Pull production system

A pull system is a Lean technique for reducing the waste of any production process. Applying a
pull system allows you to start new work only when there is a customer demand for it. This gives
you the opportunity to reduce overhead and optimize storage costs.

This is a system where production is based on actual daily demand in this production,
information, flows from market to management.

In pull production systems, the product is manufactured in response to a specific demand. The
order is used to trigger a pulling action from the end of the production line (e.g., from the last
workstation). If that workstation cannot fill the order, it requests additional units from the
preceding workstation. This action continues with each following workstation requesting units
from its predecessor workstation.

Example of this production system is JIT production system.

A method of production control in which downstream activities signal their needs to upstream
activities. Pull production strives to eliminate overproduction and is one of the three major
components of a complete just-in-time production system.

In pull production, a downstream operation, whether within the same facility or in a separate
facility, provides information to the upstream operation, often via a kanban card, about what part
or material is needed, the quantity needed, and when and where it is needed. Nothing is produced
by the upstream supplier process until the downstream customer process signals a need. This is
the opposite of push production.

There are three basic types of pull production systems-

Supermarket Pull System

The most basic and widespread type, also known as a fill-up or replenishment or a-type pull
system. In a supermarket pull system each process has a store—a supermarket—that holds an
amount of each product it produces. Each process simply produces to replenish what is
withdrawn from its supermarket. Typically, as material is withdrawn from the supermarket by
the downstream customer process, a kanban or other type of information will be sent upstream to
the supplying process to withdraw product. This will authorize the upstream process to replace
what was withdrawn.

Each process is responsible for the replenishment of its supermarket, so daily management of the
worksite is relatively simple and kaizen opportunities are relatively easy to see. The disadvantage
of a supermarket system is that a process must carry an inventory of all part numbers it produces,
which may not be feasible if the number of part numbers is large.
Sequential Pull System

A sequential pull system—also known as a b-type pull system—may be used when there are too
many part numbers to hold inventory of each in a supermarket. Products are essentially "made-
to-order" while overall system inventory is minimized.

In a sequential system, the scheduling department must set the right mix and quantity of products
to be produced. This can be done by placing production kanban cards in a heijunka box, often at
the beginning of each shift. These production instructions then are sent to the process at the
upstream end of the value stream. Often this is done in the form of a “sequence list,” sometimes
called a “sequential tablet.” Each following process simply produces in sequence the items
delivered to it by the preceding upstream process. FIFO of individual products must be
maintained throughout.

A sequential system creates pressure to maintain short and predictable lead times. In order for
this system to work effectively, the pattern of customer orders must be well understood. If orders
are hard to predict, production lead time must either be very short (less than order lead time) or
an adequate store of finished goods must be held.

A sequential system requires strong management to maintain, and improving it may be a

challenge on the shop floor.

Mixed Supermarket and Sequential Pull System

Supermarket and sequential pull systems may be used together in a mixed system—also known
as a c-type pull system. A mixed system may be appropriate when an 80/20 rule applies, with a
small percentage of part numbers (perhaps 20%) accounting for the majority (perhaps 80%) of
daily production volume. Often an analysis is performed to segment part numbers by volume
into (A) high, (B) medium, (C) low, and (D) infrequent orders. Type D may represent special
order or service parts. To handle these low-running items, a special type D kanban may be
created to represent not a specific part number but rather an amount of capacity. The sequence of
production for the type D products is then determined by the method the scheduling department
uses for sequential pull system part numbers.

Such a mixed system enables both supermarket and sequential systems to be applied selectively
and the benefits of each are obtained, even in environments where the demand is complex and
varied. The two systems may run together, side-by-side horizontally, throughout an entire value
stream, or may be used for a given part number at different locations along its individual value
stream.
How to Manage a Pull System?

Nowadays, the pull system concept is widely spread across various industries. Professionals use
it not only in manufacturing but also in software development, customer support and more.

In the context of workflow management, a pull system allows workers to pull their next task if
they have the capacity to start working on it. This may help you prioritize tasks better and
prevent teams from overloading. By doing so, your team can stay focused on executing the most
important work just in time

Advantages of Using a Pull System

Unlike push systems, which force team members to work on multiple tasks, a pull system lets
team members focus on a single work item at a time. This approach allows a work unit to:

Quickly adapt to changes that may occur in the work process

Scale the optimal capacity of your team
Deliver work items much faster
Reduce waste of resources
Increase productivity
Improve flow efficiency

Manufacturing facilities greatly benefit from switching from a push system to a pull system.
Using a pull system reduces waste within a company since no overproduction occurs. This also
frees up space in the workplace and reduces the cost of storing excess inventory.

Businesses that use a pull system experience increased customer satisfaction as products are
manufactured specifically to fulfill their requests. Since products are made in small quantities,
quality issues will be identified faster than with a push system and, if an error is found, less
defective products would require disposal.

A pull system allows manufacturing facilities to save time that would be spent planning for
future demand and producing goods that may never be sold. They also experience increased
flexibility, as they can rapidly respond to changes in demand. Each of these advantages of using
a pull system reduces total costs for the business, whether directly or indirectly, resulting in
increased profit.
Push production system

This manufacturing system is based on projected production plan where information flows from
management to market.

In a push system the emphasis lies on using information about customers, suppliers and
production to manage material flow. The name push system results from the way the system
Works: Materials and parts are made and after that they are send to the place where they are
needed next (which is another stage in production or inventory), thus the system is pushing
material through production. This pushing however is done according to schedule.
The push system is relying heavily on the accuracy of the schedules, which come from the
MPS. These schedules, in turn, depend on the accuracy of information about the customers
demand and lead times. So for this information another system is developed: Resource
Requirements Planning System (RRPS). RRPS is all the planning that is directed at determine
the amount and timing of production resources (personnel, cash, materials, production capacity)
needed in the short-range planning horizon. MPS, CRP and MRP are important elements of this
planning. Push systems are used in almost every type of production, but there are more benefits
in job shop environments. In these environments the push system provides comprehensive
information to improve short run production and management decisions.

Example of this production system is MRP (material require plan)

The push system of inventory control involves forecasting inventory needs to meet customer
demand. Companies must predict which products customers will purchase along with
determining what quantity of goods will be purchased. The company will in turn produce enough
products to meet the forecast demand and sell, or push, the goods to the consumer.
Disadvantages of the push inventory control system are that forecasts are often inaccurate as
sales can be unpredictable and vary from one year to the next. Another problem with push
inventory control systems is that if too much product is left in inventory. This increases the
company's costs for storing these goods. An advantage to the push system is that the company is
fairly assured it will have enough products on hand to complete customer orders, preventing the
inability to meet customer demand for the product.

An example of a push system is Materials Requirements Planning, or MRP. MRP combines the
calculations for financial, operations and logistics planning. It is a computer-based information
system which controls scheduling and ordering. Its purpose is to make sure raw goods and
materials needed for production are available when they are needed.
Pull System vs. Push System
Another system used in supply chains is a push system, which sharply contrasts with a pull
system. In a push system, units are produced based on forecasted demand and then pushed into
the market, whereas a pull system uses actual demand. Companies using a push system must
predict what the customer will want to purchase and in what quantity, which is difficult as sales
can be unpredictable and vary from previous years.

In a pull system, the quantity produced is just enough to meet current demand. However, in a
push system, products are mass produced for estimated future demand. These products must
remain in inventory until they are needed, which could take months, years or may not happen at
all.

Push (make all we can just in case.)

Production approximation
Anticipated usage’s
Large lots
High inventories
Waste
Management by firefighting
Poor communication

Pull (make what’s needed when we need it)

Production precision
Actual consumption
Small lots
Low inventories
Waste reduction
Management by sight
Better communication.
Common, but misleading illustration of push and pull

One of the key differences in lean production is to use pull production rather than push
production. While pretty much everyone knows (at least in theory) how to implement it using
kanban, the underlying fundamental differences are a bit more fuzzy. But what exactly is the
difference between push and pull? Also, what makes pull systems so superior to push systems?

It turns out that most definitions are going in the wrong direction. Even the names “push” and
“pull” are actually not well suited to describe the concept. Neither are common illustrations,
including the one here in the upper left.

MRP
Material requirements planning (MRP) is a system for calculating the materials and components
needed to manufacture a product. It consists of three primary steps: taking inventory of the
materials and components on hand, identifying which additional ones are needed and then
scheduling their production or purchase.

Joseph Orlicky, author of the definitive Material Requirements Planning (MRP): the New Way
of Life in Production and Inventory Management, said, "Never forecast what you can calculate."
Nowhere is this rule more evident than in the manufacturing industry, where determining the
right amount of raw material for current demand is a challenge. Underestimating will force you
to short your clients, causing them to seek the products elsewhere. Overestimating will cost you
money in either waste or storage. 

Material requirements planning (MRP) is a planning and control system for inventory,
production, and scheduling. MRP converts the master schedule of production into a detailed
schedule, so that you can purchase raw materials and components. Used mostly in the
manufacturing and fabrication industries, this system is a push type of inventory control,
meaning that organizations use forecasting to determine the customer demand for products. The
manufacturing or fabrication company will forecast the amount and type of products they will
purchase, along with the quantity of materials to produce them. They then push the products to
the consumers. This contrasts with a pull system, where the customer first places an order. The
main disadvantage of a push system is its vulnerability when sales vary. In this scenario, the
forecasts become inaccurate, which for manufacturing, cause either a shortage of inventory or an
excess of inventory that requires storage. 

Inventory is divided into two categories, independent and dependent demand. Independent
demand is a desire for finished products, such as cell phones or automobiles, whereas dependent
demand is the demand for components, parts, or incomplete assemblies (sometimes called sub-
assemblies), such as phone screens or tires for automobiles. You determine quantities for the
dependent demand by determining quantities for the independent demand. For example, if you
forecast your independent demand for the number of completely assembled cell phones that you
expect to sell, you can forecast the quantities of your dependent demand materials, such as your
screens, processors, batteries, and antennas. These part quantities depend on the quantity of cell
phones you want to produce. This relationship between the materials and the finished product are
shown on a bill of materials (BOM) and are calculated with MRP. 

However, manufacturing is only one industry that relies on the appropriate balance between
supply and demand. Whether you work in a bakery or in a technology firm, implementing
material requirements planning (MRP) concepts can dramatically benefit your company.
Although originally intended exclusively for the manufacturing and fabrication industries, MRP
is applicable to almost any industry, including the service industry. This is because MRP focuses
on two universal concerns of business — customers and resources. MRP analyzes all company
activities in terms of customer demands and manages all company resources via its own logic
and data processing.

