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Abstract
This paper examinzs first the far-reaching consequences of unifying bills of material and routings on the basic functions
of production planning and control, i.e.: (a) On the structure of the production database and the opportunity for significant
simplification; (b) On the mid-term planning of materials and capacities (traditional MRP and CRP software modules) and
the chances for simultaneous planning of materials and capacities; (c) On the opportunity to support the extended enterprise
and lean production concepts through better planning of the supply chain; (d) On shop floor control and the chances for
reducing the volume of transactions and apply more effective scheduling strategies. In parallel, the paper proposes a new
production planning and control (PPC) concept which capitalizes on the above consequences. This concept has led to the
development of a PPC software system that uses the traditional and widely accepted MRP processing logic, thus avoiding
the intricacies of the OPT system and being much more readily accepted by manufacturing personnel.
Keywords: Manufacturing data management; Bills of materials; Routings; Product data engineering
on his traditional working practices. This can be Classification structure also provides a leveling
done by making a proper use of the create view of information about a problem domain putting at-
capabilities of relational DBMSs. However, there is tributes that are common at a higher level, and then
practical evidence that users in small manufacturing extending the attributes to a lower level. Within a
firms prefer the unified view of the product network classification structure, inheritance makes it possible
which they find easier to understand, handle and to share attributes.
maintain, instead of the separate BOMs and routings In this respect, the attributes that pertain to all
views. Resources or to all Sources are defined higher
Another step towards simplification and integra- in the classification structure, and are extended by
tion at the same time can be taken by replacing the the specializations (materials and operations, work
separate Work Centers and Suppliers entities centers and suppliers).
by a single Sources entity. From the point of The proposed simplified production database con-
view of the production planner, the work centers and ceptual schema unifying bills of materials and rout-
the suppliers are nothing else but sources providing ings as well as work centers and suppliers can be
either manufactured parts or raw materials. seen in Fig. 4.
The design of our simplified production database
follows the object-oriented analysis approach (Coad
and Yourdon, 1990) in order to achieve a reduction 2.2. Reduction of database attributes
of entities and attributes through the explicit repre-
sentation of commonality. This is done by defining a A careful design of the generalized RESOURCES
classification structure of the Resources and and SOURCES object classes would permit a mini-
Sources objects. The classification structure por- mization of the total number of attributes by assign-
trays class-member organization, which reflects gen- ing common meaning to as many as possible. In this
eralization-specialization and provides a basis for way there would be left a relatively small amount of
subsequent inheritance, and gives an explicit repre- attributes to the specialized subclasses MATERI-
sentation of attributes commonality within such a ALS, OPERATIONS and WORK CENTERS, SUP-
structure. PLIERS respectively.
2.3. Part numbers end coding conventions inventory, this is not the case for finished parts
inventories where always the only choice is to name
The traditional part number and coding conven- them according to the last operation that was per-
tions in PPC systems with separate bills of materials formed on them. This leads to a separation between
and routings are the following: stores inventory (finished parts and finished goods)
(a) A part number change is necessary at all where the code name is equal to the last operation
points in the process where interface transactions performed and work-in-process inventory where the
may be anticipated and buffer stocks are required. To code name is equal to the next operation to be
distinguish the items concerned, the part number performed.
should change just before the buffer stock, or store When bills of materials and r-outings are unified,
concerned. In other words, you issue and you pro- it is mandatory to always name inventory according
cess a given name, but you deliver an object with a to the last operation it passed. This data structure
different name to the next buffer point, considering it leads to the consolidation of both work-in-process
to be the structural parent of its predecessor. This and the stores inventory file.
is the origin of the genealogical terminology inherent
in bill of materials definitions and of the routing,
another key concept in manufacturing information 3. Consequences to goods flow control and the
systems. extended enterprise
(b) A routing is the sequence of steps a part goes
through from issue to delivery, i.e. the subprocess The unification of bills of materials and routings
between name changes. The components in progress, as well as the induced unification of work centers
whose aggregate constitutes the work-in-progress and suppliers have profound consequences on the
(WIP) inventory, are always expressed as child structure of the Goods Flow Control system. Those
parts, whereas the routing always refers to the consequences are internally leading to a simultane-
parent part , i.e. to the output of the subprocess. ous material and capacity requirements planning and
The far-reaching implications on the two main externally leading to a comprehensive support of the
concepts of manufacturing management (bills of ma- extended enterprise concept.
