by Kelsey H | Oct 5, 2021 | Planning & Scheduling
Sales and operations planning, or S&OP, is a process companies can use to coordinate planning across every area of their business. For manufacturers in particular, S&OP helps keep everyone from operations to production on the same page, with the goal of meeting customer demand and maximizing profitability.
S&OP is made up of two key steps: supply planning and demand planning. During the process of demand planning, companies are trying to determine how much product their customers realistically want and need so they can adjust production accordingly to avoid over- or under-manufacturing. To do that, they need to find ways to forecast upcoming changes in the market.
Ultimately, the goal of demand planning is to align planned inventory with the projected demand for each product produced. This process is incredibly important for successful businesses today, because as we’ve seen, market circumstances can change in an instant. In order to survive, manufacturers need to be as prepared as possible – which means taking several different approaches to demand planning.
Analysis of Sales Data
One of the most useful resources to consult when trying to gauge customer demand is your own company’s sales data. According to IBM, past history is typically the best predictor of future performance. There are several ways you can analyze sales information to better understand what the upcoming period will bring. Looking into trends from the previous quarter and fiscal year as a whole can help you see how sales have performed most recently, giving you a close estimate of what to expect at the current baseline conditions. Alternatively, comparing sales from the same week year over year can help account and prepare for traditionally slow or busy periods. Looking at the data through these different viewpoints will help paint the full picture of what to expect in both the short- and long-term.
Customer Information
In addition to sales history, other data can provide more detailed information about your customer’s needs in the coming weeks and months. Research tools like surveys, focus groups and interviews with members of your target audience can produce valuable insights into their priorities, opinions and unique circumstances. Though you may feel like you already have a good handle on your audience’s past behavior, the world is always changing, and if you don’t have the most current information, you’ll start to fall behind. Even if you don’t have the time or resources to complete these studies yourself, independent research groups often publish their findings for general use. A quick Google search for recent studies from reputable sources, such as Pew Research Center, Gartner, or Statista, can quickly grant you access to the data you need.
Market Forecasting
Beyond your own business history and target audience data, it’s important to understand what is happening in your industry and the economy as a whole. Although your company may have recorded steadily increasing sales the past few years, looming economic problems could instantly change demand, regardless of your past success or recent customer trends. Having experts you can trust to rely on for accurate market forecasting can add the last piece to the puzzle in understanding the projected demand for your company’s products. Keep in mind that outside factors, such as major weather events or disease outbreaks, can also quickly influence demand, meaning that you’ll want to keep a pulse on those conditions as well.
Now that you’ve compiled all this information, you may decide in any given time period that it’s best for your business to scale production up or down to match demand. Without a planning and scheduling tool like VirtECS, effectively implementing these changes can be difficult and time-consuming. VirtECS allows you to instantly update plans for your manufacturing plant and create resulting production schedules that are both feasible and cost-effective.
To find out more about how VirtECS can aid demand planning at your plant, download our guide. Be sure to check back to read our next article coming soon, where we will dive into supply planning, the other key step in the S&OP process, and how to address the capacity planning challenges that many manufacturers face.
by Kelsey H | Sep 20, 2021 | Planning & Scheduling, Process Improvement
According to a 2019 survey from EY (formerly Ernst & Young Global Limited), only 38% of manufacturers take a formal, strategized approach to allocating their capital. Unfortunately, that means nearly two-thirds of manufacturing companies may be leaving money on the table, missing out on opportunities for increased growth or making suboptimal investments.
You don’t have to have an endless budget to create innovative solutions for your manufacturing plant. In fact, we think it’s best to do more with less. When you use a tool to identify the most beneficial and strategic ways to allocate your capital, you can save funds up front while also continuing to provide value down the road. We’ll explore more of the potential long-term benefits of strategic capital allocation below.
Avoid Investments with Mediocre Results
In any business investment, there’s an expectation that the venture will financially benefit the company and eventually pay for itself. However, without a systematic approach to capital allocation, there is no guarantee your manufacturing plant will see the returns it needs.
