Creating a stable plan by applying production wheel planning

Supply Chain Resilience Hub > Success Stories > Creating a stable plan by applying production wheel planning

Challenge

Despite having relatively predictable demand and high inventories, this industrial manufacturer still suffered occasional shortages of items and had to change production plans and schedules constantly in order to maintain service levels. Operating costs were unnecessarily high and day-to-day running of the supply chain was absorbing a disproportionate amount of management time due to fire-fighting.

Approach

The SupplyVue analytics tool was used to capture the supply chain transactional and planning data to understand the context and run an analysis of the current supply chain performance.

Assessment

Sales profile – daily buckets

Sales profile – weekly buckets

This dashboard shows the average finished goods inventory level was 23 days. The analytics showed that this was providing a 97% stock availability at a 1 day inventory level threshold. So the business was experiencing occasional inventory shortages.

Stock against sales

This dashboard shows that there was no cadence or predictability about the demand being placed on the factory. The time interval between orders was variable as was the order quantity for each order.

The finished goods replenishment system was being managed on a reorder point control mechanism. This was causing unpredictable demand on the factory. This will be one of the contributing factors causing the service issues. It is probably difficult for the factory to provide service level due to the unpredictable demand pattern.

Replenishment policy assessment

Weekly capacity requirement

Conformance to schedule

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This dashboard shows the average finished goods inventory level was 23 days. The analytics showed that this was providing a 97% stock availability at a 1 day inventory level threshold. So the business was experiencing occasional inventory shortages.

This dashboard shows that there was no cadence or predictability about the demand being placed on the factory. The time interval between orders was variable as was the order quantity for each order.

The finished goods replenishment system was being managed on a reorder point control mechanism. This was causing unpredictable demand on the factory. This will be one of the contributing factors causing the service issues. It is probably difficult for the factory to provide service level due to the unpredictable demand pattern.

Description

Demand signal was not stable

Opportunity to synchronise supply chain to the weekly demand pattern

Opportunity to standardise replenishment lead times

Too many short term changes

Future State

This dashboard shows the segmentation analysis that was performed, classifying the products into runners, repeaters and stranger classes.

Segmentation analysis

Using SupplyVue the team reviews the production sequence, using the line changeover matrix to identify the lowest cost manufacturing sequence.

Using this ideal sequence. SupplyVue used production wheel methodology to create an ideal 16-week production plan.

Production wheel definition

Production plan scenarios were generated and evaluated using the capacity and cost inventory analysis dashboards. The trade-offs between manufacturing cost and inventory levels, and between levelling capacity and inventory levels were analysed, enabling the management team to decide on the production policies that most aligned to their business objectives.

Capacity & cost comparison + inventory impact analysis

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This dashboard shows the segmentation analysis that was performed, classifying the products into runners, repeaters and stranger classes.

Using SupplyVue the team reviews the production sequence, using the line changeover matrix to identify the lowest cost manufacturing sequence.

Using this ideal sequence. SupplyVue used production wheel methodology to create an ideal 16-week production plan.

Production plan scenarios were generated and evaluated using the capacity and cost inventory analysis dashboards. The trade-offs between manufacturing cost and inventory levels, and between levelling capacity and inventory levels were analysed, enabling the management team to decide on the production policies that most aligned to their business objectives.

Description

20% reduction in changeover time and cost

Levelled demand to stabilise and reduce shift patterns

Reduce inventory levels through reduced cycle times & increased conformance to plan

Dramatic reduction in scheduling changes