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 | Feb 23, 2021 | Planning & Scheduling
Scenario analysis for process improvement and throughput can be very valuable, but tedious, error prone, and impossible to do well with only a spreadsheet or simulator. Using VirtECS allows you to look at scheduling options with a speed and detail that were previously unachievable.
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by Kelsey H | Feb 4, 2021 | Planning & Scheduling
If your manufacturing planning and scheduling systems still depend heavily on manual processes, you’re not alone. Research from Edge Research has shown 50% of manufacturing companies still rely on manual efforts to plan and monitor their supply chain activities.
Rather than using employees’ time and energy on complicated manual calculations, consider allowing automated processes to handle these equations to give your planning and scheduling department more time to spend on valuable supervision. Using software for these processes can help relieve many of the pain points that every manufacturer deals with. We’ll give some examples of how reducing manual scheduling calculations can benefit your manufacturing business below.
Account for Additional Factors
From a logistics standpoint, scheduling software programs can factor in many more constraints to an equation than a manual process realistically could. When these constraints affect each other, as they so often do, the complexity continues to grow exponentially. Scheduling software can take in detailed data about equipment, labor, materials, and other plant constraints, while still generating a viable schedule in a fraction of the time a manual process would require. With this added accountability within the system, manufacturing schedules will become more accurate. When every detail is accounted for and included in the scheduling process, you’ll feel confident that your plant is always working from the most optimized schedule possible.
Minimize Errors
In any calculation that is performed manually, there is always a risk of human error. Out of every 100 steps completed, a human will make about 10 mistakes on average, according to the Institute for Robotic Process Automation. Because planning and scheduling processes are so interconnected, even just one mistake made along the way can have a significant ripple effect. When errors are made in production, the plant must perform more re-runs, which result in decreased efficiency and higher costs. However, when these complicated calculations are completed with software, accidental errors are all but eliminated. The money and time your plant would usually spend fixing mistakes can instead be invested into continuous improvements.
Free Up Employees’ Time
Speaking of saving time, when software is used to automatically create schedules, your planners and schedulers can put the hours they spent on manual calculations to more constructive use. The data input process becomes much more streamlined, freeing up their time for more supervision and output analysis. This is not only more beneficial for the plant itself, but it is also more rewarding work for employees. According to data from Hubspot, 22% of an employee’s time is spent on repetitive tasks, such as manual calculations. Spending a long period of time performing repetitive and monotonous tasks can have a negative effect on employees’ work performance, as well as their overall satisfaction at work. When schedules are created through software, employees are able to devote more time to learning new areas the business, finding areas of improvement and better applying their knowledge to the company.
VirtECS is an advanced manufacturing planning and scheduling software tool that can reduce the need for manual calculations. Our software handles data integration to generate a plant schedule that accounts for current and future demands, plant equipment, current inventory levels, and process flow. VirtECS has been implemented at leading companies in chemical, consumer products, electronics, food and beverage, and pharmaceutical industries. If you’re interested in learning more about VirtECS and the ways it can optimize your plant’s production, please download on our guide here.
by Kelsey H | Dec 15, 2020 | Planning & Scheduling
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.
by Kelsey H | Dec 3, 2020 | Planning & Scheduling
In manufacturing, production rests on a complex network of procedures. As we head into 2021, manufacturers will be looking to increase efficiency and lower their costs by evaluating their processes from every angle to identify potential improvements. For many, that improvement will start with planning and scheduling.
Planning and scheduling sound similar, but they actually represent distinct aspects of manufacturing production. When these two procedures are properly interconnected, it can produce a myriad of benefits for manufacturers. But first, we need to identify the differences between planning and scheduling, and why one must occur before the other.
The Difference Between Planning and Scheduling
For manufacturers, planning involves big-picture strategy. In a broad sense, planning is the process of determining a proposed course of action a company needs to reach their desired results. In the planning phase of manufacturing, decision-makers determine what they will aim to achieve and how they will make it happen. Planning must be done before scheduling can begin.
Based on these plans, plants can then create detailed schedules. Schedules determine the specific timing and order of the individual tasks needed to carry out the plan, along with the resources required for each step. A schedule will include when each action will occur and who will get it done. Once the schedule is complete, production can begin.
When plans and schedules are created without regard for each other, manufacturers may be surprised with the number of challenges they face. If your organization creates an ambitious plan to initiate sales growth, your production will need a precise schedule to achieve any results. Coordinated planning and scheduling can make reaching goals simpler and more achievable for manufacturers in a number of different ways.
Benefits of Coordinated Planning and Scheduling
Without plans and schedules that are aligned, it can be difficult for manufacturing production to run smoothly and accomplish set goals. According to a survey of manufacturing professionals, two of the top challenges manufacturers face when trying to achieve their goals include a lack of collaboration and disparate systems. A well-honed schedule based on strategic plans can eliminate these common issues to meet or even exceed expectations.
Manufacturing equipment is also always becoming more advanced and complex. These new processes can help improve overall plant efficiency, but only if production schedules are also updated to handle the increasingly complex plans. With an innovative, coordinated approach to plant planning and scheduling, manufacturers can update schedules in real time to reflect new improvements or changes.
As plans and schedules work to make production run harmoniously, it becomes easier to reach your organization’s desired results. An effective plan and schedule will beget an effective outcome. When plans and schedules are coordinated, plants are much less likely to overlook conflicts and fall behind on production. In return, manufacturers are able to improve their capacity utilization, produce better on-time delivery rates, and ensure customer satisfaction.
As with most things today, the most effective way to manage planning and scheduling is through advanced technology. Software like VirtECS is designed specifically for manufacturers’ planning and scheduling challenges and can be customized to fit the unique specifications of your organization. It can even integrate with existing manufacturing software systems to resolve the universal shortcomings of their scheduling capabilities. With more than 25 years of research invested, VirtECS software has been employed worldwide by leading companies in biologic pharmaceuticals, chemical, electronic assembly and other industries. To find out more about our planning and scheduling software, simply fill out the form below to access our VirtECS Overview.
