Page 326 - Orlicky's Material Requirements Planning

C HAP TE R 18

Process Industry

Application

Process-flow industries comprise about half of manufacturers worldwide, with the pro-
portions much higher in Australia, New Zealand, and South Africa. The process industry
has always been a challenge and a poor fit for traditional material requirements planning
(MRP) systems. In the first edition of this book, Joe Orlicky posed the question of whether
MRP would ever be used in process industry.
Process industries are typically highly automated plants with a large capital invest-
ment. Examples of process industries include food processors, refining, pulp and paper
mills, beverage, primary metals mills, and plastics and chemical manufacturers. To real-
ize the best return on investment and the lowest product costs, these plants generally run
24 hours a day, 7 days a week. The changeover of the line from one product to another
typically is quite expensive. The whole plant is usually down during the changeover. The
entire production work force is idle, and the expensive capital assets are not producing
revenue. Costs, however, continue. For this reason, the main focus for any enterprise
planning system in the process industry is effective capacity management, including
product sequencing and optimization of orders through the plant, rather than material
planning. The two main tools are called process-flow scheduling (PFS) and advanced plan-
ning and scheduling (APS).

PROCESS INDUSTRY OVERVIEW
Process-flow scheduling provides the highest utilization level possible in the plant by
sequencing changeovers and scheduling by-products and coproducts to minimize down-
time. This scheduling process is also known as block or campaign scheduling. Once the
capacity is planned, then the specific production output is confirmed against the order
book and optimized for profitability given the capacity constraint—exactly the opposite
of the process for discrete manufacturing. The traditional manufacturing business model

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