Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

4.5.4 Selecting an Appropriate Branch Model, Production Type, and Concept for Planning & Control

Intended learning outcomes: Identify the concept of branch model in logistics and operations management. Explain why it is not possible to simply identify a branch model with a specific production type and a specific concept of planning & control.



As the figures in the previous sections show, the branch of industry or service is indeed related to many of the characteristic features of planning & control. Facility layout and the product variety concept thus prove to be the most important features with regard to the pragmatic development of concepts for planning & control.

A branch model in logistics and operations management encompasses concepts appropriate to specific branches, including suitable types of business processes and business methods.

Do such branch models really exist? Let us take as an example the company ABB Turbo Systems (www.abb.com/turbocharging) near Zurich, Switzerland. ABB produces turbo-chargers for ship motors, each unit according to customer order. A turbocharger is de facto a machine with high value-added. ABB produces many production structure levels in-house. What we find is that the application of a unique production type or a unique concept for planning & control would lead to problems in many domains of the enterprise operations:

The main business is the sale of customized machines with multiple variants. The appropriate production types are one-of-a-kind production and — from a systems capability viewpoint — single-item-oriented line production. Thus, the variant-oriented concept has to be applied for planning & control.

Many components and semifinished goods are variant independent and can be produced for a large span of the value-adding chain independent of any customer order; that is, make-to-stock, with frequent order repetition. The appropriate production type is batch production, or — from a systems capability viewpoint — job shop production. The appropriate concept for planning & control can be a simple pull principle (reorder after consumption), which is listed in the figure above under the Lean/JIT concept.

The service parts business, finally, is considered to be just as important as the main business, and this with reason. There, characteristic features are important, such, as for example, backtracking down the history of the machine configuration to the one used for the original production order. The availability of service parts stands in the foreground. The service parts are often just one production structure level above the components and semifinished goods for the main business. But, in contrast to those, the consumption of service parts is lumpy. Thus, the simple pull principle cannot be applied for planning & control. MRP, or the time-phased order point technique of the MRP II concept, based on appropriate forecasting techniques, can be used here. Again, job shop and small batch production is an appropriate production type.

This example clearly illustrates that it is not possible to simply identify a branch model with a specific production type and a specific concept of planning & control. Generally, several production types and concepts for planning & control have to be implemented in parallel in a given company, as indicated by Figure 4.5.4.1. This Figure refers to the characteristic Figures 4.5.1.1, 4.5.2.1, and 4.5.3.1 developed in the previous subsections.

Fig. 4.5.4.1        Several production types and concepts for planning & control have to be implemented in parallel in a given company.

Vice versa, a specific production type or concept of planning & control is generally valid in different branches. This is one of the reasons why researchers and professionals emphasize the standardization of these production types and concepts of planning & control rather than encourage branch models. Of course, for a given branch, it can be useful to adapt some of the terminology to the common usage in that branch, as well as to further develop the general planning & control techniques with a view to the specific needs and terminology of that branch.

Chapter 9 will present a similar discussion with regard to MRP II and ERP software. At present, there seems to be no simple software available that covers all kinds of production types or concepts for planning & control. Moreover, simple reorder for the components after consumption can be controlled by the Kanban technique (see Section 6.3), which in the eyes of many professionals requires no software at all. As is the case for the underlying production types and concepts for planning & control, a specific MRP II / ERP software package — such as SAP R/3 — can generally be used by different branches. Again, branch packages are available — for example, for furniture production — where specific techniques are implemented in a “branch-customized” way, using branch-customary terminology and graphical user interfaces that represent familiar business objects in the branch.




Course section 4.5: Subsections and their intended learning outcomes

  • 4.5 Branches, Production Types, and Concepts for Planning & Control

    Intended learning outcomes: Describe branches of industry in dependency upon two characteristic features, "volume versus variety". Explain in detail production types and concepts for planning & control. Disclose selecting an appropriate branch model, production type, and concept for planning & control.

  • 4.5.1 Branches of Industry in Dependency upon Characteristic Features

    Intended learning outcomes: Produce an overview on branches of industry. Explain different branches in dependency upon the two features facility layout and product variety concept.

  • 4.5.2 Production Types

    Intended learning outcomes: Produce an overview on production types. Explain the different kinds of facility layouts seen — from a systems capabilities viewpoint — as production types together with other production types.

  • 4.5.3 Concepts for Planning & Control

    Intended learning outcomes: Present the concept for planning & control. Explain different concepts of planning & control in dependency upon the features facility layout and product variety concept.