by Kelsey H | Oct 11, 2022 | Planning & Scheduling
If one of your business goals is to maximize profits or improve efficiency, matching production capacity plans to market forecasts is essential. If planned capacity doesn’t match the forecast, your company will either miss out on potential sales because of insufficient inventory or amass excess product that you can’t move, resulting in costly storage or product waste.
For years, most manufacturing plants have relied on a process called rough cut capacity planning, or RCCP, to create forecast-based production plans. Many businesses utilized RCCP because it provided improvements over manual planning processes, and there were few other options available. However, as the name implies, the calculations were based on rough estimates of the site’s capacity, which could still result in inventory that did not meet demand.
Throughout our years of experience, we’ve worked with a variety of manufacturers that still rely on RCCP as their capacity planning strategy. In that time, we’ve observed its advantages and disadvantages firsthand. We’ll share our knowledge with you below, and also discuss alternatives that can provide a more accurate and efficient approach to capacity planning.
Positives of RCCP
Naturally, there are many reasons RCCP became the industry standard for capacity planning. RCCP is a form of long-term capacity planning that balances current plant capacity metrics with the future demand forecast, giving the business time to build up inventory or add capacity to meet projected sales. For example, if forecasts indicate demand will increase in six months, RCCP will help your company identify whether you should hire more employees for certain shifts, invest in more equipment and production lines, or cut idle time. These insights help plants scale up profitability and avoid wasting any unsold product.
Because RCCP is powered by automated calculations, it’s also much easier to make frequent planning and scheduling modifications. When businesses rely on manual capacity calculations, the time and effort it takes to create a plan can make it difficult to adjust as forecasts change. Continuously using RCCP ensures the plant will stay on top of developing trends and works only from the most efficient plan. Similarly, your site can use RCCP to make quick schedule decisions based on the highest-priority or highest-demand activities in order to maximize valuable production time.
Drawbacks of RCCP
Although RCCP offers improvements and benefits to traditional, manual capacity planning, it’s still based primarily on approximations and back-of-the-napkin assessments rather than a highly detailed plant model. As a result, there are often inconsistencies or errors in RCCP’s model, and the subsequent capacity plan will not account for every constraint or contributing factor. Without a fully optimized and accurate plan, your business will always miss out on some opportunities to increase capacity and sufficiently meet demand.
It’s also important to note that utilizing RCCP requires your plant to stay organized and on top of data collection. Without regularly updating the tool with new information on productivity, maintenance, waste levels, and other factors, the plans it creates will become increasingly inaccurate and outdated. If your business doesn’t have the time or systemization in place to gather this data, RCCP can’t function effectively. Despite these drawbacks, companies continued to rely on RCCP because until recently, it was the best choice they had.
Advantages of Finite Capacity Planning as an Alternative
To improve upon the benefits already offered by RCCP, other capacity planning strategies must offer more definite and detailed solutions. To achieve that, they must be based on precise specifications and a plant model that contains all the process knowledge of the site. When you increase the specificity, your business can engage in a more finite capacity planning process. This added level of detail will help the plant respond to projected forecasts even more purposefully, which can have lasting financial advantages. For example, a finite capacity planning tool can help your plant make smart tradeoff decisions based on your most profitable products, or instantly calculate the cost of an urgent plant schedule revision to determine whether the disruption is worthwhile.
After working with a client in the specialty chemical manufacturing industry, we recognized how their newly acquired site could benefit from finite capacity planning capabilities. During our project, we took the pre-existing detailed plant model we created and layered capacity planning optimization on top. Given the impressive results we saw with this client, we recently invested in creating a finite capacity planning tool that can be adapted to manufacturing sites in several industries. To learn more how this tool benefited our specialty chemical client, check out our recent case study.
by Kelsey H | Sep 7, 2022 | Planning & Scheduling, Process Improvement
There are many ways to meaningfully expand a manufacturing business. We’ve discussed in the past how building a new plant or onshoring your supply chain can be strategic choices that offer increased control and customization. However, those methods can take months or years to accomplish. To expand more quickly, some companies choose to acquire existing manufacturing sites instead.
