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Do you have a planning issue?

Do you have a planning problem?  Do you need to improve the planning of your products or services?  90% of companies need to improve their planning processes and systems.

We have worked with companies of all sizes all over the world and the vast majority of them have issues with planning and most don’t realise it.  So how do you know if you have a planning problem?  What are the symptoms to look for in a company? What is a good planning process anyway?  How do you improve your planning processes?  Well this article provides a few insights into planning and systems and how to develop your business.

What are the symptoms of poor planning?

All of the following can be attributed to poor planning:

• High levels of obsolete stock – you made the wrong things or promised the wrong things

• High levels of finished goods, work in progress or raw materials – you don’t plan optimum levels

• Shop floor is faced with constantly changing priorities – fire fighting, lack of control of what to make and when

• Poor customer service (on time delivery) – What you promise can’t be produced by production in time

• Frustrated staff – little runs smoothly in production, sales and planning

• Stock outs – you run out of things as you have not planned them correctly

• Low inventory turns – you order the wrong stuff at the wrong time

• High levels of unplanned overtime – you are constantly fire fighting as you don’t have control of what to make and when, to satisfy customer requirements

• Lots of people expediting – you need to have people doing this or nothing would get shipped

• High levels of special transport – you make things late and then pay more to ship them to keep the customer happy

• Production stops due to missing parts – you hadn’t planned at the right levels

Issues such as, customers changing requirements, machines breaking down, manufacturing in large batches, functional organisations and inappropriate production processes also amplify these symptoms. 

However, in a well-organised and controlled company your planning processes will reduce the importance of theses issues and plan round them to ensure success.

What is good planning and what makes it complicated?

If we are to understand planning issues and resolve them it is important for us to go back to basics and discuss what is a good planning process in the first place.

Planning in manufacturing terms is essentially determining what to make, when, and in what quantities to ensure 100% customer on time delivery against their required date, while building as little inventory as possible.  Sounds simple but why then does it get so complicated?

• We typically have more than one customer and more than one product

• We have complicated and many levels in our bills of materials (recipe for your products) and have to plan for each level (sub components)

• We manufacture in larger batch sizes than our customers actually order

• We have products with a shelf life

• Our customers change their minds – volumes, products and delivery times

• All our raw materials and sub component manufacturing takes varying times to obtain or make

• We have many suppliers, many of whom are poor at planning, meaning they let us down

• We don’t make things with 100% quality

• Our systems don’t have accurate data to work with – inventory levels, bills of materials, routings etc

• Production make what they want in the quantities which best suit them and don’t listen to the planner

• Managers constantly change the priorities based on fire fighting

• We don’t know what our capacity is so we over promise to the customer

• Engineering and development steal our capacity to try things out without planning properly

• We have a variable scrap rate or yield from our processes

• Our production workforce is not stable – sickness etc

• Production work at different rates – each shift or machine produces different amounts

• Our planner doesn’t have the skills, authority or respect to make the plan happen

• Our systems are not reliable and our processes are not adhered to

• Everyone likes fire fighting, people get promoted as they are good at fire fighting, planning is boring and we don’t have time to sort out of the mess.

A good planning process in a company forces them to communicate, agree and stick to priorities and to work off one formal plan that everyone buys into.

A good planning process takes into account constraints in the business – capacity, quality issues, machine reliability, batch sizes, shift patterns, suppliers etc.  It understands them and works with them.

A good planning process understands that customer demand changes and uses rules to minimize stock while improving customer service

A good planning process knows where the issues are and forces the company to improve them.

How do you improve your planning process? 

Most companies use a system to help them with their planning ranging from expensive systems like SAP all the way down to Excel spreadsheets.  The problem however, is just implementing a system, even if it cost millions of pounds will not solve your problems.    Remember all systems are just boxes which do calculations quicker then we could do them ourselves.  They are only as good as the data in them and the people using them and how the information generated by them is used in the rest of the business.  If therefore you have not organised yourselves correctly, educated the workforce and agreed how to use them then these systems can cause more problems than they solve.  When they are sold they are miracle cures to all your issues.  The reality is if you don’t get the basics right then you have no chance.  As a result you must put in place the following rules, processes and disciplines then your planning processes and systems will have a chance.

• The system must have a minimum inventory record accuracy of 95% for raw materials, work in progress and finished goods – in other words we know what we have and where it is

• The system must have 98% bill of material accuracy – it must know how you make the products, all the components used and the amount of scrap etc to accurately plan to deliver what you need for your customers

• There must be one plan that everyone follows and one person who is the master of the plan – Master production scheduling

• The organisation must be set up so that the planner tells production what to make, in what order and in what quantities.  Production make to the plan

• The organisation must be set up so that only the planner can change the priorities on the shop floor.  This includes the managing director

• Production must be give a fixed schedule to work to – this can vary in time but must be in place

• Periodically the key people in the business, plan what will be made, sold and developed in the business so that all areas can be kept satisfied – Sales (customers), production and engineering/ development – This is called the sales and operations planning meeting

• In order for the system to plan it needs good data, therefore there must be excellent shop floor data collection that regularly updates the system either electronically or manually

• You must understand your capacity at the business level and individual work station levels other wise how can you promise anything to a customer with certainty

• You must understand where the constraints (bottlenecks) are in the business and plan around them

• Only the system should provide customer promise dates not best guesses by sales people

• You must have an organisation where only one system is used and people do not have their own systems and procedures – work in a formal manner

• Engineering, development and new product introduction must be planned

• Everyone must stick to the rules from the Managing director down

• Everyone must be trained on the importance of system and planning

• Everyone must have clear roles, responsibilities and measures to ensure success.

Once you have reviewed these kinds of issues only then should you start reviewing the best system for your business. 

When faced with the issues above most companies don’t know where to start.  They know they have issues, they know their planning processes and systems are broken but they are confused and are constantly fire fighting so don’t have time to diagnose the problems never mind solve them. 

This is where the great systems sales people come into their own.  “Implement our system and it will solve all you problems,” they say.  Grasping at anything you spend a fortune and embark on a yearlong implementation of a new system.   At least then you look like you are doing something about it.  You then start to customise the system you have bought – more money, longer implementation time and more confusion.  The systems guys love this they make more money.  The reality is that if you ever get the system working and I did say if then it doesn’t solve the issues, as they are still the same.

• Poor data accuracy

• Poor data collection from shop floor, customers and elsewhere

• Poor discipline

• Confused role and responsibilities

• Poor training and education in planning and control

• Wrong organisation structure

• Lack of sticking to the rules

• Lack of understanding of constraints

• Lack of understanding of true capacity

• Poor quality and planning of that poor quality

• Poor supplier management

So what should you do to ensure that this is not the case?

We would recommend that you take a step back and do a diagnostic assessment of the company’s issues surrounding planning and control.  Then armed with the data start to plan how you will transform your business.  Don’t jump in!  Understand your problems before you try to solve it. 

We conduct diagnostics of planning, supply chain and business improvement initiatives and then help companies develop plans to improve the business.  With our expertise and understanding of best practise having worked for major companies all over the world we can give you a guide on how to improve your planning processes.  The diagnostic only takes a few days and can give you the information to have a meaningful discussion about the business and what is required to develop it. 

Strategic Business Partners have vast experience of helping companies understand their issues and helping them plan to resolve them.  If you are interested in anything we have had to say then please contact us we would love to talk to you