Describe one aspect of how product variations affect manufacturing planning. /How has the concept of “Mass Customization” been facilitated by evolving manufacturing technologies?
Answer the following 2 questions. At least 250 words using APA Format. Be able to respond to at least 2 peer reviews with 2-3 sentences or 50 words. Please view attached for lesson.
Describe one aspect of how product variations affect manufacturing planning.
How has the concept of “Mass Customization” been facilitated by evolving manufacturing technologies?
ManufacturingWeek 3 Learning Objectives: After completing this week’s assignments, you should be able to: • Be familiar with prevailing manufacturing functions and how facility location is influenced by raw material sources or finished product consumption points.• Understand the different manufacturing approaches and when they are applicable, such as “assembled to order,” “made to order,” and “made to plan.” Presentation Slides:Lecture 3 – ManufacturingReadings:• Manufacturing• Distribution and Distribution Requirements Planning• Mass Customization• Manufacturing Resources PlanningParticipation: • Week 3 Discussion Topics:• Topic One• Topic Two• SCM Globe MANUFACTURINGOne can trace the origins of modern manufacturing management to the advent of agricultural production, which meant that humans did not constantly have to wander to find new sources of food. Since that time, people have been developing better techniques for producing goods to meet human needs and wants. Since they had additional time available because of more efficient food sources, people began to develop techniques to produce items for use and trade. They also began to specialize based on their skills and resources. With the first era of water-based exploration, trade, and conflict, new ideas regarding product development eventually emerged, over the course of the centuries, leading to the beginning of the Industrial Revolution in the mid-eighteenth century. The early twentieth century, however, is generally considered to mark the true beginning of a disciplined effort to study and improve manufacturing and operations management practices. Thus, what we know as modern manufacturing began in the final decades of the twentieth century.
Flywheel assembly line at the Ford Motor Company’s Highland Park, Michigan, plant ca. 1913. ASSOCIATED PRESS, FORD MOTOR COMPANY
The late 1970s and early 1980s saw the development of the manufacturing strategy paradigm by researchers at the Harvard Business School. This work focused on how manufacturing executives could use their factories’ capabilities as strategic competitive weapons, specifically identifying how what we call the five P’s of manufacturing management (people, plants, parts, processes, and planning) can be analyzed as strategic and tactical decision variables. Central to this notion is the focus on factory and manufacturing trade-offs. Because a factory cannot excel on all performance measures, its management must devise a focused strategy, creating a focused factory that does a limited set of tasks extremely well. Thus the need arose for making trade-offs among such performance measures as low cost, high quality, and high flexibility in designing and managing factories.The 1980s saw a revolution in management philosophy and the technologies used in manufacturing. Just-in-time (JIT) production was the primary breakthrough in manufacturing philosophy. Pioneered by the Japanese, JIT is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at the workstation “just in time.” This philosophy—coupled with total quality control (TQC), which aggressively seeks to eliminate causes of production defects—is now a cornerstone in many manufacturers’ practices.As profound as JIT’s impact has been, factory automation in its various forms promises to have an even greater impact on operations management in coming decades. Such terms as computer-integrated manufacturing (CIM), flexible manufacturing systems (FMS), and factory of the future (FOF) are part of the vocabulary of manufacturing leaders.Another major development of the 1970s and 1980s was the broad application of computers to operations problems. For manufacturers, the big breakthrough was the application of materials requirements planning (MRP) to production control. This approach brings together, in a computer program, all the parts that go into complicated products. This computer program then enables production planners to quickly adjust production schedules and inventory purchases to meet changing demands during the manufacturing process. Clearly, the massive data manipulation required for changing the schedules of products with thousands of parts would be impossible without such programs and the computer capacity to run them. The promotion of this approach by the American Production and Inventory Control Society (APICS) has been termed the MRP Crusade.The hallmark development in the field of manufacturing management, as well as in management practice in general, is total quality management (TQM). Although practiced by many companies in the 1980s, TQM became truly pervasive in the 1990s. All manufacturing executives are aware of the quality message put forth by the so-called quality gurus—W. Edwards Deming, Joseph M. Juran, and Philip Crosby. Helping the quality movement along was the creation of the Baldrige National Quality Award in 1986 under the direction of the American Society of Quality Control and the National Institute of Standards and Technology. The Baldrige Award recognizes up to five companies a year for outstanding quality management systems.The ISO 9000 certification standards, issued by the International Organization for Standardization, now play a major role in setting quality standards, particularly for global manufacturers. Many European companies require that their vendors meet these standards as a condition for obtaining contracts.The need to become or remain competitive in the global economic recession of the early 1990s pushed companies to seek major innovations in the processes used to run their operations. One major type of business process reengineering (BPR) is conveyed in the title of Michael Hammer’s influential article “Reengineering Work: Don’t Automate, Obliterate.” The approach seeks to make revolutionary, as opposed to evolutionary, changes. It does this by taking a fresh look at what the organization is trying to do, and then eliminating non-value-added steps and computerizing the remaining ones to achieve the desired out-come.The idea is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer. Recent trends, such as outsourcing and mass customization, are forcing companies to find flexible ways to meet customer demand. The focus is on optimizing those core activities in order to maximize the speed of response to changes in customer expectations.Based on the work of several researchers, a few basic operations priorities have been identified. These priorities include cost, product quality and reliability, delivery speed, delivery reliability, ability to cope with changes in demand, flexibility, and speed of new product introduction. In every industry, there is usually a segment of the market that buys products—typically products that are commodity-like in nature like sugar, iron ore, or coal—strictly on the basis of low cost. Because this segment of the market is frequently very large, many companies are lured by the potential for significant profits, which they associate with the large unit volumes of the product. As a consequence, competition in this segment is fierce—and so is the failure rate.
