In a make to stock environment over production can take place both at parent level and at child level - this can yield efficiency benefits but can also negatively impact capacity.
Has anyone developed a method where during bottlenecks only the sales order demand can be understood - again both at parent level and at child level.
I have seen this happen in a manufacturing environment where “for efficiency” they always made extra… Even crazier, they had a “minimum sale” qty, and then manufacturing would bump up from there as well… Example:
Customer WANTS 10 units… minimum is 50, so the salesperson sells them 10 for the price of 50… but the customer only wanted to pay for shipping for 10.
Manufacturing sees the order for 50, decides it is better to make 100. Because their “Rules” say the minimum order quantity is 50, they ship 50 to the customer… and keep 50 in stock. only charged the customer for shipping 10. End result. customer received 40 extra, manufacturing increased stock by 50 unneeded pieces.
How can you “detect” that this is going on? Watch inventory value… if the inventory is constantly rising, then you are making more than needed. if you only make (or purchase) what you need, then inventory should remain constant or fall.
In an optimized factory, the amount of inventory in stock should be very low… only enough to keep manufacturing moving. If there are long lead times on product, then you may need to keep extras. If your product must be purchased “by the box” then of course, you may have leftovers…
I don’t know of any standard reporting mechanism within E10 that can be used other than monitoring the statistics of inventory level cost PLUS new inventory purchases PLUS new inventory Manufacturing LESS Consumption of inventory through jobs or customer shipments… if you track all these values for change, you should see trends that would be valuable.
In general my experience is that Make To Stock environments have reasonably good practice around inventory and WIP - the problem exists where perhaps demand is spread across a number of weeks/months and the grouping of Demand (increasing the DaysOfSupply) gives efficiency gains but causes bottlenecks that are artificial.
MRP Pegging does offer some visibility but doesn’t really solve the problem - therefore planners / production controllers have great difficulty in working out the correct quantity to make and when based on Sales Order demand rather than parent Job demand.
Often due dates are missed because production hours were used to make stock early of product A whilst product B queued.
I am trying to create some tools to assist this common problem.
On Two occasions I have used a Data Directive BPM when MRP created the Job to set different fields (depending on what’s needed) after running a query checking for open sales orders for the part:
Set Job Planner Code, so then the users processing the unfirm MRP Jobs could sort between Restock and Jobs that there is actually an open Sales Order.
Increase the Job Priority Code for Parts that have an open Sales Order and/or Lower the Job Priority Code for Parts that have no Sales Order demand.
I have found that the combination of lowering the Job Priority Code for Parts with no Sales Order demand and then immediately after MRP runs run the Global Scheduling process to reorder the Jobs and then run PO Suggestions after that is very effective in pushing the Restock noise down.
Having a BPM that triggers on MRP creating or updating a Job lets you apply additional MRP logic and change aspects of the Jobs. Not 100% solution, but there are lots of opportunities to tune up MRP a bit this way.