Material requirements planning (MRP) is a production planning, scheduling, and inventory

control system used to manage manufacturing processes. Most MRP systems are software-based,
but it is possible to conduct MRP by hand as well.

An MRP system is intended to simultaneously meet three objectives:

Ensure materials are available for production and products are available for delivery to
customers.

Maintain the lowest possible material and product levels in store

Plan manufacturing activities, delivery schedules and purchasing activities.

Objectives of material requirements planning

Not surprisingly, the primary objective of MRP is to make sure that material and components are
available when needed in the production process and that manufacturing takes place on schedule.

Effective inventory management and optimization is another goal of MRP. While MRP is
designed to ensure adequate inventory at the required times, a company can be tempted to hold
more inventory than is necessary, thereby driving up inventory costs.

MRP can also improve manufacturing efficiency by using accurate scheduling to optimize the
use of labor and equipment.
Proponents of MRP and DDMRP say these approaches can help achieve a better matching of
supply and demand. This achievement, in turn, can reduce product costs and increase revenues as
customer demand is fully met and no revenue opportunities are lost from missed ship dates or
inventory shortfalls.

The scope of MRP in manufacturing

Dependent demand vs. independent demand

Independent demand is demand originating outside the plant or production system, while
dependent demand is demand for components. The bill of materials (BOM) specifies the
relationship between the end product (independent demand) and the components (dependent
demand). MRP takes as input the information contained in the BOM.[5] [6]

The basic functions of an MRP system include: inventory control, bill of material processing,
and elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used
to plan manufacturing, purchasing and delivering activities.

"Manufacturing organizations, whatever their products, face the same daily practical problem -
that customers want products to be available in a shorter time than it takes to make them. This
means that some level of planning is required."

Companies need to control the types and quantities of materials they purchase, plan which
products are to be produced and in what quantities and ensure that they are able to meet current
and future customer demand, all at the lowest possible cost. Making a bad decision in any of
these areas will make the company lose money. A few examples are given below:

If company purchases insufficient quantities of an item used in manufacturing (or the

wrong item) it may be unable to meet contract obligations to supply products on time.

If company purchases excessive quantities of an item, money are wasted - the excess
quantity ties up cash while it remains as stock that might never be used at all.

Beginning production of an order at the wrong time can cause customer deadlines to be
missed.

MRP is a tool to deal with these problems. It provides answers for several questions:

 What items are required?

 How many are required?

 When are they required?

MRP can be applied both to items that are purchased from outside suppliers and to sub-
assemblies, produced internally, that are components of more complex items.
In determining how much material your product needs, MRP differs from consumption-based
planning (CBP). MRP logic uses information received either directly from customers or from the
sales forecast, calculating the material required based on the dependencies of other materials.
CBP calculates material requirements only via historical consumption data. CBP does not
consider the dependencies between different materials, as it presumes that future consumption
will follow the same pattern that the historical data did. 

MRP synchronizes the flow of materials, components, and parts in a phased order system,
considering the production schedule. It also combines and tracks hundreds of variables,
including:

Purchase orders

Sales orders

Shortage of materials

Expedited orders

Due dates

Forecasts

Marketplace demand

Material

Inventory

Data

Bill of material

For all companies, MRP has a few goals in common. These include making sure that the
inventory level is at a minimum, but high enough to provide for the customer need, and that you
plan all of the activities, including delivery, purchasing, and manufacturing. 

There are some terms that will come up in MRP repeatedly. Some are terms related to MRP as a
concept, and some are specific to MRP software. These terms are as follows:

Item: In MRP, an item is the name or code number used for the event you’re scheduling.

Low-Level Code: This is the lowest level code of an item in the bill of materials and
indicates the sequence in which you run items through an MRP. You use low-level code
because an MRP system recognizes and connects the level that an item appears in the
product chain and uses it to plan the proper time to meet all of the system demands.
Lot Size: This is the quantity of units you order during manufacturing

Lead Time (LT): This is the time you need to assemble or manufacture an item from
beginning to end. Two types of lead time are ordering lead time and manufacturing lead
time. Ordering lead time is the time it takes from  starting the purchase  to receiving the
purchase. Manufacturing lead time is the time it takes for the company to completely
manufacture a product from start to end.

Past Due (PD): This is the time during which you consider orders behind schedule.

Gross Requirements (GR): You generate this MRP calculation  through forecast
scheduling using the number of produced units, the amount of required material for each
produced unit, the current stock, and the ordered stock /stock in transit. This is the total
demand for an item during a specific time period.

Scheduled Receipts (SR): These are the open orders for products that the company
currently possesses but has not yet fulfilled.

Projected on Hand (POH): This is the amount of inventory you’ve estimated to be

available after you meet the gross requirements. To calculate this sum, you add the POH
from the previous time period to the scheduled order receipts and the planned order
receipts and then subtract the gross requirements. (Current POH = Previous POH + SR +
POR – GR)

Net Requirements (NR): You generate this MRP calculation through master scheduling
using gross requirements, on-hand inventory, and other quantities. This is the actual,
required quantity to be produced in a particular time period.

Planned Order Receipts (POR): The quantity of orders during a time period that is
expected to be received. This planning for orders keeps the inventory from going below
the threshold necessary.

Planned Order Releases (PORL): This is the amount you plan to order per time period.
This is POR offset by the lead time.

Cumulative Lead Time: This is the greatest amount of time that it takes to develop the
product. You may calculate it by looking at each BOM and figuring out which one takes
the longest.

Product Structure Tree: This is a visual depiction of the bill of materials, showing how
many of each part and how many sub-parts you need to produce the product.
Net-Change Systems: These are systems which identify only the changes between the
new and old plan.

Master Production Schedule (MPS): This is the schedule of finished products that
drives the MRP process. The quantities in MPS represent what you need to produce to
meet the forecast.

Lumpiness: This is when product/material that is low or at zero suddenly spikes.

Examples of lumpy or uneven demand include the need for service parts. You only need
service parts when an appliance breaks, so forecasting the need for the parts may be
difficult, as the demand is not continuous. 

Time Fence: Time fences are boundaries between different MRP planning periods. They
offer the opportunity for programming changes, such as rules and restrictions. 
What Is the Benefit of Material Requirements Planning?

You may use MRP concepts in a variety of different production environments. You may also use
them for service providers, such as job shops. Examples of production environments include
instances in which products are complex, products are only assembled to order, or demand items
are discrete and dependent. In these cases, MRP can reduce the stored inventory, the component
shortages, the overall manufacturing cost, and, therefore, the cost to purchase. This more
accurate scheduling improves your company’s productivity by decreasing the necessary lead
time, giving your customers a higher quality of production and service. Overall, your company is
more competitive in the marketplace.

However, with these advantages come a few drawbacks. Foremost, MRP is only successful if the
accounting is accurate. You must keep records of inventory and BOM changes up to date.
Inaccurate input causes inaccurate output. Another potential downside to MRP is that it can be
costly. If you don’t keep the input in a timely fashion, it can be difficult and expensive when
switching over to a new system. 

Material Requirements Planning Steps and Processes

MRP works because it is a well-organized framework of processes and calculations. An MRP

system can completely transform a company’s operational procedures. Many people within an
organization contribute to the MRP process, including sales, production, purchasing, receiving,
stockroom, and shipping personnel. 

MRP consists of three basic steps: 

 Identifying the Quantity Requirements: Determine what quantity is on hand, in an

open purchase order, planned for manufacturing, already committed to existing orders,
and forecasted. These requirements are specific to each company and each company
location and change with the date.

 Running the MRP Calculations: Create suggestions for materials that you consider
critical, expedited, and delayed.

 Complete the Orders: Delineate the materials for the manufacturing orders, purchase
orders, and other reporting requirements. 

                        

The calculations that MRP performs are based on the data inputs. As shown in the diagram
above, these data inputs include:

 Customer Orders: This refers to the specific information you receive from customers
and includes one-offs and regular ordering patterns.

 Forecast Demand: This is a prediction from the marketplace about how much probable
demand there will be for a product or service. It is based on historic accounting and
current trend analysis.

 Master Production Schedule (MPS): Both forecast demand and customer orders feed
into the master production schedule. The MPS is a plan that a company develops for
production, staffing, or inventory. It is the production future plan that includes the
 quantities you need to produce the products in a specified time period. It also includes
inventory costs, production costs, inventory information, supply, lot size, lead time, and
development capacity.

 Bill of Materials (BOM): Also called a product structure file, this includes the details
and quantities of the raw materials, assemblies, and components that make up each end
product.

Data

The data that must be considered include-

The end item (or items) being created. This is sometimes called independent demand, or
Level "0" on BOM (bill of materials).

How much is required at a time.

When the quantities are required to meet demand.

Shelf life of stored materials.

Inventory status records. Records of net materials available for use already in stock (on
hand) and materials on order from suppliers.

Bills of materials. Details of the materials, components and sub-assemblies required to

make each product.

Planning data. This includes all the restraints and directions to produce such items as:
routing, labor and machine standards, quality and testing standards, pull/work cell and
push commands, lot sizing techniques (i.e. fixed lot size, lot-for-lot, economic order
quantity), scrap percentages, and other inputs.

Outputs

There are two outputs and a variety of messages/reports-

° Output 1 is the "Recommended Production Schedule." This lays out a detailed schedule
of the required minimum start and completion dates, with quantities, for each step of the
Routing and Bill Of Material required to satisfy the demand from the master production
schedule (MPS).
 ° Output 2 is the "Recommended Purchasing Schedule." This lays out both the dates on
which the purchased items should be received into the facility and the dates on which the
purchase orders or blanket order release should occur in order to match the production
schedules.

Messages and reports-

 Purchase orders. An order to a supplier to provide materials.

 Reschedule notices. These recommend cancelling, increasing, delaying or speeding up

existing orders.
Methods to find order quantities

Well-known methods to find order quantities are-

Dynamic lot-sizing

Silver–Meal heuristic

Least-unit-cost heuristic

Mathematical formulation

MRP can be expressed as an optimal control problem-

Initial conditions:

i=1,...,J

Dynamics:

t=0,...,T-1,i=1,...,J

Constraints:

t=1,...,T,i=1,...,J

Where x' is local t=0,...,T-1,i=1,...,J inventory (the state),

z the order size (the control), d is local
demand, k Objective: represents fixed
order costs, c variable order costs,
h local inventory holding costs. δ() is
the Heaviside function. Changing the dynamics of the problem leads to a multi-item analogue of
the dynamic lot-size model.

