Although production and materials planning can be overlooked in its importance in most companies if going smoothly, it is cornerstone to success. Unfortunately, when not going smoothly, it can bring a company to its knees. For example, production might not know what to run, changeovers can be out of control, customers become unhappy, materials shortages persist, resources are scrambling to catch up with changing conditions, and chaos ensues. Read more about this topic in our article, The Million Dollar Planner.

An Industrial Equipment Manufacturer Case Study

An industrial equipment manufacturer struggled to keep up with month end sales goals when receiving last minute notice from Engineering of final design of the engineer-to-order item (bills of materials) before the item was scheduled to ship to meet customer requested dates. There were multiple stages to the manufacturing process (fabrication, weld, paint, final assembly), and parts had to be shipped offsite for process steps and married up along the way at the “right” time to make the orders come together.

The bottleneck and pacing item was the machine shop, yet visibility was limited to seeing which parts had to complete production at the same time, and the production schedule was completely manual based upon paperwork on hand since there was a lack of visibility in the system. The production supervisor would go through the work order packets, pick out manufacturing differentiators (size, material type, etc.) and group the packets in piles by the optimal run sequencing. For example, you run different sizes on different machines, and you would sequence by material type to be most efficient with changeovers.

Although the machine shop pulled out the stops on a regular basis to meet sales goals, it required constant expediting and coordination of process steps, was sub-optimal based upon the work order packets available at the time, and the process was completely dependent on a person (who also turned into a single point-of-failure). Since there was a lack of visibility, sales order availability frequently moved from month-to-month, creating concerns with predictability. And the machine shop ran less efficiently than it would have if there was visibility to the full scope of work order packets.

As we provided consulting support to this client, we learned about the optimal sequencing triggers (size, material type, etc.) and looked for ways to identify these triggers sooner in the process. Of course, it is never as easy as it appears. Thus, we had to work upfront in the sales quoting process to get a better picture of the demand plan by adding configuration strings (high-level identification of the item) into the process and system early in the process. By adding this information into sales orders, the team had better visibility to what was coming down the pike prior to Engineering’s final design so that we could gain visibility to plan capacity and materials (master scheduling) instead of reacting to sales orders late in their life cycle. We integrated this visibility into a SIOP (Sales Inventory Operations Planning) process to build a monthly cadence and review of critical sales and operational forecasts.

To address the machine shop scheduling, additional triggers had to be identified and incorporated into the data. Sales order statuses were also key to the process as sales orders went through engineering, production engineering, customer approval, material availability, and work order creation before the items were available to be scheduled. We built these statuses into a planning report along with key triggers and dates (incorporated from a production status review process). Once this report was built, a dashboard was developed for improved visibility and ease of use. This powered the production scheduling process and replaced the packets process so that the system automated the 80/20 and focused attention on what was meaningful to optimize the production schedule and ensure the parts married up at the right time.

Master Scheduling & Production Planning Results

As the client gained visibility to required capacity and materials, they were able to start making directionally correct decisions early in the process with the master scheduling process. As capacity bottlenecks arose, they were able to address proactively before “running into a wall”. For example, we gained visibility that paint was a future bottleneck, and so the head of Operations was able to put together the appropriate capital requests, gain approval, and order an additional paint system to support sales growth goals. Additionally, offload capacity was needed to supplement the weld area, and so leadership was able to pursue additional options prior to negatively impacting customers.

From a materials standpoint, Purchasing was able to look into the future and secure materials ordered from the Russia-Ukraine region while they were still available. While every client struggled to maintain service levels during COVID, our client was able to keep one step ahead and sustain higher levels of service for customers.

As the production scheduling process was upgraded, our client gained visibility to the machine shop and could optimize efficiencies and gain capacity. The head of Operations said he was able to double capacity to support sales growth. The production schedule was no longer dependent on a person; it became part of a process. Thus, this key resource could focus attention on further optimizing machine shop performance.

The Bottom Line

Pay attention to your planning processes as they will drive bottom line business results. Changing from reactive to proactive sounds far easier than it is when you get down to the details, but rolling out the appropriate process, data, and ERP system upgrades will propel progress. If you are interested in talking about implementing a master planning and production scheduling process upgrade to improve visibility and results, contact us.

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Production Planning Best Practices to Recover Capacity

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Does Production Scheduling Matter?

The best companies focus on production scheduling. Even though Production Schedulers aren’t typically highly paid positions, the function will make or break your ability to serve customers, improve operational performance and accelerate cash flow. Thus, it should be a key priority if you want to achieve profitable growth.

