Getting Started with Product Wheel Design and RedesignWhether you’re new to Wheels, or looking to revamp the Wheels that you currently have in place, you may be wondering where to start. Through years of implementations, we’ve identified the most important components of Product Wheel design… and we’re going to share them with you!
The good news:
- Product Wheel scheduling doesn’t require additional capital.
- Product Wheels are common sense. Planners, schedulers, and operators intuitively understand that there is a best sequence in which to make their products.
- Product Wheel scheduling can increase your manufacturing efficiency by 5-30%.
- Make to order and make to stock products can be mixed within the Product Wheels. In fact, make to order manufacturers can often use Product Wheels and repetitive techniques to increase their manufacturing efficiency.
The Keys for SuccessThe most effective Product Wheel designs take 5 essential considerations into account.
Step 1: Determine how often the Product Wheel should completeHow often should any given product be made? Customer order lead time, shelf life, demand variability, storage space, capital costs, and changeover difficulty all must be considered. To provide a starting point, classic economic order quantity calculations can be done to calculate recommended frequency. You can bookend the frequency by calculating the shortest possible Wheel that won’t run you out of capacity, and the longest possible Wheel that won’t exceed storage, working capital, lead time, or shelf-life constraints. Use these three starting points and adjust based on your business objectives. If you want to improve customer service and lead time or reduce inventory, lean towards shorter cycles. If you wish to improve cost and efficiency lean towards longer cycles. More sophisticated cycle design algorithms can make recommendations across families of products.
Step 2: Calculate the safety stock requiredSafety stock levels for each SKU must allow for the Product Wheel cycle to complete as planned without interruption. If you can’t reliably complete the Product Wheel, you won’t have a repeating sequence in place. It can be tempting to think that you can get away with less inventory, or that ongoing changes to the schedule won’t impact the overall operating strategy. In reality, the calculations don’t lie, and the confusion created by frequent emergencies and rescheduling often results in more inventory than if you had followed a deliberate inventory design. Often, people think that the proper level of inventory to protect Product Wheel cycles is unattainable, that it will mean too much inventory and working capital. The reverse is usually true. Data based inventory calculations usually show that some SKU’s are too high, some are too low, and the net is equal or less than the current practice, along with better customer service and increased operating efficiency.
Step 3: Group products and assign them to linesGroup products that run well together based on changeover characteristics. We call these product families. Once the product families are established, assign them to specific production lines. Changeovers within a family are easier and faster than changeovers that involve family-to-family changes. Often this step alone is worth several points of operating efficiency. Then, place the products assigned to each line in the sequence that maximizes efficiency by considering the various changeover characteristics. Make to order products can be placed within their appropriate families and sequence, to provide a placeholder for their production whenever there is demand.
Step 4: Implement the Product Wheel designOnce you’ve designed the Product Wheel, an ERP system like SAP can be set up to create production or process orders that approximate your design. If your system has the capability, you can use period-based lot sizes corresponding to the Product Wheel frequency. Otherwise use lot sizes that will create the designed Product Wheel frequency given average demand. Using simple sorting algorithms, many systems can schedule production or process orders in a repeating sequence. Since you’ve simplified scheduling, you might continue to use Excel to sequence your ERP/MRP orders now that the scheduling logic is understandable, defined, and trainable. However, be forewarned that it can be difficult to keep track of where you are in the Product Wheel, know when to break the Wheel (and when not to), and where to insert emergency orders. Simple sorting often gives away some production efficiency compared to more sophisticated sequencing techniques. If you’re looking to skip over these difficulties and maximize efficiency, look into incorporating specialized scheduling software.
Step 5: Assess and refine the WheelNow that you have a solid starting point, you’ll have the opportunity to continually assess and fine-tune the design. As you continue to use and redefine the Wheels, you’ll quickly start to see their value across the entire supply chain.
Summary:Put an end to less-than-optimal production scheduling by designing (or re-designing) and implementing Product Wheels. Taking a structured, holistic approach to your Wheel design will set you on the path to see substantial, lasting value. Looking for insight into how these steps can be applied to the planning and scheduling at your plant? Contact us to get started.
ABOUT THE AUTHOR
Mac Jacob, Head of Product, CPIM, SCOR-P, was a key contributor to building Procter & Gamble’s supply chain, ranked as one of the four best in the world by the Gartner Group. He started in project management, production planning, warehousing, and shipping in a small manufacturing plant, and then became the planning manager for Luvs Diapers for North America. He realized that it was the supply chain systems that were holding back the business and led a project that eventually became P&G’s global SAP/MRP II implementation. At one time or another, he was the business leader, developed the work processes, and wrote the original training materials for most of P&G’s supply chain planning systems.