Automated automobile assembly line in Durban, South Africa. © CHARLES O’REAR/CORBIS Quality can be divided into two categories: product quality and process quality. The level of a product’s quality will vary with the market segment to which it is aimed because the goal in establishing the proper level of product quality is to meet the requirements of the customer. Overdesigned products with too high a level of quality will be viewed as prohibitively expensive. Underdesigned products, on the other hand, will result in losing customers to products that cost a little more but are perceived as offering greater benefits.Process quality is critical since it relates directly to the reliability of the product. Regardless of the product, customers want products without defects. Thus, the goal of process quality is to produce error-free products. Adherence to product specifications is essential to ensure the reliability of the product as defined by its intended use.A company’s ability to deliver more quickly than its competitors may be critical. Take, for example, a company that offers a repair service for computer-networking equipment. A company that can offer on-site repair within one or two hours has a significant advantage over a competing firm that only guarantees service only within twenty-four hours.Delivery reliability relates to a firm’s ability to supply the product or service on or before a promised delivery due date. The focus during the 1980s and 1990s on reducing inventory stocks in order to reduce cost has made delivery reliability an increasingly important criterion in evaluating alternative vendors.A company’s ability to respond to increases and decreases in demand is another important factor in its ability to compete. It is well known that a company with increasing demand can do little wrong. When demand is strong and increasing, costs are continuously reduced because of economies of scale, and investments in new technologies can be easily justified. Scaling back when demand decreases may require many difficult decisions regarding laying off employees and related reductions in assets. The ability to deal effectively with dynamic market demand over the long term is an essential element of manufacturing strategy.Flexibility, from a strategic perspective, refers to a company’s ability to offer a wide variety of products to its customers. In the 1990s companies began to adjust their processes and outputs to dynamic and sometimes volatile customer needs. An important component of flexibility is the ability to develop different products and deliver them to market. As new technologies and processes become widespread, a company must be able to respond to market demands more and more quickly if it is to continue to be successful.Manufacturing strategy must be linked vertically to the customer and horizontally to other parts of the enterprise. Underlying this framework is senior management’s strategic vision of the firm. This vision identifies, in general terms, the target market, the firm’s product line, and its core enterprise and operations capabilities. The choice of a target market can be difficult, but it must be made. Indeed, it may lead to turning away business—ruling out a customer segment that would simply be unprofitable or too hard to serve given the firm’s capabilities. Core capabilities are those skills that differentiate the manufacturing from its competitors.In general, customers’ new-product or current-product requirements set the performance priorities that then become the required priorities for operations. Manufacturing organizations have a linkage of priorities because they cannot satisfy customer needs without the involvement of R&D and distribution and without the direct or indirect support of financial management, human resource management, and information management. Given its performance requirements, a manufacturing division uses its capabilities to achieve these priority goals in order to complete sales. These capabilities include technology, systems, and people. CIM, JIT, and TQM represent fundamental concepts and tools used in each of the three areas.Suppliers do not become suppliers unless their capabilities in the management of technology, systems, and people reach acceptable levels. In addition, most manufacturing capabilities are now subjected to the “make-or-buy” decision. It is current practice among world-class manufacturers to subject each part of a manufacturing operation to the question: If we are not among the best in the world at, say, metal forming, should we be doing this at all, or should we subcontract to someone who is the best?The main objectives of manufacturing strategy development are (1) to translate required priorities into specific performance requirements for operations and (2) to make the necessary plans to assure that manufacturing capabilities are sufficient to accomplish them. Developing priorities involves the following steps:1. Segment the market according to the product group.2. Identify the product requirements, demand patterns, and profit margins of each group.3. Determine the order winners and order qualifiers for each group.4. Convert order winners into specific performance requirements.It has been said that America’s resurgence in manufacturing is not the result of U.S. firms being better innovators than most foreign competitors. This has been true for a long time. Rather, it is because U.S. firms are proving to be very effective copiers, having spent a decade examining the advantages of foreign rivals in product development, production operations, supply chain management, and corporate governance then putting in place functional equivalents that incrementally improve on their best techniques. Four main adaptations on the part of U.S. firms underscore this success:1. New approaches to product-development team structure and management have resulted in getting products to market faster, with better designs and manufacturability.2. Companies have improved their manufacturing facilities through dramatic reductions of work-in-process, space, tool costs, and human effort, while simultaneously improving quality and flexibility.3. New methods of customer-supplier cooperation, which borrow from