Page 302 - Orlicky's Material Requirements Planning

CHAPTER 15 Industry Effect on MRP 281

lead-time response, and many other factors that affect the overall cost. This final decision
depends on many factors and must be considered from an overall competitive position
for the enterprise. The capacity strategy usually focuses on maintaining aggressive cross-
training with the operators so that they can operate a number of machines. This enhances
the overall flexibility of the enterprise and could lead to a market advantage.

ASSEMBLE TO ORDER
In an assemble-to-order company, the customer is provided with more product variety
than in the make-to-stock company if he or she is willing to wait a small amount of time.
Dell Computer has embraced this competitive strategy with documented success. Only
the semi-finished subassemblies are forecast, built, and inventoried. When the customer
orders a finished product, these items are assembled on demand to provide a custom
product. The MRP system for an assemble-to-order company should contain a linear
finite configurator. With a linear finite configurator, order-entry personnel can select from
a pre-established list of options to build a finished part. Each of the choices that can be
promised in a finished product must exist in inventory. This is very different from a
dynamic parametric configurator. A linear finite configurator usually creates a temporary
part number to represent and track the end item. If exactly that set of options is ordered
again, the demand will be added to the previous order. This provides the enterprise with
the visibility of the configurations that are the most popular and therefore may warrant
a move to a make-to-stock strategy.
A success strategy for setting up this type of configurator is to make the choices that
distinguish the product at the very end of the manufacturing process. Having the com-
mon parts early in the selection process also helps to make the assembly line run more
smoothly. Capable-to-promise (CTP) functionality is still in its early stages in most MRP
systems. Available to promise (ATP) is the process used to commit make-to-stock prod-
ucts. ATP works best on finished-goods items that are forecast, and then customer orders
are received directly against that forecast. CTP matches the promise capability with how
the assemble-to-order company actually plans its products. True CTP functionality
requires visibility into the supplier’s production schedules, inventory, and capacity.
Material superbills (S-bills) are used for planning (see Chapter 11). Forecasts in the
assemble-to-order company are accomplished at the semi-finished-goods level using per-
centage product mix as an indicator of relative need. Customer orders are received at the
finished-goods level. CTP examines the material availability one level down and the
available CTP delivery to the customer. A company using CTP also likely would be using
a two-level master schedule.
Figure 15-7 shows an example of a superbill that can be used to plan this product.
There is little need to know how many red heat shrink, type C connectors, 12-inch cable
with strain relief were shipped. The important issue is to have sufficient wire, connectors,
heat shrink, and strain reliefs available. These semi-finished goods are placed into inven-
tory pending actual customer orders for the final assembled product.