ANALYSIS OF AN HYBRID PRODUCTION CONTROL SYSTEM FOR MANUFACTURING MANAGEMENT

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1 146 2 Συνέδριο Τεχνολογίας και Αυτοματισμού ANALYSIS OF AN HYBRID PRODUCTION CONTROL SYSTEM FOR MANUFACTURING MANAGEMENT H.H. Liakos and D.l. Tseles TEI of Piraeus: Department of Automation Thivon & Ralli st. 250, Aegaleo, Athens Abstract The paper presents an hybrid method as a production control system; the successful combination of two widely known production methods; Manufacturing Resource Planning or MRPII and "Just-In-Time or JIT. The paper analyzes the two production control systems (advantages and disadvantages), compares them in broad terms (efficiency, workforce sxills and training, their effect in the internal and external environment of the industry) and prcves that despite their different mentality they are complementary and that manufacturing section can combine them and exploit the full benefits and advantages of both control systems. 1. INTRODUCTION The problems of production control are firstly researched by the USA and European technical managers from the beginning of 60s [1]. The traditional inflexible top-down approach forced them to changes m the general mentality within the industries. The first organized production control system is the introduction of MRP [2] as an answer to the rapid development of Japanese Kanban systems [3], After a decade of continuously implementation and improvement of MRP or MRPII systems, many European industries shewed that their production lines had problems and generally they needed more competence, flexibility and better daily production control. Hayes and Abernathy [4] research reveals the problems of USA manufacturing in managerial attitudes and organizational systems. They suggest that the existing top-down aoproach of the senior management of the implementation of new production systems leads to separation of strategic thinking and policy from technological decision making and short-term gains at the expense of long-term development. This paper presents the two widely known production control systems, compares them n broad terms (efficiency, workforce skills and training, their effect in the internal and external environment cf the industry) and proves that despite their different mentality they are complementary and that manufacturng section can combine them as an hybrid production control system and exploit the full benefits and advantages of both control systems. 2. ANALYSIS OF THE TWO PRODUCTIONS SYSTEMS 2.1 MRP II In most manufacturing companies that use MRP [2] as production control system, the production planning and control activity can be separated into three or four stages of work, going from the general (long termplanning horizon) to the specific (short-term horizon). This approach that is called top-down clanning, has a general aim to substitute a large complex planning problem (occurring over a long period of time) with a number of smaller, more manageable ones. This framework follows a business plan. Firstly the operation decides overall manufacturing operations over a medium term planning horizon an activity called production planning. The second stage of the top-down approach is the result of the production planning, the master production schedule (MPS). The MPS has to achieve a balance between the sales forecast requirement of independent demand and available capacity. It provides the basis of ali plans required by manufacturing operations and is normally an iterative procedure.

2 t^jed stage is materials requirement planning that develops master scheduling in more detail, on ieriais requirement and on caoacity to meet the overall plan. Materials requirements planning (MRP) is a "puter based planning system used for scheduling production and controlling inventon/. MRP treats mponents as dependent items. MRP orders each time only the components required to maintain a flow of i ^ and jt forms the centre for both production scheduling and materials procurement. RPII [2] is based on computer software that plans production. MRPII uses actual or expected customer ers and develops a software which plans every part and assembly needed. MRPII is a "push" system ure 1), because raw materials and parts progressed through manufacturing operations by forward heduling. The basic advantages and disadvantages of MRPII are presented in table 1. Table 1 Basic benefits of MRPII systems reduced inventory increased turnover of inventory improved customer service MRPII is a developed information system inside the operation Basic disadvantages of MRPII workforce has limited responsibility. They mainly perform orders fails to tackle with waste and excess of any kind master schedules usually are unrealistic and data is inaccurate ignores quality issues based on a theory of economic batch sizes compartmfentalizes the manufacturing functions 2.2 JIT JIT [3] is a disciplined approach that provides continuous productivity improvement and quality through respect for people and elimination of waste. In the manufacture of a product JIT provides for the cost effective production and delivery of only necessary parts, in the right quantity, at the right time and place, while using a minimum of equipment, material and human resources. JIT is accomplished through the application of specific elements which require teamwork. JIT based on Kanban system which is a method first used in Toyota car plants to smooth the flow of components through the factory floor. Kanban (manual method) is a means of achieving the objectives of JIT using operator participation to observe the build-up of inventory levels. The philosophical basis of JIT is to produce perfect Products, what customer wants (what is required), at the rate that customer wants, and at the exact time. JIT Is characterised as a "pull" system because the production activity is controlled by actual demand (not forecasted demand as with MRPII). The implementation of JIT demands to smooth final production operation because as figure 2 indicates, it is the last operation which set the rhythm for the whole system. Producing a

