This month we'd like to continue in our Job Shops series to give you more insights on Job Shops and ERP software. Click here to read Part 1.
Job shops are common to Northeast Ohio and the Great Lakes region. Job shops cover a wide range of industries but have several common characteristics:
1. Products manufactured are generally to single customer’s design and need
2. Small to medium-size customer orders
3. Production occurs in small batches that is intermittent without the velocity of repetitive or continuous flow manufacturers
Job shops are easy to recognize because their manufacturing processing technologies or materials are often included in the companies’ names. For example, ABC Stamping, Capitol Plastics, VeryBrite Plating, and XYZ Rubber Molding.
ERP software, originally called MRP software, was initially written to solve the component inventory challenges of product-based companies. In fact, it’s alleged that IBM wrote one of the first MRP systems to help plan the thousands of components for its big, mainframe computers. Others suggest that Black & Decker developed the first MRP system to systematically plan component inventory for its myriad of hand tools. Either way, the original intent was product-based companies, and the planning process was driven by a sales/demand forecast.
In job shops, component and material availability is not a business driver. Stock enough resins and pigments, and a molding job shop can make just about any part for any customer provided the presses and molds is available. Stock enough bar stock or coils of metal, and the machine shop or stamping shop can make parts for the world provided the machines and tooling are available.
So, in job shops, the M is MRP becomes a C for Capacity.
Classic, text book MRP is of some use in job shops, but often overkill. Simpler min/max or order point planning on raw materials, especially if incorporate with a Vendor Managed Inventory (VMI) program, is often sufficient. The ERP challenge for job shops lies more in Capacity Requirements Planning or, as it’s evolved into more recently, finite and infinite production scheduling. Some ERP systems even call this Job Shop Scheduling.
CRP and Scheduling routines simulate the flow of intermittent batches of production from start to finish through the shop allowing for queue, setup, run, wait/delay, and move times. They even accommodate operations performed outside at subcontractors.
Some more advanced scheduling systems schedule multiple constraints, especially useful for tooling-intensive job shops. In molding and stamping shops, for example, presses are constraints, but so are the molds and dies, and so are, in some cases, the laborers particularly if the labor requirements vary greatly from product to product.
Classic, product-based MRP systems often fall short in job shops because of their over-emphasis on material availability and under-emphasis on capacity availability. Please contact us here if you have any questions.