the Japanese keiretsu (large holding companies) practices of close linkages but maintain the independence of the organizations desired by U.S. companies, have been put in place.4. Better leadership—through strong, independent boards of directors who will dismiss managers who are not doing their jobs effectively—now exists.In sum, the last few decades of the twentieth century witnessed tremendous change and advancement in the means of producing goods and the manner of managing these operations that have led to higher levels of quality and quantity as well as greater efficiency in the use of resources. In the new millennium, because of global competition and the expansive use of new technologies, including the Internet, a successful firm will be one that is competitive with new products and services that are creatively marketed and effectively financed. Yet what is becoming increasingly critical is the ability to develop manufacturing practices that provide unique benefits to the products. The organization that can develop superior products, sell them at lower prices, and deliver them to their customers in a timely manner stands to become a formidable presence in the marketplace.SEE ALSO Factors of Production Thomas HaynesSource Citation (MLA 7th Edition) Haynes, Thomas. “Manufacturing.” Encyclopedia of Business and Finance. Ed. Burton S. Kaliski. 2nd ed. Vol. 2. Detroit: Macmillan Reference USA, 2007. 483-486. Gale Virtual Reference Library. Web. 21 Oct. 2016.URLhttp://ezproxy.umuc.edu/login?url=http://go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=umd_umuc&v=2.1&id=GALE%7CCX1552100207&it=r&asid=2d143662ce6128ddcfea12e53dba735aGale Document Number: GALE|CX1552100207~~~~~~~~~~~~~~~~~~~~~~~~~~~~~’Distribution and Distribution Requirements PlanningA supply channel is composed of three structures. At one end of the channel is the manufacturer. The manufacturer focuses on the development and production of products and originates the distribution process. The terminal point in the channel is the retailer who sells goods and services directly to customers for their personal, non-business use. In between the two lies a process called distribution, which is more difficult to define. One involved in the distribution process is labeled a “distributor.” The APICS Dictionary describes a distributor as “a business that does not manufacture its own products but purchases and resells these products. Such a business usually maintains a finished goods inventory.” The proliferation of alternative distribution forms, such as warehouse clubs, catalog sales, marketing channel specialists, and mail order, have blurred functional distinctions and increased the difficulty of defining both the distribution process and the term “distributor.”One ultimately could maintain that distributors include all enterprises that sell products to retailers and other merchants—and/or to industrial, institutional, and commercial users—but do not sell in significant amounts to the ultimate customer. According to this definition, most companies that are involved with the disbursement of raw materials and finished products belong, in one sense or another, to the distribution industry. By adopting this definition, distribution is expanded to cover nearly every form of materials management and physical distribution activity performed by channel constituents, except for the processes of manufacturing and retailing.Distribution involves a number of activities centered around a physical flow of goods and information. At one time the term “distribution” applied only to the outbound side of supply chain management, but it now includes both inbound and outbound. Management of the inbound flow involves these elements:• Material planning and control• Purchasing• Receiving• Physical management of materials via warehousing and storage• Materials handlingManagement of the outbound flow involves these elements:• Order processing• Warehousing and storage• Finished goods management• Material handling and packaging• Shipping• TransportationDistribution channels are formed to solve three critical distribution problems: functional performance, reduced complexity, and specialization.The central focus of distribution is to increase the efficiency of time, place, and delivery utility. When demand and product availability are immediate, the producer can perform the exchange and delivery functions itself. However, as the number of producers grows and the geographical dispersion of the customer base expands, the need for both internal and external intermediaries who can facilitate the flow of products, services, and information via a distribution process increases.Distribution management also can decrease overall channel complexity through sorting and assistance in routinization. Sorting is the group of activities associated with transforming products acquired from manufacturers into the assortments and quantities demanded in the marketplace. Routinization refers to the policies and procedures providing common goals, channel arrangements, expectations, and mechanisms to facilitate efficient transactions. David F. Ross describes sorting as including four primary functions:1. Sorting is the function of physically separating a heterogeneous group of items into homogeneous subgroups. This includes grading and grouping individual items into an inventory lot by quality or eliminating defects from the lot.2. Accumulating is the function of combining homogeneous stocks of products into larger groups of supply.3. Allocation is the function of breaking down large lots of products into smaller salable units.4. Assorting is the function of mixing similar or functionally related items into assortments to meet customer demand. For example, putting items into kit form.As the supply chain grows more complex, costs and inefficiencies multiply in the channel. In response, some channels add or contain partners that specialize in one or more of the elements of distribution, such as exchange or warehousing. Specialization then improves the channel by increasing the velocity of goods and value-added services and reducing costs associated with selling, transportation, carrying inventory, warehousing, order processing, and credit.
