How to make a plan and manage it.

PC&L-Hicham ELAAJJANE
Introduction – tools for effectiveness

INCREASE RELIABILITY

TQM,Six
Sigma,SPC,ISO,etc.

ENHANCE
REDUCE WASTE
COORDINATION
AND TIME
Executive
Lean Mfg,JIT,quick
changeover,cellular
S&OP,ERP,Master
manufacturing,etc. Scheduling,Kanba
n etc

Master scheduling is primary a tool for enhancing coordination. Basically

demand and supply.
 Hierarchy of planning
Technics of planning Technics of capacity management
Resource
S&OP Planning
MPS RCCP

MRP CRP

Scheduling Input/output
control
• The model is Top down based.
• At each level the plan must be balanced with the capacity , 3 questions must be answered:
what are the priorities ?
What capacity is available ?
How can differences be resolved ?
Techniques of planning
 S&OP : sales and operation plan
 Horizon : 18 months
 Frequency : monthly
 Unit : family
 MPS : Master Production Scheduling
 Horizon : minimum 3 months ( 13 weeks )
 Frequency : weekly
 Unit : item or option
 MRP : Material Requirement Planning
 Horizon : minimum 3 months ( 13 weeks )
 Frequency : weekly
 Unit : item
 Scheduling :
 Horizon : very short term
 Frequency : daily
 Unit : item

• As we move down the hierarchy , the level of details increases and

the planning horizon decreases and also the time bucket decreases.
The 4 Fundamentals
Volume

Demand Supply

Mix

• Demand and supply must be balanced at both the volume and mix
levels.
• If not , the result will be : unhappy customers ,layoffs , too much
inventory.
• Shipping products to customers with world class reliability and
speed requires that all 4 elements be well managed and controlled.
 Product volume and Mix

Volume Mix

* The big picture * the details

* How much ? * which ones ?

*Rates * orders

* Product families * Individual products

*Planning with sales & Operation plan * Planned with master scheduling
 T
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Products Families

• Represent how the product is presented to the market

• Logical groupings based on similar sales and manufacturing
requirements
• Should be meaningful in terms of volume sales generated
• Ideally should be no more than 6-12 product groupings per
business unit
Volume/Variety Relationship
High
Engineer to order Mass customisation

Make to order
Product Variety

Assemble to order

Make to Stock

Low High
Product Volume
Manufacturing Strategies
Delivery Lead Time

Design purchase Manufacture Assemble Ship Engineer to order

Delivery Lead Time

Inventory Manufacture Assemble Ship Make to order

Delivery Lead Time

Manufacture Inventory Assemble Ship Assemble to order

Delivery Lead Time

Manufacture Assemble Inventory Ship Make to Stock

 Selection of scheduling Approaches
‘A’ Type ‘X’ Type ‘V’ Type
Make to stock Assemble to Order Make to Order
End Product End Product End Product
MPS/FAS FAS FAS

MPS

MPS
Raw Materials/ Raw Materials/ Raw Materials/
components components components

MPS/FAS __Builds MPS __Builds Components and MPS__plans raw materials

finished items to subassemblies and components
forecast FAS __final assembly of exact FAS__Builds only to
configurations customer orders
 How to build S&OP
THE MONTHLY SALES & OPERATIONS PLANNING Step5 Executive
PROCESS S&OP Decisions
meeting Authorized
game plan
Step4
Pre-SOP
Recommendations
meeting
and agenda for
executive S&OP
Step3 Supply
planning Capacity constraints
phase 2nd-pass spreadsheets
Step2
Demand
Planning Management forecast
phase 1st-pass spreadsheet
Step1
Data
gathering Statistical forecasts
Field sales worksheets

End of Month
The S&OP Process Inputs/outputs
• Projected demand • Sales plan
• Market intelligence • Production plan
• Actual sales • Inventory plan
• Capacity • Backlog plan
information • Financial plan
• Management • Product & process
Targets development plan
• Financial • Workforce plan
Requirement
S&OP
• New product
information
• New process
information
• Workforce
availability
Measuring S&OP performance

Review historical
performance

Ensure consistency Identify causes for

with previous plans variation from plan

Set targets for

future performance

The following measures should be evaluated at each sales and operations planning meeting :
• Actual sales versus planned sales
• Actual production versus planned production
• Actual inventory versus planned inventory and/or
• Actual backlog versus planned backlog
 How to choose Strategy or method of planning
• The main strategies are :
– Chase strategty ( Produce the amounts that are demanded at any time )
– Level Startegy ( Continously produce an amount equal to the average demand )
– Subcontracting
– Hybrid Strategy ( a combination the others )