Problems with MRP systems

Although using an MRP system is vastly superior to cobbling together a system of spreadsheets
and hand calculations, problems do arise. The biggest issue is data integrity. Data that is either
not up to date or has errors gives output that is inaccurate and can end up costing your business
serious money. You should carefully screen inventory and BOM data. Errors often occur during
cycle-count adjustments, input and shipping, and reporting of scrap, damage, waste, and
production. Barcode scanning and pull systems can minimize these types of errors. 

Moreover, MRP systems can be rife with error when companies with facilities in different
countries do not set up by individual location. For example, the MRP system could indicate that
there is plenty of raw materials available for production when, in fact, that raw material is on the
other side of the world. Staff power is also not always accounted for in MRP. In these cases, the
MRP creates a capacity issue.

In addition, lead times can throw off MRP. The required lead time can change based on the
product. MRP assumes that the lead time is always the same for each product, regardless of
changes in supply, required quantities, or the possible simultaneous production of other products.

Solving your data-integrity issues may take some concentrated effort. Best practices for ensuring
that your data is high-quality before you start your MRP process include:

 Using barcode scanning or a pull system to replace stock and enter products into
inventory

 Making sure that shipping prints the container labels

 Requiring advance shipping notifications (ASN) from your suppliers that feed into a label
system. In order to detect shortages and over-shipments, match labels with internal
company numbers as product arrives. 

 Recording scrap daily

 Troubleshooting and fixing causes of cycle counts that incorrectly change your inventory 

 Confirming the bill of material at the production site

Integrity of the data. If there are any errors in the inventory data, the bill of materials
(commonly referred to as 'BOM') data, or the master production schedule, then the output
data will also be incorrect ("GIGO": garbage in, garbage out). Data integrity is also
affected by inaccurate cycle count adjustments, mistakes in receiving input and shipping
output, scrap not reported, waste, damage, box count errors, supplier container count
errors, production reporting errors, and system issues. Many of these type of errors can be
minimized by implementing pull systems and using bar code scanning. Most vendors in
this type of system recommend at least 99% data integrity for the system to give useful
results.

Systems require that the user specify how long it will take for a factory to make a product
from its component parts (assuming they are all available). Additionally, the system
design also assumes that this "lead time" in manufacturing will be the same each time the
 item is made, without regard to quantity being made, or other items being made
simultaneously in the factory.

A manufacturer may have factories in different cities or even countries. It is not good for
an MRP system to say that we do not need to order some material, because we have
plenty of it thousands of miles away. The overall ERP system needs to be able to
organize inventory and needs by individual factory and inter-communicate the needs in
order to enable each factory to redistribute components to serve the overall enterprise.
This means that other systems in the enterprise need to work properly, both before
implementing an MRP system and in the future. For example, systems like variety
reduction and engineering, which makes sure that product comes out right first time
(without defects), must be in place.

Production may be in progress for some part, whose design gets changed, with customer
orders in the system for both the old design, and the new one, concurrently. The overall
ERP system needs to have a system of coding parts such that the MRP will correctly
calculate needs and tracking for both versions. Parts must be booked into and out of
stores more regularly than the MRP calculations take place. Note, these other systems can
well be manual systems, but must interface to the MRP. For example, a 'walk around'
stock intake done just prior to the MRP calculations can be a practical solution for a small
inventory (especially if it is an "open store").

The other major drawback of MRP is that it fails to account for capacity in its
calculations. This means it will give results that are impossible to implement due to
manpower, machine or supplier capacity constraints. However this is largely dealt with
by MRP II. Generally, MRP II refers to a system with integrated financials. An MRP II
system can include finite or infinite capacity planning. But, to be considered a true MRP
II system must also include financials. In the MRP II (or MRP2) concept, fluctuations in
forecast data are taken into account by including simulation of the master production
schedule, thus creating a long-term control.[8] A more general feature of MRP2 is its
extension to purchasing, to marketing and to finance (integration of all the functions of
the company), ERP has been the next step.

Solutions to data integrity issues

Bill of material – The best practice is to physically verify the bill of material either at the
production site or by disassembling the product.

Cycle count – The best practice is to determine why a cycle count that increases or
decreases inventory has occurred. Find the root cause and correct the problem from
occurring again.
 Scrap reporting – This can be the most difficult area to maintain with any integrity. Start
with isolating the scrap by providing scrap bins at the production site and then record the
scrap from the bins on a daily basis. One benefit of reviewing the scrap on site is that
preventive action can be taken by the engineering group.

Receiving errors – Manual systems of recording what has been received are error prone.
The best practice is to implement the system of receiving by ASN from the supplier. The
supplier sends an ASN (advanced shipping notification). When the components are
received into the facility, the ASN is processed and then company labels are created for
each line item. The labels are affixed to each container and then scanned into the MRP
system. Extra labels reveal a shortage from the shipment and too few labels reveal an
over shipment. Some companies pay for ASN by reducing the time in processing
accounts payable.

Shipping errors – The container labels are printed from the shipper. The labels are affixed
to the containers in a staging area or when they are loaded on the transport.

Production reporting – The best practice is to use bar code scanning to enter production
into inventory. A product that is rejected should be moved to an MRB (material review
board) location. Containers that require sorting need to be received in reverse.

Replenishment – The best replenishment practice is replacement using bar code scanning,
or via pull system. Depending upon the complexity of the product, planners can actually
order materials using scanning with a min-max system.

Demand driven MRP

In 2011, the third edition of "Orlicky's Materials Requirements Planning" introduced a new type
of MRP called "demand driven MRP" (DDMRP.The new edition of the book was written, not by
Orlicky himself (he died in 1986) but by Carol Ptak and Chad Smith at the invitation of McGraw
Hill to update Orlicky's work.

Demand driven MRP is a multi-echelon formal planning and execution technique with five
distinct components:

1. Strategic inventory positioning – The first question of effective inventory management

is not, "how much inventory should we have?" Nor is it, "when should we make or buy
something?" The most fundamental question to ask in today's manufacturing
environments is, "given our system and environment, where should we place inventory to
have the best protection?" Inventory is like a break wall to protect boats in a marina from
the roughness of incoming waves. Out on the open ocean the break walls have to be 50–
100 feet tall, but in a small lake the break walls are only a couple feet tall. In a glassy
smooth pond no break wall is necessary.
 2. Buffer profiles and level – Once the strategically replenished positions are determined,
the actual levels of those buffers have to be initially set. Based on several factors,
different materials and parts behave differently (but many also behave nearly the same).
DDMRP calls for the grouping of parts and materials chosen for strategic replenishment
and that behave similarly into "buffer profiles." Buffer profiles take into account
important factors including lead time (relative to the environment), variability (demand or
supply), whether the part is made or bought or distributed and whether there are
significant order multiples involved. These buffer profiles are made up of "zones" that
produce a unique buffer picture for each part as their respective individual part traits are
applied to the group traits.

3. Dynamic adjustments – Over the course of time, group and individual traits can and will
change as new suppliers and materials are used, new markets are opened and/or old
markets deteriorate and manufacturing capacities and methods change. Dynamic buffer
levels allow the company to adapt buffers to group and individual part trait changes over
time through the use of several types of adjustments. Thus, as more or less variability is
encountered or as a company's strategy changes these buffers adapt and change to fit the
environment.

4. Demand-driven planning – takes advantage of the sheer computational power of today's

hardware and software. It also takes advantage of the new demand-driven or pull-based
approaches. When these two elements are combined then there is the best of both worlds;
relevant approaches and tools for the way the world works today and a system of routine
that promotes better and quicker decisions and actions at the planning and execution
level.

5. Highly visible and collaborative execution – Simply launching purchase orders (POs),
manufacturing orders (MOs) and transfer orders (TOs) from any planning system does
not end the materials and order management challenge. These POs, MOs and TOs have to
be effectively managed to synchronize with the changes that often occur within the
"execution horizon." The execution horizon is the time from which a PO, MO or TO is
opened until the time it is closed in the system of record. DDMRP defines a modern,
integrated and greatly needed system of execution for all part categories in order to speed
the proliferation of relevant information and priorities throughout an organization and
supply chain.

These five components work together to greatly dampen, if not eliminate, the nervousness of
traditional MRP systems and the bullwhip effect in complex and challenging environments. The
Demand Driven Institute claims the following: In utilizing these approaches, planners will no
longer have to try to respond to every single message for every single part that is off by even one
day. This approach provides real information about those parts that are truly at risk of negatively
impacting the planned availability of inventory. DDMRP sorts the significant few items that
require attention from the many parts that are being managed. Under the DDMRP approach,
fewer planners can make better decisions more quickly. That means companies will be better
able to leverage their working and human capital as well as the huge investments they have made
in information technology. One down-side, however, is that DDMRP cannot run on the majority
of MRPII/ERP systems in use today, so organizations will have to implement a compatible
system in order to run DDMRP.

DDMRP has been successfully applied to a variety of environments including CTO (configure to
order), MTS (make to stock), MTO (make to order) and ETO (engineer to order).[6] The
methodology is applied differently in each environments but the five step process remains the
same. DDMRP leverages knowledge from theory of constraints (TOC), traditional MRP & DRP,
Six Sigma and lean. It is effectively an amalgam of MRP and kanban techniques. As such, it
incorporates the strengths of both but also the weaknesses of both; hence its limited adoption.

MRP II

The full meaning of MRP2 is Manufacturing Resource Planning. The technology of MRP
expended in 1980 to create new approach called Manufacturing resource planning or MRP2.

In manufacturing resource planning (MRP2) the valid production schedule proved itself to be so
successful that organization knows that resource could be better controlled and planned with
valid schedule. In the book of production planning and controlling writer Gordon Minty noted
that-“By the improvement in cash flow projections, personal management projection and
customer delivery commitments the main areas affected were marketing, personal and finance”.

With master production schedule MRP2 facilities the improvement of detailed production
schedule used for machine and labor capacity, provide schedule when the production is to run
according t the arrival of materials. It provides the data for the cost of production including labor
time, material used and machine time, also MRP2 provides final production numbers to finance
and accounting departments.

