REORGANISING FOR SUCCESSbyBrian Willcox CFPIM of Action MRPII | |
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| When running MRPII overview courses for manufacturing company executives, I spend a fair amount of time explaining the information and material flow needed within the company. I find most companies are so departmentalised that it is the department's interests that are worked for and not the company’s, nor the customer's. If we are going to succeed we need to satisfy our customers and to do that we need a structure designed to meet these aims. We also need an information system to provide the data to allow us to make logical, practical decisions, fully realising the implications of those decisions. It has been found over the years, that an organisation chart which seems to work very effectively in the MRPII environment, is one called the materials management concept. This concept entails breaking down the operational functions into three basic areas, manufacturing, materials (or logistics), and engineering and now a fourth one is sometimes added, master scheduling. | |
| Manufacturing consists of three sections. The objective is to ensure that the person responsible for manufacturing can actually be responsible. Thus the people involved in his activities on whom he is dependent need to report to him. Thus for manufacturing we have three areas of responsibility, production who produce, industrial engineering who decide how and where it is produced, and planned maintenance, to ensure that the machines will produce. (Maintenance in some organisations may also fall in the engineering function). | |
| The engineering function consists of the design engineers, the laboratory, and the drawing office or whatever format is applicable to a particular industry. Again the concept is to group together the related activities so that the person at the top can be fully responsible for and accountable for their activities. | |
| The third group is materials management or logistics as it is sometimes called. This includes everything to do with the planning and actioning of material flow. It starts with the planning function and goes through the purchasing and scheduling, goods receiving, finished goods stores, dispatch and distribution and in fact, everything to do with planning and moving material. The advantage of this group is that it brings together all the planning and material movements from the existing different sections of the organisation so that the whole material flow is coordinated with the company's interest in mind. | |
| The position of the master scheduler is very much dependent upon the level at which master scheduling is performed. When there are a limited number of complex, major finished products which can be maintained by one person, then the master scheduler can report to the managing director. It should be remembered that the maintenance of the master schedule includes the total concept of reorganising the supply of product to meet the customer's needs which demands negotiations with both marketing and manufacturing. When the master scheduler does report to the managing director, it enables him to be independent and balance the requirements of customer's, finance, manufacturing, and materials management without bias in the interest of the company. When the company is smaller or their is a large range of scheduled finished products, the master scheduler may be the chief planner responsible for the MRP planners, to whom he delegates and oversees the work of scheduling these large number of products. In this case, he would probably report to the materials manager. When a final assembly schedule is used, master scheduling is performed at the "module" or "option" level and both of the above approaches are found. The position of the master scheduler is usually dependent upon the number of modules to schedule and the number of bill of material levels in the product. | |
| One of the key factors with this approach is it identifies the materials management function as one of the key positions within the company and when one considers the cost of the product, material is usually between 60 and 90% of the cost, obviously it needs its fair share of attention if the company is to be run in an economically practical way. | |
| The significance of this is that production must produce only to the level of output required by the plan and not simply the maximum possible. Material management's function is to ensure that the plans are viable and practical, and that the material is available to support the function. With this concept, the functions are grouped by management activity and each of the M.D.'s first line have a certain area of responsibility, but the important thing is that each of them can be accountable as he is given the tools and people to do the job. It must be stressed that although this type of structure is well proven, it is not essential and may be difficult to implement in all companies, especially the smaller ones, but the concept of making people accountable and the means to be accountable is essential. | |
| July 1998 |
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