It is now useful to return to planning time fences to discuss how the master scheduler can use them to more effectively manage produc- tion schedules. Consider again the MPS matrix used to introduce the concept of planning time fences, reintroduced here as Figure 4.5. Let
us consider this to be the master schedule for an A3 unit manufac- tured by Criterion Electric Controls Company, introduced earlier in the chapter.
Criterion has forecasted level demand at 70 units per period. The master scheduler, Judy Wilson, has placed a PTF at the end of period 6, and as before, the computer has spotted the potential defi ciencies beginning in period 6 and generated two CPOs of 130 each to coun- teract the defi ciencies. However, since a PTF has been established between periods 6 and 7, the fi rst of these CPOs has been placed in period 7 with an action message (negative availability inside the PTF) being sent to the master scheduler. Moving the fi rst of those CPOs into period 6 as a fi rm planned order is necessary from the vantage point of the computer software. However, additional analysis must be done before taking action. To learn something new from this situation, consider the following scenario.
Figure 4.5 Managing with Planning Time Fences
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Managing with the Master Schedule
The sales group has just returned from a major trade show where customer response to the A3 unit has been extraordinary. Each of the regional sales managers has told the national sales vice president that its sales representatives will be submitting new and higher forecasts for A3 units within the near term. This is truly good news for the company, and the sales vice president is anxious to ensure an adequate supply of A3 units to meet the tremendous demand he expects to materialize soon. Normally, he would have consulted with the vice president of fi nance on any major change in the sales forecast, but today he was so excited by future sales prospects and so uneasy about the company’s ability to satisfy orders, that he picked up the telephone and called Judy Wilson fi rst.
“Judy, this is Phil. Good news on the sales front. We have big or- ders ready to come in on A3s, so we are increasing the forecast in pe- riod 4.”
“I’m glad to hear about the big sales, Phil, but could you give me a fi gure for how much higher your forecast will go?”
“Sure,” said Phil, proudly. “Right now it is 70 units in period 4. We plan to knock that up to 270. Wait, on second thought, let’s go to 370.
No sense in getting caught short, is there?”
Wilson knew immediately that she would earn her paycheck this day. Several things would happen if she entered this forecast change as requested. The obedient computer software would place a series of CPOs for 130 units in the MPS row of period 7, along with an action message to convert three CPOs for 130 units to FPOs and move them into period 4. Figure 4.6 demonstrates just what Wilson’s computer screen would show her.
The large new demand forecasted for period 4 would create a pro- jected defi cit in periods 4, 5, and 6. The computer software would never dial the sales vice president to ask how realistic this demand forecast was. Rather, it would respond in the only way available to it: by placing a very large computer- generated supply order—520 units, four complete lot sizes (multiples of 130 specifi ed)—in period 7, just outside the planning time fence. These large CPOs, which have been aggre- gated to a larger CPO, would solve the volume problem for Wilson, but
certainly not the timing problem in periods 4 through 6. An action mes- sage would recommend fi rming the CPO of 520 units into an FPO and moving the FPO into period 4, or moving two FPOs of 130 each into period 4, one of 130 to period 6, and creating one for 130 in period 7 (dependent upon the software logic).
Keeping the CPOs outside the planning time fence has the benefi t of avoiding unexamined new demand forecasts from automatically exploding downward through the material requirements planning system, where materials would be ordered and expected as well as capacity called for on short order. The planning time fence permits the master scheduler to keep this change in suspension while she considers its consequences on the entire production and materials system.
Figure 4.6 MPS for A3 Units, with Increased Demand in Period 4
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Managing with the Master Schedule
As an experienced master scheduler, Judy Wilson knew that she would not be changing the master schedule on the sales vice presi- dent’s request alone. A few things were out of order:
1. This change would take place within time zone B, and Criterion’s company policy required the approval of both the sales vice president and the plant manager. The reason for this policy was to avoid the chaos that normally resulted from unauthorized changes made within the cumulative lead time. Wilson would fi rst check to see if the plant manager had signed off on this proposed schedule change.
2. Wilson’s natural suspicion was aroused by both the timing of this request and the sales vice president’s initial tentativeness with respect to the number of orders he expected to receive. Saying “on second thought, let’s go [from 270] to 370” was not reassuring to Wilson.
Also, forecasted demand increases typically followed the annual trade show attended by the company and, historically, many of these sales failed to materialize in the forecasted period—if at all.
Aside from these two concerns, Wilson knew intuitively that if she brought the CPOs into period 4 that the magnitude of the increased supply would create material and capacity problems below the level of the master schedule. Completing this volume of A3 units would re- quire evening shifts at double- time wages, rushed materials purchased at premium prices, and expedited shipments to customers—all very costly to the company. “Has anyone even spoken with the vice presi- dent of fi nance?” Wilson wondered aloud.
In the case described, the master scheduler earned her pay by be- ing both open- minded and tough- minded. She had to be open to the possibility of increasing shipments by considering possible alterna- tives to the computer action messages, like bringing some of the 520 units into periods 4 and 6—capacity, materials, and costs permitting.
She also had to be tough- minded in observing change policies that support smooth operations and collaboration of different functions of the company. Finally, she needed to answer the six questions with respect to demand, the impact of demand changes on production, materials and capacity availability, costs, risks, and opportunities.
Planning time zones help master schedulers manage this diffi cult process. Planning time fences hold automatic MPS changes outside of zones A and B, where unexamined changes invariably cause problems, and they prompt the master scheduler with action messages to either implement its suggestions or think of better alternatives.
Management is often asked whether the company should “sell what it makes” or “make what it sells.” The answer should always be “yes.”
That’s a good idea! What the company needs to do is add time to the question. Refer to Figure 4.7. In the close-in time periods, the com- pany should make the demand equal to the supply—sell what’s being produced. Beyond a defi ned timeline, the company’s planned supply should be equal to the planned demand (aggregate planning taking lot sizing into account). The reader may be asking where this timeline
Manage Demand
to Match Supply
Manage Supply
to Match Demand
Sell What’s Being Made!
Make What’s Being Sold!
Time Periods Today
Figure 4.7 Demand and Supply Management Time Fence
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Managing with the Master Schedule
appears. Again, there are no hard- and- fast rules, but the fi nishing or fi nal assembly time is a good starting point.