FLOW SYSTEMS

Any company that has decided to implement flow manufacturing or is trying to manage an existing flow environment will have some very specific system software functionality needs.

Software is a difficult issue for most companies. You need software to run your business efficiently. Acquiring off the shelf products is the best choice, but the application may not do what you want, or it may force you to change the way you want to do business. Custom software, while tailored specifically to your needs, can be incredibly expensive and time-consuming to develop and maintain. Updating software to continually meet a changing business environment can be next to impossible.

Most manufacturing companies today are using integrated ERP/MRP manufacturing systems to run their factories and businesses. ERP consists of a large number of integrated modules, and is intended to provide software functionality to virtually all aspects of the manufacturing business, across physical locations. There are hundreds of different ERP software systems available on the market today; the largest vendors include SAP, Oracle, JD Edwards, SSA GT and Baan. There are few manufacturing companies in the U.S. today that are not using some form of MRP/ERP software. The methodology inherent in MRP /ERP is what we call traditional or scheduled manufacturing, and virtually all of the ERP packages are designed using these methods.

The global conversion to flow manufacturing is prompting a fresh look at these software tools and systems. ERP/MRP systems were not designed to support specific flow manufacturing requirements, although many functions remain the same. The biggest differences between flow and scheduled manufacturing are in the way that ERP/MRP handles production planning and shop floor functions. ERP tends to be batch-driven, scheduling in daily or weekly buckets, and assumes infinite capacity. The work order and pick list methods are examples of push methods. The ERP logic attempts to push process and planning information through the Bill of Material. scheduling start or release dates for both final and subassembly levels. Process-oriented line designs and pull methods are not used. While ERP/MRP software vendors are certainly aware of these differences between flow and traditional manufacturing, flow methods represent major changes to their software, and so improvements have been slow in coming.

A further concern for companies needing to use software tools is the accelerating rate of change in our economy and world. Traditional application development normally takes a long time. The typical estimate from the IS department for any software change, however minor, is "six months and sixty thousand dollars". By the time the enhancements are implemented, the business requirements might have changed. Traditional software development takes too long to create, and it is too hard to modify.

What are the new system requirements in a flow manufacturing environment? Flow-based manufacturing software must support three main functional requirements: initial factory process design, material and supply chain pull methods, and daily production planning and execution. The list of requirements includes the following capabilities:

• Kanban sizing database
• Process relationship documentation
• Process flow maps
• Standard work definitions
• Standard time maps
• Process-based throughput volume and takt time calculations
• Rework, scrap, and options maps
• Workstation definition
• Graphic work instructions
• Finite capacity planning (APS)
• Sequencing tools
• Flow metrics tracking and reporting

If commercially available software to provide this kind of functionality is not available (yet), the alternative is to develop custom tools. How can we do this efficiently? Custom software is notoriously expensive, buggy and takes a long time to develop. While there is no magic solution, methods and tools have been offered for years to shorten the application development time. The most widely distributed and used development tool is Microsoft's Visual Basic development environment. VB applications abound, and certainly compared to the application development environments of the past, progress has been made. For some types of applications, VB is a good development platform, especially when integrated with a strong database server. For other types of applications, however, even VB is too slow and inflexible. Enhancements and modifications can still be painfully time-consuming. In general, custom (and commercial) application development is expensive, slow, inflexible, high maintenance, buggy and often out of date before the development is even completed, and that fact has not changed.

Flow manufacturing companies and small software development companies have struggled with these issues for many years. If developers want to provide highly customized, high performing tools to their internal or external clients, they will have to find a new way. They need to be able to deliver the functionality their clients require, and respond to changes as the world changes, without requiring months of time and effort. The best alternatives being applied today are to use PC-based tools.

It needs to be acknowledged up-front that not all applications are good candidates for this type of application development approach. Accounting information. for example. needs to be in a highly controlled environment. backed up. and protected from unauthorized access. If the information needs to be accessed on a real-time basis, is shared by many users, or the users are dispersed geographically, an ERP system is often the best solution. The types of information that is best suited for a shared and distributed MRP /ERP environment include:

• Accounting and Finance
• Purchasing
• Engineering and Bills of Material
• Inventory
• Order Entry
• MRP/Long range planning and forecasting

ERP /MRP REVIEW

One of the more obvious opportunities for flow manufacturing companies is to make sure that they are using their existing systems to their full capability in support of flow manufacturing. A survey of existing ERP capability will show that most of the functionality of an existing ERP system will still be used in a flow manufacturing environment. albeit in different ways. For example. inventory transactions to receive. move. scrap and relieve inventory quantities will still be done in a flow environment, but we expect the transactions to be simplified and reduced significantly. The software itself is probably already adequate.

Before gaps can be identified in the existing software, a good understanding of the "to be" flow requirements needs to be developed. and a complete review of the legacy software capabilities needs to take place. The outcome of this analysis will identify areas where policies and procedures need to be updated, areas when the legacy system itself needs to be enhanced, and areas when missing functionality will be addressed via stand-alone or third-party solutions.

FLOW APPLICATIONS

Flow-related applications can often either be more loosely integrated with MRP/ERP, or run independently. Loose integration suggests that flow manufacturing data can be shared with an MRP/ERP system, but with a simple data transfer method and normally not on a real-time basis. The criteria for determining whether the information needs to be stored in a central ERP-type database or not depends on several factors: sensitivity, criticality, frequency of change, difficulty of integration, need for real-time access. The more tightly the information needs to be integrated within a large MRP / ERP system to be useful, the greater the development risk and the longer the development time. The types of flow manufacturing information that we can consider for stand-alone or loose integration include:

• Kanban sizing
• Flow line design
• Daily production planning
• Line design simulation modelling
• Supply chain tools

Loose integration can take the form of a flat file transfer between the application and the MRP /ERP system, possibly done overnight on a daily basis. Real-time integration, while theoretically possible, is not a realistic goal or need for the types of flow applications discussed here.

