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The Process of Production Scheduling
Manufacturing organisations allocate significant funds to acquiring plant, machinery, equipment, and buildings to support their production operations. Effective control of these resources is crucial to optimising manufacturing costs per unit and maximising the return on investment. By doing so, organisations can enhance the efficiency and potential of their manufacturing facilities.
Efficiently utilising manufacturing resources reduces costs and improves service levels. This is essential for ensuring the organisation's long-term financial stability, sustained growth, and increased turnover, sales, and profitability. Organisations can achieve these objectives and strengthen their economic standing by managing their manufacturing resources effectively. The most common manufacturing strategies are:
- Make-to-Plan (MTP): The manufacturing facility makes the products that have been formalised into the manufacturing plant production plan. The products may be dispatched immediately, stored, or used in another manufacturing process.
- Make-to-Order (MTO): Products are manufactured according to customer sales orders.
- Assemble-to-Order (ATO): The products are manufactured using MTO or MTS processes, and the generic product is assembled to tailor the finished product(s) to the customer's specification before being dispatched.
- Make-to-Stock (MTS): Like MTP, the manufacturing facility makes the products that have been formalised into the manufacturing plan. The products are stored awaiting order dispatch.
Manufacturing organisations typically adopt a pricing-oriented approach, aiming to maximise production runs to minimise the cost per unit. This is achieved by implementing manufacturing strategies such as MTP, MTS, or ATO. These strategies are beneficial when manufacturing capacity is costly to reduce. At the same time, the cost of maintaining inventory is comparatively less expensive.
Maximising Production Efficiency
One effective manufacturing practice is ATO, which reduces inventory levels by replacing multiple lines of different finished goods inventory with a single generic product. This generic product can then be customised according to each customer's requirements before it is dispatched. By adopting this approach, manufacturing organisations can streamline their inventory management processes and minimise the costs of holding excessive inventory.
Various organisations opt for manufacturing processes that offer flexibility to accommodate customer requirements, with service provision being the primary factor influencing manufacturing capacity. The prevalent manufacturing strategy employed in such cases is MTO, as the expense associated with inventory maintenance is significant, and fulfilling customer needs takes precedence.
To enhance production capacity, organisations focus on utilising methods and technologies that minimise the expenses related to transitioning production lines between assorted products. This is achieved by implementing batch manufacturing processes, allowing efficient production while catering to varying customer demands.
By prioritising customer satisfaction and operational efficiency, organisations can effectively manage their manufacturing operations and adapt to changing market demands. Strategically utilising MTO and batch manufacturing processes enables organisations to optimise their production capacity and meet customer requirements cost-effectively.
Effective Sales Order Management
With the market's evolution, organisations can now cater to a broad range of customer needs and requirements. Unlike the early days of the industrial revolution, when simplicity and uniformity were the norm, today's organisations are equipped with advanced technology that allows them to customise their products or services to meet the diverse demands of the market. This shift in approach has been driven by customers' changing expectations and desires, who now expect a more personalised and tailored experience.
The famous quote by Henry Ford, "the customer can have any colour so long as it is black," no longer holds in today's market landscape. Organisations are now focused on understanding and fulfilling the unique requirements of different customer segments rather than adopting a one-size-fits-all approach. This customer-centric mindset has led to developing various products or services that cater to specific preferences, ensuring customers have multiple options.
As a result of these changes, organisations can now target specific market segments with tailored products or services that meet and exceed the needs and preferences of end users. This shift towards customisation and personalisation has enhanced customer satisfaction and enabled organisations to maximise profitability by tapping into niche markets. By leveraging technology and innovation, organisations can adapt to the evolving market dynamics and stay ahead of the competition.
Product Marketing
In today's marketing landscape, the dynamics have shifted significantly. Unlike during the industrial revolution, when organisations were solely responsible for pushing their products and services into the market, consumers now have power. Organisations no longer drive technological advancements in products and services but are pulled by consumer demands. This shift has transformed the market into an opportunity that organisations must adapt to rather than a controllable aspect of their business.
The challenge for organisations in today's diverse market is not being market innovators but rather keeping up with and meeting the ever-changing needs of consumers. While organisations can still introduce innovations that temporarily shape and control the market, consumer demands eventually take precedence. As a result, the market transitions from being driven by organisational innovation to being dictated by consumer demand, influencing the development and offerings of products and services.
The key for organisations is to recognise that the market is now consumer-led and controlled. Instead of trying to control the market, organisations must embrace the idea that consumers can shape and influence the direction of product and service development.
By understanding and catering to consumer demands, organisations can effectively serve the market and stay relevant in an ever-evolving business landscape. This shift requires organisations to be agile and responsive, constantly adapting their strategies to meet the needs of the consumer-led market.
Manufacturing Scheduling
Organisations need help managing their manufacturing and distribution supply chains due to the complexity of diversified markets. These markets require organisations to cater to a wide range of product and service needs, and ineffectively managing manufacturing, distribution, and inventory resources can result in losing competitive advantage.