3 148 smoothed scheduled for final operation is the first step in synchronising the production. This line has to "pull" parts and others operations to it in specific proportions. The basic advantages and disadvantages of JIT are shown 'π 2 Table 2 Basic advantages of JIT Basic disadvantages of JIT workforce has responsibility and has to be skilful is used mainly in repetitive manufacturing flexible and minutely responsive to time there is the risk of longer lead times integrates all parts of the operation demands a high level of maintenance which costs a lot of money concern for quality and continual improvement tends to be based on constant batch sizes, reduced in relation with MRPII eliminates inventory identifies and removes the obstructions in order to smooth the flow of production forms a production system and not only a control system as MRPII From the above analysis of MRPII and JIT planning and control systems, seems that these systems have different philosophical basis and many conflicting characteristics. The major difference between MRPII and JIT is that the former is a "push" system which is based on forecasted methods and the latter is a "pull" system which is based on actual demand. This is the initial point which creates the different structures between MRPII (forward control of production, figure 1) and JIT (backward control of production, figure 2). 3. THE HYBRID PRODUCTION CONTROL SYSTEM The detailed examination of the two control systems proves that MRPII and JIT include complementary characteristics. In table 3 these characteristics are described. The conception of complementary systems forced manufacturers to use the best features of the two approaches in Europe and especially in United Kingdom, like in "Tektronix UK factory" (5). Tektronix Inc. is a multidimensional corporation manufacturing test and measurement instrumentation and graphics terminal. Tektronix UK is a subsidiary company of Tektronix Inc at Hoddesdon, which manufactures low cost oscilloscopes, waveform monitors, optoelectronic components and other instruments. Since 1985 the company had successfully implemented MRPII that was linked with the central MRPII system in Tectronic Inc. in the USA. In 1985 a decision was taken to design and manufacture entirely at Hoddesdon a new low cost osciloscope.the 2225 model. Table 3: Complementary characteristics MRPII and JIT MRPII ' JIT 1) Emphasis on long term planning 2) Emphasis on the immediate and forecasting 2) Weak on controlling work in progerss 2) Controls succesfully the daily production flow 3) Based on computer system 3) It is mainly manual 4) Concentrates on the manufacturing process 4) Concerns for the whole production 5) Focuses on resources and capacity constraints 5) Focuses on ability to produce The internal consultant of Tektronix UK believed that MRPII and JIT complement each other. Once a plan has been produced based on a market forecast, MRPII generates the material requirements to meet that plan, helping to plan the purchase of materials in time to assemble the products. JIT methods then ensure that the daily flow of work or production lines is compatible to actual customer orders. Tektronix UK forms a model that the combined use of JIT and MRPII in the same production line, has reduced the time taken to build an oscilloscope from around 40 days to less than five. The bottlenecks and queues that were a feature of the shop floor have eliminated. The manufacturing programme, fully implemented, has cut total manufacturing times by up 65%, with reduced inventories and an improved customer response to match.

