Waterloo Production Scheduling Blog

As a manager in a manufacturing, you are under constant pressure to do more with less and to wring more cost savings out of your operation.  When business volumes drop, top management cuts your capacity with a cleaver.  When business returns, rarely are you allowed to add capacity at the same rate it is cut.  How can you win?

Advanced Production Scheduling software (APS) can help.  APS allows you to generate schedules short, medium and long term.  It gives visibility into when work will finish considering the limited capacity (machines, people, tooling, material, etc.) of your operation.  You can use the software’s what-if feature to evaluate scenarios that improve both delivery and efficiency, and that help you work around problems.

Specifically, improved production scheduling can help you wring more cost savings out of your operation by:

1. Improving trade-offs between set up efficiency and delivery
2. Minimizing overtime
3. Better controlling the shop floor
4. Efficiently working around problems
5. Cutting expediting
6. Reducing schedule generation times

Improving Trade-Offs Between Set Up Efficiency and Delivery

You can be responsive to your customers by continually breaking down set ups, but efficiency suffers.  Stay in a set up as long as you can and your efficiency improves, but you sacrifice customer service.  Advanced production scheduling software can help you optimize set ups in a way that both minimizes cost and maximizes delivery.

Minimizing Overtime

You know you are behind and delivery is suffering.  Under pressure to “catch up” quickly, you extend shifts and work Saturday.  Maybe you even schedule work on Sunday.  How do you know you are using expensive time and a half and double time hours in the best possible manner, and not just building costly inventory?

Advanced production scheduling software identifies the current and future bottlenecks in your operation that will contribute to late work.  Rather than reactively scheduling a lot of overtime “just in case”, APS pinpoints how to apply overtime in a cost effective manner where it is needed the most.

Better Controlling the Shop Floor

Without a schedule that your operation buys into, the shop floor can quickly get out of control.  Shop floor staff tend to work on jobs that run without problems rather than what is needed, and jobs will occasionally “get lost”.  Efficiency and delivery can suffer.  Advanced production scheduling software improves shop floor control by explicitly considering capacity and generating good schedules that are understandable and that all staff can believe in and follow.

Efficiently Working around Problems

While you work like crazy to eliminate variability, problems such customer changes, vendor problems, quality holds, broken equipment, and sick people will always occur.  Production scheduling software gives you visibility into how these problems impact your operation.  APS software also gives you the ability to generate and chose from different scenarios that get you out of trouble with the least possible cost.

Cutting Expediting

One solution to delivery problems is to devote staff to expediting hot orders.  Expediting is a non productive activity that adds nothing but cost.  You can eliminate expediting with a well controlled shop floor driven by a detailed production schedule that all staff follow,  Also, the visibility and problem solving capability afforded by advanced production scheduling can greatly reduce the instances when expediting is required.

Reducing Schedule Generation Times

Advanced production scheduling software can quickly generate base schedules and what-if scenarios that explicitly consider capacity and accurately predict order completions.  In comparison, other scheduling methods do not consider capacity nor predict finish dates and are manual and time consuming.  Using APS software can free planners, schedulers, and managers from the drudgery of schedule generation, and allow them to use freed up time on higher value add activities.

You have a full functioning ERP / MRP system that handles inventory, bills of material (BOMs), and BOM explosions. Why might you want your production scheduling software to also handle materials?

Your production scheduling system doesn’t need to handle material if you only want to schedule “short interval” work released by your ERP system for which you already have material in house. However, if you limit your planning and scheduling to such a short time horizon, you are leaving all kinds of money on the table. See the post Advanced Production Scheduling Software: Pay for It By Extending Your Decision Making Horizon for details.