terial and routings) underline the importance of
choices affecting part numbers. 3.1. Simultaneous materials and capacity planning
When bills and materials are unified, a fundamen-
tal difference is induced in part number coding con- A major criticism to the MRP II approach con-
ventions, especially those concerning the work-in- cerns the concept of successive material and capacity
process inventory. An important issue in production requirements planning. The results of the material
management systems is the way to store inventory requirements planning stage (MRP) are the input to
and work-in-process inventory data. Consider for the following capacity requirements planning stage
example, the inventory of a particular part that was (CRP) and feedback can be achieved only with
already processed at a certain operation of the rout- difficulty. A further very strong drawback has its
ing and was not yet processed through the next origin in the issue of planned lead times used in
operation. At this sl:age we have two ways to code MRP calculations. The notion of MRP scheduling
this inventory. We can call it by the last operation it based on known average lead times makes MRP
went through or we can arbitrarily assign it to the essentially capacity insensitive. It involves the major
next operation it is supposed to be processed through. assumption that the actual shop floor loading at the
In traditional MRP systems most of the work-in-pro- time of planning conforms to these planned values,
cess inventory is considered to be stored physically which is almost never the truth. What is needed is an
in the queue of the machine where it is to be further integrated approach of simultaneous materials and
processed, therefore it is quite natural to assign the capacity management @cheer, 19881.
inventory to the next operation code. A first effort towards simultaneous material and
While two options are open for work-in-process capacity planning (Fisk and Seagle, 1978) is to use
298 I.P. Tat.kpulos/ Computers in Industy 31 (19961 293-304
resource requirements planning in order to determine a flow network showing the relations between the
the capacity requirements of every work center in- work centers in the shop stored in the computer
duced by the sales plan. Then an aggregate planning memory exactly the same way that the bills of
model is used in order to determine production rates material of the products are stored.
for every particular work center. The decision takes The calculations of the changes of capacity re-
into account the projected work-in-process invento- quirements back to the first work center in the
ries expressed in production hours which are given manufacturing sequence follow the gross-net require-
by the difference of cumulative output (capacity ments calculation principle of MRP. The role of
requirements) and cumulative input (production rate) inventories is played by the work backlogs in order
at the end of each planning period. to define the required changes of production rate (net
Against the attractiveness of the approach, Fisk requirements) of a dependent work center caused by
and Seagle caution the user that it does not necessar- the changes in its capacity requirements (gross re-
ily yield a feasible production plan. Dependencies quirements). The backlog of the work center may
between work centers can make it impossible to absorb the fluctuation and leave no need for change
achieve the indicated production rates. For example. in production rate.
to inventory 100 hours in work center 5 may require The problem with all the above approaches is that
release of an order some weeks earlier to an already they are using the differentiation in coding between
overloaded work center 3. the SKUs (part number after the last completed
Another early effort is reported by Hastings and operation) and the WIP (Work-In-Process), i.e. code
Willis (1982) for an integrated approach to produc- of the next operation in the process plan. This differ-
tion scheduling and material requirements planning entiation makes it difficult to recognize the fact that
(<<Schedule Based MRP,,) that simultaneously com- work backlogs (expressed in hours before a work
putes a feasible production schedule and the related center) and work-in-process incentories (expressed
material requirements plan. The approach is based on in pieces after a work center) are practically the two
the BOMfr data structure. sides of the same coin, and that work-in-process
An earlier effort of Tatsiopoulos is based on the inventories are nothing else but stored capacity. The
Input/Output Control (IOC) methodology (Plossl unification of bills of materials and routings makes it
and Wight, 1973; Kingsman et al., 1989; Wiendhal, easy to overcome this confusion and consolidate all
1987; Bertrand, 19811. IOC is similar to the graphi- inventory buffers in a factory.
cal-tableau approach for aggregate production plan- The most known effort to deal with the above
ning if one replaces physical inventories with work problem is the OPT system (Goldratt, 1988) that
backlogs. The concept of IOC was originally ad- unifies bills of material and routings forming product
vanced in connection with individual work centers at networks. However, the implementation of OPT con-
the shop orders release decision level and this is how cepts represents a rather complicated finite schedul-
it has been incorporated in some standard MRP II ing approach which is very difficult to explain to the
software packages (e.g. the module SOLAR of the manufacturing personnel, especially of small and
COPICS package by IBM, 1983). This method can medium sized enterprises (SMES).
