Production Schedule Volatility Got You Down?
- On 07/22/2018
Manufacturers need to step back and think about what they want to achieve with a production schedule so they can take maximum advantage of their ERP system and make it more effective
Many manufacturers are all too familiar with the concept of "MRP volatility" or "system nervousness" regarding their ERP production schedule. The root cause of schedule dates changing frequently and dramatically can be many and varied. Some root cause factors include:
- Revised customer order dates
- Labor entry
- Planning lead times
- Engineering time standards
- Purchased material lead times
- Purchase order due dates
- Supplier performance
- Material usage reporting
- Quality defects and scrap
- Engineering change activity
- And much, much, more ...
Many manufacturers may throw up their hands in frustration and look at ERP production scheduling as an intractable problem that is just too complex to solve in a practical and manageable way. Others may believe that their current software just isn't up to the task such that they feel that additional capital investment in Advanced Production Scheduling (APS) is needed. Manual workarounds and brute force expediting are often the result.
A "judo chop" to resolve ERP production schedule volatility
In many cases, your ERP scheduling software isn't the problem. The number of scheduling variables can often be greatly reduced by changing your scheduling approach and gaining a renewed understanding of what is trying to be achieved. This is the key to attaining a stable production schedule that effectively conveys work priorities and lends itself to shorter lead times and improved on-time shipments.
The fundamental issue is understanding the difference between a manufacturing schedule that establishes target due dates (i.e., it defines "the plan") versus a manufacturing schedule that projects outcomes (i.e., it reflects the "execution to the plan"). It must be understood that the scheduling assumptions that go into calculating "due dates" are completely different than and mutually exclusive to those required to calculate "estimated completion dates (ECDs)" effectively. For this reason, I refer to the former as a "BASELINE production schedule" because it establishes a stable baseline set of work priorities and target due dates for the manufacturing organization to shoot for. The latter, in contrast, is referred to as the "PROJECTED production schedule" because it attempts to estimate when work will actually be completed based on progress made on the shop floor.
If the executional outcomes on the shop floor are allowed to feed back into and infect the BASELINE production schedule, then wildly changing production schedule dates and work (and material) priorities will surely occur.
Does that mean that you need two production schedules? Yes. Yes, it does.
Note that the BASELINE schedule is stable whereas the PROJECTED schedule is dynamic. If you are running the shop floor with only one production schedule that you wish to "reflect the realities of the shop floor" while at the same time providing direction on what needs to be done, then there is the very strong possibility that a feedback loop has been inadvertently been created for which volatile dates are the inevitable result.
How Do I Fix This?
Understanding the difference between a BASELINE production schedule and PROJECTED production schedule is definitely the first step to revitalizing your approach to achieving effective manufacturing scheduling and shop floor production control. When this philosophical issue is overcome, manufacturers can then examine the mechanics of their system to see how effective and manageable BASELINE and PROJECTED schedules can be implemented in a way that prevents feedback loops, minimizes or eliminates the need for manual scheduling and expediting, reduces lead times, and maximizes on-time performance.
Resources and Next Steps
More information and assistance is available to help revitalize your ERP production scheduling:
- Visit the Altemir Consulting YouTube channel to see videos that further explain the dynamics of ERP production scheduling
- Read Lean MRP: Establishing a Manufacturing Pull System for Shop Floor Execution Using ERP or APS. It is available from Amazon as a paperback or Kindle e-book. In addition to explaining production scheduling, it also lays out an approach for using the BASELINE schedule to establish a lean pull system on the shop floor.
- Contact Altemir Consulting and schedule a 15-minute phone call to discuss your particular issues and formulate a plan to resolve them.
In many cases, new production scheduling practices can be instituted that will revitalize the performance of your manufacturing organization without the need for additional capital investment.