Chase strategy Level strategy

Production
Quantity Production
Demand Quantity
Demand

Time Time

 Advantages : minimum stock/meet customer  Advantages : smooth , level production avoids

requirements labor and capital cost of demand matching
 Disadvantage : cost of change/maximum  Disadvantage : Buildup of inventory/require a
capacity needed more accurare forecast
Planning Horizon
End
Item I. Suicide quadrant
III Customer Schedule Too much work
Information directly from the Not effective
customer is used for most of the Does not give good results
detail needed inside the planning Forecast are less certain in far term
time fence Forecast with greater amount of details
Focus on Shortening the lead time i.e end items have much errors

IV Agility Quadrant II Aggregate only

Lead times are reduced so much Rough cut planning is used to anticipate
that no need for detailed required resources in both capacity and
forecasting material
Detail is needed only when moving inside the
planning time fence

Family

Near Far
Planning Horizon : avoid the suicide quadrant !
End Item

III Customer Schedule I Suicide

Quadrant Quadrant

IV Agility II Aggregate only

Quadrant Quadrant

Family
Near Far
Stay out of suicide quadrant (QI), Forecast and plan at the aggregate , volume and level into
the future(QII); this will sharply reduce the amount of forecasting , through collaboration
with customers , obtain their schedules and translate them into schedules for
yourselves(QIII); this could further reduce the need for forecast . Finally reduce lead times
so much that can be possible to produce so quickly , then no need for detailed forecasting
(QIV)
 The Master Scheduling Process

5
Publish MPS

4
Re-evaluate using RCCP

3
Revise MPS

2
Evaluate using RCCP

Inputs 1
Develop preliminary MPS
The Master Scheduling Process Inputs/outputs
• Production plan • Master production
from S&OP schedule (MPS)
• Detailed forecast • projected FG
• Inventory level and inventory levels for
targets MTS products
• Backlog levels and • projected S/A
targets inventory levels for
• Time fence policies ATO products
• Customer orders • projected FG backlog
MPS
• Interplant orders levels for MTO and
• Service parts orders ETO products
and forecast • product availability
• Distribution information
requirements • order promising
• Planning bills of information
material
• Actual production
and supply levels
 What is effective schedule ?
Manufacturing
efficiency

Production System
Tradeoffs

Inventory Levels Customer Service

The Goals of Master scheduling

• To balance supply and demand priorities
• To develop practical solutions to supply constraints
• To prioritize and allocate supply to customer demands
• To establish a strategy to avoid overloaded schedules and unbalanced conditions
• To create a schedule with attainable completion dates that staisfy customer needs
Symptoms of Poor Master Scheduling

• Unreliable delivery promises

• Persistent past due orders
• Excess inventory
• Expediting selected orders
• Excessive schedule changes
• Upper management scheduling intervention
• Excessive overtime or idle time
• End of month shipping surge
• Front Loaded schedule
• Lack of accountability
MS performance measurements

• Customer Service measurements

– On-time delivery
– Line-item fill rate
• Percent of work orders completed each week
• Percent of weekly change to MPS
• Production floor interruptions due to
– Scheduling
– Supply concerns
• Number of time fence rule violations per number of orders in a period
• Number of past due orders
• Backlog level
• Leadtime reduction
• Inventory turns
• Days of Supply
• Excess/obsolete inventory
Validating and maintaing the MPS

• Consistency to the production plan

• MPS focuses on customer satisfaction and resource optimization
• Forecast consumption can be used to plan for future customer orders
• Order promising , request : commit/recommit process must be in place
• Review change process must be in place

• MPS must be realistic and achievable

• Regular review and revision is needed
• Master Scheduler needs to use tools such as :
– Time fences
– Safety stock
• Rough-cut capacity planning used to validate the MPS
 Time Fences & their qualifications

Demand Time Fence Planning Time Fence

• Sets the period of the MPS where changes are • Sets the period within which changes to the MPS
seldom permitted must be evaluated by the master scheduler
• Covers period of actual customer demand • Combination of actual demand plus forecasted
• Usually set to cover the production and assembly demand
time for a product or the delivery time for a • Usually set to include material and components
service acquisition time

