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An integrated reference model for production planning and control in SMEs

Article in Journal of Manufacturing Technology Management · October 2004

DOI: 10.1108/17410380410555871

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 Introduction
An integrated reference Manufacturing firms which mainly make
model for production customised products, competing for each order
with other supplier companies on the basis of
planning and control in price, technical expertise, delivery time and
SMEs reliability in meeting due dates are usually labelled
as “versatile manufacturing companies”
(Kingsman and de Souza, 1997). This sector
Alessandro Persona consists of those companies that manufacture
high variety products in relatively low volumes
Alberto Regattieri and and includes engineer-to-order (ETO) and
Pietro Romano make-to-order (MTO) companies, as they
typically do not hold finished good inventory,
being very difficult to predict customer
requirements and specifications (Hendry, 1998).
The authors After the customer order is received, the company
is responsible for design and manufacturing
Alessandro Persona is a Professor based in the Department
activities according to the customer needs and
of Management and Engineering, University of Padova,
Vicenza, Italy.
requirements as stated in the sales order.
Alberto Regattieri is based at DIEM, University of Bologna, Besides that, assembly, testing, installation as well
Bologna, Italy. as after-sales services are also the norm for this
Pietro Romano is a Professor based in the Department type of company. This environment caters for
Electrical, Managerial and Mechanical Engineering, University of complex product structures that have many part
Udine, Udine, Italy. types and each part type has a small quantity order
size. In such a context, each product is almost
Keywords unique in terms of design, manufacturing and
Production planning, Small to medium-sized enterprises, technological requirements and precedence
Software tools constraints. Consequently, the lead time required
to complete all the types of job is high and routings
Abstract processing times are highly uncertain (Babu, 1999;
Ong, 1997). Such uncertainty, added to that
Versatile manufacturing (VM) companies typically manufacture
associated with customer orders, makes the
high variety, mainly customised products in relatively low
volumes, competing for each order with other supplier production planning and control problem a very
companies on the basis of price, technical expertise, delivery difficult one.
time and punctuality. The research presented in this study is Table I highlights the distinguishing features of
included in a wide cross-disciplinary project which involved ETO and MTO environments in comparison with
seven research centres. In particular, this paper aims at make-to-stock (MTS) and assembly-to-order
identifying the general requirements and guidelines for the (ATO) contexts, as summarised by Samandhi
definition of an integrated model of the order to delivery cycle in (1995). Moving from ATO to ETO reveals a shift
a VM environment, which can particularly be suitable for the in two respects: first, the importance of bill of
small-medium enterprise needs. A number of guidelines
materials (BOM) decreases, and secondly, the
emerged, mainly in the areas of customer requirements
information systems becomes more and more
definition and commercial configuration of customer order,
supply and production planning, and intermediate and final a tool for engineering, in addition to its function
project evaluation. of planning and control. All information systems
for customer-order-driven production have one
Electronic access common property, which distinguishes them
clearly from the other systems designed for MTS
The Emerald Research Register for this journal is
production; the central role of the customer order,
available at
that seems a project.
[Link]/researchregister
To sum up, some of the more common
The current issue and full text archive of this journal is problems encountered in versatile manufacturing
available at (VM) systems are as follows (Babu, 1999;
[Link]/[Link] Bertrand et al., 1990; Gelders, 1991; Ong, 1997;
Spencer, 1994).
Journal of Manufacturing Technology Management
Volume 15 · Number 7 · 2004 · pp. 626–640 Received: October 2002
q Emerald Group Publishing Limited · ISSN 1741-038X Revised: May 2003
DOI 10.1108/17410380410555871 Accepted: June 2003
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 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Table I Distinguishing features of the manufacturing environments

Characteristics MTS ATO MTO ETO
Product Standard Defined product family No typical product family customised Fully customised
Product demand Can be forecast – – Cannot be forecast
Capacity Can be planned – – Cannot be planned
Production lead-time Unimportant to customer Important Most important Most important
Key competitiveness Logistics Final assembly Fabrication & assembly Whole process
Complexity of operations Distribution Assembly Component manufacturing Engineering
Uncertainty of operations Lowest – – Highest
Top management focus is on Marketing & Distribution Innovation Capacities Customer order contract
Middle management focus is on Stock control MPS & customer order Shop-floor control & customer order Project management
Source: Samandhi (1995)

