The Challenge for Complex Manufacturers: Forecasting and Delivering On-Time

Why It’s So Hard For Complex Manufacturers to Consistently Deliver On Time

On the surface, some might say manufacturing is a very straightforward process, and should have predictable results. You have a set of products. Each product has a design of how to build it, step by step, and associated bill of materials. So based on the orders you receive, you assess your production capacity and your parts inventory and put together a schedule for purchasing and manufacturing. You know how long each step takes, so you should be pretty good at predicting your dates. 

The process is relatively simple when you have a few parts that go into a single product. But if you are a high-mix manufacturer, you have hundreds or thousands upon thousands of parts, used across any number of different products. Your machines and people all work across many assemblies and inventory may even be shared across multiple products. Now it’s not so simple to schedule and forecast on a pad of paper or a spreadsheet

Where Current Investments are Paying Off

Fortunately for complex manufacturers, software companies have built sophisticated tools to help to plan and manage the manufacturing process. Manufacturing Resource Planning (MRP) systems ingest all of your requirements and create a manufacturing and delivery plan that takes into account all of the complexities of your business – your requirements, your multi-level Bills of Material, your manpower forecast, your shared machinery, your shared inventory, etc. MRP is even responsive to disruptions to  the plan: a customer changes their requirements, or engineering changes the design, or any myriad of other changes, and you can re-run MRP and have it provide you with updated yet predictable delivery dates.

Where Your ERP/MRP Investment Falls Short

So now that MRP technology has stepped in to address the special complexities of high-mix manufacturing, delivery seems straightforward: just release the orders to manufacturing and purchasing, and build to MRP’s plan. Unfortunately for manufacturers, disruptions continue to crop up after orders are released. Suppliers are late, machines break down, manufacturing yields don’t meet expectations, and on and on. MRP steps in here and identifies all of the problems for your teams, in the form of Exception Messages.

The first few disruptions aren’t a big deal to address – though it can be costly. Your teams may be able to adapt with order expedites and overtime to get you back on track to deliver against MRP’s due dates. But as the disruptions snowball, it becomes impossible to address every exception in a timely manner. As you start to drift further and further from the MRP plan, you no longer have confidence that you can deliver against MRP’s due dates.  But what dates can you meet? It’s at this point that teams typically resort to spreadsheet models to prioritize work and forecast deliveries. And spreadsheets come with their own challenges, including the significant effort required to produce and maintain them, and the difficulty of accurately modeling complex processes and interrelationships. Teams typically focus on identifying and addressing near-term critical items, but have little insight into the trade-offs and longer-term impacts of their decisions. 

How To Address the Shortcomings of Your Current Technology

Given the current and expected impact of the disruptions you have experienced, issues your teams probably want to understand:

• What items are now on the critical path?
• What items can I safely push out without impacting the deliveries – now or in the future?
• What does each team need to work now to address the most critical items?
• If I focus on addressing the issues identified, when can I expect to deliver each end item?
• How can I keep this plan updated as future disruptions occur, without endless hours of manual planning?

Modern software solutions can understand your current state of affairs by examining your MRP data, and then model your factory to predict future outcomes. With a thorough understanding of your demand, designs, deliveries, operations, inventory, and your WIP, advanced software models can pick where MRP leaves off, and provide your teams with the insights and guidance they need to forecast and deliver more products on time.