Theory of Constraints Handbook - James Cox Iii [189]
The feedback process requires reporting when an order arrives at any work center in the list of “to be watched” and reporting when that order has been completed at that work center. In order to implement this process, the organization needs both the appropriate software for reporting and the discipline of the operators to report it accurately.
Generic Issues in MTA
MTA for Components
The main essence of MTA is the combination of marketing and operations. Let’s now consider the possible value of producing certain common components to availability. Here we are speaking of common components used in MTA finished goods for customers. Like in the original meaning of MTA, we better have a strong commitment to maintain excellent availability of those common components. The point is that in planning the production of the end products, either to order or to availability, it would be possible to rely on the availability of the common components. The value, when it is truly applicable, is a major cut in the production lead time.
The main reason for maintaining stock for common components is to shorten significantly the response time to the market. Another reason has to do with minimizing the significant setup times that are sometimes involved in producing basic parts/materials used in many end items. For instance, in many V-plants, such as plastics or paper, there are a few base materials, which are used in many end items. The primary operation in preparing the base materials (like an extruder) often has very large setup times. The operational problem stemming from the long setups is that many urgent orders for a certain base material emerge all the time, as any demand for one of the huge number of end products creates a demand for one of the base material products. The longer is the wait time for the primary operations, the more end-items and the more production orders enter the red zone, thus putting pressure on the primary operation. Urgent requests (usually for a small quantity of one base material) make it difficult to keep the minimum batch size required to keep that primary resource from becoming a bottleneck. The straightforward solution is to produce those base materials to availability, and then the only urgent replenishment is when the stock of one of the base materials is penetrating the red.
Producing base materials or components to availability splits the entire manufacturing floor into two different environments separated by stock buffers. Both are planned in separate runs, even though one environment feeds the other.
The planning and the BM for MTA of components is the same as for MTA of end items. Note two important points:
1. In order to provide a smooth transition of an item from order to availability, the initial stock must be in place.
2. Every item should be defined as either to order or to availability. If there is a need to produce the same item both to order and to availability, then define the two separate Stock Keeping Units (SKUs), one for orders and the other for availability. This point will be discussed later in the section on mixed environments.
Which Items Fit MTA and Which Fit MTO?
It is quite clear that not every item should be managed to availability. One factor to consider is the level of the demand fluctuations. Here is a simple graphical representation of a typical MTA item demand versus a typical MTO item demand. Let us start with a typical MTA shape in Fig. 10-2.
FIGURE 10-2 Semi-continuous behavior of sales for a typical MTA item.
Sales for an item that nicely fits managing to availability is having a spread of daily consumption that is less than the average daily sales (Coefficient of Variation less than 1). That also means that on most days there are some sales. Such a spread allows for frequent and fast replenishment and the on-hand stock would stay mainly in the yellow.
Other items might have a very sporadic demand that fits a MTO pattern. Most days there is no single sale, but there are days where the clients purchase relatively