ROLE OF THE DISTRIBUTION FUNCTIONThere are a number of critical functions performed by the channel distributor. Ross describes these functions as:1. Product acquisition. This means acquiring products in a finished or semi-finished state from either a manufacturer or through another distributor that is higher up in the supply channel. These functions can be performed by independent channel intermediaries or by the distribution facilities of manufacturing companies.2. Product movement. This implies significant effort spent on product movement up or down the supply channel.3. Product transaction. Distributors can be characterized as selling products in bulk quantities solely for the purpose of resale or business use. Downstream businesses will then sell these products to other distributors or retailers who will sell them directly to the end customer or to manufacturers who will consume the material/components in their own production processes.Following are the separate elements contained within the three critical functions of distribution:• Selling and promoting. This function is very important to manufacturers. One strategy involves the use of distribution channels to carry out the responsibilities of product deployment. In addition to being marketing experts in their industry, distribution firms usually have direct-selling organizations and a detailed knowledge of their customers and their expectations. The manufacturer utilizing this distributor can then tap into these resources. Also, because of the scale of the distributing firm’s operations and its specialized skill in channel management, it can significantly improve the time, place, and possession utilities by housing inventory closer to the market. These advantages mean that the manufacturer can reach many small, distant customers at a relatively low cost, thus allowing the manufacturer to focus its expenditures on product development and its core production processes.• Buying and building product assortments. This is an extremely important function for retailers. Most retailers prefer to deal with few suppliers providing a wide assortment of products that fit their merchandizing strategy rather than many with limited product lines. This, of course, saves on purchasing, transportation, and merchandizing costs. Distribution firms have the ability to bring together related products from multiple manufacturers and assemble the right combination of these products in quantities that meet the retailer’s requirements in a cost-efficient manner.• Bulk breaking. This is one of the fundamental functions of distribution. Manufacturers normally produce large quantities of a limited number of products. However, retailers normally require smaller quantities of multiple products. When the distribution function handles this requirement it keeps the manufacturer from having to break bulk and repackage its product to fit individual requirements. Lean manufacturing and JIT techniques are continuously seeking ways to reduce lot sizes, so this function enhances that goal.• Value-added processing. Postponement specifies that products should be kept at the highest possible level in the pipeline in large, generic quantities that can be customized into their final form as close as possible to the actual final sale. The distributor can facilitate this process by performing sorting, labeling, blending, kitting, packaging, and light final assembly at one or more points within the supply channel. This significantly reduces end-product obsolescence and minimizes the risk inherent with carrying finished goods inventory.• Transportation. The movement of goods from the manufacturer to the retailer is a critical function of distribution. Delivery encompasses those activities that are necessary to ensure that the right product is available to the customer at the right time and right place. This frequently means that a structure of central, branch, and field warehouses, geographically situated in the appropriate locations, are needed to achieve optimum customer service. Transportation’s goal is to ensure that goods are positioned properly in the channel in a quick, cost-effective, and consistent manner.• Warehousing. Warehousing exists to provide access to sufficient stock in order to satisfy anticipated customer requirements, and to act as a buffer against supply and demand uncertainties. Since demand is often located far from the source (manufacturer), warehousing can provide a wide range of marketplaces that manufacturers, functioning independently, could not penetrate.• Marketing information. The distribution channel also can provide information regarding product, marketplace issues, and competitors’ activities in a relatively short time.
DISTRIBUTION REQUIREMENTS PLANNING (DRP)The need for more detailed distribution planning led to the emergence of distribution requirements planning (DRP) during the 1970s. DRP is a widely used and potentially powerful technique for helping outbound logistics systems manage and minimize inbound inventories. This concept extended the time-phase order point found in material requirements planning (MRP) logic to the management of channel inventory. By the 1980s DRP had become a standard approach for planning and controlling distribution logistics activities and had evolved into distribution resource planning. The concept now embraces all business functions in the supply channel, not just inventory and logistics, and is termed DRP II.DRP is usually used with an MRP system, although most DRP models are more comprehensive than stand-alone MRP models and can schedule transportation. The underlying rationale for DRP is to more accurately forecast demand and then use that information to develop delivery schedules. This way, distribution firms can minimize inbound inventory by using MRP in conjunction with other schedules.