Generation of truly reliable price/delivery possible in a VM context if capacity is to be

date quotations planned at the customer enquiry stage. In fact,
This process has a major impact on the possibility enquiries do not arrive in order of importance,
of the firm securing the order, because firms must thus it would be necessary to re-schedule all jobs
maintain their promised lead times to remain each time a high priority job arrives, otherwise the
competitive. Thus, they must be able to promise planned capacity level is exceeded and it may cause
reliable delivery dates (i.e. which can be unacceptable delays to other jobs.
achieved with the available production capacity). From the preceding points, it emerges that VM
This decision is usually made on the receipt of companies encounter a variety of difficulties in
customer order, and it may be set by the customer coping with uncertainty associated with the order
and the salesman with no relation to the required to delivery cycle and, consequently, they often
processing time or, alternatively, it may be set in suffer from delivery unreliability, very long lead
co-operation with production planners and can be time, poor resource allocation, cost increase and
based on the total work content of the job. customer complaints and dissatisfaction. Today,
the increased competition pressure and customer
Balance between conflicting business expectations are forcing many enterprises to
objectives achieve speed and reliability in delivery, reduce
Manufacturing systems simultaneously need to cost of operations, improve resource utilisation,
meet the due dates, deal with high amount of work together with unpredictable flexibility.
in process inventory (due to long lead times), and Information Technology can provide a
minimise the possibility of low resource utilisation. competitive advantage for VM companies, as it can
support them in successfully managing the order to
Inefficacy of conventional production delivery cycle (e.g. collect order information,
scheduling approaches provide complete visibility of the order cycle, access
In a VM environment, the details about product any data in the logistic system, plan and analyse
specification become gradually known during the activities and make trade-offs). However, it is being
development, design and process planning phases. increasingly realised that most ERP based software
This effect makes the production scheduling less systems available are more applicable either to
accurate, and frequently causes revisions of MTS enterprises, which are in a repetitive batch
operations schedule during manufacturing. manufacturing environment, or to large companies
Further difficulties arise because of the presence of (Babu, 1999; Davenport, 1998). These software
multiple machine and capacity constraints systems are not very suitable for VM enterprises,
together with a high level of variability in routing especially for SMEs (Hieber, 1999; Ong, 1997). In
and processing times. This creates inevitable fact, while large companies are capable of investing
conflicts of delivery priorities, which are made huge amounts of capital, manpower and time to
even more difficult by machine breakdowns, modernise their information management systems,
labour absenteeism, delays in delivery of materials SMEs are constrained by limited resources to
and components, etc. improve their technology.
Thus, there is an increasing need for specific
Inefficacy of conventional capacity planning “tools” for small companies which have limited
and control approaches budgets and are looking for proper systems to
“Finite” machine loading is inefficacious, because integrate various activities related to the order
job priorities need to be determined before loading to delivery cycle through robust information
work centres. Predetermining priorities is not management and decision support systems.
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 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