Assuming you want to extend your scheduling horizon, why do you need your production scheduling software to handle material? Depending upon your situation, more than one of the following reasons could be relevant:

1. As you extend your time horizon, material can become a capacity constraint. Even in flat bill of material environments, incoming material needs to be purchased and may be in short supply. In deeper bill of material environments, higher level items depend upon the production of lower level items. ERP / MRP’s estimated, average lead times just aren’t good enough to give the predictive information that you need to make good management decisions.
2. In some flat bill of material environments, incoming material is a commodity, and is relatively available. However, in these kinds of environments, you may be tempted keep plenty of material on hand since you don’t know exactly when you’ll need it, increasing carrying costs. Production scheduling software that considers material as well as capacity can tell you exactly when you need incoming materials based on other capacity constraints (machines, tooling, labor). You can significantly cut inventory (and carrying costs) by synchronizing material purchases to your capacity constrained production schedule.
3. In material constrained, make to order environments, the ability to check material constraints as well as capacity constraints is essential to promising realistic customer delivery dates. In addition to considering all relevant capacity constraints, the production scheduling software also needs the capability to explode bills of material. Why not use your ERP / MRP system to explode bills, you might ask? Because ERP / MRP has no simulation capability. To get the bill to explode, you’ll need to first give the customer some guess at a delivery date and accept the order. You will then need to wait until the exploded orders make it to the production scheduling system before you can schedule them. The realistic date you’ll get out of your production scheduling software may be very different than the estimated date you gave the customer, and it may be too late to change the date.

   A much better strategy is to enter the customer order into the production scheduling system on a simulated basis, explode the bill netting available inventory, schedule created orders considering both capacity and material constraints, and come back to your customer with a highly accurate estimated completion date. Once the customer has accepted this accurate date, the order can then be entered into the ERP / MRP system.

To get the full benefit of production scheduling software, extend your time horizon and consider materials. This strategy can give you significant benefit in make to order and make to stock environments, whether material is constraining or is readily available.

You want to schedule your production better. You think production scheduling software can help. But in today’s environment of tight budgets, how can you put together a proposal to management for scheduling software that makes sense?

At a minimum, any proposal to buy production scheduling software needs to pay for itself, and ideally provide a significant return to your company. Will simply automating what you are doing now get you the kind of returns you need? Should you rather try and think outside of the box, and try and harness the power of advanced production scheduling software to make leaps forward in how you run your business?

The production scheduling process controls how your company allocates resources (capital, labor, purchased material) to meet customer needs. In manufacturing environment, it is a primary mechanism by which you build product, and commit costs. With this said, production scheduling means many different things to different people. Some companies take a longer range views. In other environments, the production scheduling process has a decidedly short range focus. In these situations, production schedulers concern themselves with what is going to run this shift, this day, and, sometimes, this week.

Short term scheduling is important. Poor decisions on how work is sequenced can hurt efficiency and lead to unhappy customers. The process can be time consuming and error prone. But in most environments, you can solve the problem by throwing people at it. We’ve seen companies divide up their operations among multiple schedulers. Armed with tools such as ERP system shop floor control modules, Excel spreadsheets, or pads and paper, the job can usually get done, albeit not without significant costs in manpower and aggravation.

Advanced production scheduling software can streamline the short term scheduling process. It can reduce scheduling manpower, it can prevent jobs from being “lost”, it can help eliminate poor sequencing decisions, it can improve your shop floor’s efficiency, and it can improve customer delivery. These benefits can be significant, and are usually enough to more than justify the purchase of advanced production scheduling software. However, by not expanding your time horizons, both figuratively and literally, you are leaving money on the table.

Think about the planning and scheduling related decisions your company makes outside of the short term. Examples of these kinds of decisions might be:

1. What lead times and delivery dates should we quote to our customers?
2. What should our work hours be (e.g. should we add or subtract shifts, should we work overtime)?
3. How should we be working in prototype work, or scheduling preventative maintenance?
4. Should we be hiring or reducing staff?
5. What should our target inventory levels be?
6. Should we be pulling production forward, or pushing it back, to level forecasted loads?
7. Should we be outsourcing production, or bringing production back in house?
8. Should we be maintaining our existing production processes, or should we be investing in new manufacturing processes and procedures?
9. Should we be investing capital in new production equipment or even in new plants?