Companies have used acquisition as an expansion strategy for decades, but it’s become a higher priority for growing businesses in recent years. According to Deloitte, 53% of US executives planned to increase their merger and acquisition investment in 2021.
Advantages of Acquisition
First and foremost, the most obvious advantage of acquiring an existing site is that it’s already a fully functioning building. You don’t need to devote additional upfront costs into creating the plant’s framework or spend the significant time it takes to get a large manufacturing site up and running. According to an expert from JHP Pharmaceuticals, it typically takes two to three years to finish construction on a new plant. Any money or time you invest into the site after acquisition can be focused on making improvements or upgrades from the existing foundation.
Additionally, as an existing business, the site may potentially come with an existing customer base, if the previous owner manufactured similar products. Acquiring a site that’s already within your industry and market can give your business quick access to a pool of customers that you can begin working with from the start. You’ll spend less time and effort on business development than if you had to build an audience from nothing. Instead, your team can focus on how to improve profitability and improve the already established sales process.
…And the Disadvantages
Unfortunately, there are unique challenges that will accompany an existing site, as well. When you inherit the site’s infrastructure and customer base, you also inherit all the issues that led the previous company to sell. The plant may be underperforming financially or have limits on production and storage capacity. Instead of building a new facility to your exact specifications, you must learn to work with the current framework and quickly identify where investments should be made to make improvements. Though your business did purchase the physical plant, you’re really paying for the potential of what the site could soon become.
How a Virtual Model Helps from the Start
To begin improving on that potential as soon as possible, many experts recommend creating a virtual model that captures all the processes within the plant as soon as you’ve made the decision to acquire it. The practice of creating the model will create an opportunity to unlock existing data from the plant and reveal major pain points. Loading the virtual model with information will make the data accessible to many people or groups, rather than the handful of operators who remember how things were set up when the plant opened years ago.
One of the clearest benefits of a virtual model is how it combines a plant’s entire process with current orders and forecasts to sort through every possible schedule for production. If you begin using this tool as soon as possible, you can limit the amount of time wasted due to unoptimized processes. For example, a schedule based on a virtual model can decrease idle time or craft sequences in a way that minimizes time-consuming transitions between products. Virtual models can also further connect with other plant systems to increase coordination and save time when making schedule changes.
In addition to improving the schedule based on current conditions, a virtual model can also help your team understand all potential configurations of the plant. At any time, you can test the outcome of adding different investments to the site, such as additional lines to increase capacity or increased product storage. You can then compare the results of the various options and decide which investment will produce the highest financial return. For companies who acquire a site that is potentially outdated or in need of repairs, this feature can become a huge asset, as it limits risk and makes it easier to predict future production.
Several large manufacturers have successfully used our virtual modeling, planning, and scheduling tool, VirtECS®, to improve operations after acquiring a new site. When one of our specialty chemical clients purchased an existing yet unprofitable site, they immediately turned to our experts to transform their planning and scheduling processes. “Once we created a model of the plant within VirtECS®, our client’s planning and scheduling process became much more robust. Rather than using a manual process that required people to exchange calls and track down data, it became a seamless process that multiple people could access,” said Steve Harding, President of APCI. To learn more about how virtual modeling transformed this chemical manufacturing site, you can check out our recent case study.
by Kelsey H | Aug 9, 2022 | Industry News, Planning & Scheduling
The digital twin, or virtual model of a physical process, is one of the biggest buzzwords in the business world right now. It has also become one of the most desired investments. According to IBM, the market for digital twin software is worth more than $3 billion as of 2020 and will continue to skyrocket until at least 2026, when it’s projected to be worth $48 billion.
Digital twin software is incredibly valuable to manufacturing plants in particular because the tool provides an in-depth virtual look at production processes and gathers data on the plant’s performance. Using this data, business leaders can test potential operational scenarios and study every detail of their processes from several angles.
