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PC&L: Production Control and Logistics

Logistics and material flow management have been an age-old issue in driving operational improvement. Compared with manufacturing, there are not too many tools that could be effectively used. On the other hand, there are many proven models, standards and best practices, ‘baptized by fire’, which is the topic of this part of the LEAN Academy.

A particular place in the ‘logistic challenge’ is taken by Production Control, or production planning. Nowadays, companies are faced with high variability in customer demand and are requested to be highly responsive to any changes that may happen at any time. This often causes tremendous cost to the organization. Because of this the expectations to control production resources and ensure stable production are continuously growing.

In this module we will become familiar, amongst other things with the rules of production. Levelling to secure optimum planning and utilization of manufacturing resources over a defined period. Thereafter, creating the MPS: Master Production Schedule – a short term (weeks) tactical and operating plan Followed by the S&OP: Sales & Operations Plan which is the medium-term (months) strategic plan to drive all the manufacturing resources to be used as effectively as possible.

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PC&L: Production Control and Logistics

  1. 1. © Lean & Mean Consulting. All rights reserved. 2015© Lean & Mean Consulting. All rights reserved. 2016 04/ 16 Production Control & Logistics Automotive Standards & Best Practices Material Flow Management & Organization / Production Planning Strategy (PC&L) World-Class Standards & Best Practices of Operational Excellence
  2. 2. 2 Training Objectives  Understand the function and philosophy of the PC&L  Learn how to anticipate variability in demand and ensure high responsiveness to any changes in schedules  Learn why leveling production is needed to optimize utilization of the resources  Get familiar with key elements of the production control: S&OP and MPS  Learn the standards and best practices of the material flow organization  Learn the principles of leveling supplies and optimizing logistic organization
  3. 3. 3 1. Introduction to PC&L 2. Customer Relationships & Production Leveling  Production Levelling  Sequencer & Withdrawal Plan  Master Production Schedule (MPS)  The Sales & Operation Plan (SOP 3. Internal Flow Management  Reception Area  Flat Storages & Overflow Stock Management  Line Supply with Small Train  Flow Racks  Withdrawals, Shipment Preparation & Pool Stock  Handling Operation Standardization 4. Supply Leveling & Logistics Optimization  Supply Leveling  Stabilize the suppliers  Increase the deliveries frequency  Use of small containers Agenda
  4. 4. 4 1. Withdrawal organized by the customer 2. Stocks are located by the supplier site 3. Frequent delivery with mix of references 4. Standardize processes in the logistics 5. „Leveling” of customer needs at medium and long term Understand the PC&L function 5 main PC&L principles
  5. 5. 5  Leveling of Production  Leveling of Supplies Control the Lead-Time The Leveling Objective: Constant level of production, and NOT constant level of stocks! Stock RM&BOP Filter: FGshop-stock+ pool-stock Our plant Supplier Customer Leveled production Leveled orders High demand variability
  6. 6. 6  Major components of Lead Time that generate stocks: 1. Overproduction 2. Lack of flexibility 3. Lack of reliability 4. Poor organization of the Production and the PC&L 5. Quality Problems 6. Irregular Withdrawals and Deliveries  Exceptional risks  Which ones? Understand PC&L function Reduction of the Lead Time
  7. 7. 7 Reduction of the Lead Time (1) Overproduction 1 – Production over needed demand  Gap between production and customer needs  Unstable production rhythm = NO respecting the rules of TAKT-TIME  Pull System + Production Leveling
  8. 8. Material Flow Management & Organization / Production Planning Strategy (PC&L) Module. 04
  9. 9. 9 Simulation game The Batch Size / Withdrawal Frequency Stage 1. • You produce three products: yellow triangles, green circles and blue squares • Production batch size for the first stage is 4 • You have three options for delivery / withdrawals frequency: • 1 / day • 2 / day • 4 / day Task: • Calculate the maximum stock before loading any truck (how many pieces in total). • Fill in just the grey fields only. Note: • Truck load reflects customer order and must be respected. • Trucks come to pick up parts in due times (at 9.00, 12.00, 15.00 and 18.00) • Depending on batch size and withdrawal frequency, you may need to have some stock available before production begins (safety stock)
  10. 10. 10 Simulation – S1 The batch size / Withdrawal frequency Max stock before loading Stock needed at the beginning of the day Stock before loading 4 deliveries / day Stock before loading 2 deliveries / day 1 delivery / day Stock before loading Batch size : 4
