Synchronising the Multi-plant Supply Chain

The art of production scheduling is in balancing demand with capacity. This is also where the supply chain equation comes in. Whether a manufacturers daily routine comprises producing parts for an original equipment manufacturer or finished products ready for distribution to wholesalers or retail outlets, two things remain crucial. First, it must have the capacity on the shop floor in terms of personnel and machinery, to meet demand. Secondly, it must have a supply or timely delivery of raw materials or components to meet this demand. Manufacturers either rely on external suppliers on a daily basis or divisions of its own enterprise to deliver materials. And even if a division within an organisation supplies parts internally for a larger-scale manufacturer, there are almost always some external suppliers somewhere down the line.

In any of the above scenarios, scheduling software is a must. Any SME or larger enterprise and its partners need to be synchonised, time-aware, flexible and highly organised. This is where a scheduling software solution can prove to be an invaluable investment and, additionally, something that can deliver a rapid ROI. With demand, capacity and supply chain flow, a finite capacity scheduling (FCS) or advanced planning and scheduling (APS) package can ensure each supplier, customer and internal department has the appropriate information to hand in a transparent, up-to-the-minute form.

While many companies have invested wisely in philosophies, software and systems to control materials, capacity often takes something of a back seat. However, the availability of capacity is a key factor in determining delivery. This can be even more complex when multiple plants/facilities are part of a supply chain. What companies need is visibility of the current status as well as where problems will occur in the future. In companies all over the world there is a seemingly common trend. Competition is increasing both from the company's traditional competitors and from new entrants to the market place, often from overseas. Their customers are looking for a faster turn-round and on-time delivery and these, rather than price, are becoming the key differentiator.

This pressure to be more agile is often seen in make-to-order companies but even where it is in a make to stock environment, there is pressure to reduce stocks to a minimum whilst maintaining a full range of products. This inevitably leads to smaller lot sizes going through the plant and any issues that reduce the efficiency of the plant, lot changeovers, etc, become important.

Many companies concentrate on the engineering issues such as commonality of parts and assemblies, changeover issues using techniques like SMED (Single Minute Exchange of Dies), design issues such as design for ease of assembly, and reducing 'floor to floor' processing time by using bigger, better and faster machines.

All of these may or may not be important to your company, but it may miss the point. What we are interested in is 'door to door' time rather than 'floor to floor' time. In effect we want to concentrate on issues that maximise throughput and minimise lead times and this may not be the same as maximising resource usage (as traditional accounting methods such as using overhead recovery to cost production would tend to encourage). Thus sequencing of lots to maximise throughput and minimise lead times is the key to increased service levels whilst reducing the cost of inventory.

The next stage is to spread the use of capacity as a constraint across a supply chain. In todays environment of lean manufacturing and supply chains, you can no longer treat your company as an island when it come to making delivery promises to your clients. You have to take into account your suppliers, sub-contractors, logistics contractors, etc., when you answer an Available to Promise (ATP) enquiry.

The more advanced applications of APS solutions allow you to take the actual current stocks and workloads of a supply chain into account when making delivery promises. Hence the solution can take into account the current and future finite capacity into the delivery calculation.

In the past other Supply Chain Management (SCM) solutions have used a single high level model of the entire supply chain that is maintained by you. This model can never be accurate enough to take into account the current and future workloads of your entire supply chain, since much of the work of your suppliers and sub-contractors is not related to you, and therefore cannot be included in your supply chain model.

Modern and secure messaging systems and the latest applications of APS solutions have provided a way forward.

Let us imagine that our factory makes Widgets, and our best sales person is currently sitting in front of one of our regular clients discussing delivery dates for a possible new order for 5000 Widgets. Our competitor has already offered a good delivery date, so to secure the order our sales person must beat the competitors delivery, but be certain that the date quoted is achievable. Unfortunately we do not carry stocks of the materials that Widgets are made from, and to compound the problem we have to sub-contract the Widget plating operation. To give accurate delivery promises we must take into account the stocks and resource availability of both our supplier and sub-contractor as well as the capacity of our own manufacturing plant.

To obtain the delivery promise our sales person emails an enquiry to our Widget Makers APS. This processes the enquiry and determines that to make the Widgets we must first buy the materials, so it automatically sends its own enquiry to the suppliers live schedule.

The supplier may be a manufacturer or a logistics/warehousing company. In either case the suppliers APS system then determines if the materials are available from stock, and if not it schedules the operations necessary to manufacture the materials, and then responds to the Widget Makers APS system with a delivery date.

The Widget Makers APS now knows when the materials will be available, and is able to schedule the manufacturing operations up to the point of the plating sub-contract process. When it reaches this point it sends an enquiry to the plating sub-contractors live schedule. This schedules the necessary operations and again returns the plating completion time to the Widget Makerss APS. This is then able to complete the scheduling of the last assembly operation on the Widgets, and then respond to the sales person with the required promise date. Although we have not seen the schedules and workloads of our suppliers and sub-contractors during this process, we do know that they have been taken into account in generating our promise date.

A dream or a reality? Well companies in many manufacturing sectors are already using such techniques to provide a crystal ball for their supply chain. In the UK there are a number of examples of this trend. For instance, one of the worlds largest pharmaceutical companies has implemented a supply chain scheduling solution along these lines. This company went through several phases of implementation, which has culminated in a network of APS solutions. These solutions cover each production unit, which are connected through a messaging system that conveys new and updated schedule progress information in a very visual way. Capacity problems that emerge at one unit are quickly recognised and passed to other units that would be affected. In this way visibility is provided for all involved while providing the local planner with a tool to consider what if scenarios in his own area in order to bring forward other batches that could use the freed-up capacity.

The bottom line is that FCS/APS and SCM are becoming increasingly important in manufacturing companies, as they look to enhance their enterprise applications to take account of real-time status of suppliers, customers and their own plant. There is a need for tools that will enable companies to react in a timely manner to events both upstream and downstream of their position within each of their supply chains. Without such software capability manufacturers and engineers are leaving much to chance.

Mike Novels is Chairman and Managing Director of leading scheduling software solutions provider Preactor International.