Figure 1 A DRP Calculation One of the key elements of DRP is the DRP table, which includes the following elements:• Forecast demand for each stock-keeping unit (SKU)• Current inventory level of the SKU• Target safety stock• Recommended replenishment quantity• Replenishment lead timeThe concept of DRP very closely mimics the logic of MRP. As with MRP, gross requirements consist of actual customer orders, forecasted demand, or some combination of both; scheduled receipts are the goods the distributor expects to receive from orders that already have been released, while goods that already are received and entered into inventory constitute the on-hand inventory balance. Subtracting scheduled receipts and on-hand inventory from gross requirements yields net requirements. Based upon the distributor’s lot-sizing policy and receiving behavior, planned order receipts are generated. Firms may order only what they need for the next planning period or for a designated time period. Known as economic order quantity (EOQ), this involves a lot size based on a costing model. Alternatively, firms may be limited to multiples of a lot size simply because the supplying firm packages or palletizes their goods in standard quantities. Also, some distributors may require some time interval between the arrival of goods on their docks and the entry of the goods into the inventory system. For example, a firm may have a staging area where goods remain for an average time period while awaiting quality or quantity verification. Hence, planned order receipt may be during the planning period when the goods are needed, or they may need to be received earlier depending on time requirements. Order release is then determined by offsetting the planned order receipt by the supplier’s lead time. Figure 1 is a representation of a DRP calculation (ignoring possible safety stock requirements).Today’s competitive business landscape demands that companies proactively address quality issues of suppliers along the distribution chain to prevent incidents that cause significant damage to the business and/or consumers. This concept of regulatory oversight and customer demand for quality products is a strategic requirement. It is quality management’s role to create a predictable product supply; this enables companies to stay competitive and mitigate risk. Organizations who fail to implement quality management into their manufacturing and value chain operations ultimately weaken their competitive standings in the market and may expose their brands to great risks.SEE ALSO Forecasting ; Logistics and Transportation ; Reverse Supply Chain Logistics ; Supply Chain Management ; Warehousing and Warehouse Management BIBLIOGRAPHYCoyle, John J., Edward J. Bardi, and C. John Langley, Jr. The Management of Business Logistics: A Supply Chain Perspective. 7th ed. Mason, OH: South-Western/Thomson Learning, 2003.McGowan, James E. “Quality Management Specialist Ranks Top Supplier Challenges for 2008.” Manufacturing Business Technology, 8 May 2008. Available from: http://www.mbtmag.com/article/CA6558421.html .Ross, David Frederick. Distribution Planning and Control: Managing in the Era of Supply Chain Management. 2nd ed. Boston: Kluwer Academic Publishers, 2004.Source Citation (MLA 7th Edition) “Distribution and Distribution Requirements Planning.” Encyclopedia of Management. 6th ed. Detroit: Gale, 2009. 190-194. Gale Virtual Reference Library. Web. 21 Oct. 2016.URLhttp://ezproxy.umuc.edu/login?url=http://go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=umd_umuc&v=2.1&id=GALE%7CCX3273100071&it=r&asid=61387b3bfce439221e82f93b9f063341Gale Document Number: GALE|CX3273100071~~~~~~~~~~~~~~~~~~~~~~~~~~~~~’Mass Customization Arnold Kaluzny & Curtis P. McLaughlinIn: Encyclopedia of Health Care Management Mass Customization Edited by: Michael J. StahlDOI: http://dx.doi.org.ezproxy.umuc.edu/10.4135/9781412950602.n490 Kaluzny, A. & McLaughlin, C. (2004). Mass customization. In M. J. Stahl (Ed.), Encyclopedia of health care management (pp. 355-356). Thousand Oaks, CA: SAGE Publications Ltd. doi: 10.4135/9781412950602.n490________________________________________Mass customization is a process that offers a variety of products or services designed to meet on demand a wide range of consumer needs without losing the economies associated with the limited choices inherent in the methods of mass production. The term was introduced by Stanley M. Davis in his book Future Perfect (1987) and is receiving increased attention in the health services management literature.Mass customization is the logical consequence of the ongoing industrialization of products and services. Health care organizations are presently evolving through that process. Historically, providing individualized and customized care within the context of the traditional doctor–patient relationship, the realities of cost, and the emergence of managed care has moved the industry into the mass production phase of the industrialization process. However, patient and provider variability and the expectation that treatment must adapt to individual differences have forced health care organizations to meet on demand a wide range of consumer needs without losing the economies inherent in a mass production system.Advancing scientific knowledge of the underlying mechanisms of health and disease increase has reduced acceptable levels of clinical ambiguity and thus has reduced variation in practice patterns and their attendant costs. The revolution in genetics, for example, is increasing, and will continue to increase, the proportion of health care activities supported by science, reducing the proportion of patient care processes subject to artistry and craft. Highly reliable processes supported by information technology and modularization can provide the potential for mass customization. This development promises individualized treatment at reasonable cost. Figure 1 shows a diagram of the four states of industrialization identified by Victor and Boynton (1998) with two possible paths. Path A shows the traditional path of industrialization in the production of goods and services. Once the dominant design of a product or service emerges in the marketplace, the process is rationalized and mass production takes place with low product and process variability. Modern quality improvement