Oracle Flow Manufacturing

product costs by minimizi

An Oracle White Paper January 1998

MS Word vers. here

Oracle Flow Manufacturing

OVERVIEW Flow Manufacturing is a total business strategy that addresses the diverse functions of the enterprise such as product engineering, demand management, shop floor design, production line scheduling, material replenishment and supply chain management. It provides a set of processes and techniques to help streamline these activities, which when applied within the framework of the Flow philosophy, helps customers attain market leadership. The primary objective of Flow Manufacturing is to produce the highest quality product at the lowest possible cost in the shortest possible time. Flow techniques enable a more customer responsive environment through reduction of product cycle times, reduce product costs by minimizing inventories, and enhance quality by implementing total quality management as part of the production process. Flow Manufacturing differs significantly from traditional manufacturing methods. In a traditional discrete environment, the Master Production Schedule and MRP are used to explode requirements and create planned orders for standard lot sizes that are "pushed" into production and purchasing. The traditional MRP approach is often characterized by large quantities of an item being processed and tracked using work orders that move in batches from one operation to the next. Flow Manufacturing is a Just-In-Time system with production lines and processes designed to produce a constantly changing mix of products at a steady rate (TAKT time). Flow Manufacturing utilizes schedules for mixed model production instead of work orders to drive production. The mixed model schedules are sequenced based on customer orders and material is replenished using kanbans. The role of MRP in Flow Manufacturing is primarily only for long term planning of material and capacity requirements. Figure 1 summarizes the differences between a traditional manufacturing and flow manufacturing environment.

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Figure 1: Traditional Manufacturing vs. Flow Manufacturing Flow Characteristics Flow Manufacturing is often perceived differently by companies based on their experiences. Following are some of the characteristics that help identify and define a Flow environment. Flow Manufacturing is Customer Demand Pull Driven In a Flow environment, products are made to customer demand. Production is based on daily schedules that identify the product mix for the day. The product mix is sequenced and the lines are synchronized to pull material needed to make the product mix. Since production is based on actual orders, finished goods and work in process inventory is minimized, allowing production to better respond to engineering changes and customer demand variations. Flow Manufacturing is Linear In a Flow environment, products are grouped into product families based on shared processes. Production lines are designed using a product layout to make one or more product families. Products flow through the line with each process working on one unit at a time. This assists in creating a balanced line with consistent production rates (TAKT time). Daily production rates can be used to manage the demand and determine lead times. Linear manufacturing also helps implement a total quality process and minimize in-process inventory. Flow Manufacturing implements Total Quality Management

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In a Flow environment, Total Quality Management (TQM) is critical. TQM is implemented as part of each process in the line. This enables the identification and resolution of problems at the source. Since products are made in a linear fashion and quality is implemented into each process, scrap and rework are minimized. This reduces product costs, keeps the line flowing and increases the quality of the product. Flow Manufacturing replenishes material at Point of Use In a Flow environment, material is pulled into the production process only as needed, to meet demand. Kanban bins are used to maintain the optimal amount of raw material at the production line and to signal replenishment as the material is consumed. Material is often delivered directly to either the point-of-use (kanban location) or to Raw-In-Process (RIP), by both internal and external suppliers. These techniques minimize inventory costs and increase inventory turns. Flow Manufacturing uses Visual Management In a Flow environment, shop floor management is primarily a visual management process. Detailed tracking of Work-In-Process and material supply is eliminated as production is rate based and material is consumed from Raw-In-Process. Completion of products is recorded after the final operation at which time the consumed material is backflushed and transactions effecting labor, machines, overhead and other resources are performed. This simplifies shop floor activities and eliminates non-value added tasks which in turn reduce product cycle times and increase responsiveness to customer demand.

