Materials Management | My Assignment Tutor

Introduction to MATERIALS MANAGEMENT CHAPTER 1 Materials Management Watch: Which bag should you use? Which bag should you use? How understanding the best option to chose, it is not always that obvious Operating Environment GovernmentRegulationsSafetyEconomyAffects demandShortages and surplusesCompetition is now globalReduced costs of transportationCommunications, reduced costs, and increased speed Operating Environment (continued) Customers demandLower pricesImproved qualityReduced lead timeImproved pre-sale and after-sale serviceProduct and volume flexibilityQualityExceeds customer expectations Order Winners and Qualifiers Order QualifiersCustomer requirements for price, quality, delivery, etc.A company must meet or exceed minimum level to qualify for orderOrder WinnersCharacteristics that persuade customers to select a product/service from a qualifying company “Today’s order winners are tomorrow’s order qualifiers” Figure 1.1 Manufacturing strategy and lead time Manufacturer does not start until the order is receivedCustom designsUnique products Long lead timeInventory purchased after order is received Manufacturer does not start until the order is receivedOften uses standard componentsLittle design time Lead time is reducedInventory held as raw materials Customer allowed to configure product based on features and optionsMay be an entirely new configurationSince features and options often available, no significant design time requiredTypically implies shorter delivery timeSimilar characteristics to Make-to-Order Manufacturer inventories standard componentsNo design time requiredAssembly only required Shorter lead timeInventory held as standard components Manufacturer produces the goods in anticipation of customer demandLittle or no customer involvement with design Shortest lead timeInventory held as finished goods Shift differentiation in product as close to customer as possibleReduced number of different items in the supply chainImplies lower supply chain inventoryImplies faster delivery Figure 1.2 Supply-production-distribution system Includes all activities and processes to supply a product or service to the customerLinks many companiesHas a number of supplier/customer relationshipsMay contain intermediaries such asWholesalersWarehousesRetailersFlow of products, services, information and cash In the past there were well defined and rigid boundaries between organizationsJIT viewed suppliers as partnersMutual analysis for cost reductionMutual product designGreatly reduced inventoryImproved communications (internet, EDI) Integrated systems (ERP) and the sharing of informationGlobal competition and supplyFlexible designs – reduced product life cyclesJIT approach to inter-organizational relationsSubcontracting or outsourcing work Manage the flow of materialsShare information through the internetTransfer funds electronically Reverse logisticsRecoverRecycleReuse Metric = a verifiable measureUsed toCommunicate expectationsIdentify problemsDirect actionMotivate peopleMust be timely Customers are rarely satisfiedSupply chains are largeProduct life cycles are getting shorterLots of dataNarrow profit marginsIncreasing number of alternatives Performance measuresQuantified and objectiveContain two parameterse.g. Orders per day, Sales per personPerformance standardsSets the goalsEstablishes controlsPerformance standards set the goalPerformance measure say how close you came Metrics Strategy Customer Focus Standard Strategic         Metrics          Operational Figure 1.4 Metrics context Establish company goals and objectivesDefine performanceState the measurementSet performance standardsEducate the participantApply consistently Company main objectives to provide Best customer serviceLowest production costsLowest inventory investmentLowest distribution costs  MarketingProductionFinanceObjective:High RevenueLow CostCash FlowImplications:   Customer ServiceHighLowLowProduction Disruptions  Many  Few  FewInventoriesHighHighLow Materials Management Planning and controlling the flow of materialsObjectivesMaximize the use of the firm’s resourcesProvide the required level of customer service Direct laborDirect materialVaries with volume soldOverheadDoes not vary with volume sold   Planning and controlling the flow of materials the manufacturing process throughProduction planningImplementation and controlInventory management Priority The Demand For Products Capacity The Ability to Produce Products   Trade-offs Between Customer Service Cost of Providing The Service To meet the demands of the marketplaceEstablish prioritiesEnsure capacity ActivitiesForecastingMaster planningMaterials requirements planningCapacity planning Putting into action and achieving the plansMade by production planning Production activity controlShop floor controlPurchasing To support production (raw materials) or as a result of production (finished goods)Provide a buffer against the differences in demand rates and production ratesHow much is enough? Inputs to the Manufacturing Planning and Control System Product descriptionProcess specificationsTime neededAvailable facilitiesQuantity required Engineering DrawingsSpecifications Bill of MaterialComponents used to make the productSub-assemblies at stages of production Recorded on a Route SheetDescribe how the product is madeOperations required to make the productSequence of operationsEquipment and accessories requiredStandard time to perform each operation Time Needed to Perform Operations Expressed as Standard TimeAn average operator, working at a normal paceObtained from the Routing master What equipment is availableWhat labor is availableObtained from the Work Center master Information fromForecastsCustomer OrdersProduction PlanningExpressed in the Shop Order All the activities involved in moving goodsFrom the supplier to the beginning of the production processFrom the end of the process to the customer Transportation            ●   Distribution InventoryWarehousing               ●    PackagingMaterial Handling        ●    Order Entry  


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