Clearly the short term decisions you make on a day by day basis are important. However, longer term decisions like the ones listed above involve the commitment of more cost on the part of your company. They also typically have a bigger impact on your company’s profitability and, if you get them wrong, even survivability.

So, how can you make sure that your company is making the best possible decisions in the medium to long term? Wouldn’t it be great if you could peer into the future and see the impact of various decisions before you make them? Ideally, you should be able to get this visibility using the same production scheduling approach both for short term scheduling and for longer term decision making. All you should need to do is extend the horizon. However, if you are an operation of any size, this is easier said than done using manual methods. Short term you can usually schedule manually with people and elbow grease. As you extend the planning and scheduling horizon, though, there are just too many variables involved and too many calculations needed.

Advanced production scheduling software can consider the numerous variables involved, harness the computational power of computers, and give you the visibility you need to make better decisions. It considers the finite or limited capacity or your organization. It considers your work load, selling prices and costs. As advanced production scheduling software loads work on your limited capacity, it shows you when work will finish relative to its due date, when revenue will be booked, and when costs will be incurred.

Think outside the box! Advanced production scheduling software can do much more than schedule in the short term. It can give you the visibility to make better decisions throughout the planning and scheduling horizon, dramatically lowering costs, increasing customer service, and improving profitability.

In the immediately preceding post, we discussed how the fit between your operations and production environment and advanced planning and scheduling / production scheduling software is paramount. However, partnering with a vendor that can help you fully unlock the potential of the software is also important.

In the previous post, we started on a list of questions to help you determine how well vendors might meet your needs. The list of questions is continued below:

3. Has the vendor helped you develop an installation / implementation plan? If so, does it make sense?

Your implementation plan should be based on what you want to accomplish with the software, and what resources you have to bring to bear. It should not be “boilerplate” or one size fits all. Your vendor should be set up to provide you as little or as much consulting assistance as you need. The amount of assistance needed will, of course, be based on how you plan to apply the software.

The amount of assistance should also be based on the expertise and availability of in house staff, and your implementation time table. If you have much in the way of available in house staff, and time is not of the essence, the implementation plan should allow you to assume more responsibility, keeping your costs low. If you need resources and you have an aggressive implementation time table, you will need a plan that calls upon your vendor to step in and assume more of the implementation load.

Be particularly wary of implementations done by vendor partners or resellers. While the developers are always compensated from software revenue, often the bulk of partner or reseller revenue comes from services. Therefore, there may be a strong incentive for them to sell you services that you may not need.

4. Who within your vendor’s organization is responsible for software bug fixes and enhancements, and what is your vendor’s release schedule?

There is no standardize agreement on the functions and features that advanced planning and scheduling software and production scheduling software should contain. Also, manufacturing environments vary widely, as do the ways in which users want to apply the software. Given these market characteristics, it is common for you to identify enhancements that will help you get increased value from your planning and scheduling software.

Some of enhancements you might identify prior to the sale, but others won’t become obvious until after you work with the software for a while. Therefore, your vendor’s policies relative to new versions and upgrades might be very important to you. You should understand the following:

• Who in your vendor’s organization is responsible for development, where are they located, and how responsive are they to requests from your implementation staff? Many vendors are resellers for other companies. Sometimes communication and responsiveness between divisions of the same company can be lacking, let alone between different companies. Also, your needs may be overlooked in the face of differing goals on the part of resellers and developers. Finally, some software development teams are located overseas. Coordination can lag given time zone and cultural differences. You best bet is to look for a vendor with a development group tightly integrated with implementation staff.
• What is the vendor’s release schedule? If your vendor just made a yearly release last week, and today you identified an enhancement that is extremely important to you, you could be at best severely inconvenienced. You should look for vendors with short duration or flexible release schedules so that you have a better chance of having your enhancement and bug fix needs met in a timely manner.
• How likely is it that you will be charged for enhancements? It is within the right of every vendor to charge for enhancements requested by customers that will require major amounts of costly work with limited general market appeal. Enhancements like these aside, vendors can take different strategies toward enhancements. Some view development as a profit center, and view client enhancement requests as an opportunity to raise revenue. Other vendors view development as a cost center. They try their best to offer enhancements under the terms of existing software maintenance agreements, and view enhancement requests as a way to improve the customer experience while adding to the long term attractiveness of the product.
5. What are your vendors references like?