Are There Best Practices for Production Scheduling?

Yes, there are best practice concepts for production planning and production scheduling. No matter the client, industry, and people, these concepts “work”. On the other hand, each situation is unique, and so the key to success is to tailor to the different set of circumstances and priorities at each client. For example, there are different people, processes, ERP systems, data sets, customer requirements, and more. The best way to determine your best path forward is to relate to different examples and determine which tools and skills best apply to your situation.

Client Example: Succeeding in Process Manufacturing with Production Scheduling

In an absorbent healthcare products manufacturing company, product started as materials at one end of the production line, was converted into an absorbent healthcare product and was packaged at the end of the line. All things considered, it was a simple process with one step. And, so why was production scheduling important? Depending on the production schedule, downtime, waste, and inefficiencies increased – or decreased. To increase output, better serve customers, and reduce stock levels (of both raw materials and finished goods), we had to schedule the fewest significant changeovers, sequence items in the most efficient order, and ensure the appropriate resources and support were available at key junctures. This optimized production, but didn’t address customer orders. Thus, we also had to balance operational needs with the appropriate inventory levels and sequencing of customer orders to meet customer needs while also optimizing production. After rolling out best practice production scheduling practices, we won awards from customers, improved operational performance, and reduced inventory levels, freeing up cash flow to invest elsewhere.

Client Example: Succeeding in Job Shop Manufacturing with Production Scheduling

In an industrial manufacturing company of storage solutions, there were multiple steps in the production process from fabrication to weld to paint and assembly. Although it sounds obvious, you need to have product available from the step prior before you can start the next step; however, in these types of companies, marrying up parts that go together in the next step operation is often an issue. There is no point in having 1 piece ready if you need all parts for the next operation. Thus, production scheduling must focus on clarifying the customer requirements and backwards scheduling the operational steps. Once you have this base schedule, the key to success often relies on scheduling certain material types together and sizes together. In this client, labor scheduling is also a critical priority to understand which work centers are scheduled to run on which shifts (and days) so that backward scheduling can ensure the correct parts are available at the “right” time. Otherwise, you have too much WIP (work-in-process) inventory and are chasing your tail to keep product flowing. Once a clear schedule was achieved, the fabrication schedule became visible, and production output immediately increased. Next, items could be optimally sequenced to further increase efficiencies and provide visibility to sales of product availability, thereby improving service levels.

Client Example: Succeeding with Kanbans with Production Scheduling

In a building products (piping) manufacturer, there was a combination of process and job shop steps to the production scheduling process. In this situation, we utilized Kanbans to pull product through the operation steps. During the busy season, we’d add Kanban cards and pull product through the process steps quicker. In this situation, the key was to level load the shop and ensure we kept enough resources to support production on a quarterly basis. We developed a high and low number of employees required to support the quarterly volume, and so long as we maintained these employees and/or reliable temporary resources, our Kanban system would meet customer orders in the most efficient way possible. The ERP system was important in supporting the production scheduling process by driving the backend (Kanban sizes, number of cards and barcoding) as well as providing capacity reporting by work cell which translated back to the demand plan. Results followed. They were able to respond more quickly to spikes in demand with higher service levels and were able to minimize costs by level loading production and minimizing spikes/ troughs in operational resources.

What’s In Common No Matter the Consulting Client?

There are a few items in common across the board for every successful production schedule. A few supporting factors that pop to mind include:

• Production scheduler(s): You need a well-rounded resource who is excited about optimizing several conflicting priorities as balancing sales, inventory, and operations is not a good fit for the a person who likes black and white assignments.
• ERP system tools: Whether it is MRP (material requirements planning), advanced planning systems, MPS (master planning), or a report showing orders, inventory, changeover groups, and more, you will need to use your ERP system to create a solid schedule. In 90%+ of our consulting projects, we expand the use of ERP and utilize advanced functionality to improve the process.
• Operational data & information: It is impossible to schedule effectively if you don’t understand your capacity. How many people are required to run certain machines and support different work cells? Do certain products require additional support? Are your people flexible to run multiple machines? Can they go across work areas? How many people do you have in total? How many shifts run which lines? Are support resources in place?
• Customer orders / demand plan: If you don’t know what is needed to ensure high service levels, you cannot schedule effectively.
• Training & education: You will need to prioritize training (how to’s – click here, perform the job in this sequence, etc.) and education (why are you sequencing in this order, what are your order policies and why do they matter).

