Resource Planning Article

The inadequate and untimely availability of resources is a major cause of manufacturers’ failure to meet their delivery schedules and profit margin forecasts – material shortages, low productivity and poor planning are not always the only causes.

Whenever someone asks me, "Bill, what was the most difficult challenge that you encountered during your career as a production manager? Without hesitation I respond, "Convincing our executive leadership of the need to adjust the direct labor work force and then getting their timely authorization to do it!" Early in my career, I watched manager after manager fail to get the job done because they didn’t have the proper resources in place to deal with the day-to-day challenges of meeting schedules. Most production managers will tell you that all they need to meet their schedules is the "parts" and in many cases they are absolutely correct. However, here in lies a business dilemma – when the "parts" finally do arrive, schedules still aren’t met because now the problem is the lack of sufficient production capacity.

The production manager saw the need for adding capacity earlier but was unable to convince executive leaders to hire additional labor because his/her production group was generating unfavorable labor variances due to "part" shortages. "Why add to the unfavorable labor variance – first resolve your "parts" shortage problem and then we’ll talk about adding people!" was the standard executive position. Overcoming this "parts vs. resources availability" dilemma is a prime responsibility of all production managers and, the inability to do so, is a common cause of their downfall.

To deal with the "parts vs. resource availability" dilemma, most successful production managers become experts at Resource Planning. Not in the overly sophisticated computer modeling type but in the practical short-term, "typical units", labor needs vs. availability analysis type. Production managers will never convince executive leadership of their resource requirements based on standard financial data – because it is always "too little too late". They must gain an in-depth understanding of their capacity and capital equipment requirements and develop programs and systems that will help them convince executive leadership that they are in control and timely action is essential.

Short-term Resource Planning requires the production managers to take control of their own destiny. He/she must develop effective continuous process improvements to control four critical Resource Planning activities:

SALES FORECASTS: One thing we all know about forecasts – they’re always wrong. Production Managers must be fully aware of how their portion of forecast is generated and be cognizant of past performance to plan. There are two primary techniques to help improve the integrity of forecasts: a) establish time fences to control when products can be added and when they must be dropped from the forecast and b) develop forecasted Bills of Materials commonly referred to as planning BOMs.

PEOPLE SKILLS: General Motors taught me early in my career that people are a company’s most precious resource. Production Managers must insure that their people are on a continuous learning curve or they will become complacent and their skills will become obsolete. A sound approach to developing and increasing people skills is to continuously perform technical and professional skills "needs vs. availability" inventories and establish an aggressive program to achieve compatibility. The goal – workforce flexibility. There is also a need to develop people's thinking outside the box skills

CAPACITY PLANNING SYSTEMS: Long-term capacity planning is normally accomplished by Materials Requirement Planning (MRP) and Capacity Planning (CP) computerized systems. The results can be used as an input to strategic planning activity. Short-term capacity planning is usually a home grown manufacturing "spreadsheet" system that uses a laborized "typical unit" method of forecasting that produces real-time labor and skills requirements.

WORKLOAD OUTSOURCING: Manufacturing flexibility, production agility and reduced product costs are challenges that must be met and achieved by production managers. Effective outsourcing of projects that focus on a company’s non-core business can be a worthwhile program. To be successful, the program should consist of a target pricing strategy, special material handling techniques, product focused logistics and strong supplier partnerships.

About the Author: Bill Gaw is the founder of Business Basics, LLC and a "been there, done that" lean enterprise advocate. He is the developer of six e-training packages and seven e-training modules published to help individuals and companies reach their full growth and earning potentials.