Using MARS-IW to Drive a Kitting or Manufacturing Operation

Charles J. Bodenstab

As distributors strive to ad value to their operations, they frequently will perform some sort of processing to the products they offer. This may be as simple as a kitting operation where a group of items are put together in a kit, and sold as such, or it may be a bona fide manufacturing function where items are modified by some manufacturing process and sold as an entirely different product.

In either case MARS-IW allows the user to both order the individual parts in anticipation of the processing function, and also to schedule the actual assembly or manufacturing process itself.

For ease of discussion I will refer to the finished product as the “kit” which will be the same for kits and for products where some manufacturing activity has been performed. The use of MARS is the same in either case.

First of all, note that if the final kit is made to order (e.g. there is no need to assemble in anticipation of demand), then our concern will be with forecasting and ordering the components only. If the kit is being made in anticipation of orders to be filled from inventory, then we will be interested in forecasting and ordering both parts, and the finished kit.

Generally, two different situations will exist which we will address separately.

Parts Are Sold Individually And As Components For The Kit

In many cases, some or all, of the parts that make up the kit are also sold individually and we must consider the availability of the parts for both functions. In this situation we will order parts from their respective vendors exactly as we would under normal circumstances. The only difference is that the “demand” or sales history should include both the direct sales for the individual parts, and the transfers of the parts into the kit making facility. The host computer must be able to handle this function of keeping track of the demand for the individual parts.

In this phase of the effort, MARS will insure that sufficient stock exists to supply the direct sales, as well as the parts needed to fulfill the kit building requirements.

The second phase of the effort relates to the need to forecast and schedule the production of the kits (or manufacturing process). To accomplish this function, first insure that all the kits have their own unique stock number. Secondly, tag all the kit numbers with some arbitrary “vendor code”. This vendor code can be any unique number, the purpose of which will be to simply gather all these items up for the reordering (or in this case scheduling) function. In a sense the “vendor” for these kits is the manufacturing or kitting function. Incidentally, if you have more than one kitting function, just set up separate vendor codes for each function.

For this operation the various MARS parameters operate exactly as they would in a normal reorder process. For example:

Order Frequency--Becomes simply the “production bucket” or the number of days being scheduled. For example, if you were creating weekly schedules, the order frequency would be seven days.

Lead Time--Is the longest length of time it will take product to be available for shipment from the date we are setting up the schedule. Consequently, if we were setting up weekly schedules and were creating the schedule Thursday of the week before the actual production, then the lead time would be eight days. (The following Friday is the latest time product will be available.)

EOQ--Palletizing--Vendor Minimum--All these parameters have a counterpart to drive the schedule in the direction you want. For example, EOQ can now deal with optimizing the run size of a particular kit. If the set-up cost of the kit is twenty minutes, which equates to about five dollars of labor time, then the “ordering cost” that drives the EOQ calculation can be set to five dollars rather than the normal fifty cents to a dollar. Palletizing, both mandatory and subjective, and vendor minimum both have obvious counterparts to the manufacturing or assembly process.

Parts Are Not Sold Directly And Are Used Only For The Making Of Kits

In this situation the process offers one additional alternative. You can run the process as above with MARS ordering in the components based on their historic consumption to make kits. Your lead time is then the same as discussed above since MARS assumes that the components are in stock (with 95% or higher assurance) and the only lead time is the length of the production cycle.

The other approach is to use MARS to create the production order, but use a lead time that is consistent with the longest lead time of one of the components. This schedule would then be for a week that is out into the future by the number of weeks inherent in the lead time used. This production schedule would then be the input to an MRP (materials requirement planning) program or a simple bill of materials ordering system. These systems would then order the components, which then would be available by the time the production schedule was to be run.