Supply chain planning production planning

Supply Chain Planning: Production Planning Introduction Why is Production Planning Important? The goal of production planning is to support the manufacturing process by determining the resources and sequence of operations required to build a product During the production planning process, a company generates the detailed production schedule required to build a product The production schedule must be tightly linked with a detailed materials plan to ensure the raw materials are available when needed The planning process also communicates required materials to the purchasing department The primary business issues addressed by production planning include: • • Ensuring machines and materials are available for production when needed Maximizing throughput and utilization of factory resources Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form How is a Production Planning Integrated with Supply Chain Planning? Production planning is one component of the supply chain planning process Supply chain planning is an integrated process that allows companies to plan and integrate the supply chain functions of procurement, manufacturing, and fulfillment Demand, supply, production, and fulfillment planning operate as interdependent supply chain planning functions The goal is to integrate these processes so that all the plans are synchronized with one another Plans generated during one process are used by one or more of the other processes In other words, planners need to know: • • What to with the information generated How the different processes relate to one another Specifically, a materials planner may wonder, "What if my suppliers can't deliver to our requested quantities and timing?" There are many ways to resolve this issue One viable option is to delay the production of some of the items until materials are available, and inform fulfillment planning about the delay in meeting customer requirements Another option may be to work with Procurement to determine if the finished goods could be sourced from another vendor Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Objectives After completing this module, you should be able to: • Discuss the purpose, objectives, and benefits of production planning • Describe the different components of production planning, the business problems it solves, and the key capabilities production planning offers • Identify key inputs, constraints, and other considerations for the components of production planning • Describe the measurements and metrics for production planning Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Introduction to Production Planning Overview Once a company has developed demand and supply plans, it must plan how to manufacture the product Production planning (sometimes referred to as factory planning) includes two components: • Production Schedule - Determine the resources required (labor and machines) and the sequence (time frame) of the manufacturing operations In some cases, the production schedule specifies the start times for the different items; it is occasionally referred to as the start plan • Materials Plan - Identify the materials needed (raw materials or sub-components) to meet manufacturing requirements, along with the time and factory floor location where the material will be needed This differs in the level of detail from the materials plan generated during supply planning Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning Constraints Production planning is limited by capacity and materials constraints For example, a machine can produce a maximum number of items per hour, or is scheduled to run a set number of times per week This differs from supply planning in the level of detail An example of a supply planning constraint is the daily production capacity of one line, while an example of a production planning constraint is the production capacity for one station on the entire manufacturing line The production capacity may be stated as either the number of items processed per time unit, or the processing time required per item Similarly, there could be materials constraints that affect production The materials plan generated during supply planning considers only key components, while the materials plan generated during production planning considers all materials required for manufacturing the products Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Components of Production Planning Production planning consists of the following two components: • • Production Scheduling Materials Planning Important Note Many companies conduct production scheduling simultaneously with materials planning For simplicity, however, we have explicitly differentiated between production scheduling and materials planning Furthermore, depending on the industry, a company could implement one or both processes Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning in Different Industries Planning emphasis on the different production planning components can vary by industry For example, capacity constraints are very important in the semiconductor industry, while materials planning is very important in the computer industry Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning in Different Industries - Semiconductor The semiconductor industry is a capacity constrained industry In addition, very few manufacturers produce product without orders from their customers A new factory can cost in excess of $2 billion In addition, while wafers are made of sand (a negligible material cost), it may take several weeks to manufacture a wafer Thus, manufacturers have limited capacity to satisfy customer orders, and demand often exceeds supply Some of the challenges of the semiconductor industry are: Maximizing product throughput Since demand exceeds supply in this industry, maximizing