The Grey Chronicles

2008.July.29

“Indianeering” Application Studies, Part I


Most Indian expats hired at GSPI are the great practitioners of the new phenomenon: “Indianeering”, an amalgamation of engineering [science], management [art] and reasoning [logic]. The previous article clarified the meaning of these three terms, separately, as well as introduced this new technology to the world. This piece will illustrate some concrete examples to show the mechanics of practicing “Indianeering” in a manufacturing scenario. Most of these examples, however, are limited to steel manufacturing, specifically GSPI. The manner of presentation would be: an exposition of pertinent Production and Operations Management theory[1] followed by the application of that theory using “Indianeering”, and a short conclusion, usually the ramifications, as an end note.


Inventory Management

Exposition: Good inventory is essential to the successful operation of most organization. Inventory is a stock of goods. A major distinction in inventory management is whether demand for items in inventory is independent or dependent. Dependent Demand items are typically subassemblies or component parts used in the production of a final or finished product. Independent Demand items are the finished goods, where demand includes elements of randomness. To be effective, inventory management must have the following: a tracking system; a reliable forecast of demand; knowledge of lead time; estimates of inventory costs; and a classification system for inventory items. The A-B-C approach is usually used to classify inventory items according to importance. The economic order quantity model is often employed to determine how much to order.

Indianeering”: Inventory items are usually classified as order-when-needed. An extreme application of “just-in-time”, nothing at GSPI is ordered unless the production line is on the verge of a scheduled production run. Operating spares, e.g., rolling oil, carbon brushes, and even the cheapest working gloves, are purchased only when they would cause the production line some considerable delay. The economic order quantity model is never applied, and even the A-B-C approach is only taken seriously when the pressure to run the mills is great. By then, every item for purchase are priority number one. But in the event that the mill could not run due to equipment trouble at start-up; every purchase requisitions are put on hold. If some unfortunate event, for example, the spare needs a lengthy lead time, then all other purchase requisitions are canceled.

Conclusion: Production runs are scarce, especially when critical spares do not arrive when needed. Thus, most of the times, dependent items have zero stocks, as money is tight.


Manufacturing Resources Planning [MRP II]

Exposition: MRP II is a computer-based information system designed to handle planning and scheduling the resources (e.g., raw materials, component parts) of manufacturing firms. A production plan for a specified number of finished products is translated into requirements for component parts (raw materials, etc.) working backward, using lead time information to determine when and how much to order. The MRP inputs include the (a) Master Schedule, which identify what items are to be produced, when they are needed, and what quantities are needed; (b) Bill of Materials containing a list of parts and raw materials needed to produce one unit of finished product; and (c) Inventory Records which detail the status of each item by time period. The MRP outputs are primary and secondary reports. Primary reports include a schedule of planned orders, order releases, changes to planned orders; while secondary reports concern with reports on performance control, planning and exceptions. Capacity Requirements Planning, one of the most important feature of MRP, determines short-range capacity planning.

Indianeering”: There is no centralized information system using MRP at GSPI, but rather an antiquated COBOL-based GSPI Management Information Console [GMIC] is relied upon. A General Production Plan [GPP], issued by Production Planning and Inventory Control [PPIC] department, is substituted for the schedule of planned orders and order releases. A revised GPP is issued when changes are made, especially when orders are canceled. No Master Schedule for the whole campaign is released. The materials, especially operating spares and parts, needed to produce the finished products are almost always triggered by Operations, with frequent follow-ups to the Purchasing department. Performance Control used to assess cost performance is done by Finance and Cost Accounting, another department. Line run scheduling, and sometimes capacity planning, is delegated to the Operations division, especially so that the expat head of PPIC equivocally claimed that his department does not deal with capacity requirements planning.

Conclusion: Frequent clashes between Operations, PPIC and Purchasing are a norm. Nobody is to blame, as there is no central body to keep everything in place. A Nerve Center–overseeing production scheduling, capacity planning, purchasing the resources–might be the answer. Rolling Mills and processing lines are sometimes under or overloaded due to poor capacity planning. Line runs are intermittent because of poor production planning or inefficient resources replenishment process. All these results to delayed orders, thus shipping demurrage.


Notes:

1 Stevenson, William J. (1990). Production/Operations Management 3rd ed. New York: Richard D. Irwin/Toppan, 1990. p. v. back to text

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