be extended to include the medium-term production The concepts presented in this paper have led to
planning level forming a hierarchical input/output the development of a PPC mfmare system that u.ses
control system (Tatsiopoulos, 1993). the standard and widely accepted MRP processing
A net-change MRP-like approach is used. In logic, thus avoiding the intricaciesof the OPT sys-
stage-by-stage MRP the Net Requirements of the tem and being much more readily accepted by manu-
parent item become Gross Requirements for its com- facturing personnel. The unified network of bills of
ponents. In the same way, when in our case we take materials and routings, according to the data model
the decision to change the production rate of a of Fig. 4 and the modified coding conventions of
particular work center, this change induces changes part numbers and operations of Section 2.3, helps to
in the capacity requirements of the work centers include the local work center stores in the standard
dependent previous work center(s). What we need is MRP running. This simply described modification
I.P. Tatsiopoulos/ Computers in Industry 31 (1996) 293-304 299
SUFPLIER_ORDER
_I
I I
has a number of significant and far-reaching results the MRP system for offsetting calculations refer
on the operation mode of the MRP system, as fol- now to the operation queuing times rather than
lows: the work orders total transit times. This makes
* The average ma.nufacturing lead times used by them much more accurate.
+ $
ORDER
/
Fig. 6. Proposed data model for simultaneous material and capacity planning
300 I.P. Tatsiopoulos/Computers in Industry 31 (19961293-304
. Work-in-process inventories are taken into ac- rely on EDI solutions for exchanging data. In this
count in the MRP gross-net calculations which case the unification of bills of materials and routings
does not happen in traditional MRP systems. as well as work centers and suppliers may prove
- Work orders are issued directly to the work cen- itself to be a powerful tool for managing resources
ters instead of a two-level procedure with work and planning activities across the network. The char-
orders corresponding to a sequence of operations acteristic of the extended enterprise is that the work
and a separate operation tickets assignment pro- previously done by a single industrial company is
cedure. now split across a network of suppliers and cooperat-
- The MRP lot sizing rules may be applied locally ing partners. In this network the nodes play the role
at the operation and work center or machine level of work centers and suppliers should have capacity
rather than the work order and part number level attributes. Therefore a planning system that treats
as foreseen by standard MRP. This gives the work centers and suppliers in a uniform way seems
opportunity to take advantage of local lot-sizing only natural in this environment.
rules, which are imposed either by technological
factors (e.g. bum-in testing in electronics manu-
facturing) or by capacity utilization factors (e.g. 4. Consequences to shop floor control
increase bottleneck capacity).
The implications concerning the data model to
Shop floor control which includes shop orders
cover the material and capacity requirements plan-
release, short-term capacity scheduling, dispatching
ning are presented in Fig. 5 (traditional approach)
and production monitoring has always been a do-
and Fig. 6 (simplified approach of this study for
main of extreme complexity with respect to both
simultaneous material and capacity planning). Dur-
decision models and transaction processing. The uni-
ing implementation it became apparent that this type
fication of bills of materials and routings gives here
of database modeling resulted in many benefits in
the opportunity for simpler decision models based on
terms of data handling, computer memory require-
control principles (e.g. the KANBAN system) sup-
ments and a very large increase in processing speed.
ported by simplified shop floor transaction process-
ing systems.
3.2. Support of the extended enterprise
4.1. Shop floor transaction processing and back-
The notion of the extended enterprise is well jlushing
described in Browne et al. (1995) and Jarillo (1993).
The combination of globalization and mass cus- A manufacturing firm can be thought of as com-
tomization pressures forces individual enterprises to prising two factories. One makes products and
work together across the value chain in order to meet the other (the hidden factory) processes transactions
customer needs. This results to inter-enterprise net- on papers and computer systems. Over time, the
working which is called extended enterprise. Ap- former has been decreasing in relative cost, com-
proaches like JIT and Lean Production fit well into pared with the latter, so that the consistently rising
this context of the extended enterprise. overhead costs tend to be the number one concern of
According to Jarillo (1993) the extended enter- manufacturing managers (Vollmann et al., 1988).
prise - which he calls strategic networks - should This is of particular concern to small firms who
not be confused with a network of subcontractors. A normally have very low overhead costs and face the
strategic network should provide companies with the dilemma of significantly increasing those costs in
advantages of the two traditional organizational order to implement a computer-based production
forms, i.e. vertical integration and subcontracting, management system.
