Page 312 - Orlicky's Material Requirements Planning

CHAPTER 16 Project Manufacturing 291

Clearly, the best solution for the enterprise is to have six cranes all dedicated to one ship.
The same is true for project management. Rather than attempting to have critical resources
multitask across multiple projects, it can be shown that dedicating resources to a single pro-
ject can reduce the project lead time drastically. Consider that one of the competitive factors
for a project manufacturer is overall lead time. This could provide a competitive edge.

MATERIAL ALLOCATION
Material allocation is also more complex in a project manufacturer. Material can be pur-
chased for a specific project and quite possibly could be usable on multiple projects. MRP
has an assumption that all materials move into and out of stock. An MRP system that
effectively supports the project management must have the functionality that material can
be purchased directly to the project and not force the development of a part number and
stock transactions. The downside of this approach is when the exact material is desired
again, and there is no traceability of it ever having been bought because it went directly to
the project. Once again, the implementation approach must weigh the costs and benefits
before deciding if and how to implement a part-numbering system for project materials.
In governmental projects, there are requirements to account in great detail the costs
paid for the parts and to provide assurance that indeed they were used on that project.
This is sometimes referred to as tracking the color of money. A company that does business
with the American military, the British military, and the Australian military may find
itself in a position of having a part purchased for the British that is needed on an
Australian project. The transactions and controls required to track the costs and move-
ments of the part could cost more than the part itself. This level of Department of Defense
cost accounting easily can lead to high levels of obsolete parts and excess inventory and
expensive processes to track them.
Material allocation depends on the BOM. This is the same for standard job shop pro-
ducers. BOMs must be 100 percent accurate to allow the integrated planning systems to
work effectively. This is covered in more detail in Chapter 11. The use of PDM systems
helps to keep the engineering BOM (EBOM) in alignment with the manufacturing BOM
(MBOM). Where the project manufacturer differs is in the desire or need to track effec-
tivity by serial number. Since the products that are made are typically large capital pro-
jects or machines, the effectivity of material usage is desired by the production unit num-
ber. Imagine that 12 units will be produced. An engineering change is required on the
third unit. The desire would be to have a BOM with effectivity set by serial number, as in
the following example:

Parent 185726 Top Assembly
Component In Out

136609 SST, housing plates 1 3
142058 Titanium, housing plates 4 12