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Operational planning in manufacturing companies has lost its
strategic importance. This loss did not occur in the last few
years, but is a process that has been taking place for decades,
before times when words like globalization, Internet and competitiveness
were heard. Nowadays, with the advent of an integrated vision
of the Supply Chain Management, the concept of planning appears
to have been reborn, renewed with such terms as collaboration,
optimization, SCP, B2B. Is this a genuine revival or simply
another arrogant technological impulse?
This book addresses these issues, discussing traditional ones
as well as new trends in planning systems. These issues are
approached from a different perspective. The concept of Compliance,
as it is applied in the field of Medicine, introduces an opportunity
to improve the quality of the planning processes.
MRP, ERP, SCP, APS, what do these acronyms have in common? Obviously
the P for Planning. However, it is the less used function in
real life. Why? Plans and programs persist in isolated spreadsheets
opposing in a stubborn way to any idea of integration and collaboration. |
Spreadsheet Plans? |
Today, we have a vast history of concepts and
literature on Planning, we also have the power
of new technologies, communications, Internet
and last generation information systems but in
spite of them, plans and programs in your company
are managed with spreadsheets. Have you wondered
why? |
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Is
there anything bad with spreadsheets? Not really,
marvels can be done with those tools, even it
is convenient to keep them in small or medium
companies, at least till the moment of finding
a more economical and effective replacement.
In the last years, the majority of manufacturing
companies, mainly the big ones, have invested
a lot of money in the implementation of integrated
IT solutions, but the spreadsheets still survive,
completely dissociated from the IT systems and
it is already time to begin to recover part of
the investment. Inside the ERP there are many
planning functions, but usually they are the less
known even by the firms dedicated to implement
the software and in consequence they are very
little exploited and almost never applied. |
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The frozen cascade |
When we run a planning process, either a SCP or
an ERP system, we obtain two types of results; a
new plan that replaces the previous one and recommendations
on the firm orders. The way for dealing with these
messages originates an old problem that still survives
in modern SCP systems, we can call it “the
frozen cascade”. For better understanding it,
let’s take a look over an easy chain: |
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| Product
A is manufactured with the semi-finished product
B and this with the raw material C. According to
the current demand there is a firm order for manufacturing
A in threes days, for it we have to manufacture
the semi-finished product B on day 2 and the raw
material C have to be at stock on day 1. Let’s
suppose that we generate a new plan and that it
detects there is not demand of product A any longer,
then the system generates a message for eliminating
the production order for product A, but it does
not warn anything about the orders involving B and
C: |
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The
orders involving B and C remain frozen in the first
links of the supply chain. Is it an error of the
system? Not really, the system can not suggest any
action since we decide what to do with the production
order for product A, if it made any suggestion,
confused and contradictory situations would occur.
The system ignores which decision we will take about
the order that is the reason for the uncertainty
so it cannot assume any alternative. The drama with
the frozen cascade is the poor syntax of the digital
language of the IT systems, they require an answer
at their level: yes or no, when the spectrum of
possibilities is much broader.
This problem is directly bonded with the number
of links of our supply chain, the more elements
we have, the greater the probability of finding
frozen cascades. Now, as we try to include all the
chain, it will be more difficult to avoid this effect,
even more if we extend it to customers and external
suppliers. Regarding the “frozen cascade”
problem, Planning does not depend on formulae or
algorithms but in the decisions of a person. |
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Why
Compliance? |
Because it is necessary to guarantee the plan effectiveness
and to close the existent gap between the management
indicators and the operational data of the ERP systems.
To control the execution of an operational plan,
it is necessary to begin with the identification
of the variables that a priori are the more meaningful,
those that allow us to:
- Know and foresee deviations.
- Act on these deviations.
- Assure the success of the plan .
With Compliance we can improve planning process
and their profitability, taking advantage of available
resources and technologies, avoiding new investments.
Only a quality planning process will let us foresee
and anticipate deviations to prevent frozen cascades. |
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Guidelines |
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A company that was not able to implement successfully
a MRP system will fail in its attempt to use an advanced
planning tool unless it changes its structure, organization,
processes and planning culture.
- If it is not possible to guarantee an acceptable data
quality for the transaction system, trying to synchronize
it with an SCP system will only increase uncertainty.
- It is necessary to solve and optimize the internal chain
for then being able to establish serious links with other
organizations. At first, it is necessary to look inside,
to begin improving from the ERP system. |
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