This paper aims at identifying the general Problems and improvement opportunities in
requirements for the definition of a reference a VM environment
integrated model of the order to delivery cycle in The identification of the key problem areas and
a VM environment, which can particularly be recommendation of corrective actions in both the
suitable for the SME needs. Such a model is MTO and ETO environments has attracted
intended to provide a number of guidelines for the a number of research efforts.
development of integrated software solutions for For example, Ong (1997) identifies various
SMEs competing in a VM context. issues of concern, problems, needs and
requirements faced by a small MTO manufacturing
company, and suggests some corrective actions,
such as the introduction of a computer aided
Research approach productivity management system (CAPM).
The research presented in this study is included Selin (1991) highlights the difficulties
in the system for advanced logistics based on associated with project management activities,
interdisciplinary modelling of networks when coping with a network of small and medium-
(SALMONS) project, which involves seven sized sub-contractors (e.g. multi-project
cross-disciplinary research centres dealing with the management, multi-plant, etc.).
development of different disciplinary models Finally, several authors have discussed the
(industrial organisation, accounting, engineering, applicability within the VM environment of the
logistics, organisation, marketing and principles of new manufacturing approaches, such
commercial law) that are to be integrated into a as world class manufacturing (Hendry, 1998),
meta-model. agile manufacturing (Babu, 1999) and JIT
In order to tackle the research objective, the (Storch and Lim, 1999; Schonsleben, 2000).
study has been carried out in three stages.
(1) Stage 1. Literature review aiming to capture
the main idea (i.e. problems, approaches and Customer requirements definition, order/
solutions) from previous researches on the product configuration and cost estimation
order to delivery cycle management in the VM In a VM environment, each product is almost
context. unique in terms of design, manufacturing,
(2) Stage 2. Analysis of the order to delivery cycle technological requirements and precedence
in six VM small-midsized companies of constraints. Thus, some authors (Gyeszly, 1991;
different operations, in order to highlight the Zhang and Li, 1999) highlight the importance of a
main phases of the cycle, the adoption of clear definition of customer needs and propose
software packages, and the major problems methods and procedures to successfully gather
found and solutions proposed. such data since the initial stage of the information
(3) Stage 3. Cross-case comparison, in order to modelling for the product development. On the
identify – even in the light of problems, same stream, Hameri and Nikkola (1999) present
approaches and solutions suggested by the benefits of establishing configuration
literature – the general requirements and management procedures and using an engineering
guidelines that should be taken into data management system (EDMS), which is
consideration for the definition of an a particular kind of a product data management
integrated solution (software packages) (PDM) system. It should be noted that
supporting the order to delivery cycle in a VM configuration refers both to front-end or order
environment, particularly suitable for SME configuration (i.e. translation of customer
needs. requirements into technical requirements to be
used for detailed design and manufacturing
activities), and to back-end or product
VM: problems, approaches, solutions configuration, which generates BOMs and
routings, using information from the planning bills
The problems related to the order to delivery cycle (family bills, modular and kit bills, etc.) and the
management in VM systems have attracted a large detailed design of new parts/components.
number of research efforts. Twelve broad As to final cost estimation and pricing decisions
categories emerged from the analysis of literature in VM companies, such topics are discussed in
– referring to the salient phases of the order to depth by Kingsman and de Souza (1997) and
delivery cycle. Zwikael et al. (2000). Moreover, Westbrook
In Figure 1, these broad categories are labelled (1993) provides a very useful classification of
and the main pertinent contributions in VM customer orders priority management and
literature are provided, together with their orderbook models suitable for ETO and MTO
methodological approach. environments.
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 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 1 A categorisation of literature on VM

