One of my first jobs was as a production scheduler. Over that 10-year career, I learned a lot about how the best-laid plans could be derailed. A single mishap — improperly routed materials, equipment breakdown, quality issue, etc. — could wreak havoc on an entire production timeline, frustrate workers and run up costs — not to mention negatively impact customer relationships.
Every decision or error has a trickle-down effect and, in the end, can result in significant costs related to expedited shipping, overtime, potential lost business and more. The latest enterprise resource planning (ERP) technology can help mitigate these risks by proactively addressing potential conflicts and improving the following three business impact areas.
1. On-Time Delivery
Are you repeatedly late on customer orders and not meeting request dates? Do you know the underlying causes? Chances are if you did you would do something to correct the problems. One of the reasons it can be difficult to pinpoint the issues and produce an accurate delivery date is because there are so many factors that are out of a production scheduler’s control.
Sequencing, materials availability, capacity utilization and run sizes all contribute to your operations and the delivery performance for your customers. Of course, there’s equipment performance and the performance of multiple individuals from materials handling, to production, to inventory, to shipping and more. Each factor influences and points to how effectively you use resources overall, including cash!
An ERP system can connect all the moving parts and allow planners to gain visibility into each area of an operation that might impact their production schedules. They can see the big picture and how each area is intertwined, yet dig deeply into the data to see the where and why of a problem to determine how to fix it.
You can use the information gained from big-picture ERP data to pinpoint where you can make continuous improvements and act accordingly.
2. Fulfillment Costs
Fulfillment costs not only reflect labor for internal warehouse picking, packing and shipping operations but also encompass the whole organization and the costs incurred to deliver produced goods to a customer’s door. If delayed production results in the need to expedite shipping using a secondary freight company rather than having those items go on your regular Tuesday truck, for example, those costs add up. Or, perhaps a machine went down for half a shift, someone didn’t produce quality results or products were mishandled during transit to the loading dock.
Any of these scenarios can result in added costs, reruns and unfulfilled orders. To compensate, some facilities keep more invested in inventory stock because they know the likelihood of defects in the fulfillment process is high, resulting in inadequate supplies and the inability to fulfill orders.
Using an ERP application to determine an efficient production schedule can help ensure the right materials are delivered at the right time, which can provide much more accurate availability dates. This helps eliminate or, at least, minimize carrying inventory longer than is required and unnecessarily tying up cash. If disruptions occur, you have visibility into where things are being held up so you can address the underlying cause and production schedulers can make adjustments.
3. Variance Control
There are different types of variances that can occur in a manufacturing setting. Did a job get completed and excess raw materials remain? Material variances could indicate a potential quality issue with a finished product that doesn’t have all its components. Or you may run out of materials before a job got finished, indicating excess scrap, improper handling, defective components or poor supplier performance.
Labor or capacity variances can occur when a product is completed ahead of or behind schedule, suggesting a certain shift might be over- or understaffed. In a best-case scenario, products are produced faster than expected because of improved efficiencies on the production line. Whatever the situation, production schedules need to be updated and refreshed based on labor variances to improve accuracy and maximize capacity planning.
With production work orders managed within an ERP application in real time, you can track progress on jobs or production activities, including the labor used for various operations and the consumption of raw materials. Accurate metrics allow you to analyze performance so you can adjust standards appropriately to ensure product cost information remains accurate and relevant.
If your organization is continually playing catch up when it comes to production scheduling and is spending more than anticipated to get your goods out the door, it’s time to consider implementing an ERP solution. Reach out to the experienced and certified ERP solutions specialists at Wipfli to discuss your specific challenges and how the latest technology can streamline your operations to garner better results.