Manufacturing Efficiency Guide - DBA Manufacturing Software


Manufacturing Efficiency Guide 2017 DBA Software Inc.

Manufacturing Efficiency Guide 2017 DBA Software Inc.

Contents3Table of Contents1 Introduction52 What Is Manufacturing Efficiency?73 The Seven Essential Processes84 Essential #1 - Plan a Strategic Inventory1 Strategic Inventory - Overview10112 Strategic Inventory - Minimum Requirements3 Strategic Inventory - What Not to Do134 Strategic Inventory - Forecast Reorder Point Entry16235 Essential #2 - Generate a Master Schedule1 Master Schedule - Overview15242 Master Schedule - Benefits3 Master Schedule - Automatic Scheduling254 Master Schedule - Item Order Policies5 Master Schedule - Item Allocations276 Master Schedule - MRP Action Window7 Master Schedule - Date Alignment308 Master Schedule - Interdependent Demand9 Master Schedule - Schedule Dates3210 Master Schedule - Self-Adjusting Job Dates11 Master Schedule - Inquiries3512 Master Schedue - Minimum Requirements13 Master Schedule - Guidelines3726293133366 Essential #3 - Release Jobs with Material38417 Essential #4 - Coordinate Work Centers448 Essential #5 - Issue Material in Real Time469 Essential #6 - Track Job Labor4910 Essential #7 - Use WIP-Based Costing52 2017 DBA Software Inc.3

4Manufacturing Efficiency Guide11 The Four Efficiency Values56 2017 DBA Software Inc.

Introduction15IntroductionOur mission is to help you maximize your efficiency potentialOur company was founded in 1992 to develop software aimed at helping smallmanufacturing businesses maximize their efficiency potential. The current version ofDBA Manufacturing reflects our many years of experience working with smallermanufacturing companies on workflow processes and system implementationWhat is manufacturing efficiency?The simple definition of manufacturing efficiency is to fulfill customer orders as quicklyand reliably as possible using the least amount of inventory and WIP.It requires seven essential processesOver the years we’ve learned that companies can only reach their full efficiency potentialby deploying these seven essential processes:·······Essential #1 - Plan a Strategic InventoryEssential #2 - Generate a Master ScheduleEssential #3 - Release Jobs with MaterialEssential #4 - Coordinate Work CentersEssential #5 - Issue Materials in Real TimeEssential #6 - Track Job LaborEssential #7 - Use WIP-Based CostingFour core values promote efficiencyTo reach your full manufacturing efficiency potential, you must combine the sevenessential processes with a company culture that promotes the following core values:····Value #1 - Planning SettingsValue #2 - BOM and Job AccuracyValue #3 - Inventory AccuracyValue #4 - Real-Time ProcessingYour efficiency gains will be dramaticIf you deploy all seven essential processes and integrate the four values into yourcompany culture, your efficiency gains will be dramatic for these reasons:····You will know when you can shipYou will know when and what to make and buyYou will know what to do next on the shop floorYou will know what your products cost to make 2017 DBA Software Inc.

6Manufacturing Efficiency Guide 2017 DBA Software Inc.

What Is Manufacturing Efficiency?27What Is Manufacturing Efficiency?Manufacturing efficiency consists of two core elements:.1. Fulfill customer orders as quickly and reliably as possibleThe primary purpose of a manufacturing system is is to fulfill customer orders. Anefficient manufacturing company fulfills customer orders as quickly and reliably aspossible. Target shipping dates are established as orders are received and ordersare shipped on time.2. Use the least amount of inventory and WIPFulfilling customer orders requires inventory – raw materials, components,subassemblies, and finished items – and work in process – which includes labor andsubcontract services. An efficient manufacturing company meets sales orderrequired dates using the least amount of inventory and WIP.Benefits·Quick and reliable shipments increase customer satisfaction and boost sales.·Increased sales boost shop utilization, which spreads fixed manufacturing overheadcosts over more items to lower unit overhead costs and increase gross margins.·Minimizing inventory frees up working capital and warehouse space.·Minimizing WIP increases shop efficiency with smaller run sizes, shorter queuetimes, less material in aisles and staging areas, and fewer quality problems with lessmaterial handling. 2017 DBA Software Inc.