techniques are then used to continuously modify (and improve) the process, leading to opportunities for mass customization.Path B shows the route being taken in many health care organizations where the mass production stage has been bypassed or at least minimized. The provision of health care has moved from a craft to process enhancement, in which the focus has been on quality-enhancing efforts such as continuous quality improvement, evidence-based medicine, best practices consortia, treatment protocols, and case management. These efforts have provided standardization sufficient to enable providers and insurers to consider mass customization opportunities. Examples of the latter include case management of catastrophic illness cases and the provision of deep Internet portals and customized feedback for insurance enrollees with chronic illnesses.Mass customization does not imply an infinite variety of products and services, nor does it imply the end of invention and adaptation in medicine. It refers to a conscious effort to introduce ever-increasing levels of personalization and variety of outcomes. Configuring and delivering modules of service in response to patient needs and preferences accomplish it. For example, a child born with spina bifida may need a wide range of medical and social services, depending on the severity of the case, the stage of treatment, the resources of the family, the resources of the community, the policies of payers, and the child’ rate of development. The professional individual or team assigned to configure that child’ care would pick and choose among available providers and services to best meet the needs of that child and family. That would require access to and use of efficient and effective patient records, methods of communication, databases, and service contracts and relationships.In the case of the insurance company, mass customization can involve concurrent review of claims data to update maintenance of a Web site for each enrollee, that provides information such as relevant patient education information, links to appropriate and reliable sources of information, and links to low-cost providers of supplies and drugs. For the doctor–patient relationship it might involve giving the asthma patient an air flow-measuring device that can be connected to the Internet so that the physician can monitor patient status every few days and recommend modified inhaler dosage levels on an ongoing basis.Trends that will enable and motivate mass customization include increased consumer demand for individualized care, reduced available physician face time per patient, exploding variety of disease classifications based on new genomic categories, and advancing and increasingly economical information technology. New requirements for electronic prescription ordering will rapidly speed up investment in the required underpinnings in real-time computer systems and interconnectivity among health care providers.Arnold Kaluzny and Curtis P. McLaughlinhttp://dx.doi.org.ezproxy.umuc.edu/10.4135/9781412950602.n490Further ReadingDavis, S. (1987) Future perfect. Cambridge, MA: Perseus.McLaughlin, C. P.Fitzgerald, C. Q. Converging genetics and information technologies and the emerging health care system. International Journal of Health Care Technology and Management 3(5–6) 498–518 (2001)http://dx.doi.org.ezproxy.umuc.edu/10.1504/IJHTM.2001.001125
McLaughlin, C. P.Kaluzny, A. D. Managed care: The challenge ahead. OR/MS Today 25(1) 24–27 (1998, February) Victor, B., & Boynton, A. (1998) Invented here. Boston: Harvard Business School Press.
Source: http://sk.sagepub.com.ezproxy.umuc.edu/reference/healthcaremanagement/n490.xml As of: October 17, 2016
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Manufacturing Resources PlanningManufacturing resource planning, also known as MRP II, is a method for the effective planning of a manufacturer’s resources. MRP II is composed of several linked functions, such as business planning, sales and operations planning, capacity requirements planning, and all related support systems. The output from these MRP II functions can be integrated into financial reports, such as the business plan, purchase commitment report, shipping budget, and inventory projections. It has the capability of specifically addressing operational planning and financial planning, and has simulation capability that allows its users to conduct sensitivity analyses (answering “what if” questions).The earliest form of manufacturing resource planning was known as material requirements planning (MRP). This system was vastly improved upon until it no longer resembled the original version. The newer version was so fundamentally different from MRP that a new term seemed appropriate. Oliver Wight coined the acronym MRP II for manufacturing resource planning.A basic understanding of MRP is essential to understanding MRP II. The following paragraphs begin with a description of MRP before moving on to MRP II.Full Text: MATERIAL REQUIREMENTS PLANNINGMaterial requirements planning (MRP) is a computer-based, time-phased system for planning and controlling the production and inventory function of a firm from the purchase of materials to the shipment of finished goods. All MRP systems are computer based since the detail involved and the inherent burden of computation make manual use prohibitive. MRP is time phased because it not only determines what and how much needs to be made or purchased, but also when.MRP first appeared in the early 1970s and was popularized by a book of the same name by Joseph Orlicky. Its use was quickly heralded as the new manufacturing panacea, but enthusiasm slowed somewhat when firms began to realize the difficulty inherent in its implementation.The MRP system is composed of three primary modules, all of which function as a form of input. These are the master production schedule, the bill-of-materials, and the inventory status file. Each module serves a unique purpose that is inter-related with the purpose of the other modules, and produces several forms of usable output.Master Production Schedule. The master production schedule (MPS) is basically the production schedule for finished goods. This schedule is usually derived from current orders, plus any forecast requirements. The MPS is divided into units of time called “buckets.” While any