Supply and production planning and control scheduling, sequencing and control activities)
A further important stream of literature on VM with the application of concepts of project
deals with production planning and control management. In fact, according to several
(i.e. generation of bills of materials and routing authors (Babu, 1999; Fox and Spence, 1998;
data, master production planning, loading, Tabucanon and Dahanayaka, 1990), the so-called
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“multi-project scheduling systems” – concerning For this reason, two studies conducted by Yeh
with allocation of scarce resources to activities in (1995, 1997) are very significant as they provide
order to be sure that multiple projects are (1) an integrated data model for combining BOM
completed by their due dates – seems to be very and routing data in the MTO context and
suitable in a VM environment, especially when (2) an integrated planning and control approach
products have long lead times. For example, – called schedule-based production – which
Tabucanon and Dahanayaka (1990) suggest that, overcomes the logical weaknesses of MRP/
in the case of very complex customer MRPII and produces realistic and workable
requirements, sub-project based planning can be production and material schedules, allowing
really useful as an effective approach for increasing for planning flexibility in production jobs,
flexibility in production planning and control work centre capacities and materials ordering
activities. De Heredia Scasso and Santana Larenas decisions.
(1991) describe how the Project breakdown In VM environment, the conventional approach
structure (PBS) – a typical project management for designing a unique BOM for each model or
tool – can be suitable for a VM environment. variant of a product is not suitable because the
Interestingly enough, in VM environment, each number of variants may be really huge. The studies
line item (i.e. an end product that requires its BOM by Bertrand and Wortmann (1992) and Olsen et al.
and routing data) on a customer order generates a (1997) provide procedures for generating and
number of associated work orders (jobs) that need managing the structures of BOM that are also
to be scheduled and controlled. Moreover, Master useful in the VM context.
production scheduling is even more complicated,
as very often planners use to schedule not only real
customer orders but also “virtual” or “blind” Case studies
orders –, e.g. orders not generated by a real
customer request, and launched in order to cope Case A
with the long supply and manufacturing lead times. Company A produces automated lines for
Virtual orders become real when they can be napkin packaging (about 80 machines per year).
associated to confirmed customer orders. On average, about 30 per cent of the final product
Thus, Master production scheduling is very is composed of special parts that need to be
thoroughly designed ex novo.
similar to a multi-project system in which a large
Figure 2 summarises the salient activities
number of detailed activities/jobs compete for the
associated with the order to delivery cycle within
same mix of resources. A problem widely
company A. In order to improve the readability,
considered in literature is to find a feasible
just the main activities, and the most significant
schedule that could minimise resource loading
links between them have been exhibited.
peaks without increasing the proposed data
Sales office is responsible for the initial contact
milestones. For example, the methodology
with customers to define product price and delivery
proposed by Martinez et al. (1997) has been
date. In doing so the sales personnel use a
applied to estimate the speed-up of each project for
catalogue, called “product list”, in which each
different levels of the resources assigned to it. family of machines is explored in about 50 different
Kolish (2000) solves the problem of scheduling priced “functional groups”. A functional group is a
multiple MTO assemblies; Khamooshi (1998) part of the machine that carries out a specific
relates to a dynamic priority scheduling model; activity – such as labelling (i.e. labelling group) and
Nudtasomboon and Randhawa (1997) develop lifting the tools (i.e. pneumatic group). About 25
solution algorithms for three single-objective per cent of the initial offers are confirmed by the
problems (time minimisation, cost minimisation customer. In this case, sales office releases an
and resource levelling) in the presence of internal commercial order (for example, for a full
renewable and non-renewable resources, and optional packaging line) detailed in several line
time-resource trade-offs. items (machines and replacement parts), each one
Another important issue in multi-project generating a job to be made. In the case of parts that
management is real-time costs and time need to be designed ad hoc, engineering is fully
monitoring. Hansen et al. (1998) provide a wide externalised, while the creation of BOMs and
review on this issue and present a generic reference routings is in-house. Once all parts are thoroughly
architecture for an automatic real-time defined, the planner manually schedules the supply
production control that could be useful in a VM and manufacturing tasks.
environment.
An effective production planning and control Major problems found
cannot be fulfilled without identifying materials .
Time consuming and imprecise customer
required at each operation in the job routing. specifications collection, since no formalised
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Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 2 Order to delivery cycle in company A

configuration tool is used to gather information Hull blocks are commonly the largest sections of
necessary to begin product development. the ship built away from final building site.
.
No standardisation and consequent Ship-building has characteristics similar to the
proliferation of parts. civil engineering and construction industry. It is
.
Conventional approach for designing BOM. a non-repeatable project (job) built to order.
.
Inaccurate materials requirement planning Figure 3 describes the entire order to delivery cycle
and capacity planning (assembly resource processes. Interestingly, the front-end part of the
loading). cycle is similar to case A, and the main difference
.
Inefficacy of the shop-floor control regards the product design, which is fully
system to react to frequent changes in outsourced, whereas the creation of BOM and
assembly plans. routing is maintained in-house.

Major problems found

Case B . Delivery date and cost estimations are usually
Company B is a mid-sized shipyard (capacity of not respected.
1,40,000 h per year). Ship-building can be viewed .
Low resource utilisation.
as a process that begins when a ship-owner .
Very high lead time and WIP.
perceives a need for a vessel, and proceeds through .
No integration in project planning and
a number of stages of paperwork (design, scheduling, and imprecise supply planning.
contracting, planning and scheduling), and that .
Absence of an intermediate stage for the
culminates in a massive collection and joining of project performance evaluation.
parts and components to manufacture the ship.
The process involves a number of specific stages:
development of customer requirements, Case C
preliminary/concept design, contract design, Company C produces extrusion lines for
bidding/contracting, detailed design and polypropylene filament production. The order
planning, construction, sea trials and delivery. to delivery process is charted in Figure 4.
These activities need to be performed in an The product is really complex and is divided into
overlapping and parallel fashion to reduce the about 25 functional groups. This case is very
overall lead time, which usually ranges from interesting because production is extensively
8 to 12 months. The ship-building process is outsourced and some high-tech parts are
divided into three large groups; hull (structural assembled directly by suppliers. Thus, supply
body), outfit (machinery) and painting. network coordination really becomes a critical
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Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 3 Order to delivery cycle in company B

Figure 4 Order to delivery cycle in company C

activity, and company C adopts an ad hoc tool for .

