johnson only

Level Two
Supply Chain Management

Planning and Control

Question.....

Why do you think planning and control is important?

Learning Objectives

• To understand the importance of planning and control within organisations
• To appreciate how we can plan and control SCM decisions
• To recognise the systems available to support planning and control

What is Planning and Control?

• Reconciliation between market demand and ability for resources to deliver.
• Planning – formalising what should happen in the future
• Control – coping with the changes in variables

The Balance Between Planning and Control Over Time

• Long term –
• Aggregate demand forecasts
• Objectives set in financial terms
• Medium term –
• Determines resources and contingencies
• Objectives set in both financial and operation terms
• Short term –
• Actual demand
• Correcting deviations
• Ad hoc consideration of operations objectives

Demand

• Dependent demand
• More predictable
• Independent demand
• Lack of visibility
• Responding to demand
• Resource to order
• Make to order
• Make to stock

The Task of Planning and Control

Requires the reconciliation of supply and demand in terms of Volumes, Timing and Quality.

Quality is an important factor but will be considered in the later quality lecture.

To reconcile volume and timing there are 3 distinct but integrated activities

• Loading
  
• Sequencing
  
• Scheduling

Loading

• Loading is the amount of work allocated to any given work centre.
• Need to take into account what time is actually available
• Finite loading
• Loading that takes capacity into consideration
• Infinite loading
• Coping with capacity to meet deadlines

Loading

Sequencing

• Decisions made in regards to the order in which will be undertaken.
• Various ‘rules’ which may be applied to aid decision making

Sequencing ‘Rules’

• Physical constraints
• Customer priority
• Due date
• FIFO and FILO
• Longest operation time (LOT)
• Shortest operation time (SOT)

Scheduling

• When a job should start and end
• Forward scheduling
• As soon as work arrives
• Backward scheduling
• Last possible start time

Planning and Control Systems

• MRP
• 1970s
• Volumes and timing
• MRPII
• 1980s
• Modelling and greater communication levels
• ERP
• 1990s
• Integrated information system

MRP

• “Material Requirements Planning is a dependant demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements” (Heizer and Render, 2010)
• Tends to be used in repetitive and product orientated situations
• Stable product demand
• Standardised product
• Supplies of raw materials and components are adequate and standardised
• Volume is adequate for high equipment utilisation

MRP

Advantages:

Low variable cost per unit due to high volume and standardised nature of the product

Low material handling cost

Reduced work in progress inventories

Easier training and supervision

Disadvantages:

Only suitable for high volume production due to large investment in specialised equipment

A lack of flexibility when handling a variety of products or production rates

Work stoppage at any point halts the entire operation.

MRP

Benefits:

Reduced stock levels with supply matched to a known demand

Improved warning and alerts for potential problems and shortages

Higher stocker turnover with less risk of stock becoming obsolete

Works well in high volume low variety environments.

Limitations:

Expensive and time consuming to set up

Focus on production rather than the end customer

Struggles to cope with short term changes in demand

Accurate and stable long term forecasting essential

MRPII

• Technological innovations such as local area networks [LAN’s] and business functional integration.
• Better communication between different parts of a business.
• Allowed for better forward scheduling and modelling of ‘what if’ scenarios and analysis; for example incorporating changes in forecast demand

ERP

• Enterprise wide ‘business solution’
• Integration of decisions and databases from across the organisation
• Potentially live information
• Be cautious – the ambition does not always appear!

Benefits of ERP

• Visibility across all business functions
• Standardisation
• Communication with business partners, often giving more accurate and timely information
• Potential for integrating the whole supply chain

ERP Integration

Limitations of ERP

• Involves considerable change to the organisation
• Technological updates – Dow Chemical spent almost ½ billion dollars and 7 years implementing a system that became outdated
• Very Expensive – can be driven to bankruptcy
• Lengthy implementation time scales

Summary

• Planning and control is vitally important and affects the way business and operations are run.
• Supporting systems are often useful, however have to be considered with caution – especially considering the need for high quality information inputting.

To Do

• Reading
• Refer to weekly reading list
• Online activity
• Details on moodle

Today.....

• We now:
• Understand the importance of planning and control within organisations
• Appreciate how we can plan and control SCM decisions
• Recognise the systems available to support planning and control

References & Further Reading

Heizer, J., Render, B. (2010) Operations Management. 10th edn. Harlow: Prentice Hall

Slack, N., Chambers, S., Johnston, R. (2010) Operations Management. 6th edn. Harlow: Prentice Hall