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InventoryRecord File-

On-Hand

Inventory

Record File-

On-Order

BOM

Record

File

Shop Floor Procurement

Material Planning Process

MPS

Requirements

Driven Initially fromThe S & OP Process

MRP Inputs and Outputs

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ABC STRATIFICATION

Inventory Stratification is the segmentation of items into layers bymonetary or usage values. These layers are known as A, B, C.

Occasionally in some businesses, there is a fourth layer, and it is

called D. Each layer has a specific formula for defining the

criteria.

A = 75 percent of the monetary value of inventory,

10 percent of the item numbers

B = 15 percent of the monetary value of inventory,10 percent of the item numbers

C = 10 percent of the monetary value of inventory,

80 percent of the item numbers

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As stated, some organizations also have a D category that

divides the C items into two groups. D items are usually

components that are very inexpensive (such as common

small washers, screws etc.,)

Most ERP business systems can automatically calculate the

inventory layers and give the user parameters that can be set

as desired.

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Topic MRP Lean

Inventory Strategy MTS(make-to-stock) MTO(make-to-order)

Inventory level High Low

WIP level Moderate to high One-piece lots

Rate To level load To customer demand

Production control Critical ratio cals Visible, kanban

Prod.Communication Shop work order Kanban pull

Lot size EOQ Customer order or one

piece

Lead time Long (queue) Short

Focus Next operation Customer requirement

Traditional Thinking : MRP Versus Lean

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Topic MRP/Lean Hybrid

Inventory strategy Appropriate inventory strategy with

customer draw

Inventory level Moderate to low

WIP level Low

Rate To customer demand

Production control Visible, kanban, MPS

Production

communication

Kanban pull

Lot size Customer order or one piece

Lead time Short

Focus Customer requirement

Modern Thinking : Hybrid MRP/Lean Model

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BUSINESS PLANNING

Strategic Planning

Financial Planning

Business Imperatives

Top-Management Business Planning

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Mission

Statement

Strategic Planning or

Vision and Objectives

Business Imperatives

Core Processes

The Elements in Business Planning

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Mission

Statement

Strategic Planning or

Vision and Objectives

Business Imperatives

Core Processes

Class A ERPDrivers

The Linkage Between Strategic andTactical Objectives

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TRICKS IN BUILDING THE RIGHT BUSINESS PLAN

TheBalanced Scorecard is one of the best and yet simple

approaches to business planning

Financial Internal business process

Learning and growth

Customer

Supply chain Technology

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Evaluation of

Internal Process

Opportunity

AlternativeApproaches

Core Value

to the

Business

Current Competitive Position

Expected Competitor Movement

Evaluation ofInternal Process

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Evaluation of

Learning and

Growth

Opportunities

Market Trends in Skill Requirements

TechnologyShiftsExistingSkill Set

Product Diversification

Evaluations ofLearning and Growth Opportunities

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Evaluation of

Customer

Changes

New Markets and Products

Services

Growth

Requirements

NewCustomers

Customer Relationship Management

Evaluation ofCustomer Changes

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Evaluation of

Supply Chain

Opportunities

Low-Cost Region Producers

Partnerships

Reverse

AuctionActivity

Acquisitions or Sales of Supply Lines

Evaluations ofSupply Chain Opportunities

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Technology

Opportunities

Application of New Proven Technology

Developing

NewTechnology

Tech. Movement

Affecting YourMarket

Acquisitions of Technology Sources

Technology Opportunities

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TALENT REVIEW

Having high-potential employees in

your department is essential in

creating a continuously improving

environment.

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Strategic planning three to five year horizon

Business imperatives Defined and communicated

Financial planning process (budget) both yearly

budget as well as a monthly, updated, twelve-month

rolling plan by product family to support the S & OP

process

Financial plan accuracy metric posted monthly

The business planning process sets the business up

properly.