One of the digital twin’s most notable achievements is the ability to give organizations a comprehensive look into the past, present, and future. It can use past performance to predict future issues or achievements, while also alerting you to current conditions in the plant. This kind of thorough reporting can give businesses the insight they need to make strategic decisions, address weaknesses, and even boost revenue.
The Past
To build an accurate model, the foundation of any manufacturing plant’s digital twin must be past production data. This should include quantifiable information on how each of your plant’s systems and machines operate, such as their average output and run time. It’s important to give the digital twin as much access to historical data as possible. This will help the model learn how your facility has typically operated up to this point so it can begin analyzing points of improvement and overlooked issues. Over time, as new data is continually gathered from current operations, the digital twin will keep an ongoing log of past performance that it can reference at any time.
The Present
In addition to analyzing past data, digital twin software will also process new information in real time from each point in your supply chain. As we mentioned earlier, this data will build on a historical log that forms the foundation that the software will use to predict achievements or disruptions moving forward. However, the digital twin will also use incoming information to provide engineers and operators with updated, real-world circumstances, which employees can utilize to recognize delays or potential production problems much sooner than they could otherwise. Additionally, they can use the digital twin to tweak production in real time to optimize efficiency and total output.
The Future
Thanks to the data gathered about both past and present plant performance, digital twins can then create a complex algorithm that predicts how the plant will perform in the future under a wide variety of circumstances. For example, if there’s a projected shortage of one raw material, the digital twin can test how plant processes will respond to different strategies for addressing the shortage. With this information, business leaders can make informed decisions on how to minimize disruptions and maintain plant output. For further testing, engineers can also use the model to test how plant performance will change with added investments, such as more employees or new equipment. On the opposite side, a digital twin can help predict when equipment or products should be retired or replaced in favor of more effective or profitable alternatives.
VirtECS® is a powerful process modeling and digital twin tool that can store and analyze in-depth plant parameters, including yields, rates, setup times, and process vessels. VirtECS® can then rapidly use the past and present data collected to explore future scenarios or potential process options to determine how the plant can optimize output. If you’re interested in learning more about digital twin analysis and the capabilities of VirtECS® in particular, download our short guide here.
by Kelsey H | Jul 20, 2022 | Planning & Scheduling
For businesses that are opening their first US-based plants or struggling to handle frequent schedule changes, understanding the complex relationship between inventory management, planning, and scheduling can come with a steep learning curve.
These three essential functions are naturally intertwined in manufacturers’ supply chains. To make an accurate schedule, operators must know when materials will be arriving and how much inventory they have available at any given time. At the same time, inventory managers need to reference planned production output to build the appropriate orders of raw material.
Achieving this balance can be a major pain point for many businesses. In our experience, the plants who do it best prioritize cooperation and integration across departments to keep operations running smoothly.
Step 1: Capacity Analysis
As you might expect, the first step to an efficient production process is planning. Planners are responsible for setting overall plant goals and determining how much output should be produced. To set the most precise yet ambitious goals, planners should consider a capacity analysis of the facility to better understand the maximum output the plant is capable of producing in a set time period. Determining the true production capacity can help planners better predict how much product will be manufactured in the coming weeks and months, allowing inventory and scheduling managers to make their own arrangements accordingly.
Step 2: Inventory Management
With specific production goals communicated across the business, it’s the inventory managers’ turn to put their own plans in action. Typically, a plant’s ideal inventory level is large enough to fulfill production requirements, but small enough that it doesn’t become costly to store long-term. To fulfill those production goals on time, it’s important for operators to have access to an accurate, up-to-date inventory record.
Unfortunately, that’s not usually as simple as it sounds. According to a GS1 survey, inventory counts are only correct about 63% of the time. That means about one-third of the time, plants are building their production schedule based on inaccurate information, which can lead to unmet goals. Using an inventory management tool can significantly improve inventory accuracy, allowing managers to track all their materials and even receive forecasts or delay alerts. With these helpful features, the inventory team can quickly alert planners and schedulers of delivery changes or availability issues. As a result, the other departments will have more time to adjust and avoid delays or wasted materials.
