Production planning is at the heart of all manufacturing operations. Planning decisions are often the catalyst for chain reactions that can quickly derail all the other production processes. With so many decisions and factors involved, it can be difficult to identify where to focus their planning efforts.
As a new year approaches, manufacturers should use this opportunity to take a more calculated and strategic approach to their production planning. We’ll share our recommended areas to focus on to help make 2021 an even more productive year for your organization.
Keep Inventory Updated
Inventory mismanagement is a common challenge for manufacturers, and it can also be one of the most costly. The worldwide cost of inventory distortion is an estimated $1.1 trillion, nearly equal to the GDP of Australia, according to research firm IDL Group. Much of this waste starts from simple logging errors – a recent GS1 US survey found that inventory is only accurate about 63% of the time. When you start with an inaccurate account of your inventory, the rest of the production planning process will be unable to run effectively.
To best manage your inventory, we recommend using inventory management software. This will help your employees keep the most accurate records, while also tracking supply and demand in real time. Your plant may also want to conduct regular inventory inspections to identify small problems before they become a larger cost-draining issue. The insights you gain from software and inspections will help your organization create the most economical plans for inventory management.
Understand Capacity Limits
Even if your current processes seem to be running smoothly, many manufacturers are not actually utilizing their facility to its full capacity. In the years leading up to 2020, the average US capacity utilization had hovered around 75%, according to the Federal Reserve. Then, in April 2020, the pandemic caused a record low utilization of just 63.97%, and the industry still hasn’t quite bounced back. These manufacturers have an opportunity to adjust their plans and find more efficient options.
The first step in determining the optimal process efficiency of your plant is studying the current schedule to calculate any delays or bottlenecks. If you can resolve these time-consuming issues, you can better sync your processes, shorten changeover, and cut out unnecessary idle times. With more efficient processes, your organization can decide to either create more product or shut equipment down for longer periods. Choosing to turn equipment off will save costs and create more time for preventive maintenance, while more product brings the opportunity for more sales.
Perform Calculations Quickly
The secret to creating the perfect plan for your organization lies behind a series of complicated calculations and equations. With so many factors to account for, it’s easy to make small mistakes when trying to find the solution manually. You’re also often working against the clock to find answers quickly and cause minimal delays to production. When you discover an error, it’s frustrating and incredibly time-consuming to start over.
With manufacturing planning software, all calculations can be completed instantly, producing a feasible and optimized solution each time. Our software, VirtECS, can be automated and will simplify cumbersome spreadsheet-based approaches. Even for highly detailed plant models, VirtECS can track inventory levels and generate solutions spanning months of time in seconds. VirtECS offers superior planning and scheduling capabilities due to more than 25 years of R&D and has been employed globally at manufacturing locations by many of the world’s leading companies. If you’re interested in implementing a more strategic approach to planning in 2021, please fill out the form below to download our overview.