MRP2 or manufacturing resource planning is too beyond from MRP1. When MRP stopped
receiving the dock, MRP2 includes the flow of value all the way to the shipping dock through the
manufacturing facility where the product is first packaged and then dispatched to the final
customer. The stream value includes machine capacity scheduling, planning, analysis modules,
demand forecasting and quality tracking tools. MRP2 come up with some tools for tracking labor
contribution margin, employee attendance.

MRP2 maintains track of functions and specific characteristic of the entire organization.
Example includes, but it is not just limit to, the following-

Product specification
Quality control
 Product design
Quality assurance
Order management
Shop floor control
Inventory
Purchasing
Cost calculation
General accounting
Cost reporting
Tax calculating
Cash flow
Tax payment

Manufacturing resource planning (MRP2) helps business to standardize their process by

providing then mechanize methods for different areas of the business. Standardization provides
easily repeated process and a platform which helps to improve those processes. Implementing
MRP2 by the company for the first time is generally having problems in controlling the
increasing transactions in manufacturing, purchasing associated with the growth. MRP2 enables
employees to do more in those business areas and have better visibility of the information for
their jobs. MRP2 allows being more competitive to the company by improving in the way works
get done.

Benefits of MRP2-

 Better control of inventories

 Productive relationship with
 Better quality and also control quality
 Improve design control
 Improve cash flow through fast delivery
 Accurate inventory records
 Reduced working capital for inventories.

Disadvantages of MRP2-

Once implemented MRP2 it will require accurate information. Errors will result in automated
planning process if the information is used in poor quality in either the bill of material module or
the inventory area. To manufacture or purchase the planning part use averages for the length of
time (lead time), and on purchase order o manufactured quantities that is generally purchase n
wok order (lot size). If the actual lot sizes produced or purchased and lead times fluctuates
consistently then the software will not be able to produce plans that match with current scenario.
Lack of understanding and poor information of then impact on average lead times and lot sizes
can cause execution failure and costly reimplementation.

It is long time that MRP2 is introduced in industry and business. For proper understanding of the
application aspects staff must be fully trained and for achieving benefits from MRP2
commitment for implementation is pre-requisite. Most of the companies in the world having
MRP2 are implementing (Enterprise Resource Planning) ERP gain maximum productive results
with highly effective software.

ROP
The reorder point (ROP) is the level of inventory which triggers an action to replenish that
particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such
that, when stock falls to this amount, the item must be reordered. It is normally calculated as the
forecast usage during the replenishment lead time plus safety stock. In the EOQ (Economic
Order Quantity) model, it was assumed that there is no time lag between ordering and procuring
of materials. Therefore the reorder point for replenishing the stocks occurs at that level when the
inventory level drops to zero and because instant delivery by suppliers, the stock level bounce
back.

Reorder Point (ROP) system is a process where the inventory is restored as soon as the existing
stock hits a specific bottom. This will help in ensuring that there is no interruption in the
production and also saves on extra costs. Given the fact that every item has its own importance
and a usage rate in the production process, the reorder point differs for every item. It also is
dependent on several other factors such as discounts, delivery time of the item and so on. With
the evolution of ERPs, this process is automated and hence very simple to perform. All the
crucial is tracked in the system and is taken care of. Early ordering also helps in cutting down
high costs put forth by vendors and administers good negotiation.

A set inventory level where, if the total stock on hand plus on order falls to or below that point,
action is taken to replenish the stock. The order point is normally calculated as forecasted usage
during the replenishment lead time plus safety stock. Syn: reorder point, statistical order point,
trigger level. See: fixed reorder quantity inventory model.

ROP also known as re-order point is the level of inventory which triggers an action to re-order
that particular inventory stock. It represents a minimum amount of an item (such as button or
zipper) which a firm holds in stock, when stock falls to this amount, the item must be reordered.
It is normally calculated as the forecast usage during the replenishment lead time plus safety
stock.
The reorder point for replenishment of stock occurs when the level of inventory drops down to
zero. In view of instantaneous replenishment of stock the level of inventory jumps to the original
level from zero level.

In real life situations one never encounters a zero lead time. There is always a time lag from the
date of placing an order for material and the date on which materials are received. As a result the
reorder point is always higher than zero, and if the firm places the order when the inventory
reaches the reorder point, the new goods will arrive before the firm runs out of goods to sell. The
decision on how much stock to hold is generally referred to as the order point problem, that is,
how low should the inventory be depleted before it is reordered.

The two factors that determine the appropriate order point are the delivery time stock which is
the Inventory needed during the lead time (i.e., the difference between the order date and the
receipt of the inventory ordered) and the safety stock which is the minimum level of inventory
that is held as a protection against shortages due to fluctuations in demand.

Therefore:

Reorder Point = Normal consumption during lead-time + Safety Stock.

Several factors determine how much delivery time stock and safety stock should be held. In
summary, the efficiency of a replenishment system affects how much delivery time is needed.
Since the delivery time stock is the expected inventory usage between ordering and receiving
inventory, efficient replenishment of inventory would reduce the need for delivery time stock.
And the determination of level of safety stock involves a basic trade-off between the risk of stock
out, resulting in possible customer dissatisfaction and lost sales, and the increased costs
associated with carrying additional inventory.

Another method of calculating reorder level involves the calculation of usage rate per day, lead
time which is the amount of time between placing an order and receiving the goods and the
safety stock level expressed in terms of several days' sales.

Reorder level = Average daily usage rate x lead-time in days .

From the above formula it can be easily deduced that an order for replenishment of materials be
made when the level of inventory is just adequate to meet the needs of production during lead-
time.

It can be explained by following examples:

Reorder Point = Normal consumption during lead-time + Safety Stock & · Reorder level =
Average daily usage rate x lead-time in days
If the average daily usage rate of a material is 100 units and the lead-time is seven days, then:
Reorder level = Average daily usage rate x Lead time in days = 100 units per day x 7 days = 700
units

When the inventory level reaches 700 units an order should be placed for material. By the time
the inventory level reaches zero towards the end of the seventh day from placing the order
materials will reach and there is no cause for concern.

Re-order point = Average Lead Time*Average Demand + Service Level*√Avg. Lead

Time*Standard Deviation of Demand2 + Avg. Demand2*Standard Deviation of Lead Time2

Reorder point = S x L + J (S x R x L)

Where,

 S = Usage in units per day

 L = Lead time in days

 R = Average number of units per order

 J = Stock out acceptance factor

 The stock-out acceptance factor, `J', depends on the stock-out percentage rate specified
and the probability distribution of usage (which is assumed to follow a Poisson
distribution).

Reorder Point (ROP) Calculator - Know When to Reorder

You have a great new product on the shelves, and it’s selling fast. Every customer purchase
means more revenue, but also brings your inventory levels lower. Of course you’ll reorder before
it goes out of stock, but if you order too early, you’ll need to spend more on storing these excess
items. If you order too late, you’ll be facing disappointed customers who’ll look to your
competitors.

How to calculate reorder point?

Calculate your lead time demand in days.

Calculate your safety stock in days.

 Sum your lead time demand and your safety stock to determine your Reorder
Point.

To understand the math’s behind our reorder point calculator, let’s break this formula down.

You’ll need to know the lead time demand, because that’s how long you’ll have to wait before
new stock arrives - you’ll want to have enough to satisfy your customers while you wait! And
you’ll need to know your safety stock, because that’ll protect you against any unexpected
occurrences. Add your lead time demand to your safety stock… and voila! Once your stock
levels hit the total, it’s time to place a new order to replenish your supply.

Lead time demand - Shipping’s not instant!

New stock doesn’t arrive immediately. Even if your products are in stock, it’ll take your supplier
time to pack your order and even more time to ship it over to you. This waiting time is what’s
known as “lead time”.

So let’s put things into perspective. Imagine a business (let’s call it J Timewear) in the United
States sells watches manufactured in China. Assuming the supplier is always in stock and has a
warehouse full of watches ready to ship at a moment’s notice, it’ll probably take the supplier a
couple of days to pick and pack the watches. After that, the watches spend another five days in a
truck to the port, and from there, it takes about 30 days for a ship to travel from China to the
U.S.. Once the watches arrive, they spend another week in customs, and then another three days
travelling to J Timewear’s warehouse.

Calculating the lead time is easy: Just add everything up!

2 + 5 + 30 + 7 + 3 = 47 days of sales
Since it takes J Timewear 47 days to get a new shipment of watches, they’ll need to have enough
stock on hand to cover these 47 days of sales.

But knowing the lead time alone isn’t enough. You’ll also need to figure out the demand during
this period. Assuming J Timewear sells an average of 310 watches a month (310/31 = 10), they’d
be selling about 10 watches a day.

So the lead time demand for J Timewear is (47 x 10 = 470)... meaning J Timewear will need 470
watches to tide them over until their next shipment arrives, if nothing unexpected happens.

Safety Stock - When things go wrong

But sometimes, unexpected things happen. This can take the form of a sudden surge in demand
after some unexpected celebrity endorsement, and now your product is selling fast. Or perhaps
your supplier’s factory has experienced a breakdown and it’ll take a week for them to replace the
damaged component and get their machine up and running again.

And here’s where safety stock comes in. Safety stock is buffer stock you carry as a last defense
against unpredictable events that either deplete your stock (surge in demand), or unexpected
manufacturing time (your lead time skyrockets because the supply chain breaks down). Of
course you’d like to have enough safety stock to bring the likelihood of going out of stock down
to zero, but most of the time that’s not financially viable. After all, safety stock IS for a rainy day
that may never come! So how do we decide then on how much stock to keep on standby?

Here’s a simple formula that you can calculate based off your purchase and sales orders history:
Let’s continue the story of J Timewear. On an average day, they sell 10 watches. But during
weekends, they can sell as many as 15. As for lead times, their usual lead time is 47 days, but
during typhoon season (yes, in China, they have typhoons) , it can go up to as high as 54 days.

(15 x 54) - (10 x 47) = 340

This means J Timewear needs to have about 340 units of safety stock on hand to guard against
the unexpected (especially during typhoon season). Therefore, with 340 units in safety stock,
selling about 80 watches on a good week (10 per day on weekdays and 15 on weekends), J
Timewear will have enough stock to last a little over 4 weeks.

Your safety stock can cater for all the variations in demand and lead time, providing you with
enough stock on hand to weather unexpected occurrences. Everyone and their entire family
wants your products? It’s time to sell your safety stock. Supplier needs an extra week because
he’s caught in the middle of a typhoon? It’s time to sell your safety stock.