Low standardisation and modularity.
synthetic supply, production and assembly .
Very high lead time (one year).
planning in a multi-project environment. .
Conventional approach for designing BOM
Major problems found and absence of planning bills.
.
No systematic past data collection for final
.
Remarkable time losses for manual data entry
cost estimation and pricing definition. in the ERP system (BOM and routing).
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 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

.
Difficulty in Master Plan change .
Difficulties in updating and recalculating
management. MPS.
.
Inefficacy of the shop-floor control system to
react to changes in production and assembly
Case D plans.
Company D produces automatic lines for
polyethylene bottle manufacturing (about 60 per
year). The final product is strongly customised. As Case E
to the order to delivery cycle (Figure 5), during the Company E produces automated lines for plastic
negotiation with customer a preliminary feasibility tube production. About 85 per cent of final
analysis study is conducted in order to verify the products require a heavy design activity. Time to
availability of critical components. The final line is market ranges between two and six months.
configured using a simple database developed in As shown in Figure 6, sales agent is thoroughly
Microsoft Excel environment. Unfortunately, autonomous during front-end activities, and is
BOM data entry on ERP system is still manual and free to decide final price and delivery date.
takes a very long time. Then, sales office works out Consequently, price and time estimation are often
a Master Production Schedule, while a MRP not respected. Configuration management is fully
system is currently used to explore the purchasing manual; an experienced person, through a book that
and production orders. However, it should be contains about 280 different BOMs referred to past
noted that planning activities are limited to the first productions, composes like a puzzle, the customer’s
level of BOM (functional group level), as code order as an aggregation of standard, variant,
proliferation (about 800 new parts per week) optional and special groups. In the case of non-
prevents updating of BOMs and routings in the existent parts, he contacts the engineering office
ERP system. asking for the design. The latter usually provides
a one level technical BOM that the planning office
Major problems found can modify before manually entering into the ERP
.
Time consuming and imprecise customer system, in order to make it suitable for
specifications collection, because of the huge manufacturing and assembling activities.
amount of information necessary to begin
product development (strongly customised) Major problems found
without using an appropriate configuration tool. .
Time consuming customer specifications
.
Time losses for manual data entry in the ERP collection and imprecise price and delivery
system (BOM and routing). date estimation.

Figure 5 Order to delivery cycle in company D

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Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 6 Order to delivery cycle in company E

.
No standardisation and consequent production orders are released. It is very important
proliferation of parts. to notice that production orders are distinguished
.
Time losses for translation of technical BOMs from commercial orders, because the former could
into BOMs suitable for manufacturing be “blind” orders (i.e. without an associated
activities. commercial order), while the latter are confirmed
.
Inaccurate materials requirement planning customer orders that generate production orders.
and capacity planning. Finally, MRP system and a finite capacity
loading software allow the definition of materials
and capacity plans.
Case F
Major problems found
Company F produces automated lines for marble
cutting and finishing (about 1,000 per year, time to
.
Problems due to the integration of five
market about three months, assembly lead time different software packages.
about 15 days). As shown in Figure 7, sales agents
.
Absence of a real-time shop-floor control
use Microsoft’s Excel to provide a rough-cut system.
estimation of final costs, without exchanging
.
No intermediate and final project
information with the technical office. Delivery date performance evaluation.
is estimated through a Project Management tool
.
Inventory management difficulties.
(Microsoft Project integrated to ERP by
Microsoft Access), where each order is Cross-case analysis and discussion of
portrayed as a long activity in a multi-project results
environment. As to materials requirement
planning, the Project Management tool allows the As suggested by Yin (1984) and Ellram (1996),
definition of a detailed MPS with orders split into in order to identify the general requirements and
three macro-phases: design, purchasing and guidelines for the definition of a reference
assembly. integrated model of the order to delivery cycle
As soon as the customer confirms the order, in VM environment, the six cases have been
specifications are loaded onto a product cross-analysed.
configuration software that automatically Table II reports a synthesis of how the main
generates BOMs for all the parts and components phases of the order to delivery cycle, which
already manufactured in the past. As to ETO parts emerged from the analysis of literature, are covered
(about 30 per cent of the total number), BOM is by the solutions currently adopted within each case
manually generated. After the BOM is completed, studied.
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 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 7 Order to delivery cycle in company F