  11. 11. 11 Production Control & Logistic (PC&L) Customer Relationship & Production Leveling GROSSDOCK Customer Relationship & Production Leveling
  12. 12. 12 Production leveling The principles to stabilize the Production (1) Sequencer A stabile TT TT Customer TPA Constraints! Variability departure time due to potential issues related to: - Customer - Forwarder 6h 8h 10h 12h 14h C1 C2 C3 Truck Schedule
  13. 13. 13 Production leveling The principles to stabilize the Production (2) A Customer We need a stabile Takt- Time Sequencer The demand mix and quantities fluctuate! Constraints! To absorb Variations of Qties/refPool stock TPA
  14. 14. 14  Shares the workload over the day / shift  Generates frequent withdrawal from Shop-stock & brings the customer demand information to the production lines (Takt Time transmission)  Organizes truck preparation area ( TPA )  Manages the flows to and from Pool Stock  Initiates Indirect Labor Standardization (handling) The Sequencer A mean to express a mixed and leveled Customer Demand
  15. 15. 15 The Master Production Schedule: MPS Customer Demand Treatment & Leveling CC C C C BBBBB W1 AAAAA W5W4W3W2 M ccccc B BBBB A A A AA T W T F ZOOM Decided Production A A A A A B BB B B C C C C C W1 W2 W3 W5W4 Customer demand leveling
  16. 16. 16  Decide the Production (Part N° & Quantities) for the ongoing week.  Satisfy 4 Constraints (sorted according priority):  Achievable  Answer the Customer Order  Respect the SOP  Leveling the production activity  Maintain constant production level with FG stocks fluctuating between „min-max” levels. The Master Production Schedule: MPS Objectives
  17. 17. 17 Which time horizon?  The horizon should be longer than longest lead-time of one of the critical resources. For instance:  Human Resources: recruitment time, necessary training, etc.  Space for production: time for construction or extension, adaptation, equipment, etc.  Machines: time for capital availability (CAPEX), delivery lead-time, assembly, run & rate, testing, validation  Raw materials: suppliers capacity, flexibility, delivery lead-time, etc.  Benchmark: 12/18 months (min. 6 months) What is S&OP? S&OP - Sales & Operations Plan is a cross-functional business plan that involves sales and operations:  Sales represent Demand  Operations represent Supply
  18. 18. 18 Sales & Operations Planning What are the inputs and outputs of the S&OP process? From Market: •Marketing Forecast •Customer Forecast From Exterior: •Suppliers Capacity From Operations: •New Product Launches •Plant Capacity •Human Resources Capacity •Previous S&OP •Initial Inventory Level From Finance: •Financial Targets •Budget To Customer •Shipment plan To Exterior •Procurement plan To Operations •Operations plan •Load balance between sites •Inventories plan •Resources plan •Action plans To Finance •Revenue plan •Budget (once a year) STANDARD S&OP PROCESS • current month S&OP • compared to prior S&OP • compared to budget • goal : 95% for each section, every month • one set of figures „input” „output”
  19. 19. 19  To anticipate & to adapt: medium term vision & plant steering  Vision of volumes over 6 months (or longer) by product family  To define the level of production (by family)  Customers Consumption (volumes, start-up & end of production)  Capacity Equipment  To define the plant’s organization at medium term  Define the working calendar according to customer calendar ( working days in a month)  Plans for repairing, renovation and necessary technical downtime - maintenance (TPM)  Identify the necessary human resources (number of operators + staff (indirect))  The supply of critical resources (raw materials and materials, but also the demand on the media) and to take into account the constraints and their Lead-Time Sales & Operations Plan: SOP Objectives
  20. 20. 20 Production Control & Logistic (PC&L) Material Flow Organization CROSS-DOCK Internal Flow Management
  21. 21. 21 Agenda:  Internal Flows: General Organization of the Layout  Reception Area  Flat Storages & Overflow Stock Management  Line Supply with Small Train  Flow Racks  Withdrawals, Shipment Preparation & Pool Stock  Handling Operation Standardization Production Control & Logistics Internal Flow Management
  22. 22. 22 Material Flow Organization Lay-out & Flow Emptypackaging Sequencer TPAzones Shop-stock N°1 N°2 N°3 Heavy equipment truck 1 truck 2 truck … queue LineA LineB LineC LineD Frontal feeding by small train Oftenandregularpicking Incoming zone Supermarket Shop- stock Shop- stock Pool-stock Finishgoodsflow
  23. 23. 23 Reception area Flow & lay-out of the Flat Storage / Supermarket Train for supply Train 2 Emptypackaging Dock 1 Dock 2 Empty packagingEmpty packaging Train of reception Train 1 Incoming Inspection
  24. 24. 24 Supermarket Management (1) Supermarket Organization: dynamic racks supply SUPERMARKET SUPERMARKET Pallets loaded on small train Small train feeds the supermarket With small boxes Overflow stock Pallets that do not fit in the supermarket are stacked in the overflow stock Reception area Transport of Small boxes Transport of pallets
