Manufacturing Process Industry

Have you tried to understand the connection between MRP II and JIT and felt something lacking, some critical piece of under­standing? This article is an attempt to bridge these concepts, provide that missing piece, which is scheduling. The author believes that many of the MRP II and JIT implementation failures have been caused by not understanding the dynamic nature of scheduling and how planning must fuse MRP II, JIT, and Sched­uling together as a responsive, constantly improving process.

Global Competitiveness today—and in the foreseeable future— will depend on businesses' ability to respond quickly to market changes and minimize the supplied cost of product to customers anywhere in the world. The two most significant things that can be done to meet this challenge are (1) make physical changes to the supply chain and the product mix and (2) improve the management of the supply chain through improvements in the information flow.

Policies and procedures, established by the business, and the application of the most appropriate planning technologies are the key opportunities for improvement in supply chain information flow. Of these two areas, most of the talk will be on planning technologies. Suffice it to say that supply chain information is collected and formatted so that the business can make decisions. However, the business objectives are not always clearly defined or detailed. The nature of the information, needed for decision making, changes depending on the objectives. The business objectives, in terms of stratification of customer service level objectives, product mix and supply chain bottleneck impact on market responsiveness, etc., need to be defined before it can be determined what kind of information is needed or its required timeliness.

Like a Popeye saying, "You are what you are and you gots what you gots." MRP II is doing the (qualified) best with what you have today. JIT is a goal. MRP II embodies pull planning, making the product just before it is needed. The logic is cascaded through every planning step, saying, if this is when the material is needed, then the precursor needs to be started this much earlier—very linear logic.

Mapping what the lead times and rates are is very valuable. An MRP II program is a fancy calculator that applies planning constants—rates and lead times to offset, in time, every planning step and determine the necessary amounts, based on lot size logic. Basically the programmer must capture this type of information and program it into the calculator. Note that the lead times may be long and lot sizes large. Today the programmers must develop their programs based on the current situation. But at the same

time they run the risk of automating a problem. However, this was the second problem. The first was overcompensating for not even knowing what the planning constants were exactly. Over-compensating translates to making more than is necessary and doing it earlier than necessary. An integrated MRP II program solves overcompensation.

JIT seeks to eliminate the non-valued-added waste in the supply chain. JIT is the endeavor to reduce to a minimum the planning constants—lot sizes, setup times, lead times, scrap, unnecessary steps, etc. The results of the JIT effort would allow you to go back and reprogram the calculator to use the new improved planning constants. In this way, the goal would simply be having planning constants that are at their physical (theoretical) limits and having perfect knowledge and confidence in these numbers, all programmed into the MRP planning calculator.

Still, the pull planning of MRP and JIT is neither feasible nor optimal. What is this, JIT and MRP II won't solve all my problems? It certainly won't help you raise your kids. Something else is needed. Once this is accepted, we can move on.

To illustrate this point consider these situations—seasonality causing demand to exceed capacity during the seasonal peak; demand exceeding the overall capacity; the JIT goal is a long way off because of budgetary or resource constraints; or the business is capital-intensive, as in the process industry. This is where scheduling comes in.

Making product earlier than is needed is push planning. Ignoring the need to make push planning part of the planning process is like driving a car that is hot and fast (we'll call it the JIT model). It's not going to go anywhere until the light changes. The light is a physical constraint to the car's speed. The linear logic described does not recognize, when two things require the same resource at the same time (a physical constraint), which one should get it. Just wanting it, isn't enough. Solomon was willing to split the baby but the mother chose. Important point. Who chooses and based on what? Production doesn't know what to do until this choice is made.

You see, MRP II and JIT narrow down the choices and establish the need date, but do not answer when it could be realistically produced, or should be.

To be Continued

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