Table II exhibits the following major problems/ master production scheduling tool should be
needs encountered by the companies in managing integrated with the project requirements
the order cycle. planning module, which is responsible for
(1) Customer requirement definition and detailed materials and capacity requirements
commercial configuration of customer order, planning, and production and purchasing
which ask for the need of a “double-side” order release, and with a finite loading system,
configuration tool to be used in the which is responsible for manufacturing
commercial requirement definition phase, to capacity constraint scheduling. It should
collect information for making the feasibility be noted that the high frequency of new part/
analysis – e.g. rough-cut capacity and component generation day-by day (up to 1,000
materials availability, price/delivery date new codes per week in the cases analysed)
estimation, etc. (“commercial side”); and makes it convenient for the MRP/CRP
after the order confirmation, to automatically module to work just at the level of
generate BOMs, routings, and all information functional groups without going into deeper
required for detailed supply and production detail.
planning (“technical side”). (3) Intermediate and final project evaluation,
(2) Supply and production planning, i.e. the need refers to the need of monitoring and
of a two level master production planning tool controlling the projects on their progress to
which can work in a multi-project assess their performance, by comparing
environment. The first level should be monitored observations with project plans,
integrated with the “commercial and to intervene to make the changes which
configuration tool” in order to provide a first will bring them back to plans. Surprisingly,
attempt to plan the design, supply and Table II shows that such requirements are
production activities associated with the completely not satisfied in the cases analysed!
customer order, check capacity and material The adoption – in addition to the
availability, and propose a likely delivery date. conventional Gantt diagrams, PERT and
The second level should provide the detailed CPM/CPA – of advanced project planning
production and capacity plans after the tools, such as the stocastic methods
customer order is confirmed. Clearly, this tool (e.g. GAN, GERT, GERTS, VERT, etc.) and
should be integrated with the “technical some project control tools (e.g. Earned Value
configuration tool”, and the plans it generates Method, S curve, crashing analysis, etc.)
should be coherent with those produced by could better support project monitoring and
the first level. Moreover, the second level control.
635
 Table II Cross-case analysis
Generative BOM
Customer Product Final product Manufacturing processing and job Material Scheduling Cost and
requirement configuration structure Final cost and supply routing requirement and resource time
collection management modellisation estimation Risk analysis planning management planning assignment monitoring
Case Product list – – Based on – Manual project Traditional BOMs – Infinite Absence of
A Absence of similar past planning capacity real-time
formal orders Single project loading shop-floor
An integrated reference model

procedure environment control

Case Satisfied by the – – Satisfied by – Manual project Traditional BOMs – Satisfied by Absence of
B current SW the current planning the current real-time
package SW package Single project SW package shop-floor
Alessandro Persona, Alberto Regattieri and Pietro Romano

environment control
Case Absence of Manual product To be improved – – Computerised Traditional BOMs – – Absence of
C systematic data configuration through in some project planning real-time

636
collection functional group aspects Multi-project shop-floor
book environment control
Case Use of a To be improved Satisfied by the – Limited to Manual project Satisfied by the current MRP system Satisfied by Absence of
D database particularly order current SW availability of planning SW package currently the current real-time
running on configuration package critical parts and Single project used SW package shop-floor
Microsoft Excel components environment control
Case Absence of Manual product To be improved – – Manual project To be improved – – Absence of
E systematic data configuration through in some planning real-time
collection functional group aspects Single project shop-floor
book environment control
Case Use of a To be improved Satisfied by the – Feasibility study is Computerised Satisfied by the current Satisfied by Satisfied by Absence of
F database particularly order current SW conducted in term project planning SW package the current the current real-time
running on configuration package of costs Multi-project SW package SW package shop-floor
Microsoft Excel environment control
Volume 15 · Number 7 · 2004 · 626–640
Journal of Manufacturing Technology Management
 An integrated reference model Journal of Manufacturing Technology Management
Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

