My colleague, Olivier Carré, presents here different approaches for developing a master schedule in low-medium volume production environments. – XP
Production planning for short or medium production runs is highly difficult today. Just as it is simple to schedule recurring products, it is just as complex to schedule low-recurring or even customized products.
Before Planning, it is important to identify products that contribute to sales. 2 “common” methods exist:
- the breakdown of turnover into runners (products with regular and frequent demand), repeaters (products with regular but not frequent demand) and strangers (products with irregular and unpredictable demand)
- the A, B, C classification based on the Pareto law.
In most companies where runners or A products represent less than 30% of the overall turnover, the MRPII (Manufacturing Resource Planning) diagram is reduced to MRP (Material Requirement Planning). How to implement an MPS (Master Production Schedule) with hundreds of end items to plan each week? In a make to order environment planning is reduced to convert an order into a WO (Work Order) and the MRP is reduced to manage purchased parts.
In other companies the planning process includes S&OP (Sales & Operation Plan) and MPS in a single tool with only runners or A products.
You need to plan
Except mockups and prototypes makers who have usually more capacity than needed, other companies should need to plan. Some companies have not yet identified it. Others have partly done it due to their customers’ requests.
Indeed, planning associated with flow management are the base of supply chain management for a company. I do not speak about Little’s Law which is the subject of another post on this blog. Planning allows the demand made to the production realistic but involve to balance load / capacity of critical resources. Do not think you can ship more products than production is able to do! You must know load value for each critical resource for each product. So, it is necessary to have a complete routing or a bill of resources limited to critical resources but here is the problem : how to calculate the load if a significant part of the turnover is based on customized products whose routing or bill of resources are not yet known?
The certified trainings for Supply chain and most of the tools do not speak about that or talk briefly about it.
What is the secret? See the pseudo bill.
This kind of BOM (Bill Of Material) is poorly described into Supply Chain reference books and even the term used in each can be different. However, you already know some pseudo bills and use them since a long time: kit bill or phantom / transient bill.
I will now introduce some not well-known pseudo bill: super bill, modular bill, planning bill and some more mysterious but such important bills which are common bill and tracer bill.
Super bill is an association of BOM. It is not used to describe an assembly but to plan. For example, you can link together end items if the company sales force considers them as a package. This bill allows the sales force to forecast the package and manages these forecasts disaggregation.
Also, a super bill can manage a complete S&OP family.
It is a top level kind of BOM used for S&OP or demand management process to manage forecasts.
Figure showing a super bill:
With a more tactical than strategical approach, the MPS uses 2 other pseudo bills: modular and planning bills of material.
In this case, the end item is an assembly based on modules with variants and attachments. Variants always exist but are selected by the customer. Attachments are accessories which can be attached or not to the product. For example, for military product, painting is a variant: green for forest and sandy yellow for desert. An attachment could be the tripod for the night vision camera. It is bought or not by the customer.
Each variant / attachment is an item of the modular bill with a factor linked on the expected sales. The sum of the variants’ factors can be equal or greater than 1. Indeed, you can overplan variants to take forecast errors into account: MRP will calculate net requirement over time.
The common part of all end items is defined as the common module. Its BOM is a special pseudo bill: the common bill.
Figure showing a modular bill (with variants / attachments):
Beyond variants and attachments products, there are customized products – made specifically for a customer order. For example, for space product, a communication satellite waveguide is a sole product which is made with a quantity of 1. The planning bill manages a products group with similar processing steps. It is not as extended as a S&OP product family and not as strictly defined as an end item. It is like a generic product. Unlike modular bill, no real manufacturing item is listed by the planning bill. But you can list standard purchased parts with a factor linked on expected sales.
Moreover, this BOM lists a special pseudo bill: the tracer bill. This empty BOM is listed by every customized product associated with this generic product. The tracer bill allows each customized product order to be linked with a generic product.
Figure showing a planning bill:
After introducing pseudo bills of material, what about their impact on planning process?
Two-level master schedule
An MPS input is demand:
- forecasts for modular bill (assembly products with variants / attachments) or planning bill (generic product as a group of customized products)
- orders for configured products (linked to a modular bill) or customized products (linked to a planning bill).
This kind of MPS is by definition a two-level MPS: planning is based on pseudo bills of material, execution is based on FAS (Final Assembly Schedule) for real end items ordered. Links between pseudo bills and real end items BOM are made by:
- common bill for modular bill (each configured end item always uses the common module)
- tracer bill for planning bill (during order processing, the tracer bill is listed by the ordering end item and link the customized product to a generic one).
Figure showing a MPS with modular and planning bill:
With this “2-level” mechanism, the MPS can only manage about 100 end items. It is now achievable. Those items include:
- recurring products
- modular bills for products with variants / attachments
- planning bills of generic products to cover all customized products made by the company
Load is calculated based on:
- filtered routing by critical resources for recurring and modular products
- bill of resources (list of average required capacities) for generic products
Balancing load / capacity becomes achievable and adds value to your planning. You can now focus on flow: using LEAN after MRPII.
Another key point is ATP (Available To Promise) calculation. You can analyze forecast versus demand for generic products sales. If the generic product sales are over/under forecasts, understand why and launch a continuous improvement process by reviewing forecast method and/or generic products mix.
Have a successful implementation!