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Wednesday, January 23, 2008

Manufacturing Management

Manufacturing Management

The Environment:

Types of Companies:

  • Basic producer (Manufacturer)
  • Converter (Process)
  • Fabricator

Methods of Production:

  • Job Shop (Project based)
  • Assembly Line
    • Batch production
    • Mass production (Continuous Production)
  • Combination of above

Types of planning:

  • Buy from outside
  • Make within the company
    • Make to stock (Manufacture in advance to compensate demand)
    • Make to order (Manufacture as and when order comes)
    • Make to assemble (Manufacture spares for assembly)
    • Assemble to order (Assemble as and when order comes)

Concerns of Manufacturing Organization:

Costly Business:

  • Material Cost- Investment in inventory
    • Direct Material Cost
    • Indirect Material Cost
  • Cost of Machines – Machine Utilization
  • Manpower cost – Operator efficiency
    • Direct labor cost
    • Indirect labor cost

A complex & Changing Product:

  • Product enhancement – New technology, new material
  • Engineering change control

A Competitive Business:

  • Customer expects quality product at reasonable cost
  • Less time to market
  • Changing pattern of demand
  • Less time for delivery

A changing environment:

  • Pains of growth or recession
  • Complexity in planning and scheduling of resources

Decentralized Production Planning:

  • Problem in reconciling the requirement of sales
  • Production and the financial interests.

An Information Explosion:

  • Gathering and dissemination of information I the most difficult problem as information is voluminous, scattered & difficult to obtain.

Functions of manufacturing Management:

  • Preparation of Master Production Plan
  • Preparation of Master Production Schedule (MPS)
  • Capacity Requirement Planning (CRP)
  • Material Requirement Planning (MRP)
  • Production Planning
  • Shop Floor Control

Master Production Plan:


  • To achieve the budgeted turnover
  • Optimum utilization of resources
  • Smooth production process

Product-wise requirement during various periods

  • Long range plan
  • Short range plan

Inputs for Preparing Master Production Plan

  • Order booking
  • Demand forecast (Products, spares, etc.)

Demand Forecast

  • Factors influencing demand forecast:
    • Life cycle of product
    • Product phase
    • Number f products
  • Forecast can be based on:
    • Past data patters (future projection)
    • Economic trends
    • Competition
    • Market trend

Master Production Schedule:


  • To provide feasible master schedule for production
  • To provide basis for decision-making regarding
    • Specific production dates
    • Available capacity
    • Total demand
    • Lead time
    • Inventory constraints
  • The MPS is stated in terms of specific products that are to be produced in certain quantities by certain dates
  • MPS specifies:
    • Sizing and timing of production order for specific items
    • The sequencing of individual jobs
    • Allocation of resources to individual activities & operation.

Capacity Resource Planning (CRP):


  • To determine long-term & short term capacity needs.
  • To mach the resources to demand
  • To determine the acquisition of required resources

Long term capacity strategies:

  • Following changes will revise he demand resource requirements:
    • Development of new product lines
    • Expansion of existing facilities
    • Construction or phasing out of production plant
  • Acquiring of resources
  • Make or buy decision

Short term capacity strategies:

  • Capacity planning for the short period to take care of fluctuation in demand during short term due to
    • Seasonal factor
    • Economic factor
  • Following strategies can be used to cope up with fluctuation in demand
    • Extra shift working, overtime
    • Sub-contracting
    • Hiring or firing of people
    • Purchasing instead of manufacturing

Capacity planning:

  • Capacity is the rate of output that can be expected from a given entity. It is the highest sustainable rate of output which can be achieved with current production mix, worker effort, plan and equipments (hrs, qty, etc…)
  • Load is the total quantity or volume required to be processed through a given entity.
  • Capacity management is the planning and control function which is link between the production plan and manufacturing resources.
  • Rough-cut Capacity planning is the process of converting the production plan and/or the MPS into capacity need for the key resources.

