Page 333 - Orlicky's Material Requirements Planning

312 PART 3 Managing with the MRP System

as an individual entertainment unit. Typically, this configure-to-order strategy is com-
pleted at the distribution center.

Flexible planning solutions. The planning solution must be able to incorporate
and manipulate pack quantities. This includes substitution of component items that are
not available with component items of equal or higher value. Defining these business
rules can take an extensive amount of time during the implementation but can ensure
that customer demand will be filled most expeditiously with little manual effort. Part of
this planning process also should include the recognition of shelf life. If a part will expire
on the first of next month, the system should recognize that the lot will not be available
for an order that is scheduled to start or ship on the fifteenth. Any established priorities,
such as customer or profitable products, also should be recognized in the planning
process. Multiple variant allocations also should be supported by the planning system.
Examples could include product grade, colors, or size.

Lot tracking and product genealogy. This tracking includes knowing which lots
of raw material were used to manufacture the finished goods. The ultimate destination
for each lot also must be traced in the event a recall is required. All lots shipped to a cer-
tain customer should be easily identifiable in addition to all customers who are shipped
a certain lot. This traceability is essential for risk management and is a governmental
requirement in industries such as pharmaceuticals, medical devices, and food processing.

Process costing. The costing system should be able to accurately allocate costs
across multiple parents on the same work order based on established business rules.
These parent parts could include co-products, by-products, and grade variants. Fall-
down in grade targets also must be handled. Fall-downs usually are sold at a significantly
reduced price or at an almost nominal cost. The cost to produce the fall-down product is
exactly the same as that for first-run product. The variance between the production cost
and the product’s value must be handled within the costing system as a process run chart
rather than discrete shop order variances.
Large process plants are required to operate at or near capacity for 24 hours a day,
with preference being for only planned maintenance outages. The budget for mainte-
nance typically is 20 to 30 percent of the total operating budget or higher depending on
larger process-unit turnarounds. The requirement for robust asset management that con-
siders planned, emergency, preventive, predictive, and turnaround or outage mainte-
nance requirements is a priority in the planning system. Key areas that must be integrat-
ed include material procurement, stores inventory, and maintenance systems.

SUMMARY
The process industry is very different from the traditional job shop. High-volume prod-
ucts made in relatively few varieties characterize this industry. Capacity is the critical