Advanced Solutions Concept

1
Logistical applications and optimizations
2
overview
Introduction
October 17 - definition of business processes
October 31 - overview of logistical business
processes
November 14 - functionality of purchase and
supply processes
November 28 - functionality of production
processes
December 05 - functionality of sales and
distribution processes
January 30 - special problems within the supply
chain handling
3
Review on the last session

• You have learned about the main functionality of
  purchase support processes
• Marketplaces and e-procurement
• Vendor evaluation
• Supplier relationship management

• You have learned about the main functionality of
  purchase execution processes
• Purchase requirements
• Bidding
• Purchase order
• Delivery and payment

You have developed a supply plan

• You have learned about the main parts of a
  material requirement planning
• Stock minus by forecast, sales orders or
  reservations
• Stock plus by production orders and purchase
  orders

You have developed an actual disposition list
You have learned about vendor managed inventory
as an example of purchase optimization
4
About this lecture
All sessions are split into 2 blocks from 0830
to 1000 and from 1015 to 1145
Each session starts with a short review of the
last lectures subjects
Next I will give you a short theoretical overview
of the days subject
Next you probably will develop 3 different
subjects in a brainstorming session in 3 groups
Each group will then present the results of their
discussions
I will present theoretical explanations for the
discussed subjects
Then I will show a example solution for a
potential written test question
Finally I will give a summary of the key messages
for this session
5
overview
Introduction
October 17 - definition of business processes
October 31 - overview of logistical business
processes
November 14 - functionality of purchase and
supply processes
November 28 - functionality of production
processes
December 05 - functionality of sales and
distribution processes
January 30 - special problems within the supply
chain handling
6
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
7
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
8
Functionality of production processes, Part 1
Problems and potentials
Production is the core process of any
manufactoring company. Therefore a well design
production IT process is a very high potential.
The coordination of production processes with
other core logistical processes such as purchase,
disposition, distribution and sales is essential
for a lean supply chain organisation.
The vertical integration provides the
interaction of both production planning and
production execution processes. The challenge and
the aim is the fully IT covered paperless
production
9
Functionality of production processes, Part 1
Learning targets
Understand the main functionality of production
planning system
Understand the main functionality of production
optimization system
Understand the interaction with other processes

Understand the important inputs and outputs of
each component
Understand the involved acting logical business
units
10
Supply chain processes
Supply chain processes represent all main
logistical activities for creation of value
according to the business definition
11
Supply chain processes
Business support processes
Logistical crossover processes
Production planning and scheduling
Shipment and distribution
Sales
Purchasing
12
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
13
Production planning
Materials requirements planning (MRP)
MRP lists
Material Quantity
Planned production order
Production schedule
Production order
Actual production
QM on produced material
Release Certificate
Goods Used
Delivered to stock
Goods Receipt
14
Production planning
15
Production planning
Sales and operations planning (Demand planning)
Sales orders and forecasts are the two entries
into the MRP process
Sales orders are automatically delivered by the
sales processes
Productions directly to stock without sales
orders are usually on the basis of experience
leading to a forecast
Forcast and sales orders are compensated
Forcasts are usually done by sales departments in
cooperation with at least the main customers
Forcasts might as well be based on mathematical
models interpreting the sales historie and
extrapolating the privious data
16
Production planning
Material requirement planning (MRP)
Sales orders and forecasts are the two entries
into the MRP process
According to the BOM the MRP produces
reservations on the next level of dispoosition
The MRP produces planned production orders or
purchase requirements
Planned production orders and purchase
requirements are the systems suggestions
according to the existing master data
Rules for lot sizes and production times are
described in the master data
Usually the MRP is done by a disposition
department
17
Production planning
Conversion of planned production orders
Usually the conversion of planned orders into
production orders is done by a production
department
With the conversion the status of the production
operation is changed from suggestion to actual
plan
18
Production planning
Release of production orders
Usually the release of production orders is done
by a production department
The release of production orders changes the
status from actual planned to start working
With the release of a production order production
papers are printed to be passed to the working
floor for execution
With the release of a production order the
preparation of the quality management is
triggered too
With the release of a production order allocation
of input material is triggered too
19
Production planning
Conformation of production orders
Usually the conformation of production orders is
done by a production department
The conformation of production orders changes the
status from start working to working (partly)
terminated
With the confirmation of a production order the
used time and material is booked and the stock is
reduced
With the confirmation of a production order the
produced amount of material is booked to the stock
With the confirmation of a production order
quality management is started
While the quality management is in process, the
produced material is kept pending in the quality
check inventory
20
Production planning
Production controlling
Production controlling usually is done by the
controlling department
Production controlling is based on the figures
delivered to the system in the confirmation
process
With the controlling of a production order the
moving internal average price of the material is
adjusted
21
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
22
Production optimization
Business support processes
Logistical crossover processes gt advanced
planning systems (APS)
Production planning and scheduling
Shipment and distribution
Sales
Purchasing
23
Production optimization
Production
Distribution
Sale
Purchase
Network Design (ND)
Demand Planning (DP)
Supply Network Planning (SNP)
Procurement Planning
Transport. Planning Vehicle Scheduling (TP/VS)
Production Planning Detailed Scheduling
(PP/DS)
DistributionPlanning Deployment
Global ATP
24
Production optimization
Planning the supply chain with APS
25
Production optimization
Production Planning Detailed Scheduling