Figure 8 represents the salient phases of the requirements particularly suitable to make
proposed integrated model of order to delivery a first attempt to plan the design, supply
cycle for VM companies. This cycle has been and production activities associated with
developed in the light of shortcomings, problems, the customer order in a multi-project
approaches and solutions found in the literature environment.
and highlighted by the analysis of the six cases .
Feasibility analysis, risk analysis, cost and
studied. In particular, the activities that should be delivery date estimation (i.e. first level
taken into consideration by commercial SW master production schedule).
developers for the definition of an integrated .
Offer drawing up, negotiation and order
solution supporting the order to delivery cycle in confirmation.
VM environment (which correspond to the three .
Order placement, referring to the
problem areas previously described) are generation and release of an internal
highlighted by different thickness boxes. commercial order – which corresponds to
To sum up, an integrated solution supporting a “project” – consisting of several line
the order to delivery cycle in VM items (i.e. “sub-projects”, each one
environment should be able to encompass the associated to an end product that requires
following phases. its BOM and routing data) each one
(1) Front-end – before order confirmation: associated with a number of work orders
.
Customer requirements definition, (jobs and sub-jobs) that need to be
referring to both real customer orders and scheduled and controlled.
“virtual” orders, which need a rough-cut
feasibility analysis, price/delivery date (2) Engine – supply and production activity
estimation and negotiation before being planning.
confirmed. .
Technical configuration of customer order,
. Commercial configuration of the customer i.e. design of new functional groups, parts,
order, i.e. translation of customer components, generation of BOM and
requirements into rough-cut technical routings.

Figure 8 The proposed integrated model of order to delivery cycle in VM context

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Alessandro Persona, Alberto Regattieri and Pietro Romano Volume 15 · Number 7 · 2004 · 626–640

.
Customer order modelling for a .
Remarkable time losses for manual data entry
multi-project environment, i.e. definition of BOM and routings in the company
and codification of links between, databases, and of information on commercial
customer orders, line items and work orders in project management planning tools
orders, splitting into macro-activities (e.g. Microsoft Project).
(WBS, OBS, PBS), milestone definition. .
Lack of customer order modelling suitable for
.
Detailed master production planning and multi-project management approach
capacity planning in a multi-project (e.g. WBS, order splitting into
environment, referring to both the sub-projects, jobs and sub-jobs, milestone
customer order as a whole and to the work definition, etc.).
orders it generates. .
Absence of shop-floor and project monitoring
.
Project requirements planning, and control, intermediate and final project
i.e. materials and capacity requirements evaluation, performance measurement
planning, production and purchasing systems, etc.
order release.
On the other side, current market offer of software
.
Finite loading.
packages does not properly support the needs of
(3) Back end – supply and production activity SMEs, which have limited budgets and personnel
control. competence in production planning and control.
.
Real time supply and shop-floor time and Firms ask for integrated or compatible software
cost monitoring. solutions including configuration tools which can
.
Intermediate (e.g. milestones) and final help them in product customisation and final cost
project performance evaluation. estimation, packages for feasibility and risk
analysis, user friendly planning systems suitable for
multi-project environment and supporting project
monitoring and control activities.
Conclusions On the basis of the results of cross-case
comparison and in the light of problems,
The characteristics of VM environment (i.e. high approaches and solutions suggested by literature, a
product variety, low volumes, customisation, long number of generalisable guidelines for software
lead times, uncertainty, etc.) make the order to development, have been identified and described,
delivery cycle and production planning and mainly in the areas of:
control, two really complex value adding .
customer requirements definition and
processes. Information Technology can provide a commercial configuration of customer order;
competitive advantage for VM companies, as it can .
supply and production planning;
support them in successfully managing such .
intermediate and final project evaluation.
activities, but it is being increasingly realised that
In conclusion, the article contributes to SMEs by
most of the ERP systems currently available are
trying to identify the general requirements for the
more applicable either in a repetitive batch
definition of an integrated reference model for
manufacturing environment, or in large
the order to delivery cycle in a VM environment.
companies. The research objective was to identify
Starting from such guidelines the study proposes a
the general requirements and guidelines for the
theoretical model that is intended to be
definition of a reference integrated model of order
implemented and tested in the following
to delivery cycle in VM environment, which can be
refinement stages of the research project in order
particularly suitable for the small-medium
to highlight major problems and disadvantages.
enterprise needs.
By analysing the existing literature on the topic
and six cases of VM small-midsized companies
operating in different industries, it was possible to References
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