  25. 25. 25 Line supply with small train (1) Small train Cycle SUPERMARKET SUPERMARKET Small train feeding the line with small boxes and evacuating empty boxes Freq.: 30 – 50’ The small train replenishes the line thanks to withdrawal Kanbans The small train driver can decant a few components from their boxes if: - There is time-gain - No quality risks The capacity of assembly line flow racks is about twice the small train cycle time
  26. 26. 26  Optimize the standard work time:  Make the time measurements of the work elements (movements, handling).  Reduce movements.  Eventually, line several loops together (ex: with removal of rubbish).  Use one train to supply several lines.  Loops organized by the logistics.  After a HOSHIN workshop the train activity must be reviewed and adjusted. Line supply with small trains Characteristics
  27. 27. 27 Small train. Few examples
  28. 28. 28  Search for the best locations for components.  Reduce variability:  Reduce useless movements, blockages, catching, difficulties.  Optimize the supply of components (distance, sliding in the flow racks).  Optimize the “flow rack” capacity according the cycle of small train.  Progress step by step & optimize continuously Flow Rack Application of Kaizen in line supply
  29. 29. 29 Flow racks - Benchmarking
  30. 30. 30 Withdrawals & Shipment Preparation (1) Withdrawal flow of FG & WIP The withdrawal train takes the WK from the Sequencer to pick the containers out of the Shop Stock (Frequency to be decided on. In a Lean factory it takes between 15’ to 30’) The forklift truck or small train brings the products into the TPA (Truck Preparation Area) or into the Pool Stock according to the WK. Decision is made by Logistics through placing the right WK in the Sequencer Shop Stock Shop Stock Shop Stock POOL STOCK Sequencer WK WK WK WK TPA
  31. 31. 31  „A full for an empty”  No empty runs  No handling inside the production lines  Leveling of workload  Standardization allows the optimization (organization = cost) Handling operation standardization Principles
  32. 32. 32 Training Modules of PC&L GROSSDOCK Supplies Leveling & Logistics Optimization
  33. 33. 33  The Transport Scheme (TSc) defines:  The route (main route et sub route) followed by each carrier from Supplier to the factory  The assignment of the docks to the routs  The Transport Program (TP) defines:  The delivery times  The number of trucks  The workload of the trucks drivers  Firm 1 month, horizon 6 month Supply Leveling Establish the Transport Scheme and the Transport Program A B C 1-6-X Main route The factory
  34. 34. 34  Manifest (pick-up sheets, loading list):  It is the truck packing list expressed by part Number in packaging units (PU).  It is as well the document to check-up loading & shipment. It is used to keep tracks off any shortage.  It is expression of a firm order  It is the proof of loading  It is the transport documentation (Delivery Note)  It is reception document (physical or computerized)  The manifest allows to control the BOP physical flow Stabilize the Suppliers Manifest
  35. 35. 35  Check deliveries against manifest  Report shortage  Appraise suppliers MPM  Repot MPM towards Suppliers  Follow up action plan Stabilize the Suppliers Deliveries Follow Up
  36. 36. 36 Increase the deliveries frequency Current situation for RM & BOP transportation The Factory Customer A B C D E 1-1-X 1-1-X 5-3-X 5-2-X 5-3-X 1-3-X CURRENT SITUATION Separated Flows, few deliveries: loss of synergies and of savings Suppliers
  37. 37. 37  Project Management structure driven by PC&L with purchasing involvement  S&OP / MPS / SP / TP  Supply Leveling & Manifest Management  „E” (Ex-works)-group of incoterms transportation  Needs expressed in packaging units  12h access to supplier shipping area  Knowledge of the nationals laws Increase the deliveries frequency Establishing a Milk Run: Requisite
  38. 38. 38 The aim is to supply the line work stations in small containers.  Purchasing negotiates, with support from the material planners, the transition to small containers.  Use reusable (returnable) containers.  HOWEVER, In some cases it is more reasonable to:  Repack. Only a small container may enter the supermarket.  Supply in disposable (one-time) containers. In this case, the supply to work stations without loss of time and waste removal must be guaranteed. Use of small containers Principles
  39. 39. 39 Use of small containers (1) Recommendations 1. The box has at least one "standard" side measuring 200, 300 or 400mm (enable to standardize the width of supermarkets and flow racks) 2. The height and the other side (see 1st criteria) of the box, are designed to optimize the ratio "Number of Parts / Box Volume" 3. The surface of a standard pallet can be exactly filled with a set of boxes 4. One part number per box (left and right detached) 5. Full box weight does not exceed 12 kg (and meets Health & Safety criteria) 6. The box is stackable 7. The box is solid enough to do project life time rotations 8. The box has plain walls (recommended) 9. The box has a flat bottom
  40. 40. 40© Lean & Mean Consulting. All rights reserved. 2016