If your product is seasonal, like school supplies, you’ll have to adjust your safety stock level to
cater to peak season demand. Once the peak season’s passed, it’s time to reduce your safety
stock levels again, as more safety stock = higher carrying costs. After all, people are a lot less
likely to be buying a new set of school stationery in the middle of summer holidays as opposed
to right before a new semester begins.
The reorder point formula

To complete the story of J Timewear, their reorder point would be:

470 (Lead time demand) + 340 (safety stock) = 810

So once their stock hits 810 watches, J Timewear will need to place a new order with their
supplier. At 810 watches, they’ll have enough to last them as they wait for new stock to arrive
(470), while holding enough stock (340) as a buffer against an unexpected surge in demand or
supply chain problems.

Planning reorder points are a crucial part of inventory management. Setting your reorder point to
the optimum amount lets you cut down on excess spending, while ensuring you’ll have enough
stock for your customers even when things take an unexpected turn.

But how can you always ensure you’ll be able to place a fresh order whenever inventory levels
hit the reorder point? Keeping tabs on how much you’ve sold every day is easy when you’re
starting out with a single store. But as you start selling more and more, across different channels,
manually recording every sale becomes a pretty exhausting chore. And if you only tally up your
numbers on a weekly basis, missing the reordering point becomes a likely possibility.

If missing the reordering point sounds like it’ll be a concern, you may want to look into getting
an inventory management software system for your business. It’ll track your inventory
movement across all channels, and once your stocks hit the reorder point, you’ll be prompted to
place a new purchase order. That way, you won’t have to keep worrying about keeping an eye on
your inventory with the stock control software doing your work for you.

Automating your inventory processes means everyone wins. You won’t need to put items on
backorder and tell your customers “Oh, I’m sorry, we’re out of stock and we can’t get new stock
for another week” and disappointing them. As for your customers, they’ll soon know that you’re
a seller that’s always able to deliver, and now that you’ve won their trust, they’ll always be
coming back for more.
Advantages:

One of the key benefits of this system is that it allows a smooth inventory flow with no
halts in between. This further builds on the inventory discipline of your business.

Makes space to identify procurement issues and helps in resolving the same leading to a
smoother process.

Makes sure that the stock is available at all times and thus avoids any production glitches.

Unnecessary expenditure in stocking and maintaining the inventory is reduced.

Helps the business to take appropriate decisions by helping to track the entire
procurement procedure.

Introduction to factory dynamics

It refers to those terms which are directly or indirectly affect or effect the overall production.
Such as- WIR, Throughput time, Critical bottle neck calculation, Work scheduling, Working
law, Working ethics, Supply chain and logistics management etc.

What is throughput time?

It stands for arrival rate. This is the velocity or speed of production and it is calculated by
determining how many items have been produced on a certain period of time.

Throughput time can be calculated by little’s law.

WIP
Throughput time ¿
CT

Throughput time is the amount of time required for a product to pass through a manufacturing
process, thereby being converted from raw materials into finished goods. The concept also
applies to the processing of raw materials into a component or sub-assembly. The time required
for something to pass through a manufacturing process covers the entire period from when it first
enters manufacturing until it exits manufacturing - which includes the following time intervals:
Processing time: This is the time spent transforming raw materials into finished goods.

Inspection time: This is the time spent inspecting raw materials, work-in-process, and finished
goods, possibly at multiple stages of the production process.

Move time: This is the time required to move items into and out of the manufacturing area, as
well as between workstations within the production area.

Queue time: This is the time spent waiting prior to the processing, inspection, and move
activities.

The concept of manufacturing throughput time is primarily oriented toward the reduction of time
required by the manufacturing process, so that you can increase the amount of throughput
flowing through your system and thereby increase profitability. Throughput is net sales minus
totally variable expenses. The bulk of the time spent in manufacturing tends not to be in
processing, but rather in the inspection, move, and queue times noted above. Thus, it is easiest to
reduce manufacturing throughput time by eliminating as much inspection, move, and queue time
as possible.
Example of Manufacturing Throughput Time-

The production manager of ABC International wants to calculate the manufacturing throughput
time for its blue one-armed widget. He accumulates the following information:

Processing time = 3 hours

Inspection time = 0.5 hours

Move time = 1 hour

Queue time = 12 hours

Thus, the total manufacturing throughput time for the blue one-armed widget product is 16.5
hours. Further, the production manager has a golden opportunity to reduce the throughput time,
since the amount of queue time is nearly three-quarters of the total throughput time, and can
probably be reduced without too much trouble.

What is cycle time?

Cycle times mean total time for completing a single task. It also known as average time but to
calculate average time we have to take several cycle times.

The total time from the beginning to the end of your process, as defined by you and your
customer. Cycle time includes process time, during which a unit is acted upon to bring it closer
to an output, and delay time, during which a unit of work is spent waiting to take the next action.

In a nutshell, cycle time is the total elapsed time to move a unit of work from the beginning to
the end of a physical process.

(Note: cycle time is not the same as lead time).

Cycle time calculated based o 5 steps. Such as-

1. Take
2. Set
3. Process
4. Realize
5. Delivery
Cycle time can be calculated by little’s law.

WIP
Cycle time ¿
Throughut time

Little’s law is the theory of probability. Little’s law is used for reducing cycle time.

Reducing cycle time by using little’s law:

Increasing through put time.

Reducing WIP.
Introducing advance methods and technology for first work.
Introducing training secession.
Counseling secession.
Extra facilities and compliance.
Developing industrial engineering department.

Cycle Time vs. Lead Time

A lot of practitioners tend to confuse Cycle Time with Lead Time. Some people say Cycle Time
is the time between two successive deliveries, while others believe it is the time between
initiation and delivery.

In simple terms, Cycle time is the time starting when an operation begins to the point of time
when the operation ends. Then what is Lead Time?

Lead time starts when a request is initiated and ends with delivery. Let’s say a customer orders a
product on November 6. The company receives the order instantly, and delivers the product on
November 10, yet work on the product begins November 8.

Therefore, the Lead Time here is 4 days, while the Cycle Time is 2 days. Lead time represents
the time expended—but not the effort. You could have a Lead Time of 25 days yet spend only 2
hours working to solve the problem or create the product.

At first glance, Cycle Time may appear to represent effort, but it represents time, as well. That’s
why cutting cycle time should be the most important mantra for any Continuous Improvement
project.

How to calculate Cycle Time?

Cycle time is the time between commencement and completion of a process, therefore, in a
customer call centre; the cycle time for a customer phone call may be the time difference
between answering the call and call completion. In a manufacturing company, involved in large
capital products, the cycle time may similarly be the time from raw material receipt through to
the time the item of production finishes final inspection.

The formula for cycle time = 1/Throughput rate. Where: Throughput rate = (Units Produced or
Tasks completed)/ Time

Cycle Time calculation in a continuous process.

In the vast majority of instances, there will be numerous products or services being processed at
any one time, therefore the cycle time calculation needs to be modified as follows:

Cycle time = Average time between completion of units.

Example: Consider a manufacturing facility, which is producing 100 units of product per 40 hour
week. The average throughput rate is 1 unit per 0.4 hours, which is one unit every 24 minutes.
Therefore the cycle time is 24 minutes on average.

Cycle Time calculation for batch processing.

Consider a pharmaceutical company producing product in batch format. Each batch may consist
of 10,000 units of product. The cycle time is normally calculated as per the continuous process
previous, however, the batch is considered the unit of measure, so that the cycle time is give as a
batch cycle time.

Example: In a pharmaceutical company, 100 batches of product, of batch size 1000 units are
produced in a 40 hours week. The cycle time here is normally given as 24 minutes to produce a
single batch of 1000 units.

Cycle Time calculation in a service process.

The service industry covers a broad range of process types, such as meal preparation and
provision in restaurants, maintenance and repair of electrical and mechanical equipment, many
government bodies, the financial industry etc.. Measuring and continually reducing cycle time is
critical to continued success.

Example: Consider a restaurant serving 20 meals per hour. On average one meal is served every
3 minutes. If the cycle time can be reduced, then it may allow a higher throughput of customers
(if that is the focus of the restaurant).

Example: Consider a bank, where customers go into the bank to complete financial transactions.
If on average one bank counter employee can complete the transaction requests of 10 customers
per hour, then on average the cycle time of each customer is 6 minutes. Can this be reduced by
having the customer complete forms in advance of getting to the desk, or by simplifying
processes so that the cycle time per customer is reduced?

Reducing the cycle time should increase customer satisfaction, plus improve operating efficiency
for the bank.

WIP

What is Work-in-Progress (WIP?)

WIP means work in progress. That means how much work has to be done but has not done yet.
This is main cause of bottle neck.
There are several effective ways to reduce WIP and control bottle neck. Such as-

Calculating WIP level properly. For this we can use a simple formula. Such as-
Total output – total input.

Analyzing present SMV.

Performance evaluation.
Remaking work study.
Sharing capacity.
Adding additional manpower and machine.
Improving work station layout.
Better operator allocation
Introduction incentive system.
Using time saving tricks.

Work-in-progress (WIP) is a production and supply-chain management term describing partially

finished goods awaiting completion. WIP refers to the raw materials, labor, and overhead costs
incurred for products that are at various stages of the production process. WIP is a component of
the inventory asset account on the balance sheet. These costs are subsequently transferred to the
finished goods account and eventually to cost of sales.

Work in process (WIP),work in progress (WIP),goods in process,[1] or in-process inventory are

a company's partially finished goods waiting for completion and eventual sale or the value of
these items.[8] These items are either just being fabricated or waiting for further processing in a
queue or a buffer storage. The term is used in production and supply chain management.

Optimal production management aims to minimize work in process. Work in process requires
storage space, represents bound capital not available for investment and carries an inherent risk
of earlier expiration of shelf life of the products. A queue leading to a production step shows that
the step is well buffered for shortage in supplies from preceding steps, but may also indicate
insufficient capacity to process the output from these preceding steps.

WIP in construction projects

Work-In-Process in construction accounting identifies the value of construction projects which

are currently being worked on by the construction firm. To properly account for each project,
four values are needed for each project at the end of any given month (or period):

The Sales Price (excluding sales tax) for the project,

The total Cost Estimate for the project,
The Costs-To-Date,
 The Billed-To-Date.

