Planning Isn’t Just a Top-down Exercise
Manufacturing is an ever-changing area within an organization, and this is what provides its value to the organization but also what can pose some of its biggest challenges as well. Any plant manager will tell you that consistency and stability are key to efficient operations, and they are not wrong. However, the need from the enterprise isn’t always so stable as there are many factors that determine production targets and changes in the existing products or even introduction of completely new ones. Providing an enterprise methodology to ensure alignment arises as a key need. The alignment should not only enable tactical responses in the plan, coordinated between operations and logistics, but also provides the scale for continuous alignment of plan against actuals which clearly identifies strategic investments to ensure operations remain highly efficient to support the needs of the forecast.
The expectations of the business sales forecast, often referred to as a “Consensus Demand Plan”, sets the stage for what is expected to be needed by the business to meet the market demand for each product line in the region where it’s needed. The forecast is still a best guess and often looks at the business outlook as a best guess by pulling in demand signals from a wide range of places to get as accurate as possible. As the time window narrows down the stage is to convert the forecast into a plan that is founded based on the ability to produce, this is done in the MRP system. This starts to reserve capacities to plan when various production, materials and labor capacities will be needed and when to hit the various production targets outlined by the forecast. The MRP systems starts to coordinate production sourcing and inventory needs along with production throughput, but this is still just a theoretical exercise. It’s a well-travelled exercise but still not tied live with operations and this disconnect is often what leads to ‘drift’ in accuracy. The ‘drift’ is not because people aren’t doing their job but rather because people are doing their job. That sounds a bit strange but the reasons behind changes in production rates over time are the result of new products or product changes being introduced, CAPEX & OPEX investments into operations, skills of operations people to execute tasks and logistical & quality issues being worked out over time. All these topics, and more, are continuously evolving and as a result are impacting throughput.
Attaining a Synchronized Plan
The real question then arises out of this, and that is how can a “Synchronized Plan” not only be achieved but continuously maintained? First steps in getting the theoretical planning process aligned with live operations, starts with a common and executable definition of the plant at the enterprise level. Since this is where the master planning is done, this is where the work starts to maintain a structure that both planners and operations can leverage. The handover from a planner to the manufacturing plant is often referred to as the planning horizon and this represents the point in time where what is ‘planned’ on the logistics side aligns to what will ideally be produced in operations. It’s no secret that the day-to-day function of a shift is rarely ideal and is more of a balancing act between production targets and managing costs to achieve them. To do this the plant and shift managers must have a common view of the ideal plan but also have the flexibility mid-shift to account for variances that arise and orchestrate a response that ensures the right business outcome. This is where the ‘reflection’ back of the what the actuals really are begins, and the real value of top-down consistency becomes key as it provides a channel that enables shop floor to top floor. What the real run times, material consumptions, product flows, quality and scrap losses, inventory consumed/produced/in-process end up being, all factor into the measurement of the accuracy and stability of the plan. This measurement (often displayed as TEEP, OOE, or OEE or a variant of them) is a key lagging indicator of how attainable the plan was for the plants. From here, you can use the centralized analytics to then build up priority and this was discussed in detail in a previous BLOG “Enterprise Analytics for your Supply Chain” and merge the lagging indicators with your forecast to get a view on where operations may struggle in the future. This will also help to reduce tolerances in place around planning confidence, to the real-world actuals and ensure that assumptions on production capacity are reduced down to the very minimal levels.
This cyclical process of planning driving operations and operations driving planning is the healthiest way to run manufacturing. It is continually adapting to the real-world for the tactical day to day and at the same time highlighting investment opportunities and their value to the business.