Demand time fence Planning time fence

Today 2 to 3 weeks 8 to 12 weeks

Stage of Assembly time Fabrication time Material

build/service procurement time
Changes Emergency change Planned change Unrestricted
Made by Senior Management Master Scheduler Computer Logic
Demand Considered Customer orders Customer orders or All planned demand
Forecast
 How to define time fence policy

time fence

time fence
Demand

planning
Current

DTF
date

PTF
Frozen Flexible Free
Emergency Tradeoff changes
Constrained by production plan
change only only

W1 W2 W3 W4 W5 W6 W7 W8 W13
 Zone 1 : typical policy may permit only ± 5%, DTF = Leat time of customer = 3 weeks (in
our case )
Zone 2 : typical policy may permit changes to be accomodated on existing demand
orders up to a range of ± 25%. ( OEMs generally request from 15% to 30% flexibility )
This horizon is calculated based on cumulative LeadTime (LT) increased by 25% up to
50% (1).
( If we consider average LT for material 4 weeks+1 week production=5 weeks so the LT is
7,5 weeks
Zone 3 : substiantial changes can be accomodated with the constraints of the
production plan

(1) Recomendation of « Master scheduling in 21st century  » thomas F wallace

Fujikura Planning Process model
 Valeo Planning model
Customer data
•Customers Releases / Forecasts
•Exogenous info.

Sales Plan Sales Plan

•Horizon: 12/18 months •Horizon: 13 weeks
•Time bucket:
Demand Planning Demand Planning
month •Time Bucket: week
•Aggregate: family/client Mid term Short Term •Aggregate: client/item
•Updates: monthly •Updates: weekly

Capacity fence
SIOP Short-term update MPS

Operation Plan
•Horizon: 12/18 months
•Time bucket: month
•Aggregate: family
•Updates: monthly Shop Floor Schedule
/ Kanban
 SIOP Macro Process Schedule #valeo#

7 to 9 Days 5 to 7 Days 2 to 3 Days

Customer
Program M Week 1 M Week 3 M+1 Week 1
M Week 2 M Week 4
+ Delins

SIOP Meeting
Measure Check Explode Update Update
Demand Manager Past Vehicles programs Demand Break
Performance Programs into families Plan out coef

Sales & Marketing Adjust Programs

Project coordinator with exogenous data

Pre-SIOP

i
Calculate Adjust Internal External Prepare
SIOP Coordinator Analyze Initialize Gross Needs Operations Capacity Capacity Monthly Action Plan Follow-up
prior New per family Plan Planning Planning Meeting
SIOP SIOP

Human Resources Rework/Optimize Plan with SIOP Actors

Supply Base Rework/Optimize Plan with SIOP Actors

Manufacturing Rework/Optimize Plan with SIOP Actors Forecasts

entry in
Process compulsory
Hyperion
Supply Chain Manager Rework/Optimize Plan with SIOP Actors
Process optional

Meeting compulsory
Rework/Optimize Plan with SIOP Actors

Meeting optional
Plant Manager
Validation

Division Director i Information

i
 MPS Macro Process schedule #valeo#

Week
Monday Tuesday Wednesday Thursday Friday
New Customers Releases

Sales & Interface with Interface with

Validate Sales Forecasts

customer customer
Marketing (exogenous info) (exogenous info)

Demand Adherence
Update Sales

Review Sales Forecasts

Prior vs Actual
Forecasts
Manager Check (adjust/correct)
Cust. Releases

Master

MPS meeting
Preliminary RCCP / RM constraints M
Prior MPS analysis Initialize new MPS Follow-up action plan
Scheduler MPS (solve issues if any) RP

Prod. Performance
Production + root cause Available
RCCP / RM constraints
(solve issues if any)
Shop Floor Scheduling
analysis Capacity / Resources

Projected inventory
Supply Base Suppliers.
Performance + root (critical Materials) RCCP / RM constraints
Vendor Scheduling
(solve issues if any)
cause analysis
Planning Bill # experience of Valeo#

• On 2007 Valeo changed strategy and decided to switch from MPS by p/n or end items
into MPS by family or subfamily.
• Due to increase of end of items and uncertain demand on far horizon , the master
scheduler is not able to maintain the required inventory levels by each p/n
( avoid the suicide quadrant ! ).
Questions / Answers

Questions / Answers
Thanks