By taking the Costs-To-Date divided by the Cost Estimate, the "percentage complete" for the
project is calculated. For example:

Assume a project is estimated to cost $70,000 by the time the work is complete

Assume at the end of December, $35,000 has been spent to date for the project

$35,000 divided by $70,000 is 50%, therefore, the project can be considered 50% complete at
December 31.

Calculation of the Percentage complete is a valuable tool in determining how much the client
should be billed - it is important that Billings, and even collection of these billings, are greater
than the costs expended to do the work. This ensures that the client is directly funding the
construction work, and that the contracting firm minimizes borrowing on behalf of the client.
Using the example above, suppose the following:

The Sales Price of the project is $100,000

$100,000 times 50% (the level of completion) = $50,000

Therefore, for the period ending December 31, the client should be invoiced at least $50,000 to
properly fund the work.

BREAKING DOWN Work-in-Progress (WIP)

WIP is a concept used to describe the flow of manufacturing costs from one area of production to
the next, and the balance in WIP represents all production costs incurred for partially completed
goods. Production costs include raw materials, labor used in making goods, and allocated
overhead.

The Differences between Job Costing and Process Costing-

For accounting purposes, process costing differs from job costing, which is a method used when
each customer job is different. Job costing tracks the costs (e.g., cost of materials, labor, and
overhead) and profits for a specific job, and it allows accountants to trace expenses for each job
for tax purposes and for analysis (scrutinizing costs to see how they can be reduced). For
example, XYZ Roofing Company provides their residential clients' bids for roof repair or
replacement; each roof is a different size and will require specific roofing equipment and a
varying number of labor hours. Each bid lists the labor, material, and overhead costs for the
work.
On the other hand, a process costing system tracks, accumulates, and assigns costs associated
with the manufacturing of homogenous products. Consider a company that manufactures plastic
combs. The plastic is put into a mold in the molding department and is then painted before being
packaged. As the combs move from one department (molding to painting to packaging) to
another, more costs are added to production.

How Costs Are Assigned to WIP

When the combs are manufactured, plastic is moved into production as a raw material; then labor
costs are incurred to operate molding equipment. Since the combs are only partially completed,
all costs are posted to WIP. When the combs are completed, the costs are moved from WIP to
finished goods, with both accounts being part of the inventory account. Costs are moved from
"Inventory" to "Cost of Goods Sold (COGS)" when the combs are eventually sold.

Factoring in Units of Production:

Accountants use several methods to determine the number of partially completed units in WIP.
In most cases, accountants consider the percentage of total raw material, labor, and overhead
costs that have been incurred to determine the number of partially completed units in WIP. The
cost for raw materials is the first cost incurred in this process because materials are required
before any labor costs can be incurred.

Implications for Investing:

WIP, along with other inventory accounts, can be determined by various accounting methods
across different companies. Thus, it is important for investors to discern how a company is
measuring its WIP and other inventory accounts. One company's WIP may not be comparable to
another. Allocations of overhead can be based on man-hours or machine-hours, for example.

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Bottleneck
In production and project management, a bottleneck is one process in a chain of processes, such
that its limited capacity reduces the capacity of the whole chain. The result of having a
bottleneck are stalls in production, supply overstock, pressure from customers and low employee
morale.[1] There are both short and long-term bottlenecks. Short-term bottlenecks are temporary
and are not normally a significant problem. An example of a short-term bottleneck would be a
skilled employee taking a few days off. Long-term bottlenecks occur all the time and can
cumulatively significantly slow down production. An example of a long-term bottleneck is when
a machine is not efficient enough and as a result has a long queue.

An example is the lack of smelter and refinery supply which cause bottlenecks upstream.

Another example is in a surface-mount technology board assembly line with several pieces of
equipment aligned. Usually the common sense is driven to set up and shift the bottleneck
element towards the end of the process, inducing the better and faster machines to always keep
the printed circuit board (PCB) supply flowing up, never allowing the slower ones to fully stop, a
fact that would be heeded as a deleterious and significant overall drawback on the process.

Identifying bottlenecks

Almost every system has a bottleneck, even if it is a minor one, if every system was running at
full capacity, at least one machine would be accumulating processes.[4] Identifying bottlenecks
is critical for improving efficiency in the production line because it allows you to determine the
area where accumulation occurs. The machine or process that accumulates the longest queue is
usually a bottleneck, however this isn't always the case. Bottlenecks can be found through:
identifying the areas where accumulation occurs, evaluating the throughput, assessing whether
each machine is being used at full capacity and finding the machine with the high wait time.
Since many flow units (e.g. customers in a shop, patients in a hospital) do not at all need the very
same treatment or service, business processes have to serve different needs. Processing times
thus might be quite different for each flow unit as well; even the path of flow units through the
process might differ. For such processes with so-called multiple flow units, we need new tools to
figure out which process step can be seen as the bottleneck.
Finding the bottleneck in a multiple flow unit scenario takes four easy steps:

Step 1: Determine the capacity of each resource in the process (m / activity time or units per
hour)

Step 2: Calculate the service demand for each of these resources considering multiple flow units

Step 3: Add multiple unit demand for every resource to calculate total demand for the resource

Step 4: Divide the total demand by the capacity of the resource to calculate the implied
utilization

The highest implied utilization indicates the bottleneck process step. To differentiate between the
implied utilization and the “regular” utilization, its best to keep this important difference in
mind:

Utilization = flow rate / capacity (always between 0% and 100%)

Implied utilization = demand / capacity (can very well exceed 100%)

The same calculation can also be done by looking at the required work time:

Step 1: Determine the work time capacity of each resource (e.g. 2 workers x 60 min = 120 min)

Step 2: Calculate the demand for work time at each resource considering multiple flow units

Step 3: Add multiple unit demand for every resource to calculate total demand for the resource

Step 4: Divide the total workload by the available time to calculate the implied utilization

Routing

Many small electronic devices such as PDAs and cell phones have changed our daily life over
the past years. A next step will be the embedding of their functionality and circuits directly into
textiles. In this paper we discuss for the first time, feasible methods and algorithms for
establishing a routing structure in textiles while utilizing standard printed wiring board (PWB)
tools. Our approaches focus on a woven textile with embedded copper wires, which guarantees
usual wearing comfort, and circuits with few chips running at few megahertz. We present
differences between regular PWBs and textiles regarding routing structure, space occupancy and
electromagnetic compatibility (EMC) along with possible manufacturing methods.
Key words: e-textiles, routing, textile packaging, System-on-Textile, wearable electronics

Introduction

Today's society increasingly relies on ubiquitous computing. In daily life, instantaneous access to
any kinds of information at any place is taken for granted. We are accompanied by many
electronic devices such as cell phones, PDAs, notebooks and MP3 players, which are more or
less bulky and not really wearable. Our vision behind wearable computing sketches future
electronic systems to be an unobtrusively embedded integral part of our everyday outfit. Some
attempts such as the Wearable Motherboard and the Wear- ARM already exist. Nevertheless,
they mainly consist of rigid or flexible printed circuit boards and hard boxes while their wearing
comfort cannot compete with normal clothing. Among other factors, they lack drapability, which
guarantees the typical textile like feeling (some textile terms are briefly explained in section
2.1.).

Our approach, however, utilizes conductive fabrics for signal transmission. In this manner,
conventional wires and entire circuit boards can be replaced by textile fabrics composing a
System-on- Textile. Inspired from PWB manufacturing, we call the technology for electronic
integration in fabrics textile packaging and the interconnection of electronic components on
fabrics textile routing. Preceding to this paper, systematic investigations of the electrical
performance of conductive textiles were already carried out by Cottet et al.

A drapable embedding of electronics in clothing would enable new applications, e.g. in the
medical field. The emerging field of medical prevention and rehabilitation necessitates
continuous monitoring of patient's health condition by having sensing devices close to the body.
The large area of clothing allows a distributed embedding of medical sensors and their
preprocessing circuits. Additionally, clothing itself could accomplish sensor functionality such
as temperature and posture sensing. Wearable computing and thus, textile-embedded electronics
ideally satisfies
such requirements since clothing offers large areas, unobtrusiveness and body proximity. Other
applications could be fashion or could lie in the typical wearable computing field of context
awareness and social interruptability where the wearable computer assumes the role of a
personal assistant. There, sensors such as accelerometers, gyroscopes and microphones are
embedded in clothing close to body joints. Based on sensors data and statistical methods, the
personal assistant identifies context of the user and provides situation-dependent support.

Scheduling in Production and Operation Management

Scheduling can be defined as “prescribing of when and where each operation necessary to
manufacture the product is to be performed.” It is also defined as “establishing of times at which
to begin and complete each event or operation comprising a procedure”. The principle aim of
scheduling is to plan the sequence of work so that production can be systematically arranged
towards the end of completion of all products by due date.

Principles of Scheduling

The principle of optimum task size: Scheduling tends to achieve maximum efficiency
when the task sizes are small, and all tasks of same order of magnitude.
Principle of optimum production plan: The planning should be such that it imposes an
equal load on all plants.
Principle of optimum sequence: Scheduling tends to achieve the maximum efficiency
when the work is planned so that work hours are normally used in the same sequence.

Inputs to Scheduling
Performance standards: The information regarding the performance standards
(standard times for operations) helps to know the capacity in order to assign required
machine hours to the facility.
Units in which loading and scheduling is to be expressed.
Effective capacity of the work centre.
Demand pattern and extent of flexibility to be provided for rush orders.
Overlapping of operations.
Individual job schedules.

Scheduling Strategies

Scheduling strategies vary widely among firms and range from ‘no scheduling’ to very
sophisticated approaches. These strategies are grouped into four classes:

Detailed scheduling: Detailed scheduling for specific jobs that are arrived from
customers is impracticable in actual manufacturing situation. Changes in orders,
equipment breakdown, and unforeseen events deviate the plans.
Cumulative scheduling: Cumulative scheduling of total work load is useful especially
for long range planning of capacity needs. This may load the current period excessively
and under load future periods. It has some means to control the jobs.
Cumulative detailed: Cumulative detailed combination is both feasible and practical
approach. If master schedule has fixed and flexible portions.
 Priority decision rules: Priority decision rules are scheduling guides that are used
independently and in conjunction with one of the above strategies, i.e., first come first
serve. These are useful in reducing Work-In-Process (WIP) inventory.

Types of Scheduling

Types of scheduling can be categorized as forward scheduling and backward scheduling.

