Manufacturing Process Industry




Order and Forecast Reconciliation

If it is assumed that scheduling is forecast driven then the question is—when is the forecast changed? The temptation is to monitor the orders and react immediately to orders exceeding forecasts and slowly to orders below forecasts. There needs to be a conscientious game plan on how to react to these situations—how long to stay the course and how much to change when it's time.

The slower the supply chain, the less a business is able to react to changing market situations. But let's also flip this around. A car can also be overdriven. Speed up—slow down—speed up— slow down. Similarly, quality can often suffer from changing rates too often. There is no point in reacting faster than the system allows you to. Compromise is the key until the JIT effort solves this problem.

Assume we have massaged all this and the manufacturing plant now trusts the demands placed on it. Basically the demand pattern is controlled and the process is demand driven. The first objective has been reached. This would be equivalent to a single in a baseball game.

"Feasibilize" Constraints

A few constraints that cause push planning are production capac­ity, labor, limited raw material availability and storage. Only two will be discussed to make the points on how to manage constraints. With a little latitude on the English language, we will call the process of leveling constraints feasibilizing the schedule.

Production Capacity

The first constraint is production capacity. Leveling this constraint means sequencing the order of products made, changing the start date of the campaigns and their sizes, effectively changing the number of required changeovers.

Raw Material Availability

Raw materials may only be available at certain times and/or only at a fixed maximum rate. This will cause the scheduling to sequence the order of products made, change the start date of the campaigns and their sizes, and cause adjustments to the rate in which product can be made.

These two constraints illustrate that different scheduling parame­ters are used to feasibilize the schedule depending on the cause of the constraint. Other constraints will similarly require their own set of parameters. Feasibilizing the short term is a double. Feasibilizing the short and long term is a triple.

Optimize Costs and Profitability

The scheduling job could stop after satisfying demand and feasibilizing the schedule, against the constraints, and often does. Just doing these two steps does as much to improve customer service as carrying more inventory. But neither insures profitabil­ity. Scheduling has a direct affect on costs.

Setup Costs

Block-operating equipment means changing it over when switch­ing from one product to another. Lost capacity is a hidden cost especially if more is needed and it is contracted or additional

capital is spent to achieve it. Besides loosing capacity, every setup incrementally adds costs. Cleanout and scrap are two big contrib­utors plus retooling (or repiping). The fastest growing cost area is the disposal cost of the solvents used for cleaning the equipment.

These are significant factors to the process industry. Since the process industry is very capital intensive, there is a strong desire to fully utilize available capacity. This means block-operating several products on the same equipment. The point is, it does not come free. The "extra" cost is the setup cost. The combination of lost capacity and setup costs is a real motivation to minimize the number of campaigns. The results are high inventories.

To be Continued


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