The key to managing the supply chain in challenging economic times
Focus on planning and scheduling processes to keep thriving.
The following is a guest post from Stephen Dombroski, Senior Marketing Manager of Food and Beverage Markets at QAD.
Managing a company’s supply chain activities is a tough task all the way around. In thriving economic times, when business is booming, orders are plentiful. Plant capacities are maxed out, and companies can’t ship product fast enough. Manufacturers are always looking for tools and methods to improve processes so no opportunity falls through the cracks.
However, when the economy struggles, firms have the same issues to consider, but now the effects are reversed. There are fewer orders. Plant production is down. Inventories build up. Most importantly, profitability is on the decline.
During these periods, companies tend to scramble. Senior management dissects each department, function and business process, with the goal being to determine where improvements can be made and where expenses can be cut quickly. The sales organization looks for ways to generate orders. The operations group tries to forecast better and utilize plant resources more efficiently. The logistics team seeks to improve inventory management and minimize transportation costs. Often, these activities can lead to even more chaos and disruption within the organization.
Avoid disruption: focus on planning and scheduling
The key is to have an organized plan of attack. Firms should focus on processes that can address multiple functions simultaneously, and ensure these exercises are coordinated between departments to minimize duplication of efforts and avoid conflicting objectives. As the saying goes, this is all about “making sure the right hand knows what the left hand is doing.”
One logical place for this plan of attack to begin is with the investigation of planning and scheduling processes. How production resources are planned and scheduled is vital, especially during turbulent economic periods. The two processes affect all aspects of the supply chain, from forecasting and inventory management to logistics and customer service.
Making the right products at the right time to maximize customer demand and service is invaluable when sales are sporadic
Senior Marketing Manager of Food and Beverage Markets, QAD
While each process has its specific goals, joined together, the two can provide a connected plan linking today and tomorrow. Production planning and master scheduling are the ways of looking at a longer time horizon and at multiple production entities, and it can apply to just one plant or numerous facilities. In brief, the two processes seek to achieve five long-term goals:
- Plan and project future production and long-term inventory positions
- Create the usage requirements for work in process (WIP) and raw material inventories
- Determine the long-term staffing and asset requirements for managing labor costs
- Analyze if the business plan and forecast can be met and identify excess capacity
- Set capacity and production rules for the production schedule
The day-to-day benefits of effective master schedules
Production and detailed scheduling are the processes of looking at a shorter time horizon and specific production areas. They give a detailed analysis of the production resources, such as product sequences, changeover times, and shift scheduling. A detailed master schedule seeks to include the following elements:
- Day-to-day, shift-by-shift scheduling of production machines and work centers
- Scheduling the dependencies of upstream operations
- Cost-effective sequencing based on characteristics as size, color, weight, and more
- Matching production to order due dates and on WIP and raw material inventory availability
- Processes to minimize extended changeovers
Manufacturing and inventory costs are typically two areas where most of a company’s operating cash is invested. Efficient production scheduling can help reduce these costs and help a company remain viable during troublesome situations and periods of economic uncertainty. Most importantly, making the right products at the right time to maximize customer demand and service is invaluable when sales are sporadic.
The implementation of efficient production planning and scheduling processes allows a company to swiftly control its most expensive assets: machinery, labor and inventory. These are tools that can be put in place quickly without significantly increasing costs or disrupting the information technology (IT) infrastructure — both of which can be detrimental to the business in both the short- and long-terms.
Companies which adopt these methodologies can easily get a better handle on their operations during challenging economic times, and most importantly, remain effective and viable enterprises.
Stephen Dombroski is the senior marketing manager of food and beverage markets at Santa Barbara, CA-based QAD, a leading provider of enterprise resource planning (ERP) software and services to global manufacturing companies. He can be reached at [email protected].