Actual applications have been developed and are being used successfully by flow practitioners for all of the functions presented in this chapter.

MATERIAL KANBAN MANAGEMENT

The case for integration is much stronger, however, when we look at the data requirements to manage a material kanban system. The management of the kanban pull system is something we do frequently, and in fact it requires daily management to perform well. We are also drawing on more of the data that resides in a traditional ERP system: part numbers, inventory balances, Bills of Material. supplier and inventory transactions. One of the key inputs to our kanban sizing formula, the Forecasted Daily Usage would normally come from our existing MRP/ERP system. While an initial kanban sizing calculation would be done up-front, we are willing to recalculate our kanban-sizing database much more often than we are willing to redesign our entire line, and it is much easier to do so. Periodic adjustment of the kanban sizing to match changes in customer demand is expected and prudent.

Where should we store our kanban information? Since we are drawing on legacy data with more frequency, a strong case can be made for making kanban an integrated function to your MRP /ERP system. It is interesting to note that ERP vendors typically add kanban as one of the first flow/lean enhancement to their systems, and that many ERP systems already have some kanban capability. On the other hand, there are large companies today that are managing their Kanban systems quite well in an off-line environment, using loose integration like flat-file transfers to keep their information up to date. An off-line kanban application is quite simple to create, and can be an interim strategy while the cost and effort of creating an integrated solution can be assessed.

SUPPLY CHAIN TOOLS

One of the ten characteristics of a flow-manufacturing environment is a tight relationship and integration with suppliers. One of the fundamental requirements is the communication of changing requirements with suppliers so that material delivery surprises don't happen often. It is important to remember that the elimination of inventory from both the shop floor and from the supply chain brings with it an element of risk: if the supply is not consistent and of high quality, the benefit of reduced inventory will quickly be wiped out by the inability to build products and deliver them on time. We recommend caution when it comes to raw material reductions. Reducing raw materials without a strong supply chain strategy is an invitation to headaches or disaster.

The new requirements of flow manufacturing and suppliers has to do with an increased need for flexibility and response, and the introduction of pull methods. We do not want to simply push inventory upstream in the supply chain. From a systems perspective, supply chain is a highly integrated function that includes inventory, material planning, demand information and Bills of Material. Companies will continue to use their MRP/ERP system to do material planning, and supply chain capabilities like EDI, auto-fax and material triggers are already a part of many ERP systems. Integration of material planning with the new Kanban system, so that suppliers can do a better job of internal planning, is often the missing piece of functionality.

FLOW PRODUCTION PLANNING

The planning requirements for flow manufacturing should be considerably simpler than in a scheduled, traditional environment; otherwise you're doing something wrong! One of the goals of flow is to replace complex scheduling with pull signals, so that ideally only one point in the line needs to be formally planned. Subassemblies and independent processes in a flow environment are connected with Kanban signals, and are not scheduled as independent entities. Paperwork should be simplified or eliminated, while work orders and pick lists are no longer used. Even with all of these advantages, many significant planning challenges remain in a flow environment:

• What is the right sequence of customer orders?
  It could make a big difference in how the line performs.
• Do I have the materials I need? Why would I even start work if I don't have all of the material? What do I do about "lumpy" orders? Customer demand is not inherently smooth.
• How do I give my customer a valid delivery date? With a backlog of orders, the actual completion date is a moving target.
• How can I optimize setup times? If I don't do a good job of planning for setups, I could be in real trouble from a delivery and capacity viewpoint. What impact does my plan have on my Kanban sizing? Does my Kanban design support what I want to do today?
• How many people do I need today? I don't want to overstaff or under staff.
• What happens to my plan if a machine goes down? All of my due dates are now at risk.
• How can I plan for the future? When will it run out of capacity? Can I perform what-if analysis? What happens when my customer changes priorities? They want it now. What does this do to all of my other orders?

The methodology of choice for shop floor planning in a flow environment is Advanced Planning and Scheduling, or APS. APS is a proven method for the planning and optimizing of manufacturing resources, both labour and machine. It performs finite capacity planning, and considers the impact of setups and changeovers, preventive maintenance, shifts and actual work content. APS will also attempt to optimize customer orders, based on specific optimization goals. In some environments the goal may be setup reduction; in others it could be smoothing the workflow. Companies have found that the APS planning logic and flow manufacturing pull systems work well together, and that APS can support the pull philosophy.

There are many software vendors that offer APS solutions, most of which are tightly integrated with MPR/ERP systems. The integration and implementation effort is typically large for these types of APS systems, and the risk is also high. The percentage of APS systems that are still in use one year after implementation is depressingly low. The fault is not with the APS methodology, but with the difficulty of integrating complex systems and maintain the input data at the necessary very high level of accuracy. Add to this functional risk the fact that these systems are usually very expensive, and Return On Investment (ROI) becomes hard to find.

An alternative to large and expensive integrated APS planning tools is a loosely integrated, PC-based approach, using the same planning algorithms but a much simplified software environment. This approach has been taken with success by several large manufacturing companies, and we expect the trend to continue.