In a single and more extensive article, we will cover the main stages of production planning, highlighting important points in which the use of specialized systems can solve complex problems that affect the optimization of resources and, consequently, the company's entire result.
We can define production planning and control (PCP) as a set of processes that aim to plan production activities in advance, in addition to coordinating and monitoring execution, ensuring that an organization's resources are used efficiently and meeting market demands.
This work ends up affecting directly or indirectly the other sectors of the company and has a decisive impact on its results. The answers expected from the PCP work are:
WHAT, HOW MUCH, WHEN, HOW AND WHERE TO PRODUCE.
We can describe the main steps:
Demand Forecasting
To begin with, we need to forecast the future demand for our products within a time horizon that allows us to organize productive, logistical, supply, and financial resources to support a compatible supply. This horizon may be longer or shorter depending on the type of product, the production strategy, whether it uses imported raw materials or components, long lead-times, and other factors. It is normally structured in product families in which the grouped items have common and sufficient characteristics for us to plan efficiently. For example, relying on similar machine and equipment configurations to determine the plant's capacity to meet this forecast; main raw materials in common, if it is necessary to start the purchasing process in advance; price and approximate cost, to determine financial viability. If the grouping in which the forecast is made does not meet these requirements, you can choose a disaggregation based on it for a greater level of detail, using the projection of the sales history, for example.
The demand forecasting process may take as its starting point historical data, market research, collaborative forecasting, statistical methods, and others. But it is not enough to project the numbers, as they must be aligned with production, optimizing the use of productive and financial resources in search of the company's maximum result.
And remember, Operacional provides its own production planning solution, with S&OP, IBP and APS tools natively integrated with a specialist system configured and customized for your operation, and which can help your company on this path towards maximum productive performance.
S&OP (Sales and Operations Planning)
After the initial demand, we have a cyclical process that we call S&OP, translated as Sales and Operations Planning, which aims to align what we expect to sell and what we can produce and provide, without losing sight of the goals defined in the strategic planning. It is a tactical-level planning process and usually also happens in an aggregated way across product families.
It may involve several sectors, such as commercial, marketing, logistics, production, supplies, and controlling, and the PCP is normally an integrative character, since all functions are connected to it, and a feasible plan must be put together.
As we can imagine, the amount of information that must be collected and organized for this to happen efficiently is very large, and having a specialized system for this is decisive. Although many companies use Excel, it may end up limiting the ability to simulate scenarios, either because of the updating and accuracy of the data, or because of risks in transposing information and manipulating formulas, as well as the tools to execute this simulation quickly and efficiently. If the time needed to set up a new scenario is long, this may prevent the company from obtaining better results. Technical data sheets, product inventories, supplies and raw materials, sales, delays, maintenance schedule, prices and replacement times, and many other important information must always be updated, otherwise the scenario set up may be compromised. The product mix itself, which can generate more or less equipment setup, must be taken into account when calculating capacity. The levels of inventories projected in each period must be aligned with the future demand curve and the business strategy and, finally, the financial result of this whole set must be aligned with the objective set by the company and support the business.
Some articles present the simulation of financial results as a broader and more evolved value approach to the S&OP process, called IBP (Integrated Business Planning). In this sense, the S&OP system can benefit from the entire existing financial and cost structure if it is integrated with the ERP (Enterprise Resource Planning) system, and correctly projects the indicators, including the cost of idleness and the impact on the final result, which can be an important analysis tool in an increasingly competitive market.
Aligning what the market wants to buy with what we can actually produce requires that S&OP be an interactive process, with commitment between the parties and that does not follow the flow in one direction only and that ends in a mere formal meeting and with little capacity to bring better results. With products that we do not have enough capacity to produce, we can simulate scenarios by choosing those that have the highest contribution margin or that have greater inventories of components and raw materials, for example. Conversely, we can promote the sale of products with the same criteria, looking at the resources with the greatest idleness, which will absorb fixed costs and improve the company's results as a whole.
The greater and more dynamic access to information and the evolution of systems capable of quickly simulating scenarios are making S&OP an increasingly continuous process, with a greater level of detail and actively interacting with short-term planning, through S&OE (Sales and Operations Execution). The ability to react in the short term can represent significant gains, improving the level of customer service, avoiding the formation of undesirable stocks and optimizing results. In many cases this is only possible with a system that integrates all planning levels with real-time data and that contemplates the particularities and rules of the business.
As a result, the decisions taken in S&OP will become a joint action plan between the areas, with the aggregated production and sales plan, commercial and marketing actions, logistics, HR, and others.
Master Production Plan
Once the S&OP scenario was approved, we generated the Master Production Plan, which details the disaggregated production plan for the products that will actually be produced, which may be finished products in the case of production for stock or that are being sold, and intermediaries, for which the production of the final item can be triggered at a later stage. As an example, we can have a master plan for the production of raw fabrics, and continuously evaluate which dyed fabric needs to be replaced by calculating the stock coverage, or by firm order, on shorter plans or directly in the schedule, the replacement being closer to the final moment in which the decision needs to be taken. As with the production of chemicals, we can have the production of intermediate products, such as raw materials for various final products to be programmed and produced afterwards.
Since we have now defined the final product, we need to adjust the volumes to be produced by observing the sizes of the production lots where appropriate, analyze the production capacity again and interact with the material planning, because when we define what we are going to produce, some component or raw material may be missing that is no longer possible to obtain in order to meet the replacement deadline, and then the plan must be adjusted.
