MPS TIME FENCESBrian Willcox CFPIM of Action MRPII |
| Some time ago I was presenting an In-House MRPII 2 Day Executive Course to a small group consisting of a Managing Director and his first line. In this group were both the marketing director and sales director. I was about half way through this course and up to this point all was going well. I was moving through the principles of master production scheduling when I ran into trouble. "Are you trying to sabotage this company?" was the question put to me. The point I had been explaining was the master production schedule time fences. Why did this particular topic created such a reaction? |
| When first discussing this subject many people's first reaction is that MRP is putting a strangle hold on the flexibility of the marketing division and the sales force. Only when you really get to grips with this subject do you appreciate it is making the company face up to the facts of life that have always been there. The master production schedule (MPS) time fences divide the full MPS into three distinct sections - see figure 1. |
| The first
section is often known as the final assembly stage. It starts at today's
date and goes as far forward to cover the final stages of manufacture. In
an electronics' equipment manufacturing plant it could well be the final
assembly and test area. In component type manufacturing with a single
level bill it would be the actual manufacturing process. This first time
fence is called the Demand Time Fence and is the point of no return, once
the job is started it needs to be finished. The period between the Demand Time Fence and the Planning Time Fence includes the lower level manufacturing process and the procurement time for each component. From today until the Planning Time Fence is the cumulative lead time of the product, that is the time to produce a batch from planning and ordering the material and going through the manufacturing process. The "look ahead" or "batching period" as the third section is known goes forward from the Planning Time Fence to the Planning Horizon. If an order is to be placed for an "A" item with a batching rule of purchasing four weeks supply at a time, obviously you need to know the requirement for those four weeks. If a "C" item with a Period Order Quantity Rule of 24 weeks needs to be ordered, you need to know the requirements for the following six months. So it is your own batching rules which determine the size of the look ahead or batching period. |
| NOW | DTF | PTF | PH |
| | Final
Assembly |____________ |
|
Manufacturing and Purchasing |_______________________ |
| Look
ahead period| |_______________| |
|
| |<========Cumulative Lead Time========> | | | ||
| DTF = DEMAND TIME FENCE | ||
| PTF = PLANNING TIME FENCE | ||
| PH = PLANNING HORIZON |
| Considering the above, it means we need a virtually frozen period of the MPS up to the Demand Time Fence, and from there to the Planning Time Fence we have a firm plan for which material and capacity has been organised. Within this period, only a trade is acceptable - if a new requirement is put in, it means an old requirement is taken out, but only if it is practical to use existing material and it uses the same capacity resources. After the Planning Time Fence, changes are possible within the capacity limitations. The purchased material can be bought to meet the requirements. |
| The time
fences need to be established per product family within the company, and
once agreed, they should be published internally and then enforced by the
master scheduler. You may ask why we need time fences then? We must be
practical. How can we make product for that sudden extra order the
salesman brings in that wasn't planned for, we haven't ordered material
for it. Should we turn the place upside down and create havoc to our
existing planned orders and our regular customers, to supply that extra
one? A serious question to be faced up to is - are all orders good orders?
What are the hidden costs of trying to satisfy that unplanned demand? Very
few people really sit down and work out what that cost is. Many sales and
marketing people object to being made to face up the facts of life because
it is uncomfortable. If you haven't ordered material, how can you make a
product? If your cumulative lead time is nine months, that means the MPS
needs to be firm for nine months. How can a company provide the desirable
flexibility under these circumstances then? The answer is we can, but at a
price. The manufacturing and purchasing lead times are what dictate the
Planning Time Fence. First we should make an effort to reduce these where
possible. The longest leg of manufacturing and purchasing is what
determines the cumulative lead time and many of the items do not need all
of that cumulative lead time. It is possible to identify an additional
time fence between the Demand Time Fence and the Planning Time Fence.
Let's call it the "Firm Time Fence". Between the Firm Time Fence and the
Planning Time Fence we would use the forecast as provided with an agreed
percentage plus up and only place the orders for the long lead time items.
As time moves on we will reach a point when we need to place orders for
the items with a shorter lead time. When we reach that point we need to
reassess the forecast and establish for sure the numbers we are going to
work against. This of course only allows us to revise the forecast down if needed and the result is that the long lead time items will either last longer or MRP will suggest rescheduling the deliveries which may or may not be possible. The risk is that we cannot reschedule the deliveries so we will have to accept the extra material in stock. This overplanning provides greater flexibility where marketing are unsure of what the market really wants several months in the future, but of course it is only provided at a cost. The amount of overplanning should be an agreed management policy decision and not something quietly agreed between the marketing and sales manager. |
| In summary, MPS time fences are essential to stabilize the manufacturing program and to make it practical. They formalise the practical restrictions which a company need to face up to and must accept that changes within these time fences may possibly be organised, but only at a cost. |
| May 1998 |
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