Therefore, it is crucial for organisations to strategically align their resources with the diverse needs of the market to succeed. Order management is a complex series of routine events that transfer a sales order into a sales invoice by undertaking the following steps:
- The sales order is received and input into the organisation's sales order processing (SOP) system. Products or services are typically detailed by product code, description, price, and quantity required.
- After inputting the sales order, a manufacturing or purchase order might be created detailing similar information required to manufacture or purchase the products or services. This system is the organisation's manufacturing planning or purchase order processing (POP) system.
- Once the manufactured or purchased products or services have arrived, the organisation must input the details into the SOP system detailing the products or services by product code, description, price, and quantity received.
- When the finished goods inventory exists for a sales order to be fulfilled, the sales order must be converted into a pick note, which details the organisation's staff and what products and quantities must be assembled before dispatch.
- Once assembled, the sales order is confirmed on the organisation's processing system by producing a pick note confirmation transaction, which generates a sales order delivery note.
- Sales orders are collected by the distribution or third-party logistics function for delivery to the customer. Sales orders are confirmed as being delivered upon confirmation that they have been dispatched or upon receipt of a signed delivery note. The details will be updated on the SOP system to confirm that the delivery note has been delivered.
- Confirmed sales order delivery notes generate customer sales invoices, which are then sent to the relevant customer for payment.
Materials Requirements Planning
The process described above must consider the importance of having a bill of materials (BOM) for manufactured products. A BOM provides a detailed list of the raw materials, parts, and sub-assemblies needed to produce the finished goods. By utilising materials requirements planning (MRP) processes, the demand for materials in finished products is traced back to ensure that raw materials, parts, and sub-assemblies are available before manufacturing the finished products begins.
Multiple levels of BOMs may need to be managed, manufactured, or purchased to facilitate the production of finished products. This ensures the necessary components are in place to assemble the final product. The intricate nature of manufacturing results in a continuous flow of raw materials, parts, and sub-assemblies into the production process, highlighting the importance of proper planning and coordination.
Manufacturers can streamline their production processes and avoid delays or shortages in the supply chain by recognising the significance of a BOM and implementing materials requirements planning. This initiative-taking approach allows for efficient resource allocation, timely procurement of materials, and the successful manufacturing of high-quality finished products. Embracing these practices can improve productivity, cost-effectiveness, and overall operational efficiency in the manufacturing industry.
Distribution Management
The distribution requirements for an organisation's products and services can result in a complex flow of outbound products and services related to standard operating procedure requirements. Sales orders are sent to various entities such as manufacturers, wholesalers, distributors, or retailers, all of which require finished goods inventory to fulfil customers' demands.
This scenario is not limited to just one organisation but extends to other entities responsible for meeting these supply needs. As a result, a supply chain from raw materials to end-users is established, characterised by its complexity and diversity. Effective information management is essential to address these intricate supply chain requirements successfully.
Ensuring that the flow of products and services is managed efficiently is crucial for organisations to meet the demands of their customers and maintain a competitive edge in the market. By establishing effective communication channels and utilising technology to streamline processes, organisations can navigate the complexities of distribution needs and supply chain management effectively. This initiative-taking approach can lead to improved customer satisfaction and overall operational efficiency.
Management of Data and Information Streams
Contemporary systems like sales order processing (SOP), purchase order processing (POP), and material requirements planning (MRP I & II) play a pivotal role in automating most of the material manufacturing and procurement tasks. Efficiently managing these information systems ensures that demand requirements are met and supplier deliveries are made on time. Any delays or disruptions in the supply chain due to late deliveries or missing materials can have severe consequences, potentially halting the entire supply chain operation.
The seamless integration of systems between an organisation, its customers, and suppliers has revolutionised how information is shared and processed. This integration allows accurate system communication, giving customer service coordinators real-time access to order status information. The live data empowers them to effectively manage sales orders and provide timely customer updates, enhancing overall customer satisfaction and operational efficiency.
Leveraging advanced technology and interconnected systems can streamline operations and improve supply chain management. The ability to track orders, monitor inventory levels, and coordinate with suppliers in real-time ensures smoother operations and reduces the risk of disruptions. Effective management of these systems is crucial for maintaining a competitive edge in today's fast-paced business environment.
Providing supply chain, procurement, and logistics personnel with consistent visibility at key stages before sales orders are sent downstream in the logistics chain is crucial for optimal efficiency. The most streamlined and productive systems only require a sales order to be entered once, with the system automating the subsequent transactions needed to convert raw materials into finished products.
Organisations can minimise delays, reduce errors, and enhance overall operational performance by ensuring that all relevant staff access the necessary information and processes before dispatching sales orders. This approach simplifies the workflow and increases the speed and accuracy of transforming raw materials into finished goods, ultimately improving customer satisfaction and profitability.
More articles can be found at Procurement and Supply Chain Management Made Simple. A look at procurement and supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness in the supply of their products and services to customers' delight. ©️ Procurement and Supply Chain Management Made Simple. All rights reserved.