Step 3: Scheduling & Optimization
Once supplied with a detailed inventory report, your plant can begin scheduling production and putting plans into action. Schedulers often utilize the inventory management tool to ensure their schedule accounts for delivery times of materials that will be arriving just in time for production to start. With inventory availability confirmed, schedulers’ next task is to create an optimized production calendar that will achieve the planning team’s goals in the least amount of time possible. Once that round of production is complete, the planning team can collect data from the schedule to inform and improve their future plans.
However, for complex processes with many constraints, manually creating an optimized, feasible schedule can be nearly impossible (and not to mention time-consuming). Over the past 29 years, we’ve developed our advanced planning and scheduling software, VirtECS®, to help manufacturers find the most efficient production schedules and maximize their output. VirtECS® offers both capacity analysis and scheduling tools, allowing plants to better understand their own capabilities and create a schedule that utilizes an increased capacity. Additionally, VirtECS® can integrate with inventory management tools to provide manufacturers with a more integrated supply chain solution. To learn more about how VirtECS® can impact your supply chain operations, send us a message and one of our experts will reach out to you with more information.
by Kelsey H | Apr 19, 2022 | Planning & Scheduling
In business, we hear all the time about the importance of being “proactive, not reactive.” In reference to manufacturing, it can be more complex to unpack the true meaning of being proactive. When you’re busy running production lines day in and day out, how can your plant realistically find time to be proactive?
Whether you’re aiming to become an innovative force in your industry or simply establish an advantage over competitors, it’s essential to spend time analyzing everything that could possibly go wrong during production. Organizations that only address problems as they arrive are unfortunately always one step behind each trend and opportunity.
That’s where being proactive comes in. If your plant develops feasible step-by-step solutions to each problem before it occurs, you can avoid surprises down the road and dedicate more time to developing new ideas and continuous improvements. Keep reading to learn which areas to prioritize when identifying potential issues and resolutions.
Supply Chain
The first area to explore for possible obstacles should be a familiar answer today: the supply chain. Manufacturers that rely on outside vendors for various resources are unfortunately at their mercy when it comes to completing production on time and hitting deadlines. If the supplier runs into labor shortages, extended shipping times, or their own shortages, your plant may end up facing the consequences. Much of the world has learned just how common these issues can become in the last couple years.
One potential solution to supply chain woes is identifying multiple backup suppliers, and even alternative materials, that your organization can quickly turn to. Building a list of substitutes allows your organization to act quickly and potentially beat a rush of competitors scrambling to find their own last-minute solutions. We saw this situation play out last year in the auto industry, when Toyota overcame semiconductor supply chain issues thanks to its large network of suppliers. You can read more about how Toyota proactively created competitive advantage for themselves in our recent article.
Maintenance
Say your plant manages to get all the raw materials it needs on time…and then your equipment malfunctions unexpectedly. Production delays due to machine breakdowns can be frustrating, but in some cases, they can be avoided. Most pieces of equipment benefit from predictive and preventive maintenance. Performing regular maintenance can extend the life of the machine, improve its efficiency, and reduce the number of interruptions to production. Additionally, predictive and preventive maintenance can be up to 40% more cost effective than reactive maintenance, according to the US Department of Energy.
Creating a data-driven predictive and preventive maintenance program can help avoid sudden stoppages caused by avoidable repairs. Your maintenance team can look for warning signs before a breakdown actually occurs, giving operators the ability to strategically plan the least disruptive schedule for equipment downtime. Plus, with less time spent scrambling to address sudden mishaps, the team can dedicate more time to coming up with new improvements.
R&D
Being proactive doesn’t stop once you’ve addressed day-to-day production problems. It should also continue into long-term planning by committing to research and development to keep your organization on the cutting edge. Dedicating time and funds to R&D can allow you to develop product design improvements, discover new markets, or identify other unique opportunities ahead of your competitors.