time frame may be utilized, usually days or weeks is appropriate. The MPS is also said to be the aggregate plan “disaggregated.” In other words, the plan for goods to be produced in aggregate is broken down into its individual units or finished goods.Bill-of-Materials. The bill-of-materials is a file made up of bills-of-material (BOM). Each BOM is a hierarchical listing of the type and number of parts needed to produce one unit of finished goods. Other information, such as the routings (the route through the system that individual parts take on the way to becoming a finished good), alternate routings, or substitute materials may be also be contained with the BOM.A tool known as a product structure tree is used to clarify the relationship among the parts making up each unit of finished goods. Figure 1 details how a product structure tree for a rolling cart might appear on a bill-of-material. This cart consists of a top that is pressed from a sheet of steel; a frame formed from four steel bars; and a leg assembly consisting of four legs, each with a caster attached. Each caster is made up of a wheel, a ball bearing, an axle, and a caster frame.The BOM can be used to determine the gross number of component parts needed to manufacturer a given number of finished goods. Since a gross number is determined, safety stock can be reduced because component parts may be shared by any number of finished goods (this is known as commonality).The process of determining gross requirements of components is termed the “explosion” process, or “exploding” the bill-of-material. Assuming 100 rolling carts are needed, the example product structure tree can be used to compute the gross requirements for each rolling cart component. In order to produce 100 rolling carts, 100 tops are needed, which would require 100 sheets of steel; 100 leg assemblies, which would require 400 legs and 400 casters (requiring 400 wheels, 400 ball bearings,
Figure 1
Figure 2 400 axles, and 400 caster frames); and 100 frames, which would require 400 bars.Inventory Status File. The inventory status file, or inventory records file, contains a count of the on-hand balance of every part held in inventory. In addition, the inventory status file contains all pertinent information regarding open orders and the lead time (the time that elapses between placing an order and actually receiving it) for each item.Open orders are purchase orders (orders for items purchased outside the firm) or shop orders (formal instructions to the plant floor to process a given number of parts by a given date) that have not been completely satisfied. In other words, they are items that have been ordered, but are yet to be received.The MRP Process. The MRP logic starts at the MPS, where it learns the schedule for finished goods (how many and when). It takes this information to the BOM where it “explodes” the gross requirements for all component parts. The MRP package then takes its knowledge of the gross requirements for all components parts to the inventory status file, where the on-hand balances are listed. It then subtracts the on-hand balances and open orders from the gross requirements for components yielding the net requirements for each component.The process not only shows how many components are needed but when they are needed in order to complete the schedule for finished goods on time. By subtracting the lead time from the due date for each part, it is possible to see when an order must be placed for each part so that it can be received in time to avoid a delay in the MPS. A manual version of MRP for a part with requirements of 100 in period 3 and 250 in period 6 and with a two-period lead time is shown in Figure 2.In order for the firm to meet demand on time (the MPS), it must place an order for 25 in period 1 and an order for 200 in period 4. Note that this is an overly simplified version of MRP, which does not include such relevant factors as lot sizing and safety stock.EXPANDING INTO MRP IIWith MRP generating the material and schedule requirements necessary for meeting the appropriate sales and inventory demands, more than the obvious manufacturing resources for supporting the MRP plan was found to be needed. Financial resources would have to be generated in varying amounts and timing. Also, the process would require varying degrees of marketing resource support. Production, marketing, and finance would be operating without complete knowledge or even regard for what the other functional areas of the firm were doing.In the early 1980s MRP was expanded into a much broader approach. This new approach, manufacturing resource planning (MRP II), was an effort to expand the scope of production resource planning and to involve other functional areas of the firm in the planning process, most notably marketing and finance, but also engineering, personnel, and purchasing. Incorporation of other functional areas allows all areas of the firm to focus on a common set of goals. It also provides a means for generating a variety of reports to help managers in varying functions monitor the process and make necessary adjustments as the work progresses.When finance knows which items will be purchased and when products will be delivered, it can accurately project the firm’s cash flows. In addition, personnel can project hiring or layoff requirements, while marketing can keep track of up-to-the-minute changes in delivery times, lead times, and so on. Cost accounting information is gathered, engineering input is recorded, and distribution requirements planning is performed.An MRP II system also has a simulation capability that enables its users to conduct sensitivity analyses or evaluate a variety of possible scenarios. The MRP II system can simulate a certain decision’s impact throughout the organization, and predict its results in terms of customer orders, due dates, or other “what if” outcomes. Being able to answer these “what if” questions provides a firmer grasp of available options and their potential consequences.As with MRP, MRP II requires a computer system for implementation because of its complexity and relatively large scale. Pursuit of MRP or MRP II in a clerical fashion would prove far too cumbersome to ever be useful. When MRP and MRP II were originally developed, hardware, software, and database technology were not sufficiently