83Manufacturing Efficiency GuideThe Seven Essential ProcessesTo reach your full efficiency potential, you must take the six steps described below toimplement the core practices that are the drivers of manufacturing efficiency. Each stepis described in full detail over the next six chapters.Essential #1 – Plan a Strategic InventoryInstead of using guesswork with shipping dates and operating with an inventory that isout of control, you plan a stocking strategy that reduces times to shipment using the leastamount of inventory to do so.Essential #2 – Generate a Master ScheduleInstead of struggling with tedious manual planning, inefficient quantities and unreliabledates, and all the expediting that goes with it, you generate jobs and POs quickly andefficiently within a coordinated master schedule that gives you an action plan forshipping on time.Essential #3 – Release Jobs with MaterialInstead of guessing or investigating which jobs have material to get started, or having torob material from some jobs in order to start other jobs – you avoid all this by using MRPto cover all job demand and and by allocating material to jobs so you know exactly whichjobs can be released to production at any given time. An additional benefit is that themaster schedule gets automatically adjusted without any need for manual intervention.Essential #4 – Coordinate Work CentersInstead of running the shop by guesswork and expediting, you run work centersequences in job priority order so that jobs are automatically expedited to meet requireddates.Essential #5 – Issue Material in Real TimeInstead of bacflushing components after the fact so that you never know what is actuallyon hand and what has already been issued to work in process, you issue materials on a“just in time” basis for real time inventory tracking that benefits all your inventory-relatedprocesses.Essential #6 – Track Job LaborInstead of running the shop by guesswork and expediting, you track job labor in real timeto update job priorities and work center queues, which enables the work centercoordination that helps jobs meet their required dates.Essential #7 – Use WIP-Based Costing 2017 DBA Software Inc.

The Seven Essential Processes9Instead of operating in the dark with incomplete product costs, you will be furnished withestimated and actual product costs that reflect material, labor, overhead, andsubcontract services, along with self-adjusting Inventory and WIP accounts. 2017 DBA Software Inc.

104Manufacturing Efficiency GuideEssential #1 - Plan a Strategic InventoryThe first essential process for manufacturing efficiency is to plan a strategic inventory toreduce times to shipment while using the least amount of inventory to do so.TopicsOverviewMinimum RequirementsWhat to DoWhat Not to DoForecast Reorder Point Entry 2017 DBA Software Inc.

Essential #1 - Plan a Strategic Inventory4.111Strategic Inventory - OverviewAll manufacturing companies have the same challengeAll manufacturing companies have the same fundamental challenge – how quickly andreliably can customer orders be shipped and how much inventory will be required to doso?Making sell items to stock eliminates time to shipmentMaking sell items to stock eliminates time to shipment altogether because items areavailable for immediate shipment from stock on hand.Stocking components reduces time to shipment for make to order itemsStocking subassemblies and purchased components instead of making and buyingthem to order means that jobs can be started immediately without delay and thusreduces time to shipment for made to order items.The Dell Computer exampleDell Computer provides a good example of how stocking components reduces timeto shipment for make to order items. Dell ships custom configured products to orderalmost immediately without delay. It can do this because all required componentsare stocked and available for immediate assembly on a just in time basis.Strategic inventory reduces time to shipment using the least amount ofinventory“Strategic inventory” is a plan for reducing times to shipment using the least amount ofinventory to do so. You decide which items are to be made or purchased to stock inorder and against those items you enter a monthly forecast and supply days target tominimize inventory.Reducing times to shipment gives you a competitive edgeStrategic inventory enables you to dramatically reduce times to shipment, which givesyou a competitive edge in the marketplace over slower rivals. Increased customersatisfaction boosts sales and faster payment cycles boost cash flow.Shipping dates will be reliable and achievableWhenever you enter a sales order line, the program uses strategic inventory settings tocalculate a required date, which is a target shipping date that you can furnish to thecustomer. Instead of guessing when orders can be shipped, you will now operate withreliable and achievable shipping dates that reflect your strategic inventory plan.Apply Forecast Reorder Point order policies to applicable items 2017 DBA Software Inc.

