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Handling/Planning a Manufacturing Structure with variable component ratio

  • 17 October 2023
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  • Katie
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Hello,

I would be really interested to hear thoughts on the following situation. I’ll use a ready meal process as an analogy.

We have a process that creates a product (mash potato), from a blend of potato A (peeled potatoes) & potato B (skin on potatoes) . Both types of potato are bought in as raw material. This blend can be a range of 30%-70% potato A, but varies each time the process is run, as done by eye as exact ratio is not important. Over a year it balances out at ~50% which can be the assumption for costing.

 

The mash potato is then immediately used in 10 different end products. E.g. 250g in 10 different types of ready meal.


From a costing point of view, assuming the mash is 50% of each type is ok.

 

However from a planning point of view, we need to work out the best way to handle & consume inventory of Potato A & Potato B, so we can trigger the reorder process. Currently, the material isn’t back flushed or issued, the inventory value is adjusted manually after a daily stock take, and supplier orders triggered when inventory drops to the re-order level. 

 

We can add a physical step in the process fairly easily to log the number of bags of each potato that have been loaded into the mixer. This data could then be used to deplete the inventory pretty accurately.

 

However as the mash is effectively a blow through part (it’s made continuously to supply the ready meal lines, and is not an end product in its own right), I’m not quite sure of the best process to use to issue the raw material. Would it be best to create a large blanket shop order for the mash that we could issue the bags of potatoes to, and receipt in the mash instantly, so it is available as material for the ready meal production schedules/shop orders? Or is there a better way?

 

I’d be really interested to hear thoughts on how you would approach.

 

 

 

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Best answer by Björn Hultgren 7 December 2023, 08:15

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Björn Hultgren
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If the mash is produced in a batch that later is used in several end products I believe it is better to have this as a real (not a phantom) step in the BOM, and actually create shop orders for it and receive it to stock as mash that is later consumed on shop orders for the end products.

The BOM for the mash would then contain 50% of potato A and 50% of potato B (you can use Recipe Structure to define it as a percentage rather than quantity per assembly as done in the product structure, but both would work).

The Reserve/Issue Method should however be set to Manual. This means you manually on the shop order issue the relevant quantity of potato A and B. So system would accept to receive the mash to stock also when you have issued more or less than the planned quantity of potato A and B respectively.

K
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If the mash is produced in a batch that later is used in several end products I believe it is better to have this as a real (not a phantom) step in the BOM, and actually create shop orders for it and receive it to stock as mash that is later consumed on shop orders for the end products.

The BOM for the mash would then contain 50% of potato A and 50% of potato B (you can use Recipe Structure to define it as a percentage rather than quantity per assembly as done in the product structure, but both would work).

The Reserve/Issue Method should however be set to Manual. This means you manually on the shop order issue the relevant quantity of potato A and B. So system would accept to receive the mash to stock also when you have issued more or less than the planned quantity of potato A and B respectively.

 

Hi @Björn Hultgren thanks for this advice - I think it is the way we will go.

 

One potential issue is that ideally I would like MRP to generate the supply proposals for the raw material (potatoes) based on the forecast for the end products (ready meals), as these are Master Schedule controlled.

 

I have a large blanket Shop Order for the mash (e.g. one month supply, that we receipt against every hour) to try and simplify the manual issuing process. However MRP sees this this blanket SO as demand. I don’t really want to create lots of individual shop orders for mash, to avoid lots of admin.

 

If possible, I would like MRP to only consider the demand from the end product for the supply of raw components and ignore the intermediate blanket shop order. Is this possible to achieve?

 

 

Björn Hultgren
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I’m not aware of any way to bypass the demand from the end product directly to the raw material in your scenario, but maybe you should consider using a production schedule to instead of the blanket shop order for the mash. A production schedule can be generated by simply defining the quantity to produce per day which will spread out the material demand. Receipts from production schedule are simple and will backflush the materials. There’s also some functionality available to calculate a a daily takt/rate from the demand of the end products and generate the schedule based on this. 

 

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Thank you @Björn Hultgren that’s an interesting point about the production schedules that I hadn’t considered.

 

I guess with this method we could still edit the components as we receipt, to reflect the changing % split of the raw material to keep the raw material inventory values correct. I can definitely see how we can use the takt time calc to flow the demand through. 

 

To keep things simple, I think we may start by setting the raw material to planning method B or C (it’s ordered every 3-4 days as storage space is limited). We can calculate total mash requirements from the data in the system and maybe create a report that the planner can use to see any upcoming abnormal peaks/troughs.

 

If this is not enough we can look at the Production Schedule solution (I may swap to a PS anyway, even if we don’t end up using it to drive demand).

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