Checking your vendor’s references is so important that we’ve devoted an entire additional blog post to the topic. In summary you should:

• Delay checking references until the end of the evaluation process. At this point, you will have a better idea of the questions you’d like to ask references. Ideally, these are the type questions that are impractical for the vendor to address as part of the regular sales process.
• Share your questions with your vendor sales staff. He or she can then try to match you up with references to answer specific questions.
• Be open-minded relative to the references that you speak with. Of course it would be ideal to speak with a reference “just like you”. This might not be practical given the different ways companies even in the same industry apply scheduling software. Rather judge references based more on how well they answer your questions than surface level similarities.

While choosing the right advanced planning and scheduling / production scheduling software is important, so is picking the right vendor. Given the potential complexity of scheduling software, deciding on the right vendor to partner with can have a big impact on your success. Choose wisely!

The benefits of advanced planning and scheduling and production scheduling software can be immense. However, production scheduling software is not a commodity. There is no guarantee that any advanced planning and scheduling software you chose is going to deliver all the benefits that you are hoping for. In other posts, we talk about how to pick the best production scheduling software for your company. Your evaluation needs to start with the advanced planning and scheduling / production scheduling software itself, and how well it fits in your environment.

As we’ve advocated elsewhere in this blog, we feel it is important that your vendor work with you to develop a sample scheduling model that shows how the software would map onto your real world situation. It is the only way to know for sure that you have a fit. Let’s say you’ve taken this step. Also let’s say that you have worked with more than one vendor to map advanced planning and scheduling / production scheduling software onto you environment. What if the software looks very similar to you? How do you choose?

Your next step should be to concentrate on the vendor. You need to pick the vendor that will be your best partner to help you unlock the full potential of advanced planning and scheduling software. The questions below might help in this process:

1. In the process of building the sample production scheduling model, how well have you and the vendor worked together?

   How well you work with vendor staff members prior to the sale is a strong indicator of what it will be like to work with them after the sale. This is particularly true if the same staff will be working with you pre and post sales. You might want to ask yourself the following questions:

   • Does the vendor put your needs first? Is he or she curious about fully understanding your needs and goals, or does he or she fixate on functions and features, a good many of which won’t even be relevant to you?
   • Does the vendor seem knowledge about production and operations environments or is he or she a “software geek”? Deep production experience is important in properly applying planning and scheduling software. The more real world experience the vendor has the better.
   • Does the vendor seem reliable, or do your phone calls and emails go unanswered for long periods of time? If a vendor isn’t responsive before the sale is made, they will only be worse after
2. How much continuity will there be between vendor pre-sales and post-sales staff?

   You may really like your vendor’s sales and pre-sales consulting staff, but there are no guarantees that you will get to work with them after the sale. While maintaining the same staff pre and post sales is clearly in the best interests of the customer, most software companies have their most senior staff work only with prospective customers. In their minds, more is at stake. After the sale, they turn consulting and implementation tasks over to more junior employees. Unfortunately, you as the customer will often then have to devote time (and money) to bringing the new vendor staff up to speed on your application (usually while paying their consulting rate). You also may find that promises made by sales staff are “forgotten” when new implementation staff take over.

   If you suspect there is going to be such a hand off, you might want to ask the following questions:

   • What are the backgrounds of implementation staff members?
   • What is the sales team going to do to educate the implementation staff on my account?
   • Who is going to be my point of contact? What level of access might I still have to pre-sales staff?
   • How do we resolve potential discrepancies between the positions taken by vendor pre and post sales staff?

Look for additional questions for vendors in our next post.