product throughput becomes extremely important Companies strive to develop "optimal" production schedules that maximize machine utilizations and product throughput Furthermore, because different products are processed on the same resource (i.e., machine), the resource requires a certain amount of "changeover" time (e.g., tool changes, cooling down) The amount of changeover time required depends on what product was just processed and which will be processed next As a result, the sequence in which products are processed on resources is also very important Inaccurate due date promises Manufacturers must ensure that they can provide accurate order promise dates to their customers Unfortunately, most manufacturers provide promise dates for customer orders based on predetermined lead-times that not always reflect reality With accurate production planning information (when product will be manufactured), manufacturers can quote more accurate order due dates to customers Industry Sector Production Planning • o High-Tech - Semiconductor o o • Maximize product throughput Maximize machine utilization Minimize changeover and other "down" times Develop "optimal" production schedules Ability to quote due dates accurately The semiconductor industry thus tends to focus on production scheduling Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning in Different Industries - Computer In contrast to the semiconductor industry, the computer industry is not capacity constrained at all, i.e., there is sufficient capacity to meet all customer demand However, the profit margins for computer manufacturers are thin, and customers demand customized configurations Thus, ensuring that sufficient material is available (without incurring excessive inventory costs) is very important in this industry Challenges in the computer industry include: High fluctuations in demand Consumers want new and improved products As a result, demand often hits a peak very soon after a new product is introduced and declines rapidly after that If the company carries too much material, they could be left holding obsolete inventory Increasing customer demand for customized products Customers want to customize their computer products; this makes it difficult for manufacturers to forecast demand for end products accurately At the same time, the manufacturer must be able to assemble a computer relatively quickly Hence, they must plan for material to be available when needed By creating production schedules quickly and for short time horizons, manufacturers can communicate with their materials suppliers to provide material just in time for production Industry Sector Production Planning Computer • • • Ability to plan for customized configurations Ability to create production schedules quickly Ability to create materials plan for a short time horizon and communicate with suppliers The computer industry thus tends to focus on materials planning Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning in Different Industries - Automotive The automotive industry is an example in which production scheduling and materials planning are both very important Each car requires several thousand parts; therefore, material coordination is extremely important At the same time, manufacturers must ensure that assembly lines are balanced and assembly stations are not over or under-utilized (idle) Some challenges of the automotive industry are: Production Flexibility Every car traveling down an assembly line is different from the preceding or succeeding car Despite this, the assembly line must remain in balance to ensure minimal disruptions to production High Number of Parts Despite the fact that automotive makers use an extremely high number of parts—a typical car manufacturer uses approximately 1.5 million parts every day—they must ensure that the right parts with the right quality are available at the right place, at the right time Maintaining Inventory Due to the large number of parts, manufacturers cannot afford to keep a high inventory of each part They must therefore minimize their inventory for parts and ensure availability Collaboration with Suppliers To maintain a low inventory of parts, manufacturers must communicate effectively, i.e., collaborate, with their suppliers Manufacturers receive parts just in time for production To ensure this, they must share their production schedules with their suppliers The best manufacturers provide their suppliers a daily (and sometimes hourly) delivery schedule four to 10 days ahead of delivery Industry Sector Production Planning Automotive o o • Balance assembly line Coordinate material availability Provide a four - 10 day rolling delivery schedule to suppliers o Collaborate with suppliers • Maintain low inventory Provide a four - 10 day rolling delivery schedule to suppliers o Collaborate with suppliers • Both production scheduling and materials planning are thus critical in the automotive industry Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Materials Planning Example - continued Considering the availability of F1 and substitute part F2, this solution highlights the materials plan for F1 and F2 from May 12 through May 17 12-May Number of motorcycles F1 14-May 15-May 16-May 17-May 100 80 75 85 130 F1 Capacity 85 85 85 85 85 F2 Capacity 15 15 15 15 15 0 15 85 85 85 85 Expected Receipts 85 85 85 85 Expected Inventory 15 15 Beginning Inventory 0 0 15 15 Beginning of Inventory Order F2 13-May Order 85 15 15 85 15 Expected Receipts 15 15 15 Ending Inventory 0 15 Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Topic Summary What is it? • Key output • What materials will be required to meet the manufacturing requirements Business problems addressed • • • Materials plan Key capabilities Minimize backorders Minimize inventory Minimize ordering costs • • • • BOM explosion Ability