Keeping on Schedule

Keeping on ScheduleIt’s a common argument today from many planners that they need the more advanced scheduling capabilities that can be achieved by upgrading to high-end advanced planning and scheduling (APS) software. Department managers are constantly battling the overworked planner problem, solved by investing in APS or by adding planning resources. It’s possible that neither approach may be the best course of action.Many enterprise resources planning (ERP) software packages come with basic scheduling capability. Planning inputs usually come from material requirements planning (MRP), forecasted demand, infinite production capacity, and the application of backward scheduling logic. Planners monitor capacity, review part availability for new demand, assign available-to promise dates to orders, create production schedules, and then readjust dates and schedules to accommodate change.A planner can quickly come to the conclusion that an upgrade to planning resources, including an APS purchase, would ease the workload. The fact is many organizations don’t take full advantage of the complete functionality of existing planning systems and complicate the problem with additional resources or the implementation of an APS solution.The perfect production planPLANNERS TAKE GREAT pride in creating the perfect production plan—one that satisfies all customer needs. Unfortunately, the perfect plan too often becomes imperfect before it ever hits the production floor.Why? Schedule changes—the nemesis of all planners. Most planners take changes in stride and rework the schedule to meet requirements. Successful planners deal well with changes and quickly replan production.The cycle for planners goes something like this: The more change, the greater the workload. The greater the workload, the higher the stress. The higher the stress, the more pressure on managers to hire more planners or purchase APS software. After all, hiring more planners or buying new software will surely solve the problem, right?Perhaps not.Root cause of changeCHANGE TO A plan is inevitable. However, for the planning function, it is important to understand the root cause of the changes and to determine the elements that can be addressed to minimize schedule change. Spending time examining the cause for change, looking to the root of the problem, and correcting deficiencies may prevent the stresses and heavy workloads that come with the scheduling. Additional personnel and software expense can be eliminated or deferred. It is important to distinguish the controllable root cause from the uncontrollable, and to understand if the cause is created within your organization or by customers or suppliers. In general, it is easier to address a scheduling problem when the cause is internal, but external-initiated change can be addressed as well.The external environmentEXTERNAL SOURCES CAN be the cause of some scheduling problems. Some snags are addressable, while others can be considered anomalies.The most frequent causes of schedule conflict are customer requested changes to delivery timing, order quantities, or destinations. The goal of the planner is tomake schedule adjustments while minimizing disruption to other parts of the schedule. With the root cause of the change identified, one might ask: How frequently does this occur with a particular customer? If frequent, a change in end-item inventory stocking policy could prevent the need to make adjustments to the production schedule already in process. The revised policy should include quantities necessary to buffer anticipated change and the stocking locations for multilocation sourced items.In certain cases, the business may want to influence the customer’s ability to make order changes. This can be done by adjusting pricing for near-term changes, instituting freeze periods, or encouraging the customer to stock additional product. Such actions require an assessment of the cost to implement. It’s also important to remember that customers may begin to view the company as inflexible.A study of demand patterns may reveal that a business can successfully forecast end-item demand better than its customers. Corresponding action can be taken to control production based on the information, thus reducing the amount of customer-induced change. Collaborating with customers to better manage demand also may minimize or eliminate unnecessary schedule changes. Variability in vendor lead times and quality is another external cause for change. Shifts in market demand can affect vendor lead times. Plus, late deliveries that are not accounted for with safety stocks usually result in schedule changes. Understanding the root cause for lead-time variability could enable corrective actions. Solutions may include carrying additional safety stock,. Supplying vendors with advanced forecast information, developing surveys of vendor lead times with adjustments to the ERP system, and increasing studies of market conditions within a company’s supply chain. While vendor leadtime variability can be considered an external environment influence, internal actions are the best course of action to manage the variability.Likewise, vendor quality issues can be tracked through inspection and a quality-improvement plan. Eliminating incoming product quality issues reduces the likelihood of a schedule change.Schedule anomalies could include product permanently lost or destroyed in transit, delays caused by Mother Nature, and misdirected shipments. While these types of problems are less likely, business leaders may want to assess buffer stock needs for these types of uncertainties. (For more information on buffer/safety stock issues, see “Safety Stock Basics” in this issue.) The internal environmentERP SYSTEMS ARE highly sensitive to inaccurate data, which have a ripple effect. Planners feel the brunt of data September 2004 inaccuracies because they are the significant source of schedule changes. Identifying inaccuracies in the following areas and correcting them may prevent the need to hire additional planners or invest in APS.■ Inventory accuracy.Inaccurate inventories will result in schedule disruptions and change. Frequent cycle counting can help reduce stock out-related issues. Quantity accuracy of 97 percent or better is a necessity to ensure MRP is providing useful output. This can be done by conducting frequent counts, investigating discrepancies, and correcting processes along the way. As time progresses and cycle counts reveal consistently high accuracy, companies can relax the frequency of counts. APS packages won’t add value unless invent ory inaccuracy is addressed first.■ Bill of material and route accuracy. Product data management inaccuracies in the bill ofmaterial (BOM) or bill of routing (BOR) files frequently account for schedule adjustments. Inaccurate BOMs can result in the need for unplanned materials to satisfy demand. Needs go unmet unless sufficient buffer stocks are available. Inaccurate routings can result in overscheduling resources. Unchangeable resources, such as a fully constrained work center, will again result in a scheduling change. Frequent monitoring of material usage variances, and adjusting BOM or BOR yields accordingly, can correct the problem. In addition, analyzing process-related variances is necessary to determine the best course of correction—either fixing a production process problem or adjusting BOM to plan for additional scrap. Conversely, overplanning usage with high-planned scrap will result in bloated inventories and altering the production or supply schedule.■ Accurate transactions. Accurately report ing materials used in the production process and accurately reporting completed production keep inventory accuracy high. All too often transaction entries are not logged or incorrectly entered into the ERP. Causes can include providing inadequate training in backflushing, incorrectly calibrated measuring devices on the production floor, poorly designed interfaces between ERP and production floor systems, unit of measure disconnects between the ERP parts list and the production floor, missed route step completion backflushing, or adjusting for accuracy when cycle counts are performed.Variance analysis (both materials and activity-based) should reveal the magnitude of the issue. Here again, cycle counting can help identify the cause of inaccurate transacting.■ Adequate safety stock. For many businesses, safety stock plays a vital role in dampening the effect of unplanned material needs. Regularly monitoring safety stock is an important component to minimizing the effects of unexpected change. Accurate data management will help minimize the reliance on safety stock and unnecessary inventory investment. Investigating schedule changes will help determine whether to correct the cause or supplement orders with safety stock. Undertaking a careful review of the events that cause a schedule change, determining the root cause of those changes, and adjusting business practices and the ERP system may prove more economically sound than hiring more planners or implementing more complex APS software. In fact, businesses that do not invest the time to ensure sound business practices and data accuracy within their ERP system often compound the problem when installing an APS solution.Changes to schedules can be eliminated by benchmarking cause data and establishing improvement metrics that encourage improved data. Change can be minimized and effectively managed by successfully identifying and controlling internal and external factors. This must be done before ERP systems can be used successfully or an APS system is implemented.◆Scott C. Nyland is a manufacturing leader in the Electronic Products Division of W.L. Gore & Associates in Newark, Delaware. He has led planning and purchasing teams in a variety of organizations and has helped in the design and implementation of ERP solutions in several manufacturing organizations.。