As geopolitical and economic risks rise, executives become more concerned. Proactive clients are taking action to boldly invest where it makes sense while aggressively focusing on inventory and cost reduction of non-value added items/ work and also ensuring high customer service levels. To accomplish these objectives, they are upgrading their production planning and labor scheduling processes and use of ERP and advanced supply chain technologies.

Production Scheduling Upgrades

How will upgrading the production planning process maximize productivity? When you plan what to produce, when to produce it, and in what sequence to produce it, you will directly impact the ability to meet customer request dates with high OTIF (on-time-in-full) levels in the optimal way for increasing efficiencies, optimizing and level loading the workload, reducing scrap levels while minimizing the amount of inventory required to the bare minimum to cover for fluctuations/ unexpected occurrences in demand and supply.

The bottom line is that planning is at the center of several competing factors. The better you optimize those factors in building the plan and account for the nuances of the products, customers, equipment, and skills, the you can turn 1+1+1 into 33! In essence, you achieve the win-win-win of better customer service and better productivity (and therefore margins) while having additional cash available to pay bills and reinvest into the business.

Case Study: Upgrades to Production Scheduling Process & Toolset

An industrial storage system manufacturer wanted to increase output, maximize productivity and better allocate capacity to increase profitability while supporting growth plans. Since they built the business with responsive, high service levels, these results had to remain intact. On the other hand, because customers could change their mind frequently and push orders out, pull them in, change quantities, or drop in last minute additions to their custom engineered orders to support end customer changes and installation schedules with immediate responsiveness from the manufacturing facilities, the planners jumped through hoops to deliver exceptional service yet could only do so much in terms of productivity gains.

The schedulers were more than fully occupied detailing installation schedules, grouping products in shippable sets, and translating them into final assembly schedules while ensuring fabrication schedules kept work flowing to keep up with anything else. Thus, tasks such as updating the ERP system with production schedule dates and developing an optimally sequenced schedule had to be left for a later date. Therefore, there was an opportunity for improvement for Sales and Project Managers to gain visibility into the schedules and for Operations to maximize productivity and drive bottom line results. To learn more about production scheduling best practices, refer to our article.

At the high level, the plan to achieve the objectives was straight forward yet challenging to implement across the organization:

  • Roll out advanced ERP functionality: By upgrading the planning functionality to allow jobs on the final assembly schedule to be split into multiple work orders and carry down to the fabrication schedule, the planning task became much more doable.
  • Focus the efforts on planning final assembly: Once this functionality was upgraded, it allowed the planners to focus on building an optimized schedule for final assembly while automating the basics of the fabrication schedule. This resulted in visibility of the schedule for Sales and Project Management because the system was updated.
  • Further automation / advanced functionality: As the planners focused efforts on the final assembly schedule, it became clear that there was still a huge amount of manual / Excel work that had to be completed to figure out how much of which items had to be run on what date to satisfy customer delivery and installation schedules while trying to make sure fabrication was available on time and efficiently. Thus, we upgraded / added several reports and enhancements to automate the “80/20” of the manual review, highlight exceptions, and add signals/ alerts for noteworthy changes.
  • Tie plans and priorities to other groups: As we gained clarity on the final assembly schedule, we started meeting with supporting groups such as Engineering, Project Managers, Sales/ Demand Planning, Master Planning, Purchasing, etc. This allowed us to coordinate priorities, keep customer dates updated and collaborate for improved execution.
  • Coordinate with Operations: As the schedules became clearer, it made sense to coordinate more closely with Operations to sequence items to maximize productivity and labor efficiencies. Since the employees are cross-trained and flexible to move between work centers based on daily needs, and there isn’t enough people to staff all work centers simultaneously, scheduling labor can be a complex task. Thus, the clearer the requirements upfront, the better for staffing to be optimized to maximize output and productivity. Additionally, insights can be utilized to reconfigure shift schedules for maximum productivity.
  • Focus on fabrication scheduling: As final assembly schedules and the coordination among functions improved, the bottleneck became fabrication scheduling. The basic fabrication schedule could be derived from the weld schedules, and so we developed a dispatch report to automate the schedule; however, it wasn’t enough. If multiple customers required deliveries simultaneously that used the same work centers, the planners might need to weave in and out of multiple items during the day which must be reflected on the schedule. On the other hand, if there was enough time to combine orders, it made sense to optimize operational efficiencies, requiring the opposite approach to planning and substantial manual maneuvering. Thus, we focused on automating the “80/20” of fabrication scheduling process by defining guidelines, translating requirements into shifts and tracking schedule adherence.
  • Look forward with capacity planning: We also summarized the requirements by work center and came up with directionally correct calculations for available capacity by shift to gain a view into capacity by site for the next several months. This view provides information for the planners to shift volume between sites while maximizing productivity and mitigating cost impacts. To learn more about capacity planning, refer to our article with best practices.

Of course, the devil is in the details, and so it required several layers of complexity, significant education and training, and testing/ pilots to succeed.

Results

We achieved several key results including:

  • Improved visibility: Instead of picking up the phone or running to the floor to understand the status of orders, Sales, Project Management, and Executives could look in the system and rely on the information.
  • Reactive to proactive: Instead of jumping through hoops on a daily basis to provide exceptional service to customers, the schedules kept us ahead of customer requirements from an 80/20 standpoint.
  • Stabilized production schedules: Instead of jumping around schedules which is less efficient for Operations, the schedules were stabilized and level loaded to a greater degree. This led to a better utilization of labor, increased efficiencies, reduced scrap, and increased output.
  • Proactive view to open capacity/ bottlenecks: By seeing into the future, resources could be reallocated to minimize overtime, unnecessary changeovers, and freight costs to satisfy customer needs. Bottlenecks are identified upfront so that they can be resolved before becoming a problem, and open capacity can be filled or the labor reallocated productively to grow revenue and profitability.
  • Productivity: While maintaining high levels of service, the company was able to maximize productivity which translates into bottom line results.

To take this to the next level, consider rolling out a SIOP (Sales Inventory Operations Planning) process to further maximize productivity, profitability and customer value. To learn more about SIOP and best practices for success, download a complimentary copy of our book, SIOP: Creating Predictable Revenue and EBITDA Growth.

The Bottom Line

Putting additional emphasis on production and labor scheduling can provide visibility, productivity and forward-looking views to successfully navigate turbulent times. No matter how complex and variable your situation, if you upgrade your production and labor scheduling processes and systems, you can stabilize, modernize, and maximize your results, If you are interested in assessing your production and labor scheduling effectiveness, contact us.

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Labor Scheduling: How to Maximize Operational Effectiveness While Servicing Your Customer