Master Production Scheduling - Is it still relevant?

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1 Master Production Scheduling - Is it still relevant? In the 1980s and 1990s Master Production Scheduling was a big thing. Practically all serious manufacturing companies has a Master Production Scheduler, there were books and courses galore on the topic and the big consultancies found that they had something new to advise on as they made their millions from implementing MRPII (Manufacturing Resource Planning) systems. Heady days! But now the job title, at least, appears to be redundant. An unscientific study, I know, but I have just searched a leading jobs web site and found only one advertisement for a Master Production Scheduler (compared to 27 for Production Controllers and 34 for Production Planners). If not quite extinct, the job is at least no longer fashionable. So how did a job once seen as so necessary and so valuable suffer such a fall from grace and, more importantly, should it have done? The objective of Master Production Scheduling is to create a production plan that uses resources (men, machines and money) as efficiently as possible to satisfy demand. That requirement surely hasn't gone away so what happened? The first thing that comes to mind is the emergence of affordable capacity schedulers (such as Preactor). In the 80s and 90s, using even RCCP (Rough Cut Capacity Planning) to check the validity of a Master Production Schedule was an overnight computer run for most companies. The iterations and adjustments necessary to get to an achievable plan could therefore take several days, by which time the World had almost certainly changed and the Master Production Scheduler had to start again. Many at the time thought they were just chasing their tails and, pragmatically, adopted a "near enough is good enough" approach. What this frequently resulted in, of course, was a Master Production Schedule that could not be achieved at a detail level. At the time, few companies had the knowledge or confidence to challenge the orthodoxy that Master Production Scheduling was the way to go so they just put their heads down and kept on going even though results were poor. Perhaps they thought that they just needed to try harder but, eventually, many just gave up.

2 When affordable capacity schedulers came along, they made the generation of achievable production plans both quick and easy. To many companies this made the role and task of Master Production Scheduling redundant. A computer system could now evaluate all possibilities and, given a set of expert rules, could come up with a viable plan in minutes. They offered 'what if' capabilities for times when a quart just could not be extracted from a pint pot and, once the 'expert rules' that covered things like set-up dependencies, tooling and priorities were set up, the job of scheduling was largely automated and de-skilled. At the same time, new and revised methodologies were coming through. Bottleneck scheduling had become The Theory of Constraints and suddenly Master Production Scheduling which, for many companies, had never delivered what all the text books, consultants and hype had promised, became old hat. But why couldn't some companies get Master Production Scheduling to work whilst others felt transformed by it? For two reasons, I think: firstly that Master Production Scheduling was not relevant for all companies in the first place and, secondly, that the advice that they got from books and from consultants was often wrong. Let's first consider relevance. With 20/20 hindsight vision it is now obvious that, whilst Master Production Scheduling was hailed as (and sold as) a panacea for all manufacturing companies, its roots lay in the Make-to-stock (MTS) environment and there it should have stayed. I have seen evidence of Master Production Scheduling techniques being used as far back as 1917, when they were used to plan the build up of stockpiles of weapons and equipment for the next big 'push' on the Western Front. In a MTS environment, it is perfectly valid for a Master Production Scheduler to sit down with Sales, Marketing, Finance and Production to decide what should be made, and when, knowing that there will be inevitable trade-offs and compromises. In Make-to-order (MTO), however, the ability of a Master Production Scheduler to decide what should and should not be made, and when, is reduced to the point that these tasks become invalid. The Master Production Scheduler is now dealing with actual customer orders, not forecasts and targets, and these firm orders cannot be