Don’t fret if these priorities are not in place. In 99% of our clients, they are not in place when we start. Yet most can be quickly put what’s needed in place at least to the degree required to start gaining results. They are not of equal priority in every client. In fact, half the battle is determining what needs to be done in what order, who has the capabilities to jump into scheduling and thrive, how to extract directionally correct data from Operations and your ERP system, etc. What is clear is that if you focus on this priority, your customer service, operational performance and cash flow will thank you!

The post Scheduling Best Practices to Improve Service & Performance appeared first on LMA-Consulting Group, a supply chain consulting firm.

I have yet to work with a client who couldn’t use improvement in their master planning process. Whether a company is squarely on the lean journey, traditional MRP or a combination of both, master scheduling can add value. In essence, a master schedule is a long-term plan which allows you to plan capacity, staffing, etc. Thus, I thought a few strategies for success can be a good idea:

• Think Long-term: to be effective, you need a long-term view.Thus, look out at the long-term. If you do not have sales orders in your system for 12-24 months, you should look at putting together a demand plan for your repetitive items.  Don’t worry about sporadic items except for saving x% of capacity.

• Inventory strategy: Build inventory strategy into your plan. Are there customer commitments for inventory? Do you have a sales & operations plan driving your inventory goals? Do you plan to increase or decrease inventory?

• Apply level loading techniques: Since you have a long-term view of requirements, it provides an opportunity to smooth out production. Take advantage of it!

• Consider lot sizes: Incorporate lot sizing logic for anything noteworthy.Think about economic order quantities.

• Coordinate: A master schedule is useless if not communicated and coordinated with manufacturing, scheduling, purchasing, customer service, etc.

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What is a $1 million dollar planner? And why does it matter?

I’ve always been intrigued by the concept of a $1 million dollar planner, which I define as a planner who provides millions of dollar of value to the your company’s bottom line – which answers the question of why it matters! I come from a planning background, so I have a bias on this subject, yet my perspective is also based in facts. Typically I’ve found that planners are a lower level position (unless they are a planning manager), yet it is a key position that significantly affects the company’s performance – making it a challenge to find the ‘right’ person for the position. Why?

A planner is in the middle of a hornet’s nest by the nature of the role – in essence, this person is coordinating among several conflicting objectives and parties including sales, finance, production, customers, etc. A planner’s job is to optimize among several variables to put together a production, distribution, transportation or other type of plan that best meet’s the company’s objectives. In a production planning example, sales typically prefers to have extra inventory to make sure to fill unanticipated customer needs (does the comment, “we can’t sell from an empty bucket” sound familiar?). Finance prefers to minimize inventory because every dollar of inventory is a dollar of cash tied up. Production typically prefers to produce long production runs since it seems more efficient, which results in increased inventory. The warehouse prefers lower inventory levels because there is less inventory to move around the warehouse and to search through to find what the customer requires. So, what would a $1 million dollar planner do with this situation?

A $1 million dollar planner would not view all these objectives as conflicting; instead, he/she would look for “and” opportunities (ways to achieve several objectives at the same time). In order to achieve this outcome, the planner has to push back on the common misconceptions and help the various functional areas work together to achieve the end result. For example, the planner needs to work with sales to show them that there are alternatives and tweaks to the theory of “you can’t sell from an empty bucket”. Instead by partnering with customers, focusing on demand data/ forecasting, working with suppliers/ deliveries and production lead times, and prioritizing efforts of key items/ skus that achieve the “80/20”, it is possible to reduce inventory while improving customer service. Another example is to push back on the need for long production runs. Instead, focus on quick changeovers for the key skus, which achieves flexibility (which improves the ability to achieve customer service and reduces the need for long production runs) with a lower overall cost.

However, what skills are required to achieve this objective? – A combination of analytical skills, communication expertise and confidence (after all, the planner typically is perceived as stirring up trouble in the minds of dueling parties). I’ve found this combination of skillsets to be a unique combination. How often does any resource posses this combination of skills, let alone a lower level position resource? Not often.

I’ve found the key to be to find the resource with the aptitude and attitude required for this type of role (whether or not they have experience) and provide the training, support and tools for success. And, this position needs what most people need – someone who values his/her contributions and understands this unique, complex environment (whether or not they can navigate it themselves). It sounds simple, but it can be the critical component to your $1 million dollar planner.

Did you like this article?  Continue reading on this topic:
Recovering Capacity with Best Practice Production Planning Practices

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