The initial review of performance to plan gets
everyone current on the progress made over the preceding week or
month. The participants now have the latest demand forecast and
any new information about production capacity or management
The next and main purpose of the meeting is to
evaluate potential changes to the plan and agree to hold or change
course. The output is an updated production (and sales) plan.
Manufacturing uses it to build what we plan to sell. Sales uses it
to sell what we plan to build.
In some cases, Sales or Manufacturing
management may have prepared proposals to change the plan. Again,
these proposals are usually set out in a prearranged format, often
on hard copy or in spreadsheets. Proponents present the merits of
their suggested changes. Other participants may question those
merits or the feasibility of the changes. Or, they may suggest any
number of modifications to the proposed alternatives.
If capacity and materials are unlimited and
production and inventory costs are no object, then the
discussion can proceed simply on the basis of which alternative is
most likely to satisfy actual demand as it materializes. However,
if our manufacturing company wants to remain in business and
thus is trying to be competitive and use expensive, limited
resources wisely, there is a dilemma. Even at the aggregate
product level of detail, there are many possible production
For example, what if Sales believes the upward
demand trend will continue for Product Group X and for Group Z as
well. "We were caught with our pants down last month. Let's
increase the forecast by 10% for these groups and match it with a
corresponding production plan increase."
Manufacturing responds, based on long
experience and intuition, that a 10% production increase for
Product Groups X and Z can't be managed without pushing other
production out in time. "Which production is Sales willing to
sacrifice? Perhaps we should continue on course for a week, limit
disruption in the factory, prepare to boost production if needed
and subcontract to make up the shortfall if we're wrong."
What is the answer? Clearly, there is no
single obvious answer. First, we might want to know what size
production increase for Product Groups X and Z could be
handled without impact on other schedules, 5%, 7%? If a 10%
increase does in fact mean adjusting other schedules, which
production could be delayed? How much delay would be required?
What is the extra cost of subcontracting
if we are forced to use it and do we have the
key purchased materials to support it anyway? What is the
aggregate inventory impact of each scenario?
In reality, many such SOP decisions are
consigned to gut feel, to the strongest and loudest personality in
the room or to a grossly oversimplified thumbnail planning model.
It's not because the alternatives can't be evaluated or analyzed
properly at this level. Again, it's because we haven't brought the
right data and software into the meeting where the real
For this task, we need much the same data used
in reviewing performance to plan. We need similar software as
well, again running on notebook PCs. In addition to flexible
Supply-Demand analysis, we need basic MPS and Finite Capacity
Planning capabilities. MPS and FCP are needed not for generating
detailed production schedules, but to help participants quickly
make aggregate level tradeoffs while staying within basic key
resource and material constraints. Traditional Rough-Cut reports
can then be used as document starting and ending points for key
In this case, by bringing the right data and
tools into the SOP meeting, we get better planning decisions and
results that are far more likely to prove executable in the real
world outside the meeting room.
To be Continued
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