to consider supplier constraints Ability to consider lead-time of materials • Manage by exception Communicate purchase orders to purchasing Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Metrics for Production Planning Overview Companies monitor the "health" of their supply planning processes using a variety of metrics, including: • • Metrics to ensure process is being followed Metrics used to measure supply chain effectiveness An organization that implements and uses an effective production planning process can provide capabilities that, together with effective procurement, manufacturing, and fulfillment functions, increase shareholder value Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning Process Control The goal of supply chain planning is for individuals within organizations to trust and use the process-generated plans to minimize the number of manual changes to those plans This ensures that an organization can maximize the value of their investment in supply chain initiatives Thus, companies use the number of manual overrides as a crucial metric to monitor whether they have sufficient control of the planning processes This metric measures the number of occurrences in which plans have been manually revised, and identifies the level of intervention in the planning process A high level of intervention may indicate that there are process, organizational, or training issues that need to be resolved Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning Effectiveness Oriented Metrics Companies engage in production planning processes to improve their supply chain effectiveness, and they can track a variety of effectiveness-oriented metrics, including: Schedule Adherence The percentage of time a company adheres to the established schedule during the week (i.e., producing the correct items in the right quantity on the day scheduled) Changing production to a different day (later in week) might result in lost sales since product may not be available when customers want it Companies seek to maximize their ability to complete all production in the correct volumes at the correct times, within the specified week Capacity Utilization The percentage of a factory's capacity utilized during a period Low capacity utilization suggests that the company has excess capacity to meet customer requirements, while high capacity utilization suggests that the company may occasionally not have sufficient capacity to meet customer requirements This is reported as a percent of total available capacity Inventory Turns The number of times that inventory turns over during the year An organizational objective is to maximize the frequency of inventory turns per year to promote the release of working capital to the business Number of Stock-outs The number of times a company is out of stock on items ordered by customers Companies seek to minimize this number because it correlates to customer service level measurement Order Lead-time The average time it takes a company to deliver an order once the order has been received This enables organizations to measure "lead-time to customer delivery" performance against their own targets as well as other industry benchmarks Companies seek to minimize the number of days it takes to deliver the requested quantities to customers once the order has been placed Furthermore, customers may have pre-scheduled delivery days that will impact the order delivery date Some customers also place orders weeks in advance, which may further distort this metric Delivery in Full The percentage of all orders for which the quantity and lines ordered have been delivered in full, on first delivery, as a proportion of total orders This shows how often an order is 100 percent right upon delivery, and how often a company "misses" (even if the miss is one unit per order) Companies seek to maximize the proportion of orders that are delivered completely to order quantity The percentage of orders delivered in full decreases when product is not available to fill customer orders or when product is not delivered as per the customer orders Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Production Planning Influences on Shareholder Value Companies seek to ensure product availability and high service levels for their customers, while simultaneously maintaining low inventory levels Production planning processes seek to ensure machines and materials are available for production when needed Furthermore, production planning processes are used to maximize asset utilization and throughput This eventually leads to an increased number of inventory turns and reduced inventory-carrying costs To maintain low inventory levels, companies strive to manufacture product as close to the dates needed without using any manufacturing overtime and without expediting materials from suppliers More accurate production schedules and timely materials availability also leads to increased product availability for customers This increases service levels to the customers In addition, it results in lower costs to fulfill customer orders because fewer customer orders need to be expedited, and most orders can be shipped accurately and completely Furthermore, less expediting also leads to reduced manufacturing and distribution overtime, as well as reduced FTEs in the supply chain management function Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Topic Summary Companies monitor the "health" of their supply chains using a wide variety of metrics Two such metrics are metrics to ensure process is followed and metrics to measure supply chain planning effectiveness Companies achieve benefits from improved production planning, including increased schedule adherence, increased capacity utilization, increased number of inventory turns, reductions in order lead-time, and an increase in orders delivered