well advanced to provide the speed and computational power needed to run these systems in real time. Additionally, the cost of these systems was prohibitive. With the rapid advances in computer and information technology since the 1980s, these systems have become more affordable and widely available.CLASSES OF FIRMS USING MRP AND MRP IIMRP and MRP II users are classified by the degree to which they utilize the various aspects of these systems. Class D companies have MRP working in their data processing area, but utilize little more than the inventory status file and the master production schedule, both of which may be poorly used and mismanaged. Typically, these firms are not getting much return for the expense incurred by the system.Class C firms use their MRP system as an inventory ordering technique but make little use of its scheduling capabilities.Class B companies utilize the basic MRP system (MPS, BOM, and Inventory file) with the addition of capacity requirements planning and a shop floor control system. Class B users have not incorporated purchasing into the system and do not have a management team that uses the system to run the business, but rather see it as a production and inventory control system.Class A firms are said use the system in a closed loop mode. Their system consists of the basic MRP system, plus capacity planning and control, shop floor control, and vendor scheduling systems. In addition, their management uses the system to run the business. The system provides the game plan for sales, finance, manufacturing, purchasing, and engineering. Management then can use the system’s report capability to monitor accuracy in the BOM, the inventory status file, and routing, as well as monitor the attainment of the MPS and capacity plans.Class A firms have also tied in the financial system and have developed the system’s simulation capabilities to answer “what if” questions. Because everyone is using the same numbers (e.g., finance and production), management has to work with only one set of numbers to run the business.DEVELOPMENTSA further extension of MRP and MRP II has been developed to improve resource planning by broadening the scope of planning to include more of the supply chain. The Gartner Group of Stamford, Connecticut, coined the term “enterprise resource planning” (ERP) for this system. Like MRP II systems, ERP systems rely on a common database throughout the company with the additional use of a modular software design that allows new programs to be added to improve the efficiency of specific aspects of the business.With the improvement of lean manufacturing and just-in-time (JIT) systems that has occurred because of the same technological advances that made MRP and MRP II more accessible, some firms have come to feel that MRP, MRP II, and even ERP systems are obsolete. However, research has found that in certain environments with advance demand information, MRP-type push strategies yield better performance in term of inventories and service levels than did JIT’s kanban-based pull strategies, and they continue to be used by big businesses and many medium and smaller businesses even today. In 2007, author Phil Robinson noted that “when properly implemented, an ERP package can be the most cost effective project a company has ever seen.”By the early twenty-first century, MRP and ERP systems were so entrenched in businesses that they no longer provided a source of competitive advantage. In 2005, the authors of Manufacturing Planning and Control for Supply Chain Management pointed out that sustaining competitive advantage would require that manufacturing planning and control (MPC) systems cross organizational boundaries to coordinate company units that have traditionally worked independently. They recommend that organizations need to begin working in pairs or dyads to develop jointly new MPC systems that allow integrated operations. Organizations will learn as much as possible from each dyad and then leverage what they have learned into other dyads. They termed this approach the “next frontier” for manufacturing planning and control systems.SEE ALSO Competitive Advantage ; Enterprise Resource Planning ; Inventory Types ; Lean Manufacturing and Just-in-Time Production ; Quality and Total Quality Management BIBLIOGRAPHYKrishnamurthy, Ananth, Rajan Suri, and Mary Vernon. “Re-Examining the Performance of MRP and Kanban Material Control Strategies for Multi-Product Flexible Manufacturing Systems.” International Journal of Flexible Manufacturing Systems 16, no. 2 (2004): 123.Orlicky, Joseph. Material Requirements Planning. New York, NY: McGraw-Hill, 1975.Robinson, Phil. “ERP (Enterprise Resource Planning) Survival Guide.” The Business Improvement Consultancy, 2007. Available from: http://www.bpic.co.uk/erp.htm .Stevenson, William J. Production Operations Management. Boston, MA: Irwin/McGraw-Hill, 2004.Vollmann, Thomas E., William L. Berry, D. Clay Whybark, andF. Robert Jacobs. Manufacturing Planning and Control for Supply Chain Management. Boston, MA: McGraw-Hill, 2005.Wight, Oliver. Manufacturing Resource Planning: MRP II. Essex Junction, VT: Oliver Wight Ltd., 1984.Zhou, Li, and Robert W. Grubbstrom. “Analysis of the Effect of Commonality in Multi-Level Inventory Systems Applying MRP Theory.” International Journal of Production Economics 90, no. 2 (2004): 251.Source Citation (MLA 7th Edition) “Manufacturing Resources Planning.” Encyclopedia of Management. 6th ed. Detroit: Gale, 2009. 548-551. Gale Virtual Reference Library. Web. 21 Oct. 2016.URLhttp://ezproxy.umuc.edu/login?url=http://go.galegroup.com/ps/i.do?p=GVRL&sw=w&u=umd_umuc&v=2.1&id=GALE%7CCX3273100178&it=r&asid=cdb695936bd01fe24c48599e8dcfaf74Gale Document Number: GALE|CX3273100178
Next Steps: Complete your readings for Week 3 and review the PowerPoint presentation lecture. Participate in the two course content discussions as well as discussing the Week 2 results of your Cincinnati Seasonings logistics network simulation. You will also undertake the Week 3 Cincinnati Seasoning assignment described in the syllabus weekly schedule. Curious? Want to Know More? Consider the UMUC online Library http://www.umuc.edu/library/index.cfm and search for reference sources appearing in the Bibliography following each reading. These supplemental sources may be used during topic discussions.
