Distinguishing Materials Management from Project Management

A sometimes overlooked function of production planning, is materials management for new product introduction (NPI).

In our previous article, we covered fundamentals of managing contract manufacturers (CM) value streams.  The goal for NPI is similar: we want NPI prototypes available per a prototype plan and (eventually) a production plan.

Below is a simplified value stream map for a managing a contract manufacturer using “plan, source, make, deliver” as major subprocesses.  The planning function “NPI Materials Manager” is shown with corresponding interfaces and is the focus of this article. 

The goal of NPI materials management is to monitor and execute the desired item (part) and BOM status according to the NPI prototype and production plan.

This is best illustrated with the following categories and questions:

 

Plan Has a prototype plan been established for the finished product? (an input perhaps provided by engineering and/or the NPI project manager). What quantity of each item is required per the bill of material (BOM)? What are the inexpensive items that we know we will need that can be purchased immediately?  (for example, resistors, capacitors for PCBAs). What are the long lead items for which procurement needs to be initiated ASAP? What are the long-lead items that are constrained by drawing release and identified as high priorities for engineering? Is this constraint build into the prototype plan? What items are required sooner to allow time for subassembly builds? (for example, PCBs will be needed for sooner to enable PCBA builds)

Sourcing & Suppliers: Source controlled components are commodities in which the source is controlled by the company for pricing negotiation (leveraging quantity buys) and superior quality (generally specialty components like cables/connectors, heat sinks, printed circuit boards, are purchased from specific suppliers).  What suppliers are the sources of long lead and/or source-controlled items?\ Has contract pricing been negotiated for source-controlled components? Have purchase orders (P.O.s) been placed, including the source-controlled items according to the contract pricing? What purchase instructions are provided to the contract manufacturer (CM) vs. purchases handled by the company and for which items?

Make (Suppliers): Does the item supplier have everything they need to manufacture the item (complete, reviewed drawings/models)? Once P.O.s have been placed, what is the estimated delivery date for the items to the CM? Has the delivery date changed and what is the impact on the prototype plan?   What configuration will the items be delivered to? Are there changes affecting manufacturing & delivery?

Make (Contract Manufacturer): Based on part delivery dates, what is the estimated prototype (finished product) delivery date(s) including estimated assembly & test time? What configuration will the finished product be delivered to? PN and revision changes will therefore need to be monitored and executed. Delivery dates may change accordingly.

Deliver: Prototype delivery to internal customers….what prototype configuration was delivered, and where to? Production delivery to external customers….what is the plan vs. estimated actual?

 

The NPI Materials manager therefore becomes familiar with BOM items and item status according to several considerations:

This resource is therefore immersed in the ‘ecosystem’ of parts, ultimately becoming familiar with BOMS and parts (items) status and can function as the process owner for ensuring the status of parts known, and is integrated into NPI and production build schedules. The work effort for this resource can be significant, especially with a lengthy BOM, multiple NPI, production products and/or multiple CMs.

This resource also ensures continuity from NPI to production therefore is a function best centralized within Operations under Production Planning depending on your organizational structure. However, it’s important to ensure the NPI materials manager isn’t distracted from existing (sustaining) production support at the expense of effective NPI materials management.

With this in mind, NPI Project Managers (trained in the discipline of project management) are not necessarily managing part details, rather are managing tasks and deliverables across multiple functions according to the product lifecycle (PLC) process (such as engineering, test, manufacturing engineering, quality, CM operations, etc.) NPI PMs are often product line specific and might be considered internal customers of the NPI material manager.

Confounding NPI materials management with NPI project management can be a misallocation of resources and sub-optimize the management of the product lifecycle process. 

Maintaining focus on parts status (NPI Materials Manager) vs. activities/deliverables (NPI Project Manager) with a healthy overlap can optimize new product introduction.