Flow Manufacturing in the Supply Chain In today environment of global competition, companies are looking at themselves as virtual s enterprises. A virtual enterprise includes not only the business units owned by the company making the product but also its suppliers, distributors and in many cases its customers as joint-development partners. The success of Flow Manufacturing lies in creating a collaborative relationship with all the members in the supply chain. By definition, Flow is a pull mechanism and the pull process can maintain continuity only with commitment from all these members. The different members in the supply chain can include engineering, sales, production, suppliers, distributors and customers. Demand is received from customers through a variety of channels (e.g. Internet, EDI, Phone) and is scheduled for production. The products are produced per the established rates and delivered either directly to the customers from the end of the line, or to finished goods inventory. As material is consumed during production, kanban signals are sent to suppliers and other sources for replenishment. MPS/MRP and Supplier Scheduling are run periodically against forecast only to communicate long term plans to suppliers. This information can be used by suppliers to establish their own production plans and line rates. Figure 2 shows Flow Manufacturing in the context of the supply chain.

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Also, while Flow Manufacturing is an excellent model in establishing successful business partnerships, it also relies on effective communication among these members. Fortunately, with the advent of technologies such as Network Computing, Intra/Internet, and EDI, the communication model has itself become more simple and highly effective.

Figure 2: Flow Manufacturing in the Supply Chain

Oracle Flow Manufacturing Oracle Flow Manufacturing is a new Oracle Application for customers that wish to implement Flow manufacturing techniques in their organization. It is integrated with the Oracle Applications product suite to support diverse environments ranging from complex Engineer To Order environments to high velocity repetitive environments. Oracle Flow Manufacturing includes a comprehensive set of features that support the entire Flow process from line design and balancing to production execution. It also enables implementation of the demand pull system using kanbans for both raw material and in-process assemblies. The planning process is streamlined using Flow schedules to sequence and schedule mixed model production. Oracle Flow Manufacturing provides a framework to create effective partnerships between the various business units of the enterprise, including production, planning, distributors, suppliers and customers. The features provided by Oracle Flow Manufacturing can be broadly classified into the following
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categories: Production Line/Process Design Kanban Management Demand Management Production Execution

PRODUCTION LINE / PROCESS DESIGN Flow production lines are designed to support mixed model production. Line Design includes grouping products into product families, defining the processes and events required to produce each product, and re-grouping events into line operations to approximate TAKT time (operational cycle time). The objective of Line Design is to have a balanced assembly line that takes the least possible time to meet the expected demand. This can be done by minimizing bottlenecks along the line, eliminating non value-added tasks, and implementing quality in the process. Product Synchronization Product Synchronization defines the processes used to make each product and the sequence of events within each process. Events are granular tasks within the process that define the physical activities on the line. Each event is assigned the machine and labor times used to perform the event. Figure 3 shows a sample set of processes and sequence of events.

Figure 3: Sequence of Events Product Synchronization can be performed in Oracle Flow Manufacturing using Flow Routings . Flow Routings support both processes and sequence of events. In addition Flow Routings can be used to define the network of processes including feeder lines, rework loops and primary/alternate processes required to produce an item. This will help model the line is to the system. Figure 4 shows a as sample Flow Routing network for a production line. Each of the operations including primary/alternate operations and rework loops can be assigned planning percentages which are used in the calculation of required material and resources to balance a production line.

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Figure 4: Flow Routing Network Flow Routings and the routing network can also be used in calculating the total product cycle time. Total product cycle time is the longest time path on the production line (including feeder lines) to make the product. TAKT Time TAKT time, also knows as the operational cycle time is the rate at which products can be manufactured on the line. TAKT time helps establish the daily rates for the production line and is calculated against expected demand for a family or families of products made on the line. Since TAKT time establishes the rhythm (or drum beat) of the line, all the processes along the line are streamlined to complete within the TAKT time. This ensures that each product moves from process to process within the TAKT time maintaining the steady production rate necessary to meet the demand. TAKT Time = Effective resource hours available per day / Average daily demand TAKT time is calculated in Oracle Flow Manufacturing using the Mixed Model Map (Figure 5) against any specified demand for a production line. Line Balancing While Engineering provides information on product routings in the form of processes and sequence of events, Manufacturing faces the challenge of organizing work on a production line so that bottlenecks are minimized and work cells are balanced. As a result , Manufacturing evaluates the feasibility of reorganizing the events into groups that approximate TAKT time. Managing the imbalances often leads to analysis that includes the questions: - Can non-value-added work be reduced or eliminated?
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- Can the work be broken into smaller units? - Can the work be grouped into larger units? - Should resource (machine, labor) capacity be increased? - Should in-process inventory be increased? - Is an additional line needed? Oracle Flow Manufacturing provides the tools and techniques to help answer these questions and assist in the line balancing process. The Mixed Model Map (Figure 5) is a graphical tool that displays the processes and products for a given line as well as the associated weighted times to complete the process. The events can then be regrouped into line operations to balance the line. The Mixed Model Map also displays the resources needed and the In-Process-Kanbans (IPK) needed to support any specified demand.

