dennis Groves, Kevin Herbert, Jim Correll; Published by Oliver Wight Internationsl

Achieving Class A Business Excellence, An Executive’s Perspective; Dennis Groves; Kevin Herbert; Jim Correll; Published by John Wiley and Sons Inc.

Gaining Control: Managing Capacity & Priorities; James G. Correll, Kevin Herbert

 ?Jim Correll is an author, a certified Fellow of APICS and former Chairman of Oliver Wight Consulting who has more than 30 years of experience helping companies with improving their supply chain processes through education and coaching. Connect with Jim Correll at (503) 329-6607.

Jim Bentzley is an end-to-end Supply Chain Executive and Consultant who has worked in the Medical Device, Electronics, CPG and Food Manufacturing industries implementing IBP (Advanced S&OP) and other process improvements to deliver bottom line results.

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