SCT Paramters 1© The Delos Partnership 2005 Supply Chain Techniques The parameters.

SCT Paramters 1 © The Delos Partnership 2005

Supply Chain TechniquesSupply Chain Techniques

The parameters


Part Maintenance in CINCOMPart Maintenance in CINCOM


MRP “Spreadsheet”MRP “Spreadsheet”

Part Master Data

Item Number : 1453678

Description : Fuel Tank

Lead Time

1 Order Quantity

20 Safety Stock

0 On Hand 15

Periods Now 1 2 3 4 5 6 7 8 9 10 11 12Gross Requirements 0 20 0 20 0 20 0 20 0 20 0 0Scheduled ReceiptsPAB 15 15 -5 -5 -25 -25 -45 -45 -65 -65 -85 -85 -85Planned ReceiptPlanned Release 0 0 0 0 0 0 0 0 0 0 0 0

Action messages R/I R/I R/I R/I R/I R/I R/I R/I R/I R/I R/I


What determines Lead What determines Lead Time ?Time ?Pick timeSet up TimeRun TimeQueueMovesWaits…ReprioritisationShortagesFirefighting…..

Should only includethese


Lead TimesLead Times

Works orderDue date- Into stock

Works orderRelease date- from stock



Works orderReady forRelease date


Purchase order Release date


Lead TimesLead Times







Purchase order Release date

Cumulative Lead Time


Economic Order QuantityEconomic Order Quantity

£0

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

£7,000

100 200 300 400 500 600

InventorySet up

Minimum Cost


Pareto Analysis - 80:20 rulePareto Analysis - 80:20 rule

Class/Value % by value % by volume Order Frequency

“A” Class Parts

80 20 1/day or1/week

“B” Class Parts

15 30 1/fortnight or 1/month

“C” Class Parts

5 50 1/quarter

Vilfredo Pareto was a 19th century economist who observed Vilfredo Pareto was a 19th century economist who observed that 80% of Italy's wealth was owned by 20% of the population. that 80% of Italy's wealth was owned by 20% of the population.


What Is Safety Stock?What Is Safety Stock?

•Safety stock is a request for buffer that is:– Time related– Quantity related– Or both

•In order to meet variations from forecast demand in terms of:

– Timing– Quantity– Both


Correct parametersCorrect parameters

Having the correct choice for the parameters is an often crucially missed opportunity for :

• Reducing inventory• Improving flexibility• Improving service levels


Accuracy of DataAccuracy of Data

“Data accuracy is an attitude of mind” – Hal Mather


Bills of MaterialsBills of Materials

1. Key link in MRP2. Vital for Costing3. Link to Drawings

Must be 100 % accurate


Definition of AccuracyDefinition of Accuracy

Check accuracy of single level Bills of Materials

Quantity per Unit of measure Part Number Description Completeness

Red PenPart Number 14356

Pen BarrelPart Number 43768

Finished NibPart Number 76452

CapPart Number 89563



Number of Single Level Bills of Materials right

Number of Single Level Bills AuditedX 100 %


Routings Data accuracyRoutings Data accuracyRoutings represent instructions to make

Capture Standard times

Used for Capacity planning

Used for costing resource


ROUTING ACCURACYROUTING ACCURACY

Basis : Represents the way that the product is made and moves through the factory via work centres

Missing/Unnecessary OperationMissing Work CentreWrong Operation SequenceWrong Work CentreNo REALISTIC Standard

Types of Error :


Definition of Routing Definition of Routing AccuracyAccuracy

Number of Routings correctNumber of Routings audited

X 100 %


Inventory AccuracyInventory Accuracy

How to get to 98 %


Inventory AccuracyInventory Accuracy

• Vital to have 100 % accuracy of inventory:– In the stores– On the shop floor– Anywhere in the company

• Vital to have 100 % accuracy of work in process


How Accurate Is This How Accurate Is This Data ?Data ?

Item Counted Quantity

Value ( £’s) Computer Record

Value ( £’s)

12351 995 995 1000 100012352 996 996 1000 100012353 997 997 1000 100012357 998 998 1000 100012358 999 999 1000 100012359 1000 1000 1000 100012360 1001 1001 1000 100012372 1002 1002 1000 100012373 1003 1003 1000 100012374 1004 1004 1000 100012375 1005 1005 1000 1000TOTAL 11,000 £ 11,000 11,000 £ 11,000


How Accurate Is This How Accurate Is This Data ?Data ?

Inventory status

Stores Location ST001

Factory F0001

Part Number 91121 200 Location ST001 200 Location F0001 0

Count 100

Count 100



Number of correct counts

Number of items counted

Item = product by location

X 100 %


Steps to Gaining Inventory Steps to Gaining Inventory AccuracyAccuracy1. Establish levels of current accuracy2. Establish control group to identify causes of

errors3. Review material flows4. Create Limited Access5. Define systems and processes6. Educate users7. Train users8. Cycle count9. Eliminate annual physical10. Never give up the challenge


Discrete IssueDiscrete Issue

1. Release order : allocate materials2. Paperwork received in stores3. Items picked4. Issued to factory etc.5. On hand balance downdated

Stage Allocated On Hand Available

Step 1 0 100 100

Step 2 100 100 0

Step 3 100 100 0

Step 4 100 100 0

Step 5 0 0 0


Backflush Technique Backflush Technique

• Backflushing is a technique for downdating inventory

• Uses Bill of Material to work out what has been used

• Supports an environment in which works orders are not used

• Allows bulk replenishment• Simplifies material control


Backflushing Backflushing PrerequisitesPrerequisites

Timing of transactions Report Production in Timely manner Scrap/Yield/Exception reporting needs to be

done quickly Bill of material accuracy needs to be 100 % Point of Use Inventory Accuracy needs to be

> 95 % Routings need to be 100 % accurate Bill of Material change control needs to be

excellent


10. Never Give up10. Never Give up

• Continue with Control Group

• Continue with Process control cycle counting forever– Informal disciplines will creep back

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