Manufacturing Process Industry

Push planning causes inventories to build in a make-to-stock environment. A different sequence will cause the first scheduled product (A) to carry additional inventory for the length of the second scheduled product's (B) campaign. Therefore, enough A must be made to satisfy demand for the full length of B's campaign. If five products are cycled through the same equip­ment, now the inventory is going up geometrically for A, B, C and D. Some questions jump out. Is there enough storage for this much A? What is the value of A versus the other products? Is there a shelf life problem? How good was the forecast as far out as A was made? These questions will impact the sequence picked for the schedule and the size of the campaigns for all affected products.

The challenge of scheduling has to do with satisfying multiple objectives simultaneously. Customer demand was the first. The second is physical capability, having enough capacity. Every time equipment is changed over from one product to another, capacity is lost. This is in conflict with the inventory scenario just discussed. Inventory consideration promotes more, smaller cam­paigns.

Scheduling is directly impacting fixed and working capital. Com­bined with its potential affect on customer service, quality sched­uling is critical to your business. Hopefully the point has been made about how important finite scheduling is and its strategic position with respect to MRP II and JIT. In other words, no matter how advanced those MRP programs are in your organizations, finite scheduling is a long-term part of that picture. The last segment to discuss is how to get control over scheduling.

It is not enough to talk about the decision-making process or what the schedule should be without understanding what is driving the process. Understanding demand is as tricky as the sequencing question, but must be put under control to get scheduling under control.

Demand is an ambiguous word. In a make-to-order business, demand is simply customers' orders that have been booked. The schedule is then driven by backlog.

The process industry is not so simple. It assumes that its business is make-to-stock. This type of business must schedule its produc­tion by forecasts.

Production must be started before all the orders are available. As the process industry goes toward more diversity and specialty markets, it can no longer afford to make all of its products in a make-to-stock mode, however, some portion of manufacturing will still need to be started before the orders are available.

Picking orders over forecast to drive production is not a freewill choice, if you will pardon my regression into an old philosophical predilection. It is dependent on the responsiveness of the supply chain and customer service expectations. Let's assume it takes one day to package and four days to make the unpackaged product. If the customer is willing to wait five days—no problem. One day, you must forecast the generic product and the last step is order driven. This is the classic Make-to-Assemble environment.

To be Continued

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