Figure 5: Mixed Model Map The Mixed Model Map can save the balanced line information into the system and compare this with the requirements for daily demand, providing the information to adjust resources on the line to meet the demand.
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Operation Method Sheets Operation Method Sheets (OMS) provide the needed information to shop floor personnel for performing an operation on the line. This information can include pictures of the assembly process, required materials, and written work instructions. These are the primary tools used to perform the operations and are especially critical on lines making many models. Oracle Flow Manufacturing supports Operation Method Sheets using the Attachments features. Multimedia documents can be attached to, and maintained for, each line operation on the Flow routing of each item. KANBAN MANAGEMENT A key objective of Flow Manufacturing and JIT production is to minimize inventory and increase inventory turns. Raw material is pulled into production as needed to meet demand, and the pulled material is replenished using a kanban signal. The minimum amount of material possible (based on replenishment time) is held at the line in kanban bins. As each bin is used up, a signal is issued to replenish the bin and the next bin is used to pull the material. There are many kanban systems in use today but the most commonly used are (i) the two-bin (two card) system and (ii) multi-bin (multi card) system. Oracle Flow Manufacturing supports both these systems for planning and execution during production.

Calculation of kanban size and number of cards Oracle Flow Manufacturing calculates the optimal number of kanbans needed in each kanban location. It can calculate the number of kanbans needed when a bin quantity is specified or it can calculate the kanban size if the number of bins are specified. Oracle Flow Manufacturing allows the simulation of multiple kanban plans. Kanbans currently in use can be compared and adjusted against kanban requirements for consistently varying demands. This process helps in both maintaining minimal material inventory and continuity of material flow from the supplier to the production line. Pull Sequences Oracle Flow Manufacturing helps you define the kanban locations for each item along with the supply source information. The supply source can be suppliers, other production lines, other inventory organizations in the enterprise, or other kanban locations in the same organization. A complete chain of demand-supply pull sequences can be defined for kanban planning. Figure 6 shows a sample pull sequence chain.

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Figure 6: Pull Sequences Non-replenishable Kanbans Non-replenishable kanbans are used to meet unexpected peaks in demand. For demand variations that are infrequent and unplanned, Oracle Flow Manufacturing allows non-replenishable kanban cards. These cards are created for specific items in specific quantities as needed. Non-replenishable kanbans cycle through the system only once, after which they are removed from production. Kanban Execution Oracle Flow Manufacturing generates appropriate events for each kanban signal. For kanbans that are sourced through suppliers, the system can generate requisitions and purchase orders. Sourcing rules can also be used to create blanket releases against purchase contracts. Internal requisitions can be generated for inter-org replenishments. Oracle Flow Manufacturing supports different statuses of kanban cards to help track their release cycle. Supported statuses include Full , Empty , In-Process , In-Transit , Hold etc. Kanban Cards can , also be accumulated and released together when a minimum order quantity greater than the kanban size is specified. A number of modifiers such as safety stock days and lot multiplier allow you to create a smooth signaling and replenishment system. Figure 7 shows the kanban execution cycle.