Forward scheduling
Forward scheduling is commonly used in job shops where customers place their orders
on “needed as soon as possible” basis. Forward scheduling determines start and finish times of
next priority job by assigning it the earliest available time slot and from that time, determines
when the job will be finished in that work centre. Since the job and its components start as early
as possible, they will typically be completed before they are due at the subsequent work centers
in the routing. The forward method generates in the process inventory that are needed at
subsequent work centers and higher inventory cost. Forward scheduling is simple to use and it
gets jobs done in shorter lead times, compared to backward scheduling.
Backward scheduling

Backward scheduling is often used in assembly type industries and commit in advance to
specific delivery dates. Backward scheduling determines the start and finish times for waiting
jobs by assigning them to the latest available time slot that will enable each job to be completed
just when it is due, but done before. By assigning jobs as late as possible, backward scheduling
minimizes inventories since a job is not completed until it must go directly to the next work
centre on its routing. Forward and backward scheduling methods are shown in the following
figure.
 Forward and backward scheduling

Objectives of Scheduling-

o Meeting customer and finished goods inventory delivery requirements.

o To achieve the required rate of output with a minimum of delay and disruption in
processing.
o To have maximum utilization of men, machine and materials by maintaining a
smooth flow of materials along the production line.
o To prevent unbalanced use of time among departments and work centres with a
view to eliminate idling of men and machines.
o To complete the production at minimum total cost and to reduce the
manufacturing cycle time to the minimum.
o To deliver products in time as per the delivery schedule committed to the
customers.

Problems in Scheduling

Scheduling cannot be done perfectly due to the following problems:

 Lack of correct and up to date information concerning lead time, production time, lot
size.
Resources constraints, capacity shortages, delay in supply of materials, machine break
downs etc.
Absenteeism, lack of skill and experience in labor and labor inefficiency resulting in
actual time taken to complete a job exceeding the allowed time (i.e., standard time).
Type of production i.e., job, batch, process or continuous production.
Problems to balance the capacities of machines in the production line and also of work
centers in an assembly line.

Factors Affecting Scheduling-

Scheduling finalizes the planning phase of P.P.C. The following factors affect production
scheduling and are to be considered before finalizing the scheduling plan.

External Factors:

These are the factors which are not within the control of the organisation’s management. They
are dictated by the outside forces to which the management adjusts.

Such important factors are as follows:

 Customer’s demand-

This demand is estimated by the sales forecasting dep’t. Scheduling is based on the forecasts of
the expected sales of specific products in the continuous production. The forecast is made on the
basis of expected volume of business in case of intermittent production.

 Delivery dates of customer’s-

In a continuous or mass production with seasonal demand, the scheduling should be decided in
such a way that there is a balanced production throughout the year reducing the stock of
inventories with a constant level of production. In case of the intermittent production with the
seasonal demand, it may be adjusted by giving delivery on agreeable delivery dates to the
consumer orders.

 Stock of goods already lying with dealers and retailers-

This situation arises in case of continuous production of standardized goods. Usually the dealers
and retailers are maintaining certain stock levels with them. The scheduling should be based on
the stock position with the retailers and dealers.
Internal Factors:

The factors within the control of management should be manipulated in such a way that
objectives of the production function can be achieved most efficiently and economically.

Some important such factors are as follows:

 Stock of Finished Products with the Enterprise-

Where the production is made to stock, the scheduling should be adjusted to the stock of finished
products with the dealers. The new sales forecast should be made and the scheduling should be
done in the light of the fluctuations in the stock holding.

 Time Interval to Process Finished Products from Raw Material-

This is the time required to process every sub assembly, and the finished product from the raw
materials.

 Availability of Machines and Equipment-

The various machines and equipment have varying production capacities. Moreover their
occupancy scheduling can be prepared with the help of machine load charts.

 Availability of Manpower

The scheduling should be done in the light of the availability of the manpower. The production
rush should be adjusted to overtime working or hiring of the temporary labor.

 Availability of Materials-

Sometimes stock out conditions interrupts the production flow. Proper stock levels should be
maintained to facilitate scheduling in continuous production. In case of probable stock out of
strategic goods, extra efforts should be made to procure them as far as possible and the limited
stock in hand should be issued only for critical operations.

 Manufacturing Facilities-

The manufacturing facilities in terms of power requirements, material handling services, store
keeping and such other facilities should be provided in accurate quantities so that it may not
affect the smooth production flow adversely and facilitate the scheduling function.

 Feasibility of Economic Production Runs-

Under the economic lot production, the two costs i.e. set up cost and the carrying cost are
equated.

 Types of Manufacturing a Product-

This determines the proper scheduling procedure-

The difference is as follows:

Lot Manufacture:

In this case product is manufactured in lots or on job orders. It can be further divided as follows:

Manufacturing to Order-

Whenever orders go through the shops for separate parts, in single or multiple pieces, each part
has to pass through many processes. Assembly shall depend on all parts ready at same time. e.g.,
castings and stampings (finished and unfinished) both requiring assembly.

Manufacturing to Stock-

This is different from the previous one principally in that very large number of pieces is
involved, so it is more convenient to produce large quantities and put them into stock to be used
for assembly as required. Parts are produced through separate lots at predetermined intervals
over a period. In this case assembly is an independent operation and can run as long as parts are
available in stock.

Continuous/Mass Manufacture:

The case may be for single product, multiproduct or assembly product continuous manufacture.
In single product, it goes through a series of processes without assembly. Output is usually
calculated in weeks or months instead of by orders. The only change can be increase or decrease
in output as demand indicates.

In the multi- or assembly-product manufacture, parts rather more important parts are produced
continuously, each operation having a given output per-day, all being proportionately increased
or decreased as indicated by demand.

As far as scheduling is concerned this is equivalent to several streams of continuous manufacture

sub assembly, assembly and simultaneous final products increase or decrease with the output of
the parts/components.

Components of Scheduling:

Starting from the customer’s orders to delivery of finished products, the schedule cycle may be
divided into following steps. Every step shall require some time which may vary from order to
order. These steps will occur in the beginning in case of the standardized production processes,
but may be modified whenever there is a change in design, processing, procurement or sales
volume.

Preliminaries to Manufacture-

(a) Credit Checking Period:

This is very little for well-established customers and well-known companies.

(b) Time for Preparing Production Order by Sales Deptt:

It consists of expressing and rewriting the orders into production orders with some identifying
number, shipping date and authorizing the manufacturing deptt to proceed with production.

(c) Time for Engineering Department:

The manufacturing department and the engineering department will concurrently receive a copy
of production order and if necessary will proceed with the design, drafting, specification and bill
of materials etc.

Time Consumed in Production Planning-

The production control department is to determine the shipping date by fitting the work into the
current plant manufacturing schedule. Too liberal or tight schedules should be avoided.
Practically it is difficult to predict the actual course of events, but good approximation will help
in establishing various allowances.

Time taken by planning department for processing and onward transmission of the order to the
production department is known as production planning time. By overlapping the activities of
various departments much time can be saved.

Procurement Cycle Time-

Procurement cycle time is the time consumed for receiving, inspection of various raw materials
and purchased components parts. The activities of ordering, raw materials or parts, their
inspection and deliveries may be simultaneous, only the largest time among these should be
considered.

Time for Storage of Raw Materials-

The time between the receiving of the raw material and its delivery for production purposes is
known as raw material storage time.

Tooling Time-
The delivery dates may be delayed due to non-availability of tooling such as jigs, fixtures and
other tools. Thus these require planning well in advance by the methods engineering department.
When the procurement for materials or parts is started, the design and manufacture or purchase
of materials should also start. The availability of tools should be ascertained before they are put
on the job.

Processing Cycle Time in Factory-

The factory processing requires planning and scheduling which should give the shortest cycle
time commensurate with existing load and most economic utilization of available equipment
capacity.

Most of the processes are of over lapping nature as they are scheduled according to (i) the
available and open machine capacity (ii) time when materials can be obtained (iii) sequence in
which parts are required and (iv) coordination of sub assembly and assembly program.

The schedule will provide the net overall processing time beginning with the first part to the
finish of last. Thus the net factory time may be determined by subtracting the overlap time if any.

Time for Storage of Components/Parts-

This will be considered only if parts are manufactured in advance of schedule and must wait for
their turn for assembly or assembly in the store.

Transit Time-

The time consumed in moving the work between various departments. It must be taken into
scheduling.

Sub-Assembly Time-

In most cases it over laps with factory processes.

Final Assembly, Testing and Shipping Time-

Final testing time of the assembly can be calculated by totaling the time taken by each unit of
product in testing. Most of the times, units are inspected in groups. The net time from beginning
to finish is the time to be included in the schedule. In case of packing and shipping one unit, the
time consumed for this purpose should be taken into consideration.

Scheduling Procedure:

Scheduling normally starts with the master schedule typical form of which i.e. the master
schedule of a milling machine is shown following figure as described in the example.
A master schedule resembles control office which completes information regarding all the orders
in hand. Master schedule is a weekly breakdown of the production requirements. The total
capacity in any week can be calculated.

As the orders are received, depending upon their delivery dates they are recorded on the master
schedule. When the shop capacity is full for the concerned week newly acquired orders are
carried to next week and so on. So a master schedule is continuously updated, it tells the running
total of master schedule is basis for further scheduling techniques.

Scheduling Procedure for Different Types of Production:

The scheduling procedure varies from plant to plant and with type of production.

The following are different cases:

For Intermittent Production: It involves the following-

(a) Scheduling within the Order:

Relative dates at which each process on each component or lot shall be started or finished is
essential to be determined so as to fit it in other orders.

(b) Scheduling of Order in Relation to Other Orders:

In stock manufacturing this will depend upon the relative dates at which each component should
be completed for stock, whereas in case of customer production. This will depend upon delivery
date of order. Sequence of order to be assigned to each machine can be determined.

(c) Scheduling to Machine:

With the required completion date for an order, reference to a schedule of relative processing
dates will show when each process should be initiated. Reference to machine load records will
provide the nearest available date for starting. When all processes on all parts or lots have been
assigned to machines, scheduling is complete.

In custom order production, in the absence of rush orders, scheduling is very easy. In situations
like this, company must have at hand the exact load data to make detailed, accurate schedule for
keeping a tight production control to meet the delivery commitments. In production to stock,
manufacturing is done for stock and control problems are simple.