An advanced planning tool can help you create a virtual model of your unique plant, allowing you to test different scenarios with new pieces of equipment or technology. By working through scenarios with various investment options, your organization can discover exactly which assets will underperform or fail to generate profit at the needed rate before making an ill-advised purchase and wasting valuable funds.
On the other hand, testing a wide range of investments may also uncover previously overlooked opportunities that will actually produce remarkable returns. With an advanced planning tool, schedulers can rapidly run through thousands of scenarios, a feat that would be impossible to accomplish manually. These capabilities help organizations find the most inexpensive route to their ideal outcome. Over time, the capital you saved by avoiding poor investments and choosing only advantageous purchases will grow exponentially.
Be Better Prepared for Potential Risks
All investments will inherently carry some form of risk. However, with advanced planning, you can be as prepared for the risks as possible and prepare for them appropriately. With a precise and accurate rendering of your plant’s schedule after the new investment, the organization can devise solutions to address issues or inefficiencies as they occur.
For example, say your plant is planning to purchase a new piece of equipment that may help speed up production, but is reliant on a certain raw material that is expensive or frequently in low supply. Once you know how those risks may affect the equipment’s capabilities, you can make plans to stock up on materials when the price is lower or have multiple suppliers on hand in the event of a product delay. Armed with this information, you can be better equipped to manage the risks and make the investment worthwhile.
Stay on the Cutting Edge
As you plan for the future, making strategic and systematic investments will ensure that you company stays on the cutting edge of innovation in the industry. This approach allows you to save capital for emerging enhancements, while avoiding trendy ventures that may not benefit your unique organization. Having the ability to make these crucial decisions will only become more important in the coming years as supply chains get restructured, raw material prices rise, and the manufacturing industry continues to change.
An advanced planning and scheduling tool is the key to identifying strategic manufacturing investments and allocating capital wisely. Our tool, VirtECS, has been perfected since 1993 to create virtual plant models that can accurately display a variety of different scenarios and corresponding production results. We frequently hear from our clients that they would never have been able to make as many beneficial changes to their plants without VirtECS. For more information on how VirtECS may help your organization, download our guide here.
by Kelsey H | Sep 7, 2021 | Industry News, Process Improvement
Microsoft Excel® has been a ubiquitous tool in planning and scheduling for many years. Excel is easy to learn, flexible, and typically already available as a corporate tool, making it a simple solution for many companies.
However, Excel also requires the user to manually input every change and check every constraint. Planners and schedulers that rely exclusively on Excel find that developing detailed plans and schedules can be tedious and time consuming, especially when frequent updates need to be made to reflect plant floor conditions. It’s incredibly easy to make costly mistakes using Excel – in fact, studies indicate nearly 90% of all spreadsheets contain at least one error. Excel also does not support standardization, so when the expert on a local tool leaves, it can be very difficult for others to maintain the existing sheet.
With many executives realizing the need for a more advanced capability to fit their unique planning and scheduling demands, some have started to look for suitable alternatives. Recently, the Wall Street Journal published an article exploring why executives at companies like Hackett Group, Inc. and Pure Cycle Corp. are looking for solutions to minimize their reliance on Excel.
Our advanced planning and scheduling tool, VirtECS, can both overcome Excel’s weaknesses as an alternative or work side-by-side with it as a helpful addition. VirtECS integrates well with Excel and can automatically import needed data that has been collected or maintained in Excel. This prevents data entry mistakes so that planners and schedulers can transition to VirtECS completely or leverage both tools. With VirtECS, you can reduce the amount of time spent optimizing your schedule, while also reducing costs and increasing revenue at the same time.
How Does VirtECS Compare to and Complement Excel?
When customers first adopt VirtECS, they quickly notice a reduction in the time required to develop their plant schedule. Manual changes that used to take hours to input in Excel are now performed automatically, allowing your schedule to respond to developing conditions within minutes. You can track all changes easily within VirtECS, making your company’s processes streamlined and more efficient.