without most of their drawbacks. A major driver for these costs are transactions,
Such a strategic network should be in a position including the ordering, execution and confirmation
to integrate its information systems and not just to of materials moving from one location to another
I.P. Tatsiopoulos/Computers in Indust? 31 (19961 293-304 301
(Fig. 7). Included are the costs of personnel in Backflush transactions are processed whenever
receiving, shipping, expediting, data entry, data pro- production is reported at a paypoint in a products
cessing, accounting, and error follow up. The goal of network. Backflush transactions will also be pro-
the approach presented here is to eliminate transac- cessed for all steps between the paypoint reported
tion and associated costs as far as possible. and the previous paypoint defined on the product
The unification of bills of materials and routings network.
enables the implementation of the backflushing Originally backflushing has been implemented as
method by which material, labour and overhead are a key element of repetitive manufacturing manage-
consumed automatically by the system when produc- ment systems as is the JIT paradigm. However, batch
tion is reported at a user-defined paypoint. Back- production manufacturers are often not suited for the
flushing can drastically reduce the number of system application of JIT principles due to the lack of a
transactions required to report production and main- stable master schedule, difficulties in cutting down
tain inventory control. machine set-ups and frequent engineering changes.
Backflushing can be performed on a single-level In addition they often are not in a position to apply
or multi-level basis as defined by the user at the pressure on their suppliers to make them deliver on a
component level of each product network (unified JIT basis. Therefore we propose here an MRP-based
bill of material/routing). This allows inventory man- system which applies the backflushing principle for
agement to maintain tight control over designated specific purposes within the shop-floor transaction
components through direct issue while other compo- system (Fig. 8).
nents are issued automatically through backflushing. Problems arise if the flow of production is not fast
Multi-level backflushing allows the user to process enough so that serious deviations may happen be-
automatic transactions for as many levels of the tween actual and updated inventory records. This
product network as is desirable. problem may be solved by choosing as phantom
Caplicit:
PPC De]n
I
STORES FOREMAN WORKER PPC Department
STORES
Fig. 7. Activity model in formal shop floor control systems.
302 I.P. Tatsiopoulos/Computers in Industry 31 (1996) 293-304
PPC dept
STORE
PRODUCTNETWORK
STO&
Fig. 8. Activity model in the proposed PPC system using unified BOM and routing%
operations for backflushing those that move fast, as and overhead unit costs of the parent). Therefore, the
well as by frequently doing physical inventory count- accumulated cost to a specific level is available as
ing. This is feasible in the small firm due to the well as the incremental costs incurred at a specific
restricted number of materials and the easy-to- level. This provides a basis for the valuation of
overview and easy-to-grasp (eye management) work-in-process inventory, incorporating labour,
characteristics of the environment. overhead, and materials values up to the completion
of each production operation. It also facilitates effi-
ciency reporting with cost breakdown by labour,
5. Consequences to product costing, engineering
overhead, and materials for individual operations.
changes and effectivity management
As far as engineering changes are concerned, we
The calculation and build-up of product costs must first define what constitutes a change from a
proceeds upward through the entire bill of material, bills of materials point of view. If the modification to
beginning at the lowest level material item or com- a part does not change its form or function (engineer-
ponent. The unification of bills of materials and ing terms), its is completely interchangeable with the
routings does not affect the basic principle of cost old part; therefore, the part number need not change
build-up, which is to proceed by calculating costs so the structural relationships of the bill of materials
one level at a time and store the material, labour and need not change. The best way to determine when a
overhead unit cost in their respective fields in the bill of materials must change is if a part number
individual PART (RESOURCE) master record. The must change. Referring to the previous Section 2.3
above presented database structure is ideally suited concerning part numbers and coding conventions, it
to the cost roll-up technique (as opposed to the cost becomes clear that with the unified BOM and rout-
fold-in technique). During cost build-up processing ings structure it is organizationally easier to handle
utilizing the roll-up technique, the appropriate cost engineering changes since you can use all the tradi-
elements of lower level components are added to the tional BOM changes and effectivity management
same cost elements of the parent, prior to the calcula- techniques in an integrated way for both components
tion of the incremental costs of the parent (the labour and operations.
I.P. Tatsiopoulos/ Computers in Industrv 31 (1996) 293-304 303
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