Proceedings for Second World Conference on POM and 15th Annual POM Conference, Cancun, Mexico, April 30 - May 3, 2004
Abstract Number: 002-0468
Manufacturing Production Planning System Based on Agile Supply Chain Management[1]
Zhixiang Chen
(School of Business, ZhongshanUniversity, Guangzhou,P.R. of China, ,
Phone: 86-020-84114149, Fax: 86-020-84036924)
Abstract:Production planning is the core component of MRPII/ERP, but traditional MRPII or ERP lack enough flexibility and responsibility to the outside uncertainty from supply and demand. This paper studies new production plan method for manufacturer in the environment of agile supply chain. The main characteristics of the new system is that it is based on the coordination theory of supply chain, uses the MAS technology to support the decentralized coordination of supply and demand information; one coordination mechanism model based on three level coordination structure is advanced; in order to increase the agility of MPS, new method of uncertainty management method using advance demand forecasting and order process model is studied.
Keywords: Agile supply chain, Production planning, coordination
1. INTRODUCTION
Production planning is the core of production system in manufacturing enterprise, with the development of market economy directing globalization and internationalization, the pressure of uncertainty from demand and supplying is increasing. When demand and competition environment is relatively stable, production planning is simple, but when demand and environment change dramatically, production plan system needs more responsive ability to suite the change, Production planners need continuously adjust their production plan to meet the uncertainty, such as Banerjee (1997) pointed out, “in spite of many millions having been spent in manufacturing planning and control systems…. no real solution to the need for greater responsiveness and flexibility has been found”. In the last decade, time and flexibility have become two key competition advantages in marketplace. In order to meet this changing environment requirement, new management modes are emerging; among all management theories and practices, supply chain management is one of the most important management modes in this fast changing market environment.
Agile supply chain management is one time-based competition strategy. In today’s ever changing markets, maintaining an efficient and flexible supply chain is critical for every enterprise (Anshuman Gupta, Costas D. Maranas, 2003). In the environment of agile supply chain, production plan decisionmechanism and condition is different from that in traditional production environment, more requirement for information sharing and coordination of decision between partners is need,. In this paper, the author studies the new production planning system for agile supply chain, advances new decision strategies for production planning.
2. FRAMEWORK OF PRODUCTION PLANNING BASED ON AGILE SUPPLY CHAIN
In order to implement the seamless linking of supply chain, the operation of every partner in the supply chain should be synchronized, such a synchronized supply chain plan ensures all partners in the supply chain can share the global information of demand, this would enhance the true degree of information transferring, reduce the effect of “bullwhip”, increase the ability of supply chain response to market.Figure 1 is the relation between uncertainty and agility in production planning for agile supply chain. The basic thoughts here is that through changing the decision mode of production planning to construct two dimensions agility of production planning for agile supply chain, i.e. demand agility and supply agility, which respectively respond to the demand uncertainty and supply uncertainty. Through this new decisionmechanism, the production planning will synchronize supply chain downstream and upstream.
Figure 1 Relation between uncertainty and agility in production planning for agile supply chain
According to the requirement of synchronized plan of supply chain management, we develop a new system of production planning and control based on agile supply chain, figure 2 is thebasic structure of this new system, the core thoughts of this system are the three-level coordination mechanism, i.e., decision coordination, information coordination, and operation coordination.
Figure 2 model of production planning and control system based on agile supply chain
The model integrates the three levels production planning activities of MPS, MRP, operation schedule and the three levels production control activities of order priority control, production resource control, and operation process control. Because both the decision-making of production plan and the implementing of production control need the support of suppliers, distributors and customer, so this is also a production planning and control system based on multi-level coordination and multi-agent integration
The operation of multi-level production planning and control system depends on two important running mechanisms and the guarantee of running environment. The two mechanisms are three-level coordination mechanism and principal agent mechanism; the running environment is information integration.
3. METHOD OF IMPROVING THE AGILITY OF PRODUCTION PLANNING
3.1 Improvement of agility of MPS
MPS (Master Production Scheduling) is the driver of production planning, which integrates the information from demand and supply, coordination capacity and demand in any manufacturer. So the first and also most important step for improving agility of production planning is improve the agility of MPS. Figure 3 is the principle of realizing this idea.
Figure 3 principle of improving the agility of MPS
The process flow of Master production schedule (MPS) in figure 3 considersthe tow types uncertainty, demand uncertainty and supply uncertainty. In order to fast respond to the change of demand and supply chain, we develop one new method of demand forecasting and order processing.
3.2 Information sharing mechanism for improving agility of production planning
Information sharing is an important strategy for supply chain management; effective supply chain management is not possiblewithout information sharing.
With the development of information technology, the ability of information sharing is being increased in many companies. In multi-echelon inventory, information sharing can help to reduce the bullwhip effect, make the whole supply chain seamless linking.
Many authors have researched the problem of information sharing, such as Lee et.al (1997), Sophie D’Amours et.al. (1999), Srinagesh Gavirneni (1999), but most of those researches only involve inventory information. In fact, the information sharing is various; it can range from production plan to inventory, demand, product design, and quality.
The best method of information sharing is make all cooperative members can gain the real time information from right source when they need information, figure 4 is the model of the information sharing mechanism for improving agility of production planning.
In order to establish information sharing mechanism among enterprises in supply chain, some key technological problems need to be solved, such as:（1）information communication technology, such as EDI and Internet technology;（2）real time information sharing technology, (3) information integration mode.
Figure 4 Information sharing mechanism for agile production planning
4. CONCLUSION
Production planning is the core component of MRPII/ERP, but traditional MRPII or ERP lack enough flexibility and responsibility to the outside uncertainty from supply and demand. This paper studies new production plan method for manufacturer in the environment of agile supply chain. First, one basic structure of production planning realizing improving the agility of production planning is advanced, which is based on the three level coordination mechanism. Then the paper discusses the two key technology, i.e., improve the responsiveness of MPS and information sharing mechanism. In the improvement of MPS, we consider the coordination relation of demand supply uncertainty through new demand forecasting and order process model. In the aspect of information sharing, we use multi-agent system (MAS) technology; support the distributed decision of production planning.
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[1] This research is supported by the National Natural Science Foundation of China (granted number: 70271023)