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Chapter 4

1. The document discusses production planning and supply chain management for a snack food manufacturer called Fitter Snacker. It describes Fitter Snacker's production process and challenges in meeting fluctuating demand. 2. It then explains how ERP systems can help with production planning, materials management, quality control and other operations through modules like production planning, maintenance, and warehouse management. 3. The document outlines Fitter Snacker's sales and operations planning process and how it feeds into materials requirements planning to determine needs for subassemblies and materials to support the production plan.

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Joao Negreiros
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28 views17 pages

Chapter 4

1. The document discusses production planning and supply chain management for a snack food manufacturer called Fitter Snacker. It describes Fitter Snacker's production process and challenges in meeting fluctuating demand. 2. It then explains how ERP systems can help with production planning, materials management, quality control and other operations through modules like production planning, maintenance, and warehouse management. 3. The document outlines Fitter Snacker's sales and operations planning process and how it feeds into materials requirements planning to determine needs for subassemblies and materials to support the production plan.

Uploaded by

Joao Negreiros
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Concepts in Enterprise Resource

Planning
Fourth Edition

Chapter Four
Production and Supply Chain Management
Information Systems
Production Overview 2

• To meet customer demand efficiently, Fitter Snacker must:


• Develop a forecast of customer demand
• Develop a production schedule to meet the estimated demand
• Goal of production planning is to schedule production economically

Fitter Snacker’s
manufacturing process
3

• Snack bar line can produce 200 bars a minute, or 12,000 bars per hour
• Each bar weighs four ounces
• Product 48,000 ounces/hour, or 3,000 lbs/hour
• Entire production line operates on one shift a day
• Fitter Snacker’s production sequence
• Capacity: number of bars that can be produced

• Fitter Snacker has problems deciding how many bars to make and when to make them
• FS’s Marketing and Sales personnel do not share information with Production
personnel
• Production personnel find it hard to deal with sudden increases in demand
• Might cause shortages or stockout
ERP Manufacturing Modules 4

• Production Planning – enable s the creation of realistic production plans across


multiple manufacturing locations an d subcontractors to fulfill d e m a n d in a timely
m a n n e r a n d according to standards expected b y the customer

• Materials M a n a g e m e n t – su ppor t s inventory- related activities s u c h a s the


tracking a n d control or raw materials, stocked items, WIP, a n d finished g o o d s in
a single, integrated inventory control environment

Quality M a n a g e m e n t – a s s i s t s in configuring specific parameters that define


what g o o d s to inspect, w h e n to inspect, a n d t o l e r a n c e l i m i t s (the extreme
v a l u e s that are considered acceptable)
5
• Plant Maintenance – used by large organizations in capital-intensive industries.
Directs the activities required to maximize the availability and operability of
equipment; reduces costs for inspections, repairs, and maintenance.

• Warehouse M a n a g e m e n t – Automates the flow of materials


into, ©t2h0r10obuy Mgahria,n nae Bnraddford
o.uAllt of the1 3 5w arehou s e

• Supplier Relationship M a n a g e m e n t eliminate m u c h of the g u e s s w o r k


b etw e e n suppliers, manufacturers, retailers, a n d c o n s u m e r s b y
e n a b l i n g m o r e visibility u p a n d d o w n the s u p p l y ch a i n include:
– Radio Frequency Identification (RFID)
– Electronic D a t a Interchange (EDI)
• Radio Frequency Identification (RFID) – u s e of tiny computer chips and
antennas embedded in products and packaging that enable better tracking
of objects using wireless networks
– Tags – chips and antennas which transmit data

• A c t i v e t a g s – have an internal battery that allows continuous


transmission of data and permits reading from a greater distance

• Pa s s i v e t a g s – do not h a ve a battery and only transmit data when a


transceiver activates them by coming within a certain range

– RFID tags do not require line of sight technology, but need only be
within range of the reader to be read
6
• Electronic Data Interchange (EDI) – u s e of computerized communication to
exchange busin e ss event data between companies, or t r a d i n g p a r t n e r s
– Allows compan ie s to create electronic documents, transmit them over private
networks or the Internet to their customers’ a n d suppliers’ computers, a n d
receive electronic acknowledgements in return

– Generally u s e d for high volume transactions running in batch m o d e or in


situations where critical, just-in-time information is required

– U s e d a s a standardized format (A N S I X 1 2 ), or c o m m o n language, that is read


b y trading partners’ information s y s t e m s

7
MRP: Material Requirement Planning

The SAP ERP Approach to Production


Planning 8

The production planning


process
Sales and Operations Planning 9

• Sales and Operations Planning (SOP)


• Input: sales forecast provided by Marketing
• Output: production plan designed to balance market demand with production capacity
• Production plan is the input to the next step, demand management

Fitter Snacker’s sales and operations plan for January through June
10

• In SAP ERP, sales forecast can be made using:


• Historical sales data from the Sales and Distribution (SD) module
• COntroling module
• Profit goals for company can be set

Fitter Snacker’s production


plan for January: The first five
weeks of production are
followed by a day-by-day
disaggregation of week 1
Materials Requirements Planning (MRP) 11

• Determines required quantity and timing of the production or purchase of


subassemblies and raw materials needed to support MPS
• Bill of Material (BOM): list of the materials (including quantities) needed to make a
product

Fitter’s factory
calendar for August

• Lead Times and Lot Sizing


• Lead time: cumulative time required for the supplier
to receive and process the order, take the material
out of stock, package it, load it on a truck, and
deliver it to the manufacturer
• Lot sizing: determining production quantities and
order quantities
12

The MRP record for oats in NRG bars, weeks 1 through 5

• MRP list shows results of MRP calculations


• MRP process creates planned orders to meet dependent requirements
• Stock/Requirements List shows:
• Planned orders
• Purchase requisitions (PurRqs)
• Purchase orders (POitem)
The Supply Chain 13

• Supply chain: all activities that occur between the growing or mining of raw materials
and the appearance of finished products on the store shelf
• Traditional supply chain
• Information is passed through the supply chain reactively as participants increase
their product orders
• Inherent time lags cause problems
• Fitter Snacker is part of a supply chain
• Starts with farmers growing oats and wheat
• Ends with a customer buying an NRG bar from a retail store

Supply Chain
Management
(SCM) from raw
materials to
consumer
The Measures of Success 14

• Performance measurements show the effects of better supply chain management


• Cash-to-cash cycle time
• Time between paying for raw materials and collecting cash from customer
• SCM costs
• Include cost of buying and handling inventory, processing orders, and
information systems support
• Initial fill rate
• Percentage of the order that the supplier provided in the first shipment
• Initial order lead time
• Time needed for the supplier to fill the order
• On-time performance
• If supplier agreed to requested delivery dates, tracks how often supplier
actually met those dates
Summary 15

• Companies are building on their ERP systems and integrated systems philosophy to
practice supply chain management (SCM)
• SCM: company looks at itself as part of a larger process that includes customers
and suppliers
• Using information more efficiently along the entire chain can result in
significant cost savings
• Complexity of the global supply chain
• Developing a planning system that effectively coordinates information
technology and people is a considerable challenge
Questions To Be Resolved In Class 16

1. In which industries is supply chain management important? In which


industries is it not? Why, or why not?
2. What are potential sources of risk in Fitter’s supply chain?

TRUE/FALSE
17

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