RE: Kan Ban -- BPCS-L

Al:

Both Lisa Abney and William McAllister have provided very pertinent insight
to the challenge you face when the customer expects zero lead time
replenishments.  Both point out the challenge is not with BPCS; it is with
the information you are receiving.  I'd agree with Ms. Abney when she says
your customer is operating with a JIT mentality.  I'd also suggest the
customer has not accepted all the responsibilities associated with their end
of JIT.  One industry you might want to look at is automotive.

Auto manufacturers operate under JIT and, on the surface, demand zero lead
time replenishment from their vendors.  However nothing could be further
form the truth.

The OEMs (Ford, GM, D/C) use weekly material release authorizations (MRA) to
project their requirements over an extended horizon and daily shipping
schedules to specify "tomorrow's" exact quantities.  When I worked with
these "documents' in the past the MRA came out on Friday and started with a
week from the coming Monday.  The shipping schedule was released at 3 this
afternoon and was for tomorrow.  In short the supplier knows the total
demand for a week one week in advance and what's to be shipped tomorrow one
day in advance.

There were several interesting terms to the OEM/supplier contract.  One, for
example, obligated the OEM to accept (or reimburse for) all authorized
quantities within a specific horizon.  I don't know what the horizon is
today (I've heard recently that it is the first week of the MRA but this is
unconfirmed) however within my experience set the commitment period was the
first 4 weeks of any MRA's horizon.

I'd also point out the current situation forces you into a make to stock
mode.  In this mode you have no choice but to be driven by a forecast, as
suggested by Mr. McAllister.  Where that forecast comes from, in the end, is
immaterial.  Remember neither a customer provided forecast nor an internally
generated one will be accurate.  As a result you'll have too much on the
shelf sometimes and not enough at other times.  The consigned inventory
approach suggested by Ms. Abney offers some relief but there are no silver
bullets, no knockout punches that will take this challenge out.

Have heart, it will get better.


Roy Luce

Systems Plus - Midwest
Developers of RPM compliant software
Main:   800-913-7587
Cell:   847-910-0884
Fax:    208-330-9032
Email:  lwl@xxxxxxxxxxxxx

-----Original Message-----
From: bpcs-l-bounces@xxxxxxxxxxxx [mailto:bpcs-l-bounces@xxxxxxxxxxxx]On
Behalf Of Al Mac
Sent: Monday, February 24, 2003 10:29 PM
To: BPCS Users Discussion Group
Subject: Fwd: Kan Ban

Do any other companies using BPCS for your ERP have experience with
customers using Kan Ban, where they expect zero lead time for their
parts.  Whenever they run low on the Kan Ban parts, they call us, and
expect immediate shipment of whatever quantity they ask for, using us like
a warehouse with safety stock of the end parts.  Is there another name for
this phenomena where "Kan Ban" is not the right terminology?

Can anyone suggest pros and cons of different ways of handling this
business?
I expect that BPCS can handle it, using some aspects of BPCS with which we
are inexperienced.
We are on BPCS 405 CD mixed mode AS/400 V5R1
We are doing engineering, costs, orders, inventory, by facility.

This Kan Ban concept is new to our BPCS users.  Some co-workers seem to
think safety stock is working Ok, while others seem to think our methods
are not working right for the Kan Ban parts.  I think the whole issue of
what is working, and what is not working, is complicated by us accepting a
whole bunch of parts new to BPCS in which we are trying to make them before
the BOM and Routings get completed, so we are getting to experience reality
for BPCS users not yet ready to use MRP as it is designed to be used, for
those new parts with the engineering backlog.

We are accustomed to driving MRP using customer orders due on various dates
a few weeks into the future.  If Kan Ban is to be shipped when customer
calls, should Post Ship Billing be used instead?
-
Al Macintyre
BPCS/400 Computer Janitor at http://www.globalwiretechnologies.com/

>Summary: Al suggests some areas for additional experiments, unless you
>already tried this stuff.
>
>Allegedly Y"all tried something and it did not work out as expected.
>So invest a few hundred bucks in a call for BPCS tech support to tell you
>what you were doing wrong.
>You can tell them that you put safety stock on this item # and MRP ignored
>it ... why?
>Then they will point out whatever field it is of what file we need to have
>different setting on.
>
>As I understand it, the customer says they will order 250,000 in one year,
>they just can't predict the precise timing ... when they call and say they
>ready for another chunk, they want it damn fast, so we need to be making
>enough before the demand comes in.
>
>Ok, consider FORECASTING ... with MRP100 you can setup a Forecast on such
>an item that says "let's make 5,000 a week" (5k x 50 weeks = 250k).
>System Parameters (SYS800) say that Customer Orders will Consume the
Forecast.
>This means we are making 5,000 a week into inventory,
>along comes Customer Order for 4,000 or 10,000 or whatever.
>we ship to the customer on the basis of THAT customer order line
>because the ForeCast has arranged in advance for MRP to plan on this even
>steady schedule.
>Try that out on an item or two and see if that works for us.
>
>Take a look at Order Policy K
>K for Kan Ban?
>This sounds like the JIT plans where you setup a repetitive "daily"
>factory schedule
>Basically you can setup like 150 periods in which even quantities of the
>item are to be released through the factory
>
>Review Ed DeHarde's suggestions again
>He had one about using a Consolidated Purchase Order Release deal that
>would work the same way as Shop Order Release.
>Perhaps we want to have a Planner Code for the stuff that crosses
>facilities and/or PEN needs, then have a Lee Slater "helper" running this
>deal for the ReSupply Order stuff.
>When Lee is ready to launch POs, he would first print what his "helpers"
>contributed, then do his stuff (process the "helper" output first to avoid
>duplication)
>
>I previously suggested Y"all look at BPCS Outside Operations
>where some outfit outside of our company does some of the work and returns
>it to us
>
>Review the criteria used in running MRP releaseable shop orders report
>Does it list ALL items that would need shop orders?
>Are there some on the list that we do not release shop orders on?
>
>Review the criteria used in running the reports that Lee Slater uses in
>planning Purchase Orders
>Is he getting ALL items that are coded that would need something other
>than shop orders?
>
>Between the two, are there any holes in what we are not looking at?
>
>Review the documentation on DRP ... try out DRP in the TEST environment to
>see if it does stuff that we need to be doing now that we have increased
>the volume of resupply orders
>
>-
>Al Macintyre
>BPCS/400 Computer Janitor at http://www.globalwiretechnologies.com/

-
Al Macintyre
BPCS/400 Computer Janitor at http://www.globalwiretechnologies.com/
See Al at http://www.ryze.com/go/Al9Mac
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