Advantage of Capacity planning (CRP):

  • Helps to simulate proposed production plan
  • Helps to rescheduling the production plan to balance workload
  • Identifies end-item to be rescheduled
  • Identify rescheduled effects on all work-centers
  • Reduces idle time and queue time.
  • Reduce work-in-process (WIP) inventory
  • More efficient use of machines and people

Material Requirement Planning (MRP)

MRP is a planning tool designed to provide visibility into the future to predict potential challenges. MRP is the best re-planning tool available because through the use of the speed of computer, it can re-plan and adjust priorities based on changes in the original plan.


  • Inventory reduction
    • No excess inventory
    • No mismatch inventory
    • No non-moving or dead stock
  • To ensure availability of required material
    • In right quantities
    • At right time
    • At right place
  • To enhance customer satisfaction by realistic commitment
  • To increase production efficiency
    • Reduction in idle time, queue time
    • Increase production capacity by better co-ordination among work-centers
  • To help in providing faster response to changing condition
    • Material shortages
    • Machine breakdowns
  • By forward planning, help supplier to reduce lead time and minimize production and inventory carrying cost.
  • To help arrive at accurate cost of production.

MRP process:

  • It relates the dependent requirements for the material and components comprising in end product to time periods know as “buckets” over a planned horizon on the basis of Master production Schedule (MPS)
  • It is used to determine how much of each material needs to be purchase or item to be manufactured in the planning horizon to ensure that orders are fulfilled on time
  • To accomplish this task MRP uses:
    • Master production Schedule (MPS)
    • Bill of material (BOM)
    • On-hand quantity (Available stock)

· MRP provides requirement oriented operations for manufacturing parts and/or assemblies for the final product, which are very important to manufacturing firms.

Steps involved in MRP:

  • Compute Gross requirement of dependent items based on MPS
  • Add requirement of independent items to gross requirement (e.g. requirement of spare parts)
  • Compute Net requirement of items by netting the gross requirement with that of Lead time
  • Determine the Production lot
  • Offset the production lots for lead time
  • Separate out requirements of Purchased items and Manufactured item
  • To calculate Cumulative Net Requirement use BOM
    • Define product / Assembly / Component structure
    • Parent-Child relationship
    • Quantity of Child required per Parent
    • Also define stage in assembly where the item is required.
    • Creation of BOM
      • New
      • From Existing structure
    • Explosion or Implosion of BOM

Production Planning:

  • Production planning is the pre-determination of manufacturing resources such as material, machine, manpower, minutes & money for the production of good of the right quality, in right quantity and at the right time.
  • It is the determination, acquisition and arrangement of all facilities necessary for future production of items.

Functions of Production Planning:

  • Shop scheduling (Machine loading chart)
  • Material Control (Material Requisition Note)
  • Process Planning & Routing (Route Card, Process Sheet)
  • Follow up of WIP

Shop Floor Control:


  • To control day-to-day production activity to achieve production targets.
  • Work measurement (Efficiency & Productivity)
  • Reduce Work-in-Process
  • Improve utilization of production resources
  • Collect cost, quality and maintenance related data.


Work Order Management:

  • Release of Work Order or Mfg, order
    • Work order
    • Material requisition note
    • Route card
    • Time ticket
    • Move ticket
    • Inspection order
    • Process sheet
  • To get required material & tools issued from stores
  • To move material between two work-centers
  • Stage inspection
  • Prepare Material Rejection Note for rejected material
  • Prepare Material Delivery Note for finished material

Work-in –Process Management:

  • Tracking of W/O based in routing information
  • Work Measurement
    • With respect to labor efficiency
    • With respect to productivity
  • Yield reporting
  • Rejection control
  • Monitoring of returns from shop

Information Reports:

  • Shift-wise labor efficiency
  • Shift-wise production completion details
  • List of completed Work Orders during the period
  • List of pending Work Orders as on date
    • Work order wise
    • Finished item-wise
  • Machine utilization for the period
  • Down time analysis
  • Analysis of rejections
    • Due to process
    • Due to operator
  • Report of scrap generated
  • Material Consumption analysis


  1. Hi Dev,

    We going to Implement 12.1.1 from 11.5.9 , We unable to inform receipt rejection through workflow to account dept. Can any possibilities to send any receipt rejection information through workflow?

  2. Yes you can.
    Make it inspection compulsory and then whatever is rejection will not be paid.


  3. Hi Devendra,

    Do You have any material/Lab exercise for oracle process manufacturing?


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