• Generation of detailled production plans
• Machine scheduling
• Methods
• Genetic Algorithm
• Constraint Programming
• Time horizon
• One week or one month, split into days or hours
• Rolling updates in hours
• Continous Scheduling
• Determination of valid working plans for workshops

26
Production optimization
Comparison of manual planning and planning with
APS
Process Orders R/3
Process Orders R/3
27
Production optimization
Typical planning scenario with APS
28
Production optimization
Typical experiences with APS

• Bottom-Up APS implementation is a success
  factor
• Optimization automatically 1x daily or on demand
  is best practice
• Reduction of the manual planning times around
  80
• Reduction of the buffer times at the demand point
  in time around 50
• Comment of a planner on the planning quality
  We did not become worse!!.
• High acceptance of advanced planning systems in
  the companies due to low hanging fruits as a
  quick business benefit

29
Practical part developing the subjects
Group A You produce 3 materials B (Black) Y
(Yellow) W (White) on only one machine Material B
is needed 100 pc on 1.7. , 50 pc on 1.8. Lotsize
is 50 in 10 days Material Y is needed 50 pc on
1.8. , 100 pc on 1.9. Lotsize is 100 in 10
days Material W is needed 50 pc on 1.7., 50 pc
on 1.9. Lotsize is 50 in 10 days Cleaning time W
after B is 10 days, W after Y is 10 days, Y after
B is 10 days Cleaning time B after W or Y is 0
days What is your production plan ?
Group B You produce 3 materials G (Grey) P
(Pink) C (Clear) on only one machine Material G
is needed 100 pc on 1.7. , 50 pc on 1.8. Lotsize
is 50 in 10 days Material P is needed 50 pc on
1.8. , 100 pc on 1.9. Lotsize is 100 in 10
days Material C is needed 50 pc on 1.7., 50 pc
on 1.9. Lotsize is 50 in 10 days Cleaning time C
after P is 10 days, C after G is 10 days, P after
G is 10 days Cleaning time G after C or P is 0
days What is your production plan ?

• you have 20 minutes for group discussion and
  writing down your ideas
• afterwards each group has 5 minutes for the
  presentation of your ideas
• your are free to use any presentation medium

30
Example solution for a potential test task, Part 1
You produce 3 materials B (Black) Y (Yellow) W
(White) on only one machine Material B is needed
200 pc on 1.7. , 100 pc on 1.8. Lotsize is 100 in
10 days Material Y is needed 100 pc on 1.8. ,
200 pc on 1.9. Lotsize is 200 in 10 days Material
W is needed 100 pc on 1.7., 100 pc on 1.9.
Lotsize is 100 in 10 days Cleaning time W after B
is 10 days, W after Y is 10 days, Y after B is 10
days Cleaning time B after W or Y is 0 days What
is your production plan ?
31
Summary and key messages, Part 1
Production optimization very high and quick
benefits
Production planning is mandatory for any
Production optimization
The main challenge within production optimization
is the modelling of the system
Reliable master and transaction data are
indespensable