in full These benefits ultimately translate into increased shareholder value Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study A cookie manufacturer makes many different types of cookies It has several bakeries across the world, but uses some common raw materials for making the cookies, e.g., flour, oats, butter, chocolate chips, peanut butter, etc For illustrative purposes, we will look at the production schedule for one of its bakeries The bakery bakes two types of cookies—chocolate chip and peanut butter The chocolate chip cookies are baked at 275 degrees F for one hour, and the peanut butter cookies are baked at 350 degrees F for one hour The bakery only has one oven for baking cookies If the oven is already set at 275 degrees, it requires another 15 minutes to heat up to 350 degrees, whereas if it is at 350 degrees, it takes 45 minutes for it to cool down to 275 degrees (both of these times are analogous to changeover times) The bakery is constrained by the following: • A maximum of 1,500 chocolate chip cookies can be baked at one time • A maximum of 1,000 peanut butter cookies can be baked at one time • • The "due time" for each of type of cookie is different as shown in the cookie delivery schedule below Quality Due Time Chocolate Chip The baker (and hence the oven) only works from a.m to 3:30 p.m Peanut Butter The company needs to produce 3,000 chocolate chip cookies (CC) and 5,000 peanut butter (PB) cookies 1,000 10 a.m 1,000 12 noon 1,000 p.m 2,000 11 a.m 3,000 p.m Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study - continued There are many ways to go about determining a feasible production schedule One approach is trial and error—try a sequence of activities and determine if the resulting sequence satisfies all the constraints If it does, you have a solution If it does not, you then must modify some aspect of the sequence, and try again until you reach a feasible solution Determine which of the following sequences provides a feasible production schedule Be sure to consider the Cookie Delivery Schedule and Capacity Constraints Click the button below to review the schedule and constraints Schedule and Constraints Capacity Constraints Cookie Delivery Schedule Quality Chocolate Chip Peanut Butter Due Time 1,000 10 a.m 1,000 12 noon 1,000 p.m 2,000 11 a.m 3,000 p.m Sequence A Bake 1,500 Chocolate Chip Cookies Bake 1,500 Chocolate Chip Cookies Heat Oven to 350 degrees Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Only one oven is available from a.m to 3:30 p.m The set-up time to change the temperature from 275 degrees to 350 degrees is 15 minutes, while the set-up time to change the temperature from 350 degrees to 275 degrees is 45 minutes The company can bake a maximum of 1,500 CC cookies or 1,000 PB cookies at one time Sequence B Bake 1,500 Chocolate Chip Cookies Heat Oven to 350 degrees Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Cool Oven to 275 degrees Bake 1,500 Chocolate Chip Cookies Heat Oven to 350 degrees Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies 10 Bake 1,000 Peanut Butter Cookies Sequence C Bake 1,000 Peanut Butter Cookies Cool Oven to 275 degrees Bake 1,500 Chocolate Chip Cookies Bake 1,500 Chocolate Chip Cookies Heat Oven to 350 degrees Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Bake 1,000 Peanut Butter Cookies Production Schedule Solution Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study - continued Global Material Requirements While there are many materials required for baking the cookies, we will concentrate on flour only For each cookie, one gram of flour is required Thus, the bakery needs 8,000 grams of flour for the day (to produce a total of 8,000 cookies) The planner runs the requirements for all the bakeries across the world (assume the company has bakeries in Asia, Australia, Europe, and North America), and determines the total flour requirements by region for the next five days The planner then communicates the requirements to all the suppliers in each region, as well as internally within the organization Day Day Day Day Day Flour Required (in Kg) 32,000 33,000 31,000 35,000 29,000 Asia 6,000 7,000 5,000 7,000 7,000 Australia 8,000 9,000 8,000 7,000 8,000 Europe 8,500 9,000 9,500 9,000 9,000 North America 9,500 8,000 8,500 12,000 5,000 Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study - continued Change in Forecast During the day, the planner receives an update on the forecast and notes that the demand for cookies has increased substantially in Asia from day five onwards (for day 5, the requirements have changed from 7,000 kg of flour to 10,000 kg of flour) By quickly determining the additional quantities needed in Asia, the planner updates the material requirements and communicates them internally, as well as to the supplier Day Day Day Day Day Flour Required (in Kg) 32,000 33,000 31,000 35,000 32,000 Asia 6,000 7,000 5,000 7,000 10,000 Australia 8,000 9,000 8,000 7,000 8,000 Europe 8,500 9,000 9,500 9,000 9,000 North America 9,500 8,000 8,500 12,000 5,000 Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study - continued Resolving Material Availability Exceptions Using Secondary Supplier Unfortunately, Procurement informs the planner that the supplier has just informed them of a labor strike in the mill, and will not be able to commit to the additional quantities that are required Procurement has contracted with a secondary supplier who will supply the required quantities but at a slightly higher price Procurement also informs the planner of the delivery schedule of the material The planner updates this information and generates a revised production schedule for the bakeries in Asia Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form A Production Planning Case Study - continued Resolving Manufacturing Capacity Constraints To further hinder