In Fig.6.5, a resuming scheme for material handling systems on the shop floor is represented, in relation to logistic functions performed. Even if we don’t con- sider building characteristics for equipment (a specific topic of the Industrial Equipment module), the chart matches material handling system typologies in every application to the specific logistic function required in a matrix concept.
This scheme can be very useful for the setting-up ofmaterial handlingsystems on the shop floor.
We remember that, inSect. 4.1, we considered the workers involved in ware- house handling (indirect labour) as auxiliary functions. The relative requirement is determined based on the frequency and length of material handling operations, also considering features of handling means used.
Totalmaterial handlingcost, in the same integrated logistic process, includes:
1. dedicated labour cost, except that which is still included in standard operation descriptions and accounted in the direct labour standard time (ST);
2. functioning cost of handling means, including depreciations;
3. cost of dedicated information technology systems, including fees for func- tioning and depreciations;
4. consumables for packaging and cost of protection of goods;
5. burdens derived from working capital of the logistic process.
During project setting and outsourcing of services, solutions should be sought that minimize the global cost mentioned above, considering the same functionality of systems (productive and delivering capacity, attended service level…).
Considering the whole logistic process along the SC, including delivery to commercial networks, the global cost formaterial handlinggenerally ranges from 6 to 9 % of final product cost (passenger cars and commercial vehicles). Its incidence is relevant and should be controlled with rigour. It is obviously higher when production is far from the final products’ market destinations and when the infrastructure of an area in which an enterprise operates is not suitable for the transport of goods.
• industrial initiatives,delivered for development of new products and for setting new production capacities needed, in relation to the above market targets and return of investments.
InChaps. 2and3, we specifically examined the methodological criteria applied for developing new products and processes and new manufacturing systems at available productive sites, according to make or buy policies agreed to by the company.
Furthermore, to organize production and commercial delivery, a ‘‘medium term operative plan’’ is needed, normally on a three year horizon, determining:
(1) a catalogue of products to be delivered to markets, with reference to technical contents and margin targets (sale prices, without considering the margins of intermediaries);
(2) periods of product availability, with particular reference to launch plans for new models;
(3) sales forecast for each model, considering all the types of engine and trans- mission and special versions requiring specific production capacity for tool conditioning.
To realize the necessary capacities for production (manufacturing system development) and commercial considerations (sales network development) on time, specific investment initiatives are run, following the methodological criteria mentioned inSect. 3.1.
The above-mentionedmedium term operative plan is normally updated on a yearly basis (preliminary to the budget), after some research cycles on demand and competitive scenarios to define operative solutions, subject to delivery by Top Management. At the cycle of every year, working activity levels are updated for the three years of horizon and, as a consequence, company resource requirements are updated too (workforce, investments, purchasing needs).
Production and commercialization planning begins with the medium term operative plan and becomes more defined in the short term in each production and commercial department (month by month, week by week, day by day…) to establish requirements. These obligations are for:
1. sales managers and intermediates, who are engaged in obtaining orders from customers and delivering products on time;
2. plant managers, who are engaged in manufacturing products in the right quantities at the right time;
3. supply chain managers, who are engaged in the punctual transfer of products to commercial dispatching centres, including spare parts for after sales technical assistance.
Before describing the elaboration process for the Operative Plan, herein referred to as theOP, we have to lay out a few facts:
• OP normally covers a temporal horizon of at least twelve months (some com- panies cover eighteen months, to have enough information for the annual budget in advance);
• OP is updated monthly (rolling system), so as to introduce timely variations due to market trends, sales results and eventual delays or anticipations in product delivery;
• OP determines labour requirements, start of working time and monthly supply plan for direct materials, according to MRP procedures;
• OP determines shop floor schedulingand relative supply frequencies per day/
week for direct materials;
• OP determines lead times for delivery of final product to customers;
• OP determines activity levels to be considered for annual budget and its revision every three months.
To elaborate OP, we have to start from the available catalogue for sale products, month by month. This catalogue is, opportunely encoded, in correlation with the PDM system (seeChap. 2) and represents theproduct grid, because it defines and links in a matrix the following data related to vehicles sold:
• models and relative standard contents;
• alternative solutions for engines and transmissions, eventually solutions for 4WD;
• special solutions for space frame and body, also in relation to specific markets (right hand drive, stronger suspension, cold country versions…).
For the cars, we can also distinguish:
• specific body versions derived from the basic model (2- or 4-doors, sports versions, pick-up, wagon, open top…);
• special non-standard versions that are subject to temporal and quantity con- straints (special acclimatization solutions, automatic seats, special info systems…);
• other specific versions not subject to specific quantity constraints (external colours, internal dressing, wheels, special tires…);
For commercial and multipurpose vehicles, more alternative versions are foreseen for the same basic model, such as: minibus, cabin van or multi van with different size and wheel axle positions. Solutions for special use, subject to specific manufacturing lead times, are offered as well because they are manufactured by external suppliers:
• special refrigerator vans, special tiltable vans…
• special versions for transport or craft (military vehicles, ambulances, camper…);
The above shows the complexity of a product catalogue for cars, commercial and multipurpose vehicles, and that which customers can choose at order, obtaining engagement on delivery lead time.
