Late Night Discussion (proximity to the market) Ing.Jaromír Skorkovský,CSc.; KPH-ESF-MU Brno 5_3 WP-00090-C~Hot-Strip-Mill-Iron-Works-Pittsburgh-Pennsylvania-Posters Chilavert-ShopFloor-720131 automotive-assembly-line reinforced-plastic-inventory 426668487_150256dad2 ferraris Zobrazit obrázek v plné velikosti. C014_Boone_Scenic_Valley_Railroad_Boone inventory 5_3 ship1 TeenDriver man_driving_car Raw material stock Part Production Part stock Assembly line Finished good stock Slitting and leveling Raw material stock (parent coils) Transport Iron Mill Transport Car dealer Dealer stock ferraris Customers Car stock Transport Artic Automotive supplier Car Manufacturing Processed steel supplier Stock Delivery Suppliers 18 11 Slitting Levelling Shearing Combi Pressing Polishing Stock Dispatch auto Customer Packaging Receipts Subloads Loads Quarantine of the def. items Decision :Quality Management Input of the defective Items Batch generations : AAAAAA, AAAAAB, AAAAAC,…. Dispatch Management Allocations Packaging and batches Call-Offs Register of work spent in Production Moulds Reservations Bar Codes Reservations Bar Codes Planning dynamicslogo Automotive supplier Supply Chain Automotive II Processing I Inventory- RM Inventory-Parts Inventory-FG Work in Progress Processing II Inventory- RM Processing I Assembly Inventory-FG Dealer 1 Dealer N Dealer´s Inventory LEAD TIMES Shipping Time Shipping Time Shipping Time Shipping Time Customer 1 Customer M LEAD TIME Parts LEAD TIME Assembly Buffer –FG Stock Reserve in days Buffer –Parts Stock Reserve in days Buffer –RM Stock Reserve in days Dealer´s Inventory Processed steel supplier Car Manufacturing Inventory-Parts Inventory- RM Processing I Assembly Inventory-FG Shipping Time LEAD TIME Parts LEAD TIME Assembly Buffer –FG Stock Reserve in days Buffer –Parts Stock Reserve in days Buffer –RMStock Reserve in days Supply Chain Automotive III 14 days 20 days 2 days 5 days Inventory-Parts Inventory- RM Processing I Assembly Inventory-FG Shipping Time LEAD TIME Parts LEAD TIME Assembly Buffer –FG Stock Reserve in days Buffer –Parts Stock Reserve in days Buffer –RMStock Reserve in days 14 days 6 days 2 days 80 days 5 days 5 days 30 days 2 days Car Manufacturing I (e.g. JAPAN ) Car Manufacturing II (e.g. USA) Redundant capacities Redundant capacities Inventory-Parts Inventory- RM Processing I Assembly Inventory-FG Shipping Time LEAD TIME Parts LEAD TIME Assembly Buffer –FG Stock Reserve in days Buffer –Parts Stock Reserve in days Buffer –RMStock Reserve in days Supply Chain Automotive IV 14 days 20 days 2 days 5 days Inventory-Parts Inventory- RM Processing I Assembly Inventory-FG Shipping Time LEAD TIME Parts LEAD TIME Assembly Buffer –FG Stock Reserve in days Buffer –Parts Stock Reserve in days Buffer –RMStock Reserve in days 14 days 6 days 2 days 2 days 5 days 5 days 30 days 2 days Car Manufacturing I (e.g. JAPAN) Car Manufacturing II (e.g. USA) Dealer´s Inventory Dealer´s Inventory 80 days Dealer´s Inventory Dealer´s Inventory Dealers in USA Dealers in USA 10 days Redundant capacities Redundant capacities Some facts I •If the company is not producing to firm order, than inventory in front of assembly must be bigger, in order to react as fast as possible to the unexpected market demand • •To boost (revive) sales every company business is driven by so called model-year-change, which means, that all FG are declared obsolete and the companies (dealers) must get rid of them within a matter of weeks. Who is giving the rebates (Czech „vratka“, „vrácení peněz“)? • •80 days of FG in USA were moved to the dealers, they paid up front the merchandise (cars) to the car producers and dealer´s collateral and pawn (Czech „zastavárna“, pledge :„zástava“) is all cars themselves • •As long as the end customer did not purchase the car it definitely still belongs to the manufacturer- means inventory is liability – burden (Czech : „závazek“) • •Japanese are closer to American markets (e.g. 30 days only) in contrast to USA producers, where you can calculate with 80 days • •Despite the tremendous investments of US producer to Automation, Logistics, and TQM, still the proximity to the market is critical. • • • • Comments : FG=Finished Good • RM= Raw Material Some facts I •Where is the core problem? How to break devastating bind of unnecessarily big inventory of FG ? • •In financial report of car manufacturer the dealer´s inventory are registered as a completed sale !!!! • •If the manufacturers take this money off the dealers back, this will be interpreted as a huge drop of sales • •Probability of sales (the forecast must be carefuly introduced in order to purchase RM and to plan more accurate the level of finished part inventory buffer and levels of FG inventory • •Design you own car ( configuration tool ) – motor, hoods, doors, etc. – in time of the design, which is done by customer the car is still not produced. • •Logistical problem to add a few dozen of components to already existing tens of thousands that were all the time required before - it would be a peace of cake. • •The resulting proximity will be lets say no more than one months. • • • • • • • ERP system as a tool to solve and support problems such as: •purchase of the row material (planning and ordering) based on : –replenishment having reason in planned production orders –replenishment having reason in expected production orders (forecasts) –replenishment having reason in safety stock levels •acceptance of customer requirements (sales order) and planning production orders •EDI communication and call – offs generation •warehouse management •financial management and statistics •quality management • See next slides See next slides factory Before implementation ERP After implementation ERP more%20factory%20pics This could be not a fairytale.. ERP stock management system and location structures 18 11 10 5 1 COILS 3317743 quarantine IMG_3135 inventory03 Production Subcontractor Inventory locations Work in progress Customer Consignment MAD 180px-Ilia_Efimovich_Repin_(1844-1930)_-_Volga_Boatmen_(1870-1873) gorbel-crane-freestanding-aluminum-bridge-325 eot-new3 TRANSFERS ERP Transakce - položky DB ERP Partneři Zprávy Náhledy sample2002-Graphs Informace Informace (trendy) Znalost metod řízení procesů a metrik Rozhodnutí Podnik keys Klíčová znalost keys Klíčová rozhodnutí Basic ERP Structure I Basic ERP Structure I Purchase Order Sales Order Vendor Item 1 Item 2 Customer Zobrazit obrázek v plné velikosti Inventory iron_mill_steam_hammer_forging king_arial%201 Quality management simplified diagram IMG_7068_4 eot-new3 A B C D 1 2 3 4 inventory03 aida_200_ton_press_x64z 5 Customer 1 quasquai Purchase Order Purchase Receipts Production Order MAD Sales Order Internal Quality Incident Card Damage Type Comments Stock Batches Weights Corrective Action Responsibility External Quality Incident Card Scrap Scrap%2520Metal%2520VIII Release 040929_rfoster_mp_ict_trafficlights_sensor Disposal (devaluation) istockphoto_2407400_devaluation_of_money Rework rework1 Purchase management simplified diagram Purchase Orders Row Material Purchase Plan Customer 1 Customer N quasquai fotokolaz2 Customer Requirement 1_1 Customer Requirement N-1 Sales Order 1-1 Sales Order N-1 Modification Modification Current New Purchase Order P1 Purchase Order P9 Safety stock.. Weeks.. Hours-Days.. inventory03 Inventory Availability B_BudgetMoney Sales Budget Production(Sales) Forecast Plate%2520Mill Call-Offs EDI REASON REPLENISHMENT Purchase management simplified diagram king_arial%201 Purchase Order Header – Vendor and condition specification istockphoto_477343_delivery_depot_ready_for_branding eot-new3 oimg_GC01954725_CA02002364 A B Y Z Quality checking oimg_GC01954725_CA02002364 GRID Inventory Thanks for Your Attention