As you work through potential proactive improvements to the plant, it can be incredibly helpful to use a virtual plant model, or digital twin, to visualize the effects of each change. A virtual plant model is a digital representation of your plant’s unique capabilities, and it can be temporarily adjusted to explore the ramifications of implementing a process change or adding a new investment. The model can also help managers anticipate problems that may occur under the current plant schedule, ensuring that their team isn’t caught flat-footed and unprepared for upcoming challenges.
VirtECS® is one such tool that offers capacity analysis and virtual plant modeling. The tool has been used by manufacturers across the world to help their employees proactively prevent production challenges, rather than constantly react to them. If you’re interested in learning more about VirtECS®’ unique benefits to manufacturers, check out an overview of our advanced planning and scheduling software.
by Kelsey H | Mar 8, 2022 | Industry News, Planning & Scheduling
As manufacturing organizations become increasingly complex, their plants also become increasingly difficult to manage and plan for. Without tools to gather data and analyze their processes, businesses are left making manual calculations or taking uncalculated risks. In recent years, many manufacturers have started using a different strategy to optimize their facilities – the digital twin.
A digital twin is essentially a full virtual model of your unique manufacturing plant, designed to match your facility’s physical capabilities down to the floor layout and equipment models. Because the digital twin is a representation of your exact plant, it can be hypothetically tweaked, reworked and adjusted to test any possible improvement. This power can help organizations find the most optimal way to operate before making any purchases or final decisions.
Digital twins have emerged as an essential planning tool for any manufacturer. According to GE, a digital twin tool like VirtECS provides increased reliability, reduced risk, lower maintenance costs, improved production quality, and faster time-to-value. In our experience, two of the primary benefits of using a digital twin are the ability to troubleshoot and solve problems quickly as they arise, and strategically planning for future innovations and improvements.
Increased Control Over Problem-Solving
By offering a virtual account of your exact plant, a digital twin gives operators complete oversight and control of each piece in the manufacturing process. For example, say an engineer discovers an equipment issue that requires extended maintenance. Without an advanced tool, your team may need to physically test several ideas until the problem can be fixed. If it’s not seen as a major obstacle, the issue might even be ignored altogether in the interest of conserving energy.
With a digital twin, on the other hand, the team can immediately start using the model to quickly evaluate the best plan to work around the damaged equipment for a longer period of time. Similarly, if there’s a disruption to the supply chain, organizations can use their virtual plant to plan ahead and assess the possible production routes around the absent materials. The digital twin provides insight into exactly how the plant will perform under the new adjustments, allowing the plant to choose the schedule that is least impacted by the disruption.
Future Planning
In addition to analyzing past obstacles and solving current problems, a digital twin can also help operators understand how the plant will perform in the future. Drawing on its vast collection of plant data, the digital twin can handle adding, subtracting or replacing parts of the process and illustrate the resulting effect on production. This feature is especially helpful for organizations considering new investments or capital expenditures. Once the new potential piece of equipment, production line, or tool is added into the digital twin, the software will simulate the new production schedule and consequent output. Your team can compare the outcome to the existing plant setup and the cost of the investment to determine if it’s worthwhile, or if the money can be better spent elsewhere.
The digital twin can also help to anticipate future issues that may arise before they happen. For example, the model can use recent plant data to predict upcoming repairs or breakdowns with equipment, giving operators time to order new parts or schedule maintenance. Fixing these potential disasters in advance will reduce costs, limit waste, and ultimately allow production to continue with minimal disruptions.
VirtECS software has been allowing customers to create a digital twin of their manufacturing process for nearly three decades. With VirtECS, manufacturers can discover how to enhance throughput, reduce costs, decide the best capital allocation, and thoroughly optimize the entire plant. If you’re interested in setting up a digital twin for your facility, send us a message and one of our experts will help you get started