• Literature
• Stadtler, Kilger Supply chain management and
  advanced planning, Springer Verlag, Berlin
  Heidelberg, 2000
• Dangelmaier, Busch (Hrsg.) (in german)
  Integriertes Supply Chain Management, Gabler
  Verlag, Wiesbaden, 5/2004

32
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
33
Functionality of production processes
Part 1
Production planning
Production optimization
Short break
Part 2
Manufactoring execution
34
Functionality of production processes, Part 2
Problems and potentials
The link between production planning at the ERP
level and production execution at the shop floor
level is seldom realised
If the production planning and the production
execution is connected mainly selfdeveloped
interfaces are used
35
Functionality of production processes, Part 2
Learning targets
Understand the needed components for a MES
(Manufactoring Execution System)
Understand the importance to customize the actual
constellation
Understand the importance of standard interfaces
to the ERP system
Understand the important inputs and outputs of
each component
Understand the involved acting logical business
units
36
Production execution
Enterprise Resource Planning
Horizontal Integration
Materials Planning
Order Release
Order Conversion
Sales Order
Confirmation
Production Controlling
Production
Horizontal Integration
Production Control Systems
37
Production execution
BW
APS
Detailed Production Planning
ERP (R/3)
QMControl
MES
Plant Maintenance Management
LIMS
Available Capacity
History Efficiency-analysis
Flow- control
Personnel power
Resources
Genealogy Batch Tracing
PDC
Documents Administration
Process Management
PCS
38
Production execution
Typical MES scenario
39
Production execution
Process messages as kernel of MES functionality
40
Maintenance management
Production execution
Typical MES fuctionality

• Maintenance of tools and machines
• periodical or preventive maintenance
• Spare part procurement

QM

• Monitoring the production quality
• Integration in LIMS

Document administration

• job instruction
• Drawings
• production papers

41
Available Capacity
Production execution
Typical MES fuctionality

• employees (time- and attendance recording, also
  completion confirmation)
• resources

Process management

• Production monitoring in a pokier sense
• Descision support in case of error
• Machine control
• Can be adopted by MES, but also through FLS

42
Sequential control
Production execution
Typical MES fuctionality
History and Service analysis

• conditioning and archiving of operating data
• Analysis of resource workload and availability
• Key Performance Indicator (KPI)

Genealogy and batch tracing

• product tracking
• Batch tracing
• Tracing of components

• monitoring and control of the production flow

43
Production execution
Benefits by using a MES system

• closing the gap between office- and machinery
  world
• increase of the efficiency, flexibility,
  competitive position, delivery reliability
• MES provides the vertical integration between
  business economics and production logistics
• augments operational readiness of the
  manufacturing facilities by
• abbreviated response times in exceptional
  cases
• online coupling of business economics and
  production
• enables completely continious business processes
• complete integration of IT by grouping of single
  solutions
• and definined interfaces between ERP MES
  FLS
• simple integration of new functions resp.
  connection of new
• production plans
• advanced optimized process flows
• wider, transparent pools
• increase of the decision certainty

44
Production execution
Criteria on requirements for the asortment of MES

• Flexible expansion
• Analysis-, planning- and simulation options
• Integration of existing application scenery
• well-engineered technical solutions
• Investment- and implementation effort
• running operation expenses
• acceptance of the users

45
Summary and key messages, Part 2
MES is the mayor challenge to integrate the shop
floor and the ERP systems
The functionality of MES systems may very
according to the supplier
The interfaces are the most complicated
structures and should be provided by the supplier
of the MES systems
The functionality must be selectable according to
the users demand

• Literature
• Stadtler, Kilger Supply chain management and
  advanced planning, Springer Verlag, Berlin
  Heidelberg, 2000
• Dangelmaier, Busch (Hrsg.) (in german)
  Integriertes Supply Chain Management, Gabler
  Verlag, Wiesbaden, 5/2004

46
Thank you very much for your participation
and see you on friday, 12th of December