Is Really Master Scheduling Your Company?
by Dave Biggs
we need 50 of these and 50 of these and 50 of those by the end of the week."
Fred never even looks up. He just offers his standard reply, "I'll see
what I can do." Fred is the supervisor of work Cell 1 and he is not Customer
Service's favorite person. Late delivery to customers is hurting the company's
it's mutual. Fred doesn't like Customer Service, either. They're always
making promises without even understanding what it takes to get things
done. Manufacturing is constantly in trouble because inventory is going
up. How can inventory go up and customer service go down? Let's begin with
the situation in Fred's work cell.
economy has been good and orders have been increasing in spite of the delivery
problems. The company went through the painful process of downsizing and
is trying to stay lean and mean. Instead of hiring new people, Fred has
his crew putting in the maximum amount of overtime to try to keep up with
the order rate.
the simplified example, capacity planning for Fred is easy because there
are only three part numbers and all of them require about the same amount
of time. Fred fabricates parts that are used in the final assembly of the
company's three main product lines. Figure 1 shows the bills of material
for the products. Fred's work cell number is 1 and he fabricates the 1A's
for Product A, 1B's for Product B, and the 1C's for Product C.
2A's, 2B's, and 3B's come from work cell 2 and the 3A's, 3B's, and 3C's,
come from an outside supplier. When the annual planning was done, the order
rate for the combination of Products A, B and C was projected to be a total
of 100 units per week. So when the smoke cleared, Fred's head count budget
was set at the amount required to build 100 units.
variation has made it difficult to forecast the actual mix of customer
orders for A's, B's, and C's. To keep the bases covered, the forecast has
been inflated. This is where the confusion begins. The forecast is asking
for 50 of Product A, 50 of Product B, and 50 of Product C to be produced
each week. The confusion is further aggravated because we have not been
able to ship all customer orders on time and requirements for 25 each of
products A, B, and C have accumulated in the late bucket.
combination of forecast and accumulated orders in the late bucket is scheduling
Fred's work center to do 75 each of items 1A, 1B, and 1C in the first week.
The problem is, Fred has a budgeted head count that can do 100 units. His
crew is putting in heavy overtime, which accomplishes another 50 units
a week. The math is against work center 1. They are being asked to complete
225 units, but they only have the resources to accomplish 150.
would you do in Fred's situation? Well, Fred has to decide which 150 units
are going to get worked on. It's not just Fred. The supervisor of work
cell 2 has to decide which of the 2A's, 2B's, and 2C's is going to get
done, and the outside supplier who has the same annual planning process
and budget constraints has to decide which of the 3A's, 3B's, and 3C's
is going to get done. Figure 2 shows the worst case when they all decide
to do something different!
this example, Fred decided to build the parts to support Products A and
B. But the supplier decided not to support Product A and work cell 2 decided
not to support Product B, so no product could be built. Unfortunately,
inventory went up because Fred's parts either went to a storeroom or was
WIP (work in process) inventory.
reality, the situation is never this bad. Expeditors begin to coordinate
the situation by communicating "hot customer needs" to purchasing so the
supplier will do at least a few of item 3A. Fred gets expedited to do at
least a few 1C's and work cell 2 gets encouragement to do at least a few
2B's. The actual performance ends up somewhere between the worst situation
where none of the parts can go into finished items and the best situation
where all the parts can go into finished items.
the master schedule is higher than the capabilities of the work centers
and suppliers, individual work units determine the real schedule by picking
and choosing what to do. During the week, expeditors modify the default
schedule with hot order information. The result is poorly coordinated efforts
that are very inefficient. Inventory goes up and customer service goes
like the old rock and a hard place. We can't perfectly forecast customer
demand and we are harmed financially if we overstaff just to cover demand
variation. And it's hard to "just say no" when the customer wants delivery