Reduces time to shipment with lean inventory
Just in time manufacturing uses item-based lead time and supply pipeline settings to generate jobs and purchase orders in response to current demand. Just in time principles are widely accepted as the most effective way to reduce time to shipment while keeping inventory lean and efficient.
Just in time replaces traditional planning methods
Just in time planning replaces the traditional planning methods used by most small businesses in the following ways.
Replaces forecast planning with supply pipeline planning
Many small businesses use forecast planning methods such as future job explosions and blanket purchase orders to align future supply with projected demand. Forecast planning is prone to shortages and propagates over-stocking because supply can never be perfectly synchronized with actual demand and inventory easily gets out of control.
By contrast, just in time manufacturing uses supply pipeline planning based on reorder points and minimum order quantities to generate demand-driven jobs and purchase orders at self-adjusting intervals, which minimizes shortages and prevents over-stocking.
Replaces hard linking with natural linking
Many small businesses make products to order by hard linking multi-level jobs and purchase orders to each sales order. When an entire product structure is forcibly made to order, each component in the structure gets its own job or purchase order, even when quantities are inefficient and other jobs require the same item. Hard linking propagates excessive numbers of inefficient jobs and purchase orders and prevents commonly used items from being planned for stocking to reduce lead times.
By contrast, just in time planning generates demand-driven jobs that link naturally level by level when items are made to order, but replenish stock independently for items planned for stocking. This streamlines the job schedule with fewer and more consistent jobs and enables strategic stocking of key subassemblies to reduce lead times and times to shipment.
Replaces manual planning with demand-driven jobs and POs
Many small businesses create jobs and purchase orders manually from static shortage reports and BOM explosions. Static shortage reports lack time-phasing, which means items are often ordered far earlier than needed, and manual planning is highly vulnerable to human error. BOM explosions artificially isolate demand into product structures and fail to account for interdependent demand among products.
By contrast, just in time planning generates demand-driven jobs and purchase orders only when needed and in response to interdependent demand. Demand-driven jobs and purchase orders are foolproof because it is impossible for any demand to fall through the cracks and not be actioned upon.
Time to Shipment MRP takes just in time to a new level
Time to Shipment MRP is a unique version of just in time manufacturing that combines the basic principles of just in time outlined above with the following innovations for small business.
Time to Shipment Planning
Most small businesses establish sales order ship dates by guesswork and pad those dates to provide safety buffer. Guesswork and padded dates are not competitive in the Amazon age. DBA enables guesswork to be replaced with a time to shipment strategy that provides customers with reliable and consistent ship dates.
Time to Shipment targets establish sales order required dates and are calculated from lead time allocations and order policies of top level items and lower-level components.
All purchased items are given a Lead Days allocation for planned procurement time and all manufactured items are given a Job Days allocation for planned production time. When an item is given a To Order policy, its lead time contributes to the lea times of higher-level items. When an item is given a Stocking order policy, its lead time does not contribute to higher-level lead times.
Time to Shipment targets are reduced by assigning a Stocking order policy to key materials, subassemblies, and sell items to remove lead time contributions.
Supply Pipeline Planning
For Stocking order policy items, inventory is kept lean and efficient with supply pipeline planning. Replenishment is triggered by actual demand at regular intervals using a dynamic Reorder Point and Min Order quantity. A monthly Sales or Usage rate and Safety Factor buffer are incorporated into the Reorder Point and a Supply Days interval is incorporated into the Min Order quantity.
Unlike future jobs and blanket purchase orders, stock replenishment is self-adjusting in response to actual demand. When actual demand for an item is greater than the monthly demand rate and safety buffer, replenishment is triggered earlier than the supply days interval, which minimizes the duration of any shortage that may occur. When demand is less than the monthly demand rate and safety buffer, replenishment is delayed until it is needed, which automatically caps stock on hand and prevents over-stocking.
Demand-Driven Jobs and Purchase Orders
On a daily basis, jobs and purchase orders are generated by MRP in a time-phased, multi-level progression in response to current demand. A job or PO for an amount equal or greater than the item’s minimum order quantity is triggered whenever net demand (total supply pipeline less current demand) falls below the item’s reorder point. Purchase order due dates and job finish dates are aligned with required dates for higher-level jobs and sales orders.
Material-Based Job Release
A big problem in most shops is knowing what jobs can be started next based on availability of materials and the order of assembly. To defend against “robbing Peter to pay Paul” syndrome, materials are often hoarded to protect favored jobs. In multi-level environments, inefficient hard linking on travelers is required to coordinate the order of assembly. These methods are counter-productive and impede the ability to ship orders on time.
DBA solves these problems with a unique job release process. MRP schedules new status jobs in the correct order of multi-level assembly. Whenever the Release Jobs screen is launched, materials and subassemblies on hand are allocated to new status jobs in planned start date order. Jobs with fully allocated materials can safely be released to production in the correct order of assembly without any need for material hoarding.
Another benefit of the job release process is that each job is given a new finish date relative to its actual release date, which makes job scheduling self-adjusting. The job schedule screen enables you to assess the impact of late released jobs on dependent jobs and sales orders.
Most small businesses rely heavily on job expediting to get orders shipped on time. Expediting one job at a time benefits that one job, but at the expense of all other jobs because production flow in work centers gets interrupted when all jobs are stopped to make way for the expedited job.
The key to shop productivity is maintaining a balanced production flow across all work centers so that all jobs meet their required dates. DBA enables this by assigning a priority to each job based on remaining production time relative to the job’s required date. Within work center queues, job sequences are listed in job priority order so that jobs trending late get priority over jobs trending early. When all work centers are run by job priority, the production flow is balanced throughout the shop. Prioritized production enables all jobs to meet their required dates so that orders get shipped on time.
DBA is designed for real time updating so that the software actively guides your production priorities. Directly within the Work Center Schedule screen, materials are issued to work centers on a just in time basis, often with a single-click using the pre-fill feature, and job labor is updated when sequences are closed, either at standard or actual hours.
Real time updating provides the feedback that makes prioritized production possible. The productivity benefits are enormous because you always know what’s on hand, what to run next in each work center, and where each job stands at any given time.
Can be applied to any type of manufacturing business
Time to Shipment MRP can be applied to any type of manufacturing business, regardless whether products are made to order, to stock, in mixed mode, engineered or customized to order, or are proprietary or made on behalf of other companies.