VirtECS can also act as a complement to Excel by providing high-powered automation, mathematics, and data analysis. Because some of our customers still choose to leverage Excel in addition to VirtECS, we’ve also designed our tool to export all data and reports into a format compatible with Excel. Having data that works within both programs allows our customers to get the most use out of all their tools.
Most importantly, VirtECS is capable of searching over many possible schedules and will always select the best, most optimal option. When using Excel, typically only one or a few schedules are examined, resulting in higher costs or lower throughput. The superior schedules produced by VirtECS translate directly to the bottom line. VirtECS projects typically pay for themselves within months of operation through cost reduction and increase in production and resource utilization.
In addition to our advanced planning and scheduling tool, our customers also utilize VirtECS Symphony to give everyone at the plant access to the optimized schedule. VirtECS Symphony is a web-based module that promotes remote collaboration, allowing a more efficient flow of communication between shop floor execution and scheduling.
We would love to tell you more about why VirtECS is an ideal replacement or complement for Excel. To schedule a phone call or demonstration of VirtECS, please fill out our form here.
by Kelsey H | Aug 16, 2021 | Industry News
“Now Hiring!” “We’re Growing!” “Start Today & Earn a Bonus!”
Are you tired of seeing these messages posted on every business’s door? Unfortunately, many industries, including manufacturing, are struggling to find enough candidates to fill open job positions. As of May 2021, the US manufacturing industry had half a million job openings to fill, according to a report from Deloitte.
Many manufacturers saw older employees retire at an increasing rate last year, which has contributed to the influx of available positions. According to a survey from MetLife, in 2020, more than 1 in 10 Baby Boomers decided to retire sooner than expected. However, there simply haven’t been as many young workers coming in to replace the retirees.
Having enough employees on hand is essential if your company wants to take advantage of consumers’ surging demand for many products. Consider adopting the following strategies to boost your candidate base and capitalize on the growing economy.
Target New Demographics
Sadly, younger demographics are often hesitant to pursue a career in manufacturing simply because they don’t know much about it. For many people, “manufacturing” still conjures up images of hard and messy work, long hours and potentially dangerous conditions. Of course, that is no longer reflective of most manufacturing positions. There are tons of careers within manufacturing that don’t require manual labor, let alone a hard hat and steel-toed boots.
However, without exposure to modern plants and facilities, potential employees may not understand how far the industry has come in recent years. As you create or update materials used to promote job openings, be sure to prominently feature your advancements in technology, attractive work environment or any other appealing benefits you can offer. Video can be a particularly effective tool to show your employees in action and perhaps even interview them on what they enjoy about your work. Outlining this new reality of manufacturing will start to change the industry’s perception among young, skilled workers.
Address Changing Priorities
The new, young work force of today is quite different than the Baby Boomers, who were coming of age when the manufacturing industry hit its peak employment in 1979. Though pay rate will always be an important factor, Millennials and Gen Zs also prioritize other values in their workplace, including work/life balance, diversity and inclusion. In order to capture the interest of this younger audience, your organization must prove that you also share and have addressed these key concerns. If you’ve already taken concrete actions, such as adding flexible work hours, remote work options or inclusion training, announce those achievements proudly on any hiring materials you create. If you haven’t added these elements yet, consider how your organization can get started to make an impression on future prospects.
Consider Untapped Markets
Though nearly 50% of all workers in the US are women, men still make up more than two-thirds of all manufacturing employees as of May 2021. This phenomenon is part of a larger societal issue, where women are overwhelmingly pushed into more traditional caretaking roles, such as teaching or nursing. However, by overlooking the female audience, many organizations are still fueling the perception that manufacturing is a hyper-masculine industry, and as a result they are missing out on an important half of the workforce. If you do happen to have a number of female employees, consider highlighting them on your website and social media on a regular basis and promote their accomplishments to illustrate your support.
