Despite the influx of Manufacturing Resource Planning and ERP systems and the training of companies like Oliver White why is this still an area of concern for companies. As we visit clients, conduct diagnostics and have discussion with other consultancies we have discovered that production planning is an area that most SME's and multi nationals alike have problems with.
The reasons:-
- Over complication of the planning process
- Lack of able planners
- Lack of training for planners
- Lack of respect in the organisation for the planning function
- Planners treat the plans as power and don't work with the other areas of the business
- Systems are overly complicated so people can't use them
- Plans don't link day to day activity to the monthly forecast on to the business plan easily
- Multiple systems that can't talk to each other
- People don't understand what planning, forecasting, sequencing, S&OP etc is and why they are important.
As a result of these findings SBP have become determined to help clients to improve their planning and control processes. As you know we specialise in improving processes so the challenge of assisting companies to improve this vital area is paramount. We have teamed up with the most cost effective, simple to use, simple to install and effective system we have found - Ssamps. This coupled with out training offerings, ability to help you implement a Sales and Operations Planning meeting and our offer of a FREE SUPPLY CHAIN MANAGEMENT REVIEW. Means we have a solution for you.
To help you along we have included some basic information below. If you would like to discuss any of these issues further then please get in touch.
WHY IS PLANNING IMPORTANT?
In any organisation it is absolutely vital that you can answer the following questions with complete confidence.
- What are we making / buying today and why?
- What are we making / buying next week and why?
- What are we making / buying next month and why?
Most companies however don't truly know the answers. They will probably know the answer to question one. When it comes to next week people start to get into trouble. Without a good planning process you will make product you don't need. Expel time and resources on the wrong items and will waste money.
Planning is therefore important to ensure
- Everyone knows what they are making or buying and why - to satisfy a customer order, to build stock for a reason, to enable a shut down or promotion to take place etc
- That mangers have discussed what should be made and why and understand the consequences
- To plan for your resources as far out as possible
- To reduce costs - overtime reduction, inventory reduction, firefighting reduction, improve productivity etc
- To gain control and have a manufactuing function which dons 't have to change priorities and waste time and capacity with those changes
- To understand where the capacity constraints are in your facility so that you can work on them and improve the business
- To provide realistic promises to your customers. When you give a delivery date you can with confidence meet it.
- Reduce stress, firefighting and arguments in your business.
Planning will enable you to gain control and run a smoother and more organised business and ultimately give you more profits.
HOW DO YOU KNOW IF YOU HAVE A PLANNING PROBLEM?
Companies that have a good planning process are orderly, controlled and discuss problems which have not arisen yet ie they work on problems that are coming up next week or next month not today. Some companies have spend millions of pounds on systems yet still have day to day problems why is that? Most will say be cause customers are always changing there minds or our leadtimes are too short or we are unique. This is all wrong the real reason is that the are poor at planning.
What are the symptoms that tell us if you have a poor planning process?
- Obsolete inventory - this generally shows that the planning process went wrong other wise why did you buy it or make it. How much obsolete inventory did you have last year?
- Poor customer service - sign that your order promises were poor to start with and that planning is not done correctly
- High inventory levels - This show that you have no confidence in your ability to forecast or plan so you cover up the problem with inventory.
- Rework or scrapping finished goods or work in process - Unless it is for quality issues then reworking products as it is not what you really needed is another sign of poor planning
- Constantly changing plans - how often in a week do your priorities change. How often do you have to put rush jobs through?
- Firefighting - this is a classic symptoms of a company that has poor plans you have to chance things through, change priorities and search for orders.
- Saying you can't plan in this industry - even companies that have a one day lead time can do planning. It is at what level and how you do it that is the issue
- Overtime out of control - overtime that is very sporadic or gets put on at the last minute is poor planning
- Shifts or people who are put on just incase - we have seen companies who have a shift which is there just in case or extra staff who are employed just in case - lack of planning
- We are unique - this is never the case and most companies are the same so you can always plan
- Sales and manufacturing constant battles - lack of a S&OP process to get everyone to agree
- Planners are not listened to by manufacturing - lack of education or planners are not very good
- etc
If you have these symptoms then give us a ring to discuss.
THE BENEFITS OF A GOOD PLANNING PROCESS
If you have a planning process that works then the benefits include:-
- Improved customer service
- Reduced inventory holdings - You only carry the right amount of inventory
- reduced obsolete stock
- Reduced overtime
- Reduced leadtimes
- Reduction in space needed
- Increase profits
- Realistic promises to customers
- Planned resource increase or decrease
- Manufacturing and Sales communicate
- Efficient manufactuing plant
- Reduction in firefighting and stress
- One plan that everyone agrees with
- An idea of where to improve the business for maximum effect
- Ability to ask what if questions - simulations for what if this happens
- Identify problems early
- Ability to provide work with suppliers better
- Spend less time and resources on planning
- Reduced expediting
- etc
KEY TERMS EXPALINED
One of the key problems we encounter is that lots of people don't understand some of the key terms involved in planning. Here are some definitions and explanations to help.
- Production planning - this is the plans for production to obtain the best optimization of inventory, resource utilization and customer satisfaction. This plan looks out over days, weeks then months. Production plans will plan to ensure that based upon your capacity constraint - people and or machines that you can do what you want to do. It will enable customers to be given promise dates and plan for resources and orders.
- Capacity planning - This plans what resources you will need when - shifts, overtime etc
- Sequencing - This is what most people refer to as planning. Real sequencing takes a production plan which says what you will make and then using some rules determines what order to make them. This can give a sequence down to the minute optimizing for change covers, shift changes, clean downs, set ups etc
- MPS - Master Production Scheduling is as it states the master plan for the whole business and plans to tell every manufacturing are what to make when based on balancing all the demand on the business
- S&OP - Sales and Operations Planning - this is where on a monthly basis Sales and Manufacturing sit down and discuss and agree what will be made when, the amount of resources that are available, promotions that are coming up etc This is a vital meeting for any business
- Forecasting - predicating the future demand for products. This can be done at family level or at individual product level. The forecast is always wrong but gives an indication of what will happen. It should be based on history, salesmen predictions, trends in the market etc.
- What if's - the ability to quickly determine what will happen if this or that happened. Giving the business the ability to plan for every eventuality.
HOW SHOULD PLANS LINK TOGETHER
Once you have a good planning process then the plans of the business should all link together. You should have the following plans in place in your business.
- Sequencing for today - You should have a plan for every machine or manufactuing area that tells manufacturing what they should be making in what quantities and in what order. Manufacturing should follow it.
- Plans for tomorrow and next week - You should have a production plan that tells you what you will be making every day week and month going out to at 12 weeks. This will highlight resource issues, customer delivery issues and inventory issues at the least. It will also enable you to do What if's and hold S&OP's
- Forecast for next month and beyond - You should have a forecast of the future demand for your products so that planning can plan what they think will happen. This should us the best data avalable.
- Ability to link the forecast to the business plan - rolling up - This tells you in monetary terms where you are against budget.
- Capacity plan for resources - men and machines - The plan to tell you when you need resources or don't based on your production plan and forecast meaning that overtime can be planned as can new shifts or machines way in advance of needing them.
- Customer Promises - you should have a plan that tells customer order takers when they can promise deliveries
- Improvement opportunities - You should be able to plan where and what you will improve in the business
