The Critical Input for Lean Manufacturing Sales and Operations Planning Using Microsoft Dynamics AX

Note: Scenarios for lean manufacturing typically involve a final assembly cell that produces a family of products.  The family may consist of make-to-stock or make-to-order products or both, and make-to-order products often consist of stocked components.  Each stocked item can be managed by fixed kanbans, where the number of kanbans should reflect the S&OP game plan about the anticipated rate of demand.  In contrast, the make-to-order products can be managed by PTO kanbans (pull-to-order kanbans) with direct linkage to sales order demand.  What follows is excerpted from a new book by Scott Hamilton, Managing Lean Manufacturing Using Microsoft Dynamics AX 2009. It focuses on the S&OP game plan for lean manufacturing of stocked items using fixed kanbans.

The demand plan represents a critical input for Sales and Operations Planning (S&OP) related to stocked items.  In this scenario, the S&OP game plan applies to the family of make-to-stock products produced at a final assembly work cell.  The game plan is expressed as a set of fixed kanbans for every item in the product structures, where the kanban levels (aka number of kanbans) reflect the demand plan.

There are three options concerning the demand plan for fixed kanbans: sales forecasts, the pipeline of actual sales orders, or a combination of both.  These three options are in relation to traditional approaches to make-to-stock products, where the planning calculations suggest planned orders that "chase the demand".  Planned orders provide one coordination tool for traditional supply orders related to purchasing, production and transfers.

Planned orders also provide the foundation for calculating kanban levels for fixed kanbans.  These calculations - ...