Manufacturing Cost Estimating 



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3. Overstructuring

This consists of defining the data in an accurate, but too detailed manner. Defining routing steps that are really suboperations of major operations, placing part number levels that are not needed in the bill of materials, and loading individual work center data for every piece of equipment in the plant are examples of overstructuring.

Example: One project team loaded a five step routing with an additional 15 steps that were really elements of the five major steps. This resulted in detailed information that appeared desirable in their conference room pilot. In actual practice, however, the extra reporting requirements placed an enormous burden on the operators. It also greatly confused the information on the dispatch lists and capacity plans. No one believed that the value of the information was as great as the cost of reporting, so the timeliness and accuracy of the data deteriorated. Soon, the reports based on this data became unusable.

4. Precision overkill

Everyone wants their data to be accurate, but some carry the drive for accuracy too far. This can result in excessive reporting requirements, unstable schedules, unnecessary systems modifications, and users' unwillingness to use the systems. Precision overkill includes providing too much detail for making gross level decisions, measuring and changing planning data and factors too frequently, creat­ing too many categories for reporting activities, and using units of measure that are more precise than necessary.

Example: In their request for proposal sent to potential software suppliers, one company specified a requirement for over 50 different "hold" status codes to identify the different reasons why an order could be stopped in manu­facturing, ostensibly for the purpose of performing a Pareto analysis and fixing the problems causing these interrup­tions. The real reason for the requirement was that these codes had been modified into their current system and they wanted the same capability in their new one. Investigation showed that the manufacturing and quality control people 

who entered these codes had for several years been using only four of them and ignoring the existence of the other forty-six. The people who were supposed to analyze the data from these reports were also not using them as intended. It is easy to see how the new system could become complex as a result of requirements like this.

5. Tools that do not fit the application—­Sometimes software tools that are not needed are installed. Sometimes the wrong tools are applied to a given task. "Since it is in the software, we might as well use it," is a statement that has led to added work for little benefit in more than a few companies.

Example: Management of a large assembled products manufacturer agreed to be responsible for the Sales and Operations Planning process and the capacity planning decisions that accompanied it. The people responsible for presenting the capacity information in these meetings believed that the management team would rather have the more accurate and detailed Capacity Requirements Plans generated from their shop floor control system than the rough cut Resource Requirements Plans included with their S&OP module. They presented a 350 page CRP report with weekly details for every work center in the plant at the monthly S&OP meetings. Management soon stopped try­ing to make capacity decisions in these meetings and delegated these decisions as an post-meeting responsibil­ity to Planning and Manufacturing.


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