Taken a Good Look at Your Scheduling Processes Lately? Maybe you Should.
The hidden costs of scheduling are often overlooked. Rush orders, equipment breakdowns, and component shortages cause changes to the schedule. Some inventories are too high, incurring costly storage or obsolescence, or too low making it difficult to fill orders. Demand increases and it’s hard to figure out how to squeeze more capacity out of the lines, or decreases and lines that are humming along must be shutdown. It seems like that’s just the way it always is.
Can you relate? Companies are often grappling with one or more of these challenges. Regardless of which ones you’re up against, improving the scheduling process can address them and improve your cash, cost, and customer service results.
Why Scheduling Matters
Before delving into why production scheduling deserves more care and attention than it typically receives, it’s important to note the difference between planning and scheduling. In planning, we decide which products to run, and in what quantities, during each time period. In scheduling, we choose the best sequence in which to make the products for each time period, in a way that setup costs are minimized, without running out of stock or missing customer due dates. Scheduling calculates the start and end times and dates of production or process orders and passes the output to manufacturing operations for execution.
Impact on the Bottom Line
Few sites realize the hidden cost of scheduling. Even a few points of manufacturing efficiency gained by creating better schedules can have a huge payoff. Often, improvements of 5-15% are possible through better and more effective scheduling.
To strategically manage to a new product launch that doubled volume we implemented a program of scheduling improvement, rapid changeover, and short cycle manufacturing. We improved operating efficiencies by 15%, reduced inventories by 50%, and maintained target customer service levels.
At a detergent plant in the Middle East, we documented a 5% operating efficiency increase by reducing bin locking and starvation through better scheduling.
The Ripple Effect
In addition to leading to strong financial results, a quality schedule ensures smooth and stable manufacturing processes and supports customer service. To do so, schedules must balance priorities, accurately represent the reality on the shop floor, and provide a zone of stability for component procurement and production execution. Bad schedules, in contrast, create massive problems in manufacturing, result in loss of sales due to tardiness of product delivery, and last but not least create significant tension across the organization.
Characteristics of a Good Schedule
A Holistic Approach
Strong scheduling balances several priorities. First, it has to respect production order due dates as defined by the planning system. Second, it must respect raw and pack material constraints, making sure that materials run outs do not interrupt manufacturing process. Third, it must respect various manufacturing constraints, like availability of special equipment, which is needed to produce some of the products, or of operators required to run specific production lines. Beyond meeting these priorities, it must ensure an optimal sequence of changeovers or setups, so as to minimize time and material losses, optimize available capacity utilization, and minimize production costs.
Leverages Tools to Manage the Complexity
By default, scheduling often happens in Excel spreadsheets; however, it’s extremely difficult to accurately represent the shop floor in an Excel model. Flexible time phased relationships between manufacturing operations, warehouses, and distribution centers are common in planning, and are hard to model in a spreadsheet. Models become extremely complex when they take into account all of the necessary constraints, and they are prone to human error. Specialized scheduling software makes it possible to accurately represent the shop floor and provides visibility to important constraints. The scheduling system must be kept up to date with accurate production rates, formulas, line availability, and product routings or recipes.
Good scheduling practice minimizes short-term interventions to the production orders. While short-term changes to the schedule may seem necessary to deliver urgent customer requirements, they often generate significant additional costs and ripple effect on the following days, creating more service problems than they were supposed to solve. They may create several additional long and expensive changeovers – which leads to capacity loss and total production volume reduction, which in turn creates more disruption, more schedule changes, and more money and efficiency lost. At Procter & Gamble we used to call this the death spiral.
Well Established Stability
A good schedule has a zone of stability which allows for delivery or availability of critical components and predictability for the operations. How can material planners, purchasing, and suppliers effectively supply components on time if the schedule keeps changing? Their only choice is to buffer the uncertainty with inventory, but this leads to risks of obsolescence and shelf-life expiration.
Measures and Assesses Performance
Schedule achievement can provide an overview of your scheduling effectiveness and should be measured. If the schedule is not being achieved, further diagnostics are required to determine the causes and corrective actions. The simple question is, “did we make what was scheduled within the zone of stability, and if not, why not?” For example:
- Are the production rates correct? If not, we will either finish too early or too late.
- Does the scheduling system represent reality on the shop floor, or is it producing schedules that are impossible to follow?
- Are operations being blocked or starved by lack of coordination with upstream and downstream processes?
- Are the downtime and uptime calendars correct?
- Did the schedule use the correct production lines and resources?
- Are the setup or changeover time assumptions correct?
- Was there an issue with component availability?
- Was there unplanned downtime or other issues that prevented the operation from running as scheduled?
5 Steps to Improve Scheduling
If you are ready to improve your scheduling process, take these five steps:
1. Find a scheduling system that can help you balance priorities and accurately represent reality on the manufacturing floor.
2. Make sure the data in the scheduling system is accurate.
3. Create a zone of stability.
4. Measure your schedule achievement within the zone of stability.
5. Ask questions when the schedule is not achieved to determine the root causes and take corrective action.
Production scheduling is essential to a company’s ability to achieve their supply chain goals, yet often not given the attention it truly deserves. By improving scheduling and ensuring your processes take key considerations into account, you’ll be well positioned to overcome whatever scheduling challenge is top priority at your plant.
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.
Oleksandr (Sasha) Velykoivanenko, Principal Mathematician, is an expert in Supply Planning and Supply Chain Management and Optimization. Sasha played a leading role in multiple planning system designs, development, and implementation during his 23 years at Procter & Gamble. He made critical contributions to Supply Chain Optimization and improvement work, bringing significant cash and cost reductions to the business, and worked for many years on building planning and supply chain management capability.