Transcript Session 8 Production and Inventory Planning

Session 9
Master Production Scheduling
http://www.pom.edu/mpc/lectures_in_manufacturing_planning.htm
lecture session 8
Mr. Tim Loar
Manager, Production Planning
Ross Products Division of Abbott
Laboratories
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Agenda
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Ross/Abbott background
Operations structure at Ross
Production planning: theory
Production drivers
Production planning: reality
Inventory Management
Conclusion
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Ross Productions Division: Primary Focus
• Nutritionals
– Infant formula
– Adult nutritionals
• Pharmaceuticals
– Growth area
• Feeding devices
– Pumps and sets
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Ross Products Division: Manufacturing
• Five manufacturing plants
– Produce 888 sku’s
– 27 different mfg. lines
• Third party manufacturers
– For expertise/capabilities don’t have in-house
– Product 674 sku’s
– 33 different mfg. lines
• 87% of Ross sales produced in Ross Plants
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Ross Products Division: Operations
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Ross Products Division: Production Planning
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Production Planning: Theory
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Production Planning: Theory
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Ross Products Division: Production
Drivers
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Forecasting
Customer service
Inventory days-on-hand
Plant SVP (stnd. value of production)
Warehouse space
Sales history
Mfg. lead times
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Daily Case Shipments Report
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Aggregate Forecast Accuracy
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Forecast Accuracy – September, xxxx
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Production Planning: Reality
Marketing forecast
Forecast administrator
Finance
Operations forecast
• Ongoing products
– Compiling the “realistic” forecast
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Monthly meetings with Marketing
Sku by sku review
Agree to forecast for next 6-12 months
(2 financial plans look out further, up to 18 months)
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Production Planning: Reality
Marketing forecast
Forecast administrator
Finance
Operations forecast
• New products/Promotions
– Strong reliance on Marketing/Sales
• No history for a forecast base
• Consumer research
– Bi-weekly/monthly promotions meetings
• Review planned promotions
• Understand demand impact on promotion item and
cannibalization of other sku’s
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Production Planning: Reality
Bill-of-Material
Forecasting system
MPS
Production Plan by plant/TPM
Plan passed to plants
• MPS generation: most trouble-free portion
– Base Accounting system is 17 years old
– MPS module is 10 years old
• Numerous limitations
• Driven by forecasts and target levels
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Production Planning: Reality
Reality…
Plant fills product
Product is incubated
Product is released
• Tough decisions
– Production trade-offs
• Limited capacity
• Long commodity lead times
• Management anxiety over backorders potential in competitive
environment
• Overall game plan
• High levels of MPS interaction/“what-ifs”
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MPS Planning Horizon Detail
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Production Planning: Reality
Plant fills product
Product is incubated
Product is released
• Tough decisions
– prioritization
• Which customer base has biggest impact
• When to contact the customer
• Which unaffected products can survive a period of neglect?
– Fallout
• Daily attention to detail put on hold
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Production Planning: Reality
Plant fills product
Product is incubated
Product is released
• Developing recovery game plan
– True RPD team effort
• Must be a team player
• Supply chain perspective
• What’s best for entire organization
…not Production Planning, not Purchasing, etc.
– MPS is the tool to facilitate trade-off decisions
• Foundation for recovery projections
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Production Planning: Reality
Plant fills product
Product is incubated
Product is released
• Performance measures
– Production to Schedule
• +/- 2% to frozen schedule
• Reported monthly
– Batch Release Tracking
• % of on-time releases
• Reported monthly
– Batch Delivery Performance
• Based on one week frozen schedule
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Production Planning: Reality
Product is deployed
• Very close interaction with MPS
– Logistics manages inventory by DC/warehouse site
– Logistics utilizes MPS to determine deployment plan
• For example, short supply out West:
– Move product from the East (high trans. $’s)
– Evaluate MPS (& finite plant schedule) to determine next
production run and product release timing
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Production Planning: Reality
Sales results feed
Back into MPS
Orders Received
• Biggest daily impact on MPS management
– Variance to forecasted sales
– Pull production forward for oversells
– Push production out for undersells
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Inventory Management and MPS
Inventory Plan
MPS
Production plan by plant/TPM
• The focus is on DOH
• Two budget processes per year
– MPS generates projected inventory value
• Based on established target levels
– Forms basis for inventory investment accountability
– MPS used to assure compliance with the inventory plan
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Inventory Management and MPS
(continued)
Inventory Plan
MPS
Production plan by plant/TPM
• MPS-related issues with inventory plan
– Tendency is to want to keep lines running
– MPS data allows for monitoring of adherence to plan
– Production must move with sales to forecast
variances
– MPS keeps planner appraised of variances to
inventory target levels based on sales results
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Inventory Management Tools
Inventory Plan
MPS
Production plan by plant/TPM
• Data Warehouse
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Comparisons of actuals vs. projections
Comparisons of current future projections to plan
Variance detail down to sku level
…or aggregated up for an entire line
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DOH By Year (1989 – 2002 Plan)
Ross Products Division
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