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We have discussed safety stock strategy and shop loading strategies. In addition, a strategy is needed to mange the manufacturing order and purchase order launch process. This strategy should have four parts:

      Lot size strategy

      Supplier delivery strategy

      Cell loading strategy as outlined in mixed-model
scheduling (see as outlined in part C)

      Expediting (or priority planning) strategy.
Some possible strategies (examples only) follow:



Lot size strategies need to be developed. For example: business rules for a lot size strategy for A items follow:


Run A items biweekly, or at a frequency dictated by the minimum batch size. If this batch size is more than X weeks of supply, this part number becomes a prime candidate for setup reduction. Caution: setups must be reduced prior to reducing lot sizes or severe manufac­turing inefficiencies will result as a company will con­sume excessive capacity and costs will rise.


B and C lot size strategies (business rules) will also be needed.


A priority planning process for parts will be needed, when items fall below daily safety stock coverage. Re­member: order point logic treats all planned orders the same, regardless of days of coverage or inventory class.

Examples of expedite business rules follow:

      A items below 100% coverage—expedite within lead
time (2 weeks).

      A items below 50% coverage—expedite today.

B items below 100% coverage—release job outside of
lead time (only if needed to load level manufacturing or supplers).

      B items below 50% coverage—expedite inside of lead

      C items below 25% coverage—expedite inside of lead

These priorities will be established in conjunction with manufacturing, and manually managed each day by production planners and supplier planners


Setup reduction at your suppliers, and on your machines, will need special attention. Lot sizes are a primary cost issue for factories and your suppliers. You pay for each setup in your unit pricing. Therefore, the smaller the lot, the higher the unit cost because of setup amortization. You can't have low costs and small lots, without formal setup reduction. When setups are one minute (transpar­ent), there will be no need for the mixed-model approach.



Once all the lead time, lot size, and safety stock strategies (business rules) have been agreed to, they must be loaded into the ERP database. This is the only way to synchro­nize your business system with your "thoughtware."


This modified concept of mixed-model scheduling will need a significant amount of dedication for its initial implementation. People will need to lock themselves in a room, for hours at a time, deciding how to apply these concepts to each product family and commodity group. This process will also need to be embedded into your formal MRP II/ERP and lean educational programs.

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