Gantt chart is normally used to give the detailed picture of the load and schedule of departments
or plants.
For Continuous Production-

In this case scheduling is a simple problem but to coordinate production with sales, inventory
levels, purchasing, engineering and financial operations, the careful planning is essential.

In case of single product continuous production, variation in the production can be achieved very
easily. In case of assembly product continuous production, scheduling problem increases. In
practice owing to the limitation of equipment manpower and materials, it is difficult to achieve
completion of all parts when required. This may be due to breakdowns, excessive rejection and
inaccuracy of estimates.

Example:

Prepare the master schedule for working on a milling machine for a month. From the past data it
is known that the machine works 20 hrs a day. So max number of M/C – hrs per week = 20 x 6 =
120

Now the scheduling is to be done in such a way that the maximum number of M/c – hrs should
not exceed 120 per week and should be below minimum number of M/c – hrs (say 6 machine –
hours)

Master Schedule:

For a Milling Machine.

Max. Productions =120 hrs.

Min. Production = 6 hrs. (say)

From this chart it is evident that the M/c is engaged in first week for 100 hrs, in second week for
85 hrs, in third week for 40 hrs and in the fourth week there is no load on the m/c. Now there is a
fourth job on this m/c.
If this new job takes less than 20 hrs in processing on that m/c then it can be directly loaded
either in first week or in second week or in 3rd or 4th. If the completion time is more than 20
hours then the job has to be loaded in different weeks or where there is no load.

The Objectives of Master Schedule:

It provides a means of keeping a running total of the manufacturing requirements.

It facilitates the production manager to plan in advance for any shifting necessity from
one product to another or for a possible overall increase or decrease in manufacturing
requirements.
It provides the required data for calculating the back log of workload ahead of each
machine.
With the help of master schedules the customer can be supplied with probable or
sometimes certain definite date of delivery after his order has been placed on the master
schedule

Advantages:

Very simple and easy to understand

It provides overall picture and current production schedule
Can be easily maintained by non-technical staff
Making and maintenance of this chart is cheap
In view of rush of orders certain percentage of total capacity can be reallocated.

Disadvantages:

Provides only overall picture and detailed operations are not indicated.
It does not provide detailed information, so this system is applicable for smaller plants.

Analytical tools
To defining a problem accurately, root cause analysis is one of the most important elements of
problem-solving in quality management. That’s because if you’re not aiming at the right target,
you’ll never be able to eliminate the real problem that’s hurting quality.

So which type of root cause analysis tool is the best one to use? Manufacturers have a range of
methods at their fingertips, each of which is appropriate for different situations. Below we
discuss five common root cause analysis tools, including:
 1. Pareto Chart
2. The 5 Whys
3. Fishbone Diagram
4. Scatter Diagram
5. Failure Mode and Effects Analysis (FMEA)

Pareto Chart

A Pareto chart is a histogram or bar chart combined with a line graph that groups the frequency
or cost of different problems to show their relative significance. The bars show frequency in
descending order, while the line shows cumulative percentage or total as you move from left to
right.

The Pareto chart example above is a report from layered process audit software that groups
together the top seven categories of failed audit questions for a given facility. Layered process
audits (LPAs) allow you to check high-risk processes daily to verify conformance to standards.
LPAs identify process variations that cause defects, making Pareto charts a powerful reporting
tool for analyzing LPA findings.

Pareto charts are one of the seven basic tools of quality described by quality pioneer Joseph
Juran. Pareto charts are based on Pareto’s law, also called the 80/20 rule, which says that 20% of
inputs drive 80% of results.

5 Whys
The 5 Whys is a method that uses a series of questions to drill down into successive layers of a
problem. The basic idea is that each time you ask why, the answer becomes the basis of the next
why. It’s a simple tool useful for problems where you don’t need advanced statistics, so you
don’t necessarily want to use it for complex problems.

One application of this technique is to more deeply analyze the results of a Pareto analysis.
Here’s an example of how to use the 5 Whys:

Problem: Final assembly time exceeds target

 Why is downtime in final assembly higher than our goal? According to the Pareto chart,
the biggest factor is operators needing to constantly adjust Machine A
 Why do operators need to constantly adjust Machine A? Because it keeps having
alignment problems
 Why does Machine A keep having alignment problems? Because the seals are worn
 Why are Machine A’s seals worn? Because they aren’t being replaced as part of our
preventive maintenance program
 Why aren’t they being replaced as part of our preventive maintenance program? Because
seal replacement wasn’t captured in the needs assessment

Of course, it may take asking why more than five times to solve the problem—the point is to
peel away surface-level issues to get to the root cause.

Fishbone Diagram
A fishbone diagram sorts possible causes into various categories that branch off from the original
problem. Also called a cause-and-effect or Ishakawa diagram, a fishbone diagram may have
multiple sub-causes branching off of each identified category.
Scatter Plot Diagram

A scatter plot or scatter diagram uses pairs of data points to help uncover relationships between
variables. A scatter plot is a quantitative method for determining whether two variables are
correlated, such as testing potential causes identified in your fishbone diagram.

Making a scatter diagram is as simple as plotting your independent variable (or suspected cause)
on the x-axis, and your dependent variable (the effect) on the y-axis. If the pattern shows a clear
line or curve, you know the variables are correlated and you can proceed to regression or
correlation analysis.
Failure Mode and Effects Analysis (FMEA)

Failure mode and effects analysis (FMEA) is a method used during product or process design to
explore potential defects or failures. An FMEA chart outlines:

Potential failures, consequences and causes

Current controls to prevent each type of failure

Severity (S), occurrence (O) and detection (D) ratings that allow you to calculate a risk priority
number (RPN) for determining further action

When applied to process analysis, this method is called process failure mode and effects analysis
(PFMEA). Many manufacturers use PFMEA findings to inform questions for process audits,
using this problem-solving tool to reduce risk at the source.
Problem analysis tools for apparel industry-
ISHIKAWA is also known as fish bone analysis. It is also known FISHIKAWA/ FISH BONE/
HERRING Bone cause and effect diagram. This method has been invented by “KAORU
ISHIKAWA” In 1968 which should the specific event.

This method or diagram has been in use since then specially product design, development and
manufacturing sector. This diagram focuses on each and every cause or reason for imperfection
in the work and helps to eliminate the problems that will occurs.

This system includes several elements based on which the system works. Such
as-

People (anyone involve with the process )

Method ( how the process is performed and the specific requirement for doing it. Such as-
procedure, policies, rules and regulation, law etc )
Machineries (any computer, equipment, tools etc required to perform the job )
Material (raw material, stationeries etc )
Measurement (data generated from the process that are used to evaluate its quality )
Environment (the conditions such as- location, time, temperature and culture in which the
process operates )
Production problems find out

People Method Measurement

 Child labor Time basis Late present

 Demotivated Station to station distance Low intensive
 Lazy
 Illiterate

 Old machine Petrol using Unhealthy workplace

 Manual m/c Utility Toilet problem
 Parts problems

Machine Material Environment

For a manufacturing industry Ishikawa/Herring bone generally works in

5M’S rules. These are:-

1. Man (physical work, brain work)

2. Machine (Technology)
3. Method (Process)
4. Material (Raw material and information)
5. Measurement ( Inspection)

Note: In some manufacturing industries 5M is replaced with 8M’S. Such as-

6. Mother nature (Environment)

7. Money (Capital and Management)
8. Maintenance.

8P’S used in marketing industry while protecting Ishikawa.

Product (Goods, Service, Materials)

Price
Place
Promotion
 People
Process
Physical evidence
Packing

5S used in service industry.

Surroundings
Suppliers (Service provider)
System ( Method, Working procedure, Process)
Standard documentation skill
Scope of work

Root cost analysis

Direction of applying root cost analysis-

Agree on the problem statement. (This is written on the mouth of the fish, be as clear and
specific as you can about the problem. Be aware of defending the problem a terms of
solution)
Agree on the major categories of causes of the problem ( Written as brunches of the
backbone or rib of the fish or bone of the fish. Here 8P’S, 8M’S and 5’S will be the
major categories)
Brainstorm all the possible causes of the problem. (Ask all the possible causes with W.H
question regarding the problem. The answer will be written as per category).
Ask again and again “why does this happen?” about each cause. (Also write down the sub
causes of the problem).
Continue to ask why and general deeper level of causes.

These will you to identity and then address root cause to prevent future problem.

Tips for applying root cause analysis-

Use the fishbone diagram tool to keep the team focused on the causes of the problems
symptoms.
Consider drawing a fish on a flip chart or large dry erase board.
Make sure to leave enough space among the major categories of the diagram so that you
can act minor detailed cause’s letter.
 When you are brainstorming causes consider having team members write each cause on
sticky notes, going around the group asking for each person for one cause. Continue
going through the round, getting more causes until or ideas or extracted.
Encourage each person to participate in brainstorming activities and to voice their own
opinion.
Note the 5 why’s technique for better diagram making .( keep asking why until you get
the root causes).
Use multi voting technique t identify or choose root cause from all the idea gene raised

Different types of problem solving tools applied in apparel industry

A3
Barrier analysis
8 discipline problem solving
Factor analysis
Failure mood and effect analysis.
Fault tree analysis.
Forensic engineering analysis.
Multiple regression analysis.
Multi variety linear regression analysis.
Orthogonal defect classification analysis
RCASEX (Root cause analysis solver engine).
Creative problem solving tools.
Collective intelligence analysis.
Divergent thinking.
Grey problem analysis.
Innovative analysis.
Instrumental analysis.
Problem statement analysis.
Problem structuring method analysis.
Sub goal leveling analysis.
Travel shooting analysis.
Wicked problem solving analysis.
Cause and effect analysis.
Ishikawa / Herring bone / Fishikawa.
Divergent thinking
Divergent thinking is a thought processing or method use to generate creative ideas by exploring
many possible solutions. It is also known as cognitive thinking.

It follows a particular set of logical step to arrive advance solution, which in some cases isn’t
correct solution.

Barrier Analysis
Barrier analysis is a ratite assessment tool use in behavior change program .The purpose of
barrier analysis is to identify behavioral determinates. So that more effective behavior changes,
Communication massage, Strategies and Supporting activities can be developed.

Barrier analyses is most commonly use in following sector-

1. Self efficiency
2. Social Norn’s
3. Positive consequence
4. Negative consequence

A3 problem solving
The name A3 problem solving deride from the paper name on which the problem is solved