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CHAPTER7ManagingMaterialsFlowCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-2MaterialsManagementActivities•Anticipatingmaterialsrequirements•Sourcingandobtainingmaterials•Introducingmaterialsintotheorganization•MonitoringthestatusofmaterialsasacurrentassetCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-3ObjectivesofIntegratedMaterialsManagement•Lowcosts•Highlevelofservice•Qualityassurance•Lowleveloftied-upcapital•SupportofotherfunctionsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-4DifferencesBetweenInboundandOutboundTransportation•Marketdemandthatgeneratestheneedforoutboundmovementismoreuncertainandfluctuating•Inboundtransportationtendstoinvolvebulkrawmaterials,supplies,orparts•FirmsexerciselesscontroloverinboundtransportationduetototaldeliveredpricingprogramsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-5TypesofForecasts•Demandforecast•Supplyforecast•Priceforecast•Long-term•Midrange•Short-termCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-6TotalQualityManagement(TQM)theapplicationofquantitativeandhumanresourcestoimprovethematerialservicessuppliedtoanorganization,alltheprocesseswithintheorganization,andthedegreetowhichtheneedsofcustomersaremet-nowandinthefuture.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-7AdministrationandControlofMaterialsFlow•Kanban/Just-in-timesystems»Kanban(ToyotaProductionSystem)»JIT&JITII•MRPsystems»Materialsrequirementsplanning(MRPI)»Manufacturingresourceplanning(MRPII)•DRPsystems»Distributionrequirementsplanning(DRPI)»Distributionresourceplanning(DRPII)Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-8BenefitsResultingfromImplementingJust-in-Time•Improvedinventoryturns.•Improvedcustomerservice.•Decreasedwarehousespace.•Improvedresponsetime.•Reducedlogisticscosts.•Reducedtransportationcosts.•Improvedqualityofvendorproducts.•Reducednumberofvendors.•Reducednumberoftransportationcarriers.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-9ElementsofanMRPISystemInventorytransactionsCustomers’ordersForecastsEngineeringchangesMasterproductionschedule(whichproductstoproduce,inwhatquantity,andwhen)Bill-of-materialsfile(productstructureandrouting)Inventorystatusfile(finisheditems,workinprogress,plannedorders)PlannedschedulesandvariousotherreportsMRPIsystemSource:MCBUniversityPressLtd.,AmrikSohal,andKeithHoward,TrendsinMaterialsManagement,InternationalJournalofPhysicalDistributionandMaterialsManagement17,no.5(1987),p.11.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-10ElementsofanMRPIISystemMaterialsrequirementsplanning(MRP)Capacityrequirementsplanning(CRP)ExecutecapacityplansExecutematerialplansRealistic?Order(productionplan)Order(productionplan)InventoryrecordsYesNoSource:KarlA.Hatt,‘What’stheBigDealaboutMRPII?”WinningManufacturing5,no.2(1994),p.2.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-11ElementsofaDRPIISystemSource:“HowDRPHelpsWarehousesSmoothDistribution,”MondernMaterialsHandling39,no.6(April9,1984),p.53.ModernMaterialsHandling,copyright1984byCahnersPublishingCompany,DivisionofReedHoldings.DistributioncenterDistributioncenterDistributioncenterDistributioncenterCustomersDistributioncenterDistributioncenterRegionalwarehousePlantwarehouseRegionalwarehouseDistributionresourceplanning7-11aCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin7-12ElementsofaDRPIISystem(cont.)Source:“HowDRPHelpsWarehousesSmoothDistribution,”MondernMaterialsHandling39,no.6(April9,1984),p.53.ModernMaterialsHandling,copyright1984byCahnersPublishingCompany,DivisionofReedHoldings.PlantwarehouseFinalassembly(manufacturing)SubassemblyBSubassemblyCSubassemblyAPartCRawmaterialsPartCPartDPartBPartEPartAMaterialrequirementsplanning7-11b