Both for total productive capacity, at a basic model level, and for capacity related to specific engines and more complex versions, there are some temporal and capacity constraints, as a consequence of investment plans and specific lead times. To test the feasibility of programs, it is necessary to aggregate sales fore- casts in this way, using the PDM system discussed inChap. 2.
In Fig.6.6, OP preparation flow is represented, beginning at commercial demand, performing necessary feasibility tests and matching demand with an offer, up to defining the executive OP that generates manufacturing and delivery oper- ations of the final and intermediate products at every stage of the SC.
The OP cycle operates simultaneously on two different sides:
• the commercial side, towards the different market areas where company brands are set;
• the industrial side, including final assembly plants and SC first level plants.
Coordination is made with the Supply Chain Department, who must match the evolving requirements coming from the commercial side with the evolving pro- ductive capacities offered from the industrial side; a more productive, more flexible and faster system is the answer to required variations. At the end of these feasibility verifications, production planning is aligned with commercial planning, attempting to maintain a physiological level for the finished product stocks at the plant and commercial network levels (the latter are normally charged to the dealers).
In Sects. 3.8 and 4.1, we saw how to adjust shop floor activity levels to accommodate trends in market demand, setting extra work hours when demand is
FEASIBILITY
?
INDUSTRIAL CONFIRMATIONS COMMERCIAL
CONFIRMATIONS
EXECUTIVE CONFIRMED
OP
COMMERCIAL DISPATCHING DEMAND
YES CUSTOMER
ORDERS COLLECTION
NO NO
CORRECTIVE ACTIONS
PLANTS ORDERS DEPLOYMENT
MARKETS ORDERS DEPLOYMENT
PLANT’S EXECUTIVE PROGRAMS ALONG THE SUPPLY CHAIN REQUIRED DELIVERIES
(NETWORK STOCKS CONSIDERING)
OFFERED DELIVERIES (PLANT STOCK
CONSIDERING) AVAILABLE PRODUCTIVE CAPACITIES SUPPLY CHAIN
FINAL ASSEMBLING PLANT Area 1
Area 2
Area 3
MARKETS
CORRECTIVE ACTIONS
Fig. 6.6 Operative plan flow diagram
higher than productive capacity or reducing working time when demand is lower.
With these types of countermeasures, we can:
• contain waiting times for customers within acceptable values;
• avoid workforce unsaturation on the shop floor;
• contain the stocks of finished vehicles produced according to forecasts but not covered by customers’ orders, within acceptable limits from a financial point of view.
The process of collecting and aggregating orders is coordinated from Operative Marketing Management, who are also in charge of correcting eventual imbalances between the market and single dealers. In this way, dispatch programs are bal- anced, transferring shares of demand from one market area to another, considering constraints due to different versions. In implementing these changes, it is important to give priority to market areas and products with higher profitability.
To make commercial demand agree with productive capacity, it is necessary to join demands by basic model coming from different market areas (meaning by body and vehicle assembly lines), and by engine and vehicle versions considered more difficult for manufacturing lead time.
The final document derived (recurrent monthly OP) distinguishes information and obligations, in relation to the temporal horizon, N being the actual month:
(1) For the medium-long term, over N?6 months, predicted information focuses on basic models and engine families, joined according to logistics of the production lines. The mix of models and versions is estimated on a statistical basis, referring to the previous months or to a forecast made by dealers. Based on these forecasts, productive capacities and resource requirements, for plants and along the SC, are planned.
(2) For the medium-short term, from N?3 to N?6, predicted information is more analytical and deals with bodies and specific space frame versions and configurations considered more difficult from a lead time point of view. As a consequence, obligations for supply of less easily accessible components are taken and required weekly working shifts are planned to correspond to the market demand, assuring probable delivery time month by month.
(3) For the short term, from N?1 to N ?2, information determines the pro- grams’ execution, because it derives from customers’ orders, and eventually integrates with anonymous orders made by dealers at their own showrooms.
Eventual deficiencies in specific orders or delays in the delivery of product promised for month N or N?1 represent a severe failure for the logistic process of the company, because they can affect customer satisfaction level and cause losses in the utilization of resources (overproduction and overstock at the plant). These failures should not occur (with the exception of rare situations), because the rolling logic of OP leads to a monthly alignment of the plan, considering commercial trends and eventual constraints coming out of the production and supply processes.
In the scheme in Fig.6.7, the operative planning process applied to production and commercial delivery is summarized, distinguishing executive phases from those of setting and checking, necessary to set resources for adjusting ongoing programs.
Examining the phases shown above, it is evident that a core coordination is made through the Supply Chain, connecting dealers with final assembly plants to assure the necessary information flow for managing delivery priorities for customers.
For shop floor scheduling, the methodological criteria shown in Chap. 3 (machine/equipment loading evaluation) andChap. 4 (workload assignment) are applied.
Referring to Vehicle Final Assembly Plants, in the following section, we will describe information technology systems applied for the management of produc- tion flows.