Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education CHAPTER 8 Production Planning and Scheduling

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Learning Objectives Understand the purpose of detailed production planning and scheduling Know about the stages and steps followed while performing production planning Get an idea of different planning options like alternate resource planning, order pegging, resource block planning, etc Understand the impact of the sales order planning on the production planning Know about the role of supply chain IT tools in production planning and scheduling activities

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Purpose of detailed production planning and scheduling The detailed production planning and scheduling is used for planning and scheduling of production orders. This planning happens in the short-term horizon and affects the tactical plan. The main objectives of this planning are: ▫ to reduce the lead time of orders, ▫ to meet the delivery schedule, ▫ to increase the utilization of resources and ▫ to make a plan which is feasible for production execution.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Production planning & scheduling as a part of supply chain planning

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Objectives of the detailed production planning and scheduling Provide the demanded products on the required availability date as planned by the supply network planning. Minimize the production order processing time. Maximize resource utilization.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Stages of detailed production planning and scheduling The mentioned aims are fulfilled through three stages of detailed production planning and scheduling: 1.Confirmation of production order and generation of detailed production order 2.Production order planning on the available resource capacity and constraints 3.Fine planning and scheduling of the production order on the planning board

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Confirmation of Production Order and Generation of Detailed Production Order The planned production order, generated by the aggregate planning, is first required to be confirmed as or converted into a detailed production order. A detailed production order mentions all input components, operations and phases and the resource names which should be used for the actual manufacture of the demanded product. The detailed production order is generated through actual BOM (bill of material) and operation routing details.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Production Order Planning on the Available Resource Capacity Once the production order is confirmed and the detailed production order is available, it is required to be planned. At this stage, confirmed requirement is matched with the supply element which is the detailed production order. Some important factors which are given due consideration in the production planning are: ▫ Requirement date ▫ Order quantity ▫ Resource capacity ▫ Production campaign ▫ Resource block planning ▫ Order pegging

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Requirement date and Order quantity The requirement date of the product as confirmed by the demand management is considered by the production planning. Through the production planning, the product order is scheduled in such a way that the product is available on or before the requirement date The order quantity refers to the lot size for the manufacture of the ordered product. It is determined by the product master data.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Resource capacity and Production campaign Resource capacity is taken into account while issuing production orders to meet the product demand. Adjustment in the product requirement quantity, date or resource loading may be required if there exist more requirements than the available production capacity in the production horizon. The production campaign or campaign planning refers to the grouping of multiple production orders for processing. This order grouping decreases the order lead time and increases the production output for a time period. In the production campaign, the orders for the same or similar products, which share the same set-up of one or more machines, are grouped. Advanced production planning tools have the campaign planning feature which allows grouping together of similar products’ orders in a particular time horizon in a campaign to increase resource utilization and decrease order execution time.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Production campaign example

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Resource block planning The resource block planning is a special case of production planning. It is used in a scenario where an organization produces multiple products of varying importance but sharing the same resource. In resource block planning, the resource capacity for a particular time period is pre-assigned to produce important products. The resource block planning is also used for orders from preferred customer. In this type of block planning, resource time or block is reserved for orders from a preferred customer. Resource scheduling under the resource block planning ensures that the preferred product or customer has the capacity reserved for their product requirement. An automated production planning considers a resource block, assigns the orders from a preferred customer or products to this block.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Order pegging The order pegging is the linking of dependent orders. It refers to the relationship between a production order and the receipt element of this order. The supply chain tools for production planning provide the feature of order pegging. In case of planning adjustment of an order, the order pegging feature automatically adjusts all the orders linked to the adjust order through pegging relationship.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Fine Planning and Scheduling of Production Order on Planning Board The result of the production planning is represented, adjusted, fine planned and scheduled on the production planning board. This board is a graphical display of the production order, resource used and time. The time on the planning board can be represented till the exactness of a second. The use of the production planning board simplifies the order loading on resources as well as helps in detecting any overload. If there is any unutilized capacity, i.e. when there is no order processing planned at a particular time, this utilization wastage is shown on the planning board and the planner can load that free capacity with additional orders. The planning board also shows whether there exists any overloading of orders, i.e. two or more orders are scheduled on a resource at the same time.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Planning Board example S: Set-up time R: Machine run time C: Clean time

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Available-to-promise planning The available-to-promise (ATP) planning is a special scenario of the production planning. The ATP planning links the sales order management with the production planning. It is mainly relevant for an MTO (Make to Order) production scenario, where during the sales order creation phase; the availability date of the order can be confirmed. In an MTO scenario, a process order starts only after the receipt of the sales order. Therefore, in this case, the sales order actually triggers the production.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Output of production planning and detailed scheduling The output of the detailed production planning and scheduling is a feasible production plan ready to be executed on production resources. This production plan is a collection of production orders of products describing the order quantity, details of input components required for production, processes to be followed along with processing times and the resources used for production. This production plan is able to meet the demand forecast and the plan as generated by the supply network planning. Any deviation in the demand forecast, aggregate supply plan and production plan should get attention of the planners and the plan should be adjusted. The completion of production planning and scheduling of orders on the available resource allow the organization to go for the next step, i.e. to actually produce the materials. After production of the material, it is posted in the stock and is ready to be moved according to the aggregate cross-location supply network planning.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education IT in production planning and order scheduling The IT integration in the detailed production planning and order scheduling has largely increased the efficiency of this entire process. The supply chain planning tools have automated the process of production planning and order scheduling. Mature supply chain tools offer functionalities widely used by the organizations to automate this process. The input of the automated production planning process is the result of the supply network planning. A planned production order as generated by the aggregate planning is confirmed and fine planned by the production planning process. It is also possible to have the demand forecast as the input of the production planning and order scheduling. Master data in terms of BOM, routings, production locations and resources are also input of this process.

Sinha and Kotzab: Supply Chain Management, Copyright © 2012 by Tata McGraw-Hill Education Recapitulation The supply chain planning cycle consists of demand planning, supply network (aggregate) planning and detailed production planning and scheduling. The three stages of the detailed production planning and scheduling are: confirmation of production order and generation of detailed production order; production order planning on the available resource capacity and constraints; Fine planning and scheduling of the production order on the planning board.. The available-to-promise (ATP) planning links the sales order management with the production planning. Today’s production planning and scheduling is done with the help of modern IT systems like SAP APO.