12Manufacturing Efficiency GuideStrategic inventory is achieved by applying a Forecast Reorder Point order policyagainst any item you wish to make or buy to stock. See What to Do below for guidancein making these determinations.Enter a Monthly Forecast and Supply Days targetWhen you assign a Forecast Reorder Point order policy, you must also enter aMonthly Forecast and Supply Days target. These settings drive two calculations:·A Reorder Point is automatically calculated from the item’s monthly forecastand replenish time to trigger job or PO generation whenever net demand fallsbelow the Reorder Point.·A Min Order amount is calculated from the supply days target so that each jobor PO quantity covers so many days of forecast demand.Dynamic Reorder Point and Min Order updatingThe Reorder Point and Min Order amounts are dynamically recalculatedwhenever a change is made to the item’s monthly forecast (Sales, Usage, orSafety Factor) or replenish time variables (Lead Days or Job Days).The Supply Days minimizes stock on handThe Supply Days target minimizes stock on hand and enables widespread useof strategic inventory without massive inventory investment. For example, if youraverage Supply Days target is 30 days, the total stock on hand for your entirestrategic inventory will be roughly equal to 15 days of forecast demand. This isbecause stock on hand peaks when supply is received, but then declines close tozero prior to the next receipt. 15 days supply is the midpoint of the replenishmentcycle and therefore represents the average stock on hand at any given time.Strategic inventory is the foundation of manufacturing efficiencyPlanning a strategic inventory is the foundation of manufacturing efficiency and sets thetable for all your other key processes. Item reorder points and replenish time settingsestablish sales order required dates and are used by MRP to generate a coordinatedmaster schedule. The master schedule gets adjusted based on actual materialavailability from inbound jobs and POs. Jobs get prioritized within work centers relativeto their required dates. All of these processes function smoothly and efficiency whenthey emanate from a strategic inventory.Boosting your manufacturing efficiencyPlanning a strategic inventory is an essential element in boosting your manufacturingefficiency. Instead of using guesswork with shipping dates and operating with aninventory that is out of control, you plan a stocking strategy that reduces times toshipment using the least amount of inventory to do so. 2017 DBA Software Inc.

Essential #1 - Plan a Strategic Inventory4.213Strategic Inventory - Minimum RequirementsBefore you assign any Forecast Reorder Point policies, make sure that all M items haveJob Days allocations and all P items have Lead Days allocations. These allocationsare required for Reorder Point and Min Order calculations.MRP Settings(MRP - MRP Settings)Item allocations are entered in the MRP Settings screen.Maintain a Job Days allocation and Run Size against all M itemsA Job Days allocation, along with a Run Size that represents a typical large-size jobquantity, must be maintained against all your M (manufactured) items.Establishing the Run Size quantityThe Run Size represents a typical large-size job quantity and provides a referentialbasis for the Job Days allocation. Because MRP allocates a fixed number of JobDays, no matter what the actual demand may be, the Run Size amount should besufficient to cover the larger job quantities that are likely to be required. You canclick the Production tab to get a listing of past job quantities to help you determinethis setting.Establishing the Job Days allocationThe Job Days is the number of shop days allocated by MRP for manufacturing theRun Size. For guidance on making this allocation, click the icon to the right of theJob Days field to launch the Job Days Inquiry, which provides a Calculated JobDays amount derived from current routing and work center settings.NOTE: If the Calculated Job Days is not a plausible amount, check the item’sBOM for faulty or incomplete routing settings. Also make sure that work centercapacity settings are correctly established, especially the Buffer Days amount,which accounts for expected queue time that often exceeds actual productiontime. For details, see the Work Center Capacity Settings chapter within theShop Control Guide.WARNING: Do not artificially inflate item Job Days allocations because all datesare inter-connected. Inflated allocations will pus

2017 DBA Software Inc. 2 What Is Manufacturing Efficiency? Manufacturing efficiency consists of two core elements:. 1. Fulfill customer orders as quickly and reliably as possible The primary purpose of a manufacturing system is is to fulfill customer orders. An efficient manufacturing company fulfills customer orders as quickly and reliably as possible. Target shipping dates are established as orders are