It’s also critical to continually meet female employees’ needs in order to retain their talent. According to a recent Deloitte survey, 1 in 4 women in manufacturing are considering leaving their jobs. For most of these employees, the decision comes down to the need for a more flexible schedule due to family obligations. If they want to keep positions filled, manufacturers must find ways to address and solve these issues internally.
As you work on your hiring efforts, it’s important to make the most of the workers you do have in the meantime. An advanced planning and scheduling tool, such as VirtECS, can be incredibly helpful in optimizing the allocation of your existing employees. VirtECS gives manufacturers the ability to make a model of their unique plant, from the layout of equipment to the number of employees available at any given time. Our clients have told us time and again how helpful our resource allocation tool has been for their operations. To learn more about VirtECS, check out our guide here.
by Kelsey H | Aug 3, 2021 | Industry News, Supply Chain
The ever-growing number of cyberattacks has much of the manufacturing industry on edge – and for good reason. According to a June 2021 report from Morphisec, one in five manufacturers in the US and UK have experienced a cyberattack in the last 12 months. As a whole, manufacturing plants reported three times as many ransomware attacks in 2020 as the previous year.
Cybersecurity has notably reached the highest office of the United States, with President Biden signing an executive order on May 12 after a string of recent attacks on federal agencies. The order outlines a “software bill of materials” that requires government vendors to provide specific tools that will help agencies identify their most vulnerable networks. It’s an important first step in the fight against virtual attacks, but these changes will have to make their way into private organizations in order to more significantly impact the manufacturing industry.
Cyberattacks bring up obvious security and financial concerns for manufacturers, but there are many other hidden dangers to these threats. One compromised plant can result in a backlog through the entire industry’s supply chain, leading to some of the product shortages we’re currently experiencing.
When attacks seem to be coming from all sides, it’s difficult to feel truly secure in the safety of your business. However, experts have noted how essential it is to work with a cybersecurity team and ask them some key questions to decrease your risk for a potential cyber threat.
What’s the status of our internal electronic connections?
According to a security expert from PricewaterhouseCoopers, assessing vulnerable connections between departments is critical to stop cyber threats before they happen. Performing a review of all tools and assets shared throughout the organization has helped other companies catch weak links in their electronic defenses and ensure sensitive information has all the proper barriers in place. You may also want to ask your IT department about the best ways to communicate with them in the event that you discover a threat or vulnerable channel. Providing a clear path of communication can help move emergency actions along much more quickly – and once you discover a cyber threat, every second counts.
Are there any parameters to remote work?
Working from home has added flexibility and physical safety for employees at many companies, but unfortunately, it’s also opened the door to cyberattacks. Data from a recent survey of IT and cybersecurity professionals indicates that remote work caused security breaches in 20% of all organizations last year. For organizations that use remote work in some capacity, it’s essential to consult your cybersecurity team about the tools currently in place to prevent hackers from stealing remote access and capturing confidential information. If you haven’t yet added any security features to address these risks, consider asking about geographic limits for remote access, multi-factor authentication, and heightened control over user permissions to your network.
Do we have protected backups in place?
For all too many businesses, cyberattacks eventually do become a reality. If your plant experiences a security threat, do you have a backup of your most critical data to get operations back up as soon as possible? And what methods does your cybersecurity team have in place to protect those backups? According to IndustryWeek, manufacturers who store monthly backups of all their data at a safe off-site location are able to recover more quickly from a cyberattack. If essential information is lost in an attack with no way to get it back, recovery may take weeks, if not months, leading to drastic delays, wasted product and lost revenue.
Vendors and partners are also an important group to consult about cybersecurity. Though they exist outside of your organization, they will likely have sensitive information about your products or services within their own network. To ensure you company is fully protected, be sure to talk to your current vendors about their cybersecurity plans and ask any new partners about their security practices before entering into an agreement. For other concerns you may have about your organization’s cybersecurity, don’t hesitate to reach out to your IT department or a trusted team of security experts in your area. These experts can provide more detailed advice for your specific needs and help you design strategic processes, giving your business as much protection as possible.
