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Each of the three primary categories have distinguishing characteristics that set them apart. This is especially true between the Master Planning and Detail Planning processes. Consider the Operations Management Processes (Figure 2) that show several characteristics associated with the two processes. The "translator" that takes the broad business view of Master Planning and puts it to work in an operational sense is the Master Schedule. The levels of detail, type of decisions, time frames of analysis and other characteristics are strikingly different. As an example, from a Demand Planning viewpoint, the strategic implication of improving the company's market share can contrast sharply with the operational pursuit of making products and shipping customer orders daily. Gaining market share has significant strategic business implications. Shipping customer orders complete and on time may be the tactical means to achieve the larger business goal. The Master Schedule should be the key that deploys Top Management's strategic initiative into the tactical reality of getting the job done.
The process of Master Scheduling defines what the company plans to
produce in specific configurations, models, and items. It specifies
the items and quantities that will be manufactured and their
schedule dates. These Master Production Schedules drive the material
plans that provide answers to the questions of what, how much and
when components, subassemblies, and raw materials should be made
available. Material Requirements Planning drives the Capacity
Requirements Planning function which compares work center loads to
the availability of equipment and personnel. The source of these
actions is a Master Scheduling function that should represent the
business strategy of Sales and Manufacturing.
The reason for this poor showing in Master Scheduling performance was identified by Pohlen and Ticknor in their paper (Parameter-Based Master Production Scheduling, pg. 17-21) presented at the APICS International Conference in 1989. A summary of the results (Figure 3) makes an important point by exposing the casual attitude Top Management has toward Master Scheduling. Most companies surveyed marginally recognize the existence of the Master Schedule. Most of those who do "use" the process seem to have limited success. The data shows that only 5% of the companies surveyed have set up the Master Scheduling module that came with their standard Manufacturing Resource Planning software! It seems that most companies are driving the Material Requirements Planning process with only the Bills of Material and Inventory information! Results from trying to use a formal Operations Management system seem predictable. There is no link between Master Planning and Detail Planning. The tactical deployment of Top Managements strategic initiatives are apparently left to some ill defined and ineffective "informal system." The results are as effective as a two legged stool! But how can this be? The excuses follow the predictable pattern of "poorly defined processes," or "too many people involved," and the classic "we're too different."
Consequences from ignoring the need for an effective Master Scheduling process is increasing the risk that the strategic plans of Top Management will be executed in ways that will likely produce limited results. Consider a company that enters customer orders directly into the production system. Their strategy was to distinguish themselves from the competition by always shipping what the customer wants when they want it. The tactical implementation of this strategy involved a plant production system and material flow using Kanbans. An electronic Kanban signaled a FMS to machine the different housings needed on each customer order. There was no Master Schedule. Production estimated the work load based on the customers' need dates and did everything possible to meet that date.
To meet the customer's need date, production would work overtime or start work early when capacity was available. The results were serious part shortages because of the uneven level of the manufacturing load. Additionally, the Shop would be machining castings to the customer order due dates. But production was executing the assembly process based on overtime capabilities and forward scheduling if capacity was available. There was no plant wide level loading or mix model scheduling in place. The effectiveness of the pull system was limited. Meeting the customer's need dates seem to be stuck at the 85% mark. They had the mistaken belief that they were a JIT shop and did not need Master Scheduling.
Attributes of Effective Master Scheduling
In most companies the effective deployment of company strategies
will not improve unless the Master Scheduling processes become more
effective in the following areas. The Master Schedule should (1)
simplify execution of the strategies of the enterprise, (2)
consider all the demands from
Strategic: Master Scheduling is the key function that should convert
the strategies of the Master Plan into the detail working plans to
produce products, ship customer orders, and make money for the
corporation. The strategic implications of the Master Production
Schedule involve converting aggregate plans and general policies
into specific rules and guidelines. The mission, strategies, and
objectives (M-S-O) of the business plan are converted to action
items through the Master Production Scheduling process.
The Production Plan reflects the planned inventory levels and the anticipated rate of sales and production by product lines. The strategies behind these plans need to be carried out as schedules for specific items. An example is the application of Safety Stock. A Master Plan may call for a 98% customer service level but it's up to the master scheduler to figure out how much finished goods on a specific item will be needed to meet the objective. When there is a strong review process in place with appropriate performance measurements covering the Master Planning functions, the probability of a quality Master Production Schedule improves dramatically. The Master Production Schedule should be the function that puts the company in a position to win by carrying out Top Management's strategies. The Demand Planning and Production Planning processes come together as a Sales/Operations Plan that will be addressed in more detail later.
To be Continued
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