production, the planner is told that one of the ovens in a bakery in Australia has broken down and will require at least 24 hours to be repaired The planner quickly updates this information and generates a new production schedule for the Australian bakery Unfortunately, the bakery does not have sufficient capacity to meet the requirements However, one of the Asian bakeries has excess capacity available The planner then shifts some of the production to the Asian bakery (while ensuring that enough materials will be available) and generates a revised production schedule for the affected bakeries Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Conclusion Module Summary Companies plan how to manufacture product during the production planning process Production planning is comprised of the production schedule and the materials plan, and is limited by constraints, including capacity and materials constraints Planning emphasis on different production planning components varies by industry While production scheduling is very important to the semiconductor industry, materials planning is critical in the computer industry The production scheduling process is used by companies to drive production on the factory floor A detailed production schedule determines the resources required (labor and machines) and the sequence (time frame) of the manufacturing operations Planners must consider capacity and materials constraints as well as alternate product routes, and customer and supply prioritization The goal is to minimize late (or early) orders, and maximize throughput and utilization of factory resources while balancing the load on that resource The materials plan developed during materials planning is a detailed schedule that defines the exact time at which materials are needed on any given day Planners consider supplier constraints, along with part substitutions, part effectivities, and customer and supply prioritizations The goal is to minimize backorders, inventory, and ordering costs during materials planning Organizational implications of production planning include centralized, team-based decisions, as well as a change in performance metrics and an increase in job complexity for the planning role Companies use metrics to ensure the process is followed and to measure production planning effectiveness The benefits of production planning ultimately translate into increased shareholder value Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form [...]... during supply planning (which only defines the day/week on which materials are needed) In contrast, the materials plan generated during production planning will define the exact time at which the materials are needed on any given day Furthermore, the materials plan generated during supply planning considers only key materials and components, while the materials plan generated during production planning. .. printed form Production Scheduling Stakeholders and Business Issues We have established the outputs from and the capabilities required for production scheduling During production scheduling, companies strive to: Maximize throughput The MPS process during supply planning considers high-level capacity constraints and creates a daily schedule for production scheduling to follow The goal of the production. .. non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Introduction to Production Scheduling The master production schedule (MPS) created during supply planning defines... Materials Planning Overview The materials planning process ensures materials are available at the right time and in the right factory location to manufacture product The production schedule is synchronized with the materials plan and defines the time that each operation on a product is performed, which in turn defines what materials are needed for operations The materials plan used during production planning. .. • Business objectives Customer prioritization Supply prioritization Alternate production routes The figure illustrates the key inputs and outputs for production scheduling Copyright (c) 2004 Accenture All rights reserved You may only use and print one copy of this document for private study in connection with your personal, non-commercial use of a Supply Chain Academy course validly licensed from Accenture... use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Introduction to Materials Planning The detailed production plan sets forth the time at which product production. .. non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Materials Planning - Planning Horizon and Key Capabilities The materials planning horizon generally... suppliers Most organizations plan for materials based on their daily needs, but some advanced supply chain planning companies may do so more often For effective materials planning, companies must develop key capabilities, including the ability to: Create a BOM Explosion The most basic capability for materials planning, a company creates a BOM explosion by taking a bill of materials (BOM) and decomposing... non-commercial use of a Supply Chain Academy course validly licensed from Accenture This document, may not be photocopied, distributed, or otherwise duplicated, repackaged or modified in any way Note: interactive elements such as activities, quizzes and assessment tests are not available in printed form Inputs for Production Scheduling There are several inputs required for production scheduling The... classified into three types—demand inputs, supply inputs, and static inputs (inputs that seldom change) Demand Inputs Customer Orders Orders placed by customers and given top priority for scheduling to ensure that due dates are met Manufacturing Orders Generated during distribution planning and master production scheduling, and used as the key input for developing the production schedule Stock Orders Requests