Mar
25
One of the key tasks for any business is utilizing your assets effectively (whether that’s materials, people or tools and equipment) in order to meet your customer requirement. Ensuring you maximize your productivity whilst at the same time managing your costs is not easy. Demand profiles can fluctuate and customers may only provide a short term horizon of orders – which makes long term business planning more difficult.
Planning your production requires a variety of inputs from supply chain, operations through to capacity planning for the assembly line. Coupled with this complexity there is often a significant disconnect between the sales order input team and the production line – orders get taken without reviewing appropriate lead times or dependencies leaving manufacturing with an up hill battle.
As an example consider that the item we need to produce has an 8 week lead time – however the sales team promise the item to the customer in 4 weeks time – this puts our planning system into arrears – with the significant pressure on our supply chain to bring in the materials required and further pressure on the manufacturing team to meet lead time – the common result is inventory arriving which can’t be used because we’re waiting for other supplier deliveries, assembly lines working out of process and an unhappy customer that does not get what they wanted when they wanted it!
The alternative is to apply a production scheduling tool – such as Master Production Scheduling – which endeavours to put together a business plan for production that features materials requirements, resources, capacity etc. Master Production Scheduling is very common in manufacturing where the plan links to a demand pattern (not necessarily the same profile as ordered by the customer.) and in many cases presents an ideal opportunity to create a smoothed production plan.
Using Master Production Scheduling
MPS is the plan that drives the business – and commits resources and materials (costs) to meet the plan. The plan is what the business can achieve – not necessarily what the customer wants! To some extent MPS allows the business to divorce production from the sales order. The table below demonstrates a smoothed production schedule that can be met by its ‘suppliers’ (supply chain, resources capacity etc). However notice that the volumes against the sales orders are different.
| Week 1 | Week 2 | Week 3 | Week4 | Week 5 | Week 6 | Week 7 | Week 8 | |
| Sales Orders | 5 | 15 | 7 | 13 | 6 | 14 | ||
| MPS | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
| Running balance | 5 | 0 | 3 | 0 | 6 | 0 |
In this simple example note that we have no firm orders allocated against week 7. This enables the sales team to see when they can commit to deliveries with the customer – they know there is no point promising another 20 units in week 3 – that order will not be met – however Weeks 7 & 8 have slots free. Notice too how the production plan does not allow the produced part to go stock out. This is a subjective rule as you might be happy to allow stock outs depending on your agreed service level with your customer. The balance is to keep a steady drum beat of production while ensuring your stock levels do not get out of hand.
The company production plan drives the organization so it needs to be robust. A plan that is not viable can have serious consequence so there are some important habits that need to be established if an MPS is to work properly, namely
- Suppliers must feed into the schedule in a timely fashion
- No planning in arrears
- Incorporate Capacity planning
- Ensure the plan is stable – do not change it every 5 minutes!
What does an MPS consist of
An Master Production Schedule will utilize a series of variables to help construct it.
- Sales Demand
- Forecast Demand,
- Costs
- Production Costs
- Inventory Costs
- Lead times
- Capacity
- Parts supply
Parts supply can be an interesting calculation – in that most organizations do not have 100% delivery schedule adherence from their suppliers – it’s vitally important that correct scheduling of supplier deliveries takes place in order that the plan is valid.
The plan itself will need to be reviewed and recalculated periodically (e.g. weekly / monthly). You should look to have a metric that reviews the stability of your MPS – if you are changing it extensively every time its reloaded then your planning process may not be functioning effectively.
MPS at the parent level part
Typically you will not MPS every part in the organization – you will look at the Bill of Material and agree at which level to drive production – for example if we look at our part below– Part Number 123 – we will MPS it at the top level – our MRP system should drive the requirements for the lower level parts – for example the purchased child parts.
Part Number 123……(Top Level Part – MPS’d)
…..Child part – manufactured
………Raw Material
………Purchased Part
…..Child part – Purchased part
…..Child part – Purchased Part
…..Child part – Purchased Part
Problems with MPS
Master Production Scheduling does have its frailties – it relies on good quality inputs and usually a robust MRP system. If we took the example of Part Number 123 above what would the impact be to our scheduling if the lead time for the Purchased parts were incorrect? Incorrect MRP data is often a cause for MPS failure.
Another common problem is poor parts supply – items do not turn up when they are supposed to – that can result in severe impacts to the schedule. The schedule must make assumptions in parts deliveries.
Many MPS will work with a fixed and forecast time window – that means that the business agrees that it will not change the MPS plan within a given window of time – for example the first 6 weeks of the plan will always remain fixed. This can be extremely difficult as there is a trade off between keeping your plan effective or supporting customers that might come in with a last minute urgent requirement – there may be reasonable rationale to review gaps in the capacity plan for urgent activity depending on your business.
Mar
24
Using a SWOT analysis is part of a supply chain assessment
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SWOT analysis is a commonly used tool often used in strategic planning that looks at a set of internal and external factors in a simple matrix style report. It’s an excellent tool when used in the early stages of strategic planning as used correctly its representative of the position at that point in time and can facilitate the gathering of information pertaining to the business.
SWOT stands for
• Strengths – internal strengths that can be used to exploit external opportunities
• Weaknesses – weaknesses within the company which result in a failure to capitalize on external opportunities
• Opportunities – available for the company to exploit
• Threats – external conditions which could cause damage to the objective or organization.
How to create a SWOT template
SWOT analysis is not a difficult tool to master and does not require complex tools or software. As a supply chain tool – it’s excellent for use in planning strategy from procurement through to materials management as it can be used at all levels from organizational leadership to departmental levels.
The SWOT analysis tool is a simple table divided into four quadrants (see example below). Each quadrant is labelled and contains the relevant information recorded for that box.
SWOT analysis example for a typical supply chain department
| Strengths
Highly trained and motivated staff Established operating procedures Stable demand pattern |
Weaknesses
Large number of suppliers to manage Poor use of technology High labour cost |
| Opportunities
Deploy commodity plans Outsourcing Partnering with key suppliers |
Threats
Large fluctuations in material cost Lack of competition between suppliers Material Obsolescence |