When operational production planning falls short
Fluctuating order intake, uncertain market forecasts and an increased complexity of supply chains present new challenges to production planning and control. Companies usually address these demands by optimizing production control for the daily processing of customer demands, using pull principles and kanban tools as essential methods. However, production capacity has to be matched with demand to achieve a smoothed production program. In this equation time is crucial: in many cases only customer demands of the next three months are factored in. This neglects long-term fluctuations in demand, product launches and phase-outs as well as seasonal changes in demand and capacity. The result is a low level of on-time delivery or poor plant productivity. High inventories of semi-finished and finished goods are also frequently observed.
Three strategic planning processes create competitive advantages
ConMoto offers strategic sales and operations planning to complement operational production planning. We implement three new planning processes:
- Sales planning: All orders, product lifecycle information and sales forecasts are consolidated into a demand forecast using statistical methods. This forecast has a time horizon of up to five years and serves as an input variable for rough production planning.
- Rough production planning: The demand forecast is compared with the existing production capacities. A long-term comparison of demand and capacity over a period of one to five years provides information about the expected capacity utilization and possible production bottlenecks. The long-term view allows early action to be taken, for example to eliminate temporary production bottlenecks by smoothing production orders or by shifting orders to other plants.
- Production program planning: Over a period of three to twelve months, a bill of materials is exploded for requirements. BOM explosion facilitates exact production planning and material availability checks. Within this medium-term planning horizon capacity and demand are matched and a smoothed production program is setup at plant level for the next twelve months. The production program includes both planned orders to satisfy orders booked and flexible advance planning for anticipated demand.
These three strategic planning processes are typically run on a monthly basis. They allow for a more balanced utilization of production capacity, early identification of bottlenecks and a gradual reduction of inventories in production and finished goods storage.
Processes, organization and IT – ConMoto is the implementation consultant
ConMoto supports the individual design of processes for strategic sales and operations planning. Our efforts are guided by the respective circumstances and market conditions. From special machine construction to merchandise and automotive engineering – we enable clients of all industries to expand their planning horizons and to act earlier than their competitors. We also develop concepts for anchoring the new planning processes in the organization. Furthermore, we make sure that the new planning processes can be connected to ERP systems. To safeguard the successful digital transformation, we define the requirements and draw up a detailed list of specifications.