4 149 e example of Tektronix UK conveys that the well implemented MRPII organizes the factory to apply successfully JIT in practice. That means that a combined production control system as an hybrid scheme could he developed and easiiiy be apnfied to Greek manufacturing companies where mainly they use only computerized MRP or MRPII production systems. In this simultaneously production and control system, MRPII is used for long term planning functions, to provide a central, highly responsive database, supports high level communications with other systems in the organization and finally supports the operational changes that JIT manufacturing demands. This policy to use MRPII as a means to help the implementation of j T, does not create the mismatch in control terms which existed in the MRPII systems. Another benefit from this hybrid method is that a factory can plan long term functions with MRPII and use JIT to smooth the daily production and succeed continuous improvement. The latter is very important because JIT provides productivity improvement through the continuous search of any kinds' obstructions. One other way of combined MRPII and JIT systems is to produce some components of the final product with MRPII control system and others with JIT For example in a car factory, the operation knows the annual forecasting demand. Components such as chassis and motors produced with MRPII philosophy and components such as bumpers and mirrors with JIT. That gives the company the advantage, to change with little effort the model of the car and has the ability to surprise its competitors. The organizations adjust JIT in components that is easier to gain the benefit of JIT, the continuous performance improvement. 4. IMPLEMENTATION OF THE HYBRID PRODUCTION CONTROL SYSTEM In TEI of Piraeous a case study is developed to show the implementation of this reengineering approach towards better production and control of the daily flow. The studied company makes some components for and assembles a limited range of domestic appliances: six different models of fan heater, two types of electrically-heated food serving cabinet and four varieties of electric kettle. The building of the factory is divided into the follow areas: Component manufacturing of some of the plastic case mouldings for the fan heaters and small items, such as handles, for the food cabinets. Metal forming and painting of metal components. All the components for the kettles are bought-in. Components are made in batches and stored untii required for sub- or final assembly. The stores hold about 500 separate items either bought-in or own manufacture. Sub-assembly manufacture. This area makes up items as motor/impeller units for the fan-heaters, kettle leads, heating units for the food cabinets. The necessary components are withdrawn from stores, subassembly work is undertaken on a batch basis and the items are put in a sub-assembly holding area ready for the final assembly operations. Final assembly. Three separate single production lines undertake the final assembly of products The layout is shown in figure 3. Figure 3: The existing layout of the company using only MRPII The demand patterns for the three types of products are: Fan-heaters: total production of 15,000 a year. Fifty per cent exported. Demand heavily seasonal with most being sold during the period October-January Food cabinets: total production of 5,000 a year. No exports. Eighty per cent sold during November- December Kettles: total production of 20,000 a year Twenty-five per-cent exported. Steady demand throughout the year

5 150 Foiicwing a period of missed deliveries and inventory problems, the organization decided to implement the hybrid scheme as production system. The two patterns of products, which have high seasonal demand (fan heaters and food cabinets) would be produced with an inventive combination of MRPII and JiT This hybrid scheme is described in the previous section. MRPII is used for long term planning functions, allocating raw materials, bought in components and providing a database for all the various departments. MRPII should create the proper climate for JIT's implementation. JIT would smooth the day by day work because materials, parts and goods should flow evenly. JIT would search for obstructions and bottlenecks and eliminate inventory levels. The implementation of JIT would decrease batch sizes and reduce the store level and holding area in the layout of the building. That means that the company needs skilful, well educated personnel with advanced responsibilities. All the staff is involved with the reorganization of the shop floor layout and many meetings should raise issues that concern them. The third product, kettle is going to be produced with MRPII control system, because the demand is steady throughout the year and there is no current need to change the policy of its production. This complete course utilizes the existing MRPII for the production of kettles and in a different role for the control production of the other two patterns of products. Thus the efforts and the money already spent for the implementation of MRPII have not been wasted. The new layout is shown in figure 4. Figure 4: The new efficient layout of the company using the hybrid production contol system 5. CONCLUSIONS In this paper an hybrid production control system is presented that combines the two widely known production systems MRPII and JIT. The paper objectice is two fold. Firstly to analyze the two production systems showing their advantages and disadnatages in broad terms and secondly to develop an approach towards a better flexible, efficient combined control system, that can exploit the full benefits of these two production and control systems. REFERENCES 1. Hill, T., Production/Operations Management Text and Cases, second edition Prentice Hall, Manufacturing Management, Postgraduate Course, The Open University, UK, Implementation of New technologies, Postgraduate Course, The Open University, UK, Hayes, R.H. and Abernathy, W.J.,Managing our way to Economic Decline, Harvard Business Review, Tektronix "four point plan" case study 4, Manufacturing Management, Postgraduate course, The Open University, UK, Rhodes, E. and Wield, D., Implementing New Technologies, Second Edition, The Open University, Hackett, G.R., Investment in Technology-the Service Sector Sinkhole?, Sloan Management Review, Scarbrough, H. and Lannon, R.. The Successful Exploitation of New Technology in Banking, Journal of General Management, vol Lane, C., Industrial Change in Europe: The Pursuit of Flexible Specialization in Britain and West Germany, Work, Employment and Society, vol. 2, 1988