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Figure 7: Kanban Execution DEMAND MANAGEMENT One of the benefits of Flow Manufacturing is the flexibility it provides in managing the demand fluctuations. Unlike traditional MRP environments, Flow Manufacturing uses simple Flow schedules to schedule and sequence sales orders. The schedules are usually communicated to the production line on a daily or weekly basis. This starts the pull process on the line as it pulls the raw material and other sub-assemblies from the feeder lines. Since schedules are communicated only to the main line and other sources of material are synchronized to the main line through the production pull process, any changes to the demand or production process can be easily managed. Oracle Flow Manufacturing supports Flow Schedules to enable line scheduling. Flow schedules can be used to include sales orders, forecast and even MDS/MPS for hybrid manufacturing environments. The system provides a number of algorithms to sequence the mix of products for the line along with a flexible API architecture to allow customer defined sequencing algorithms. PRODUCTION EXECUTION Facing stiff competition, manufacturers are focusing on reducing time-to-market for their products. As part of this effort, companies are re-engineering their production activities to implement processes that are simple to manage and efficient to execute. The maintenance intensive effort of creating work orders and detailed tracking of product movement on the shop floor is being considered a less effective alternative as simplified schedules and visual management take precedence. With production lines designed for daily rates and production moving to linear manufacturing, companies are engaged only in recording completions of the product as they come off the line.
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Oracle Flow Manufacturing allows you to record completions of assemblies without having to create work orders. Completions can be either unscheduled or against a Flow schedule The system will . backflush all components and perform resource and overhead transactions upon recording completion of the finished product. MULTI-MODE MANUFACTURING SUPPORT Oracle Flow Manufacturing is tightly integrated with the Oracle Applications product suite to support a full multi-mode manufacturing environment. Not only can customers use Oracle Manufacturing to support different manufacturing modes (e.g. discrete, repetitive, flow) in different business units, they can also use Oracle Manufacturing to support different manufacturing modes in the same business unit. This allows customers to gradually transition from current discrete and repetitive environments to a flow manufacturing environment for one or more product families at a time. Since Oracle Flow Manufacturing is implemented as part of Oracle ERP solution, customers can also s use Oracle Supply Chain Management to share and plan for resources and constraints across the s enterprise for all product families. BENEFITS The cost of conversion to the Flow manufacturing paradigm can often be paid for by the savings in inventory alone. However, the benefits are many, including: Shorter cycle times Eliminating non-value added tasks Increased capacity availability Increased labor productivity Reduction in plant space Improved product quality

SUMMARY Today customers are more empowered than at any time in history. They want to get high quality s products at low prices and they want the products now. We have seen this trend for the last few years and we will continue to see it in the coming years. In addition, global competition and the increasing pace of change has made the race for market share and leadership increasingly fierce. So, how do companies succeed in this environment? Are current techniques for manufacturing and supply chain management still valid in this new demand context? The answer is . Companies need to change and adapt to these new demands. It takes a continuous No re-engineering of business processes to be efficient and responsive to changing customer needs. MRP is thirty years old. Most companies have already received all of the possible incremental benefits of implementing traditional planning and execution techniques. Companies are now looking to
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implement business processes that provide sustainable competitive advantage. In order to attain this and achieve radical benefits, companies must look beyond best practices to implement revolutionary business processes like Flow Manufacturing. Flow Manufacturing is a total business strategy that will provide companies the competitive advantage to attain market share and leadership. Oracle Flow Manufacturing is the first software product in the industry to implement Flow manufacturing within an ERP framework. This provides customers with significant advantages that include: Deploying Oracle Manufacturing in a multi-mode environment. Sharing existing resources and constraints across the enterprise for all product families Seamlessly and gradually transitioning from discrete or repetitive environments to a Flow environment with low cost and low risk In addition to the extensive set of features offered by the product, the ability to use it in a network computing architecture will allow it to seamlessly integrate with systems both within and external to the organization. Availability Oracle Flow Manufacturing will be available in Release 11 of Oracle Applications. For more details on the release status of the features described in this document, please review Oracle Flow Manufacturing Release 11 Announcement .

Oracle Flow Manufacturing January 1998 Author: Raju Ganapathiraju Contributing Authors: Kurt Robson, Lou Unkeles Copyright © Oracle Corporation 1995 All Rights Reserved Printed in the U.S.A. This document is provided for informational purposes only and the information herein is subject to change without notice. Please report any errors herein to Oracle Corporation. Oracle Corporation does not provide any warranties covering and specifically disclaims any liability in connection with this document. Oracle is a registered trademark and Enabling the Information Age, Oracle Flow Manufacturing, Oracle Supply Chain Management are trademarks of Oracle Corporation. Oracle Corporation World Headquarters
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500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: 415.506.7000 Fax 415.506.7200 Copyright © Oracle Corporation 1995 All Rights Reserved

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