Master scheduling is more art than science. Although the master
schedule itself may be composed of several thousand numbers upon
which management decisions are made every day, the job of master
scheduling goes well beyond just creating the numbers. For instance,
the numbers may indicate that the plant is in an overloaded
condition. Now what? How does the master scheduler get out of this
overloaded condition and how does the company stay out of it?
Correctly handling situations like the overloaded master schedule
is the real job the master scheduler must face everyday, that of
making critical decisions using the information provided by the
It has long been said that the challenge of master scheduling is to
balance the demand for a product with a supply of that product. This
balancing act requires an artist's touch that goes well beyond the
numbers contained on the master schedule. For example, numbers may
show or indicate that customer orders are not coming in as
forecasted, but what does the master scheduler do about it? How
about the problem where customer orders exceed the forecast? What if
a product is recalled? How about dealing with a plant shutdown,
either for a period of time or permanently? Sometimes customers
change their mind and want a delivery either earlier or later; how
should the master scheduler address moving orders in and out when
production stability is so important?
Master scheduling is a demand driven process. Although there are a
few companies which build product strictly to customer orders or
contracts, most would acknowledge that there is some type of
forecasting that takes place prior to receiving the order. Companies
have engineers on staff, skilled people in the plant, inventory in
the stockroom, and tooling in the crib. Why do they have these
resources? Well, it's because they believe they will need them to
fulfill upcoming customer demand. So, here's the first problem the
company must face, that of hiring engineers, hiring manufacturing
people, buying inventory, and possibly designing, making, and
procuring needed tooling, all based on a forecast that is bound to
have some inaccuracies.
Referring to the table, we see that the actual demand for the
quarter is very close to the forecasted demand (102%), but it
becomes quite erratic when it comes to the monthly numbers (124%,
56%, 126%). This is typical of companies that must rely on
forecasts; the accuracy of the forecast is dependent upon two
things, the level in the structure that is forecasted (the higher
the level, the better the accuracy) and the time period forecasted
(the closer to the current period, the better the accuracy). The
other problem is that the master scheduler schedules in weeks or
days and the forecasts come in monthly totals.
When someone forecasts, things happen! Materials are ordered, people
start thinking about adding or reducing capacities, money is spent,
etc. These efforts can be costly. Forecasts are not always taken
seriously. Sales sometimes gets into the habit of overstating the
forecast to insure less stockouts. On the other hand, sales
sometimes understates the forecast because of commission structures,
bonus plans, and performance club objectives. Many times there is no
reward or penalty for forecast accuracy.
One might ask, what are the real costs of forecast inaccuracy?
Let's start with the customer not getting the product as requested
or promised. How about excess inventories, overtime expense,
production people stressed, less productivity, idle production
hands, idle capacity, marketing trend analysis, and second guessing
to name just a few. What about the revenue projections being off,
and a sales force that is scared to guarantee delivery to the
Master schedulers know that actual demand will not match the
forecast, except in very rare circumstances. Therefore, the master
scheduler as well as manufacturing must remain flexible. Both
functions must be able and willing to shift capacity and materials
as necessary while keeping a somewhat stable manufacturing run rate.
The master scheduler must also know who approves changes to the
schedule in the various time zones (e.g., two weeks prior to
shipment, one month prior to shipment).
It takes courage to look beyond the customer order backlog and rely
on forecast numbers. Since MRP II and master scheduling is a demand
driven process, what else is there? The forecast should be
constantly monitored to improve its accuracy. People involved in
forecasting must understand the importance the forecast plays in the
overall picture and the actions taken based on the forecast. These
management issues and problems must be addressed and not swept
under the rug. Many answers to production problems lie in the hands
of the forecaster and master scheduler..
To be Continued
For balance of this article, click on the below link:
Lean Manufacturing Articles and go to Series 02
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