• Choose a category
• All
• Classic-Fiction

By Root 2546 0

and effective way. Having the same items under two different management systems is too complicated to be truly optimal in reality. Our clear suggestion is to separate the item SKU identifier of the MTO from the item managed to MTA, even though for all practical purposes they are the same item. When the MTO orders for an item, usually managed as MTA, are treated as orders for a separate item, then there might be a case where the MTO order is expedited even though there is enough stock on-hand to deliver it. A similar case can happen when it seems we need to expedite the production orders for the MTA item, but an MTO order has been finished long before its due date and thus there is enough stock to cover the immediate demand. Our advice is to ignore those cases and simply expedite even though there may be another solution for it, or the production manager can take it on as his own responsibility to stop expediting and make the necessary shift between the two identities of the item (having two different SKUs for the same physical item).

This leaves us with managing MTA items to the side of MTO items. Before we state the solution, we recommend addressing the flawed perception of priority in reality. Put yourself in the shoes of an operator who has to choose between two orders: one is an MTO order, with a specific client willing to pay, the other is for stock, meaning we do not know when a client would buy it directly from stock. It seems that the MTO order has a clear priority because it means “Throughput now,” versus “possible Throughput sometime in the future.”

Suppose the MTO order is to be delivered in three weeks, while the MTA order is for a product that is currently short at the finished-goods warehouse. Would you now also prioritize the MTO order? If not, then what is the rule?

Another perspective is proposed. In MTA, the company is offering a commitment to provide availability. The same commitment is given to a client for the MTO order by specifying a date where the order would be completed. Thus, the issue of priorities means: what are the priorities to follow for the best chance to meet ALL of our commitments? BM yields the green-yellow-red priorities and the claim is that even though both have different sorts of buffers, the meaning of the green-yellow-red, and even the meaning of the buffer status, is exactly the same. When an operator is facing orders with various buffer statuses, he does not need to know which one is MTO and which one is MTA. The color code is the main priority mechanism, with the buffer status as additional, more detailed information.

There is one problem concerning the mixture of MTA and MTO: managing capacity. MTA is stricter in its requirements of maintaining protective capacity of the CCR because in MTO we have the flexibility of quoting longer lead times when necessary. When the amount of MTA relative to the MTO is relatively small, say approximately 15 percent MTA and 85 percent MTO, then reserving 15 percent of the capacity for MTA and basing the time quotation of MTO on 85 percent of the available capacity is an acceptable solution. For all other cases, we suggest taking the MTA capacity management as the overall rule. It means MTO would be handled based on time quotation of standard lead time, assuming it is always possible because there is enough capacity at hand. Having the capacity buffer in place (the ability to increase capacity easily and rapidly) is an excellent way to draw the maximum capacity from the internal resources and using the capacity buffer whenever needed. More on this approach can be found in Schragenheim, Dettmer, and Patterson (2009, Chapter 7).

Dealing with Seasonality

Seasonality poses obvious problems in managing stock in general. Chapter 11 in this Handbook deals at length with this issue, including the dilemma to choose between forecasting the demand and simply following DBM.15

In this chapter, we highlight the acute problem for the manufacturer. Managing capacity is a special problematic area in manufacturing, often for the wrong reasons, such