Page 329 - Orlicky's Material Requirements Planning

308 PART 3 Managing with the MRP System

The most common return on investment for an MRP implementation in a discrete
manufacturing plant is through the effective planning of component materials, as mea-
sured by inventory reduction. The process industry is unique in that it generally uses few
raw materials. Raw materials frequently are purchased in very large bulk quantities such
as rail cars or ships. These materials commonly are purchased at a commodity price that
can fluctuate widely in the market. Detailed material planning by exploding require-
ments through BOMs does not provide the same benefit for the process industry. The
detailed material planning capability of the discrete MRP system must be replaced with
a process flow scheduling approach.
Adding to the difficulty caused by the conversion process, the inherent characteristics
of the process-flow business cause challenges for traditional MRP implementation. Process-
plant businesses are continuously shuffling brands and product lines. These businesses are
constantly selling and acquiring lines of product to align with the desired strategic plan.
The MRP system must be sufficiently flexible to adapt to these changes after the initial
implementation. This can be a very different approach than some implementations take,
where the configuration of the system is locked down and difficult to change once the sys-
tem has been configured. Providing the ability to reconfigure quickly based on business
changes, mergers, and acquisitions is essential for overall success of the process business.
Another area that is unique to the process industry is the inherent nature of supply-
chain management. Owing to the purchase and sale of plants, one week a supplier could
be a feeder plant, and then quickly this plant could be a sister plant owned by the same
corporate entity. A process business requires a well-designed business model to under-
stand the impact and consequences of customer and supplier locations so that a holistic
solution can be developed that benefits the entire supply chain. Since the total operating
cost of the plant equipment is relatively fixed, overall profitability must be ensured by
best using capacity and the people operating the plant with minimal overhead functions.
In some process industries, tolling and exchange contracts with complementary or com-
petitive suppliers also are used to balance supply and demand for multisite operations
that may have a significant geographic distribution.

PROCESS-FLOW SCHEDULING
The process industry is characterized by having relatively few raw materials that can
explode into a variety of end products, coproducts, and by-products. A proven method
for scheduling this type of output has been developing over the past 25 years under the
guidance of Dr. Sam Taylor and Dr. Steve Bolander. This type of scheduling is known as
process-flow scheduling (PFS). This book is not intended to be a complete discussion of this
scheduling technique. We intend just to introduce the concept. This chapter attempts to
create an awareness of these tools and their differences from the MRP body of knowledge
already presented. The close integration of the internal schedules, the reliability of con-
strained capacity usage, and the impact of outside events have positioned the process
industry as the leader in advanced planning and scheduling (APS) systems.