Are you a manufacturer in 2020 who is struggling to manage the complexity and unpredictability of your production ecosystem? Are you finding it challenging to generate a reliable production plan that will drive on-time delivery, efficiency, and profitability? If you answered yes to any of these statements, you could be facing one or more of the four production planning pitfalls.
1. Awareness Pitfall
In order to generate a high quality production plan, you have to first consider all the relevant inputs, like raw material and finished goods inventories, equipment, routing for each part, and supplier delivery limits in your production environment(s). In other words, you need to have a granular production ecosystem model.
If you are using tools like excel or first-generation Advanced Planning and Scheduling (APS) systems, you are unable to consider all relevant inputs. These low-resolution solutions are not capable of completely modeling your complex production environment. You cannot plan that which you cannot see and are left with an inaccurate reference for the supply chain.
2. Power Pitfall
Another challenge is the lack of computational power required to apply all your production constraints to the model and run through each possibility to find the best possible solution. Additionally, many production inputs and rules result in many trade-offs that need to be considered across the entire production horizon.
Legacy systems, heuristic-based APS systems, lack the computational power to consider all these inputs and look ahead to make the best trade-offs. Fortunately, optimization technology can consider the entire solution space and look ahead for the best solution. A legacy system is a lot like the novice chess player who can only look one move ahead. A modern constraint-based, optimization driven APS software is like a grandmaster who can think many moves ahead.
If you are using incomplete modeling and limited computational power, then you will generate unreliable plans. Here are just some of the consequences:
- Unreliable delivery dates.
- Heavy fluctuations in production capacity requirements resulting in unforeseen and significant overtime and high expenditure costs.
- Additional carry costs due to increased raw material, work in process (WIP), and finished good inventory.
- Higher costs from suppliers who must expedite orders and carry extra inventory.
3. Agility Pitfall
COVID-19 is amplifying another common production planning challenge; the need to replan quickly in response to unforeseen circumstances. Is your operation able to generate a new, optimized production plan in minutes if there is a change in:
An emergency is exactly the time when you don't want things to come to a grinding halt as your planning team feverishly attempts to figure things out by hand.
Speed is essential in such situations, but so is the ability to perform more sophisticated planning operations. For example, are you able to respond effectively to changes but still maintain plan stability? Are you able to ramp down, shutdown, restart, and ramp up efficiently? If not, it may be time to look into a constraint-based, optimization-driven, APS solution that can help you respond quickly and effectively to changes in your production environment.
4. Resource Pitfall
We have already discussed how production planning through manual means like excel, or even with the assistance of first general APS solutions, is very challenging. It is also extremely time-consuming as this typically requires many iterations by the planners to arrive at a suboptimal plan. It is common for organizations to allocate hundreds of man hours per week for production planning, and that is not counting the time spent doing emergency replanning when things inevitably go wrong. Did you know that in some instances re-planning takes so much time that it does not even occur?
Production planners are often highly knowledgeable, senior employees, and their time is very valuable. Modern APS systems, with automated planning capabilities, can significantly cut down on the grunt work your planners are doing and free them to identify and work on areas that need to be improved.
Constraint-Based,Optimization-Driven APS Systems
A sophisticated modern APS system can help you avoid all of these planning pitfalls. It can help you fully model your production environment and apply sophisticated optimization technology. It can significantly reduce your operating costs by improving your production efficiency and saving your planning team time. It can also provide a reliable basis for available-to-promise (ATP) to help you deliver your products on time and delight your customers.
Optessa is a 3rd generation, constraint-based, optimization-driven APS system. We are helping enterprise manufacturers save millions of dollars per year per facility with advanced planning and scheduling. We are deployed in over a hundred factories globally with fortune 100 manufacturers.
In the next installment of this newsletter, we will be featuring some of our case studies and discussing the benefits our customers have realized from our APS solutions. Visit our website and let us show you how we can solve your most complex problems.