Often for the correct quantity to be produced to be calculated, it may be necessary to evaluate characteristics of product inventories according to the batch, which may or may not be included in the demands depending on specific characteristics and levels of demand of different types of customers and processes. Ignoring important restrictions at this point may result in a lack of resources to fulfill what was planned, causing rescheduling and delivery delays, as well as synchronism problems and delays with a ripple effect throughout the chain.
Materials Planning
With what will be produced defined, we can generate material planning to ensure that the needs of raw materials, inputs, and components are met when necessary, optimizing inventory levels. For this to happen, the planning system must have access to product engineering, with the list of materials and delivery times, expected loss rates in each process, and a record of setbacks and similar products, so that materials can be exploded correctly. We can also find peculiarities, such as considering the available stocks in an analytical way, understanding lot rules, quality, purpose, and others. A particular batch of raw material may be indicated for specific applications, such as in the textile industry: the purpose of the batch of yarn may imply a restriction of colors when dyeing the fabric, or in the chemical industry, where a specific characteristic of a batch of raw material may also restrict the finished products in which the component can be used. The ability to automatically frame inventories contemplating these restrictions and in an optimal manner is only found in specialist systems.
Depending on the type of material, demand dates can be adjusted with a greater level of detail after the production scheduling stage, in which the specific start and end time of each production order is calculated, further optimizing inventory levels, as it can calculate the time of supply on the timeline.
Production Schedule
At the production planning stage, we take as a basis the master production plan and the firm orders in the portfolio to detail in the short term when and where to produce, generating production or assembly orders and sequencing the operations of those orders on the productive resources. This sequencing is essential for the various production sectors to be synchronized, optimized, and clearly visualizing their priorities. In addition, sequencing allows calculating the time needed for machine setups and making adjustments to obtain maximum performance at these changes when possible. A common way for this function is to use the graph of Gantt, which allows this management visually, regardless of the production model pushed or pulled. Another tool that can be used are the frames of Kanban, manual or electronic, which allow each workstation or supply to clearly visualize the sequence and the right moment to perform its task.
With the proper sequencing of the schedule and synchronism of operations, we can optimize material inventory levels and their movement more safely and with greater precision in relation to the time when they should take place. In addition, it provides updated information on order delivery forecasts, improving the level of service, preventing and mitigating delays when possible.
To support this process, it is increasingly common to use APS systems (Advanced Planning and Scheduling), What can be translated such as advanced planning and programming. They are systems designed to optimize the use of resources by automatically generating and sequencing production orders through heuristics developed to find solutions in complex environments. It must take into account restrictions and specific characteristics of each production environment and have the capacity to perform flow balancing to optimize production as a whole and not just sectorially. Information such as demand delivery dates, technical data sheets, inventories, production schedules, performance indices and expected qualities, setup rules, and other information, must be up to date. Performing this function manually turns out to be inefficient in environments with large volumes of production orders or complex flows.
This system category can be integrated with the MES solution (MManufacturing Execution System) and actively control communication with the execution of the processes, incorporating the programmed sequence of execution of the tasks directly into the supervisory systems of the equipment, for example, becoming an important step on the path of implementing industry 4.0.
Calculating the expected delivery date at the time the order is entered is also a functionality that some APS systems may offer, taking into account inventories in process and the current occupancy of the factory. This functionality can be a differential when negotiating with the customer, but in addition to having a fast response time, it must use well-defined parameters, since the order entry sequence is not the same as the production sequence and cannot impact the factory's efficiency.
Depending on the type of industry, implementing an APS system can be quite complex, since the tools do not always provide sufficient parameterization to contemplate existing restrictions, or because of the difficulty in gathering and integrating the information and rules necessary for the process. All it takes is one relevant criterion to be left out and everything that was generated ends up being lost. It is not uncommon, in project meetings where parameters and rules are discussed, many restrictions that are used in practice to be forgotten or even omitted, generating rework, or worse, compromising the entire result. In many cases, APS software is purchased and deployed by the company and ends up being underused, generating programming that in practice cannot be applied. As a consequence, it ends up being administered manually by the PCP or even within each industrial sector, preventing greater gains in the optimization of resources and in the quality of deliveries to customers.
Maintaining a native APS in our systems ended up becoming an important differential, both in the speed of response it allows for changes in planning scenarios, and in the ability to contemplate the particularities of each business, with the modeling of rules in each project, generating real gains for production planning.
Monitoring and control
Monitoring and monitoring production operations is an essential part of PCP's work and aims to ensure that they are aligned with what was planned. The planner must be aware of the indicators of production, efficiency, quality, and compliance with deadlines, so that deviations are evaluated and treated at their source with agile corrective actions in each corresponding area or even if new standards are defined and used in the next planning cycle. It must maintain constant communication with the production, maintenance, logistics and sales areas, coordinating the actions necessary for the established planning to be fulfilled.
It is also a fundamental part to closely monitor the progress of orders at each stage of the production process, and the systems must provide this information in a consistent manner.
With increasingly connected systems on machines, obtaining important production information is no longer a challenge. The differential ends up being to actively use this data, feeding the planning system, updating the programming scenarios in real time, adjusting the predicted sequences and recalculating the delivery forecasts.
Conclusion
As we saw in this article, in which we summarize the main aspects of expert systems, many challenges involve production planning processes and, at the same time that more and more information and tools are available, complexity and restrictions are also increasing. Deadlines are becoming shorter, the number of SKUs larger, the development of chemicals for new applications, exchange rate changes in raw material imports, ever shorter collections, customizations, B2C, and there are many other factors that end up leading to an increasing level of demand.
And remember, Operacional provides its own production planning solution, with S&OP, IBP and APS tools native to Operacional SGT and PROCESS, specialized and configurable systems for your operation, and that can help your company on this path towards maximum productive performance.
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