3 rescheduled with impunity. The agreed delivery date, and quantity, must be considered inviolate if the customer's business is to be retained. The only valid role is to calculate achievable delivery dates before orders are actually taken and this can be generally be handled by entering 'what-if' orders to a capacity scheduler. (It is only necessary to agree with your sales people how long such orders should be left in the system, denying capacity to other enquiries, before they should be deleted.) But, even in environments such as MTS where Master Production Scheduling has been successful, it has not been universally successful and that brings us to the second point: that of bad advice. This came from books and from consultants (and it didn't help that most books were, and indeed still are, written by consultants). The killer piece of bad advice, which was constant in every book or article on Master Production Scheduling that I ever read and on every course that I ever went on was that the Master Production Schedule should be defined at a finished item (SKU) level. For many companies, even some operating in an MTS environment, this was impracticable or even impossible because of the number of products involved. Just how many products a Master Production Scheduler can plan, monitor and control would be an interesting debate but, in hindsight, it is clear that the impossible was demanded in many companies; hence the poor performance of Master Production Scheduling and its gradual demise. But, if we accept that the technique has been a great success for many companies (and it has) how do we ensure that it becomes successful for more? Obviously, one answer is not to apply it inappropriately (in a pure MTO environment, for example) but there are other things that we can do to make the task more successful by making it more manageable. Some may require that suppliers of manufacturing ERP and MRPII systems up their game but let's consider the big two. Firstly the assumption that Master Production Scheduling should take place for individual products. We have seen that this, for some companies, varies from the impracticable to the impossible. But, in an MTS environment we may have many similar products within a family group and these may differ only in detail (for

4 example, they might come in differing colours or they might be packed differently). Scheduling product families then becomes much more manageable than scheduling products (and forecasting at a family level is often more accurate and therefore more useful also). For full effect, ERP/MRPII systems will have to be able nett-off productspecific orders against family forecasts: some do and some don't, so get advice from your system provider before you proceed. The second thing that MTS and CTO (Configure-to-order) companies can consider is Master Production Scheduling at a lower level of the bill of material (i.e. at a subassembly or even the raw material level). Consider these four types of company: Fig. A B C D Company A is the classic MRP company, as represented by Rolls Royce and General Electric. This type of company has a relatively small number of end items (SKUs) but a large number of purchased items. Company B is quite the opposite; having a small number of raw materials but a large number of end items. Examples of this type of company are frequently found in the plastics industries. Company C is a company that builds a relatively small number of common subassemblies from a fair number of raw materials and then produces a large number of variants of their products using these sub-assemblies. They are usually configure-toorder (CTO) companies and PC manufacture would be a good example. Company D has a relatively small number of raw materials that get turned into many components and sub-assemblies that are then turned into a small number of end products. A manufacturer of wooden garden buildings would fall into this category.

5 The essence of master production scheduling is that it is carried out by production planners and demand for sub-assemblies and components (dependant demand) is calculated by MRP. Not surprisingly, given that MRP & MPS came originally from type A companies, they work very well there. Consider, though, type B companies which can have a very large number of SKUs. Now manually scheduling becomes very much harder because there are simply so many products to consider. On the other hand, in these kinds of company, complex bills of material are not the norm and manufacturing lead times are generally short, so it is raw material supply that is the key. If you plan your materials well (see forecasting and The Law of Big Numbers), you have a good chance of making anything you need (assuming that you have sufficient capacity). Type C companies need to concentrate on their sub-assemblies as, if they get these right, configuring the final items is relatively straight forward. They can also use The Law of Big Numbers to decide how many of these they should be making: I worked with a PC manufacturer who was using an MRPII system to offer next-day despatch on all sales orders. This, incidentally, worked because the bulk of the combined manufacture and purchase lead time, if you look again at the diagram, is always below the narrowest point. Type A companies tend to have long lead times for both manufactured and purchased items, type B companies tend to have short manufacturing lead times, type C companies will have short manufacturing lead times for the configuration element of their manufacture and type D companies are very similar to type A. Incidentally; this narrow point is often a good place to hold safety stock. Type D companies, as we said, are very similar to type A companies but with simpler raw material requirements. By concentrating manual planning on these narrowest points, we are dealing with the least possible number of parts and the task becomes much more manageable.

6 So, in conclusion, Master Production Scheduling can still contribute if it is applied appropriately and with intelligence. It is not relevant to all companies but that does not mean that is relevant to none. As with all methodologies, the user must realise that a "one size fits all" approach is not going to work and must only see it as one of a range of tools to choose from: it really is horses for courses. Above all; companies must be careful about taking advice. The consultant with something to sell may be blinkered: after all, when the only tool you have is a hammer, every problem looks like a nail.

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