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The Makings of a Great Master Production Schedule

By Jeremy Sauer, CIRM | N/A 2013 | 8 | 1

Any world-class supply chain has a great master production schedule (MPS). The MPS is the cornerstone for synchronization, drives resource requirements, aligns production goals, and authorizes both purchasing and manufacturing to supply components to the finished schedule at the right time.

The starting point for any great MPS is an understanding of the business objectives that are supported by the annual operating plan (AOP), which consists of 12 months of sales and production goals. This plan is used as an input to the sales and operations planning (S&OP) process. Both are signed off by the director of sales and director of operations. The S&OP process shows 12 months of sales, production, and inventory levels, providing cost of goods sold for the yearly finance report. Once the two plans are ready, we know the manufacturing strategy used in loading the MPS. This manufacturing strategy can be level, chase, or a hybrid approach to meet the demand plan.

My company, Mathews Inc., has a make-to-stock strategy that levels loads for consistent delivery and employment. Along with the finished-goods operation plan in the S&OP process, we create 12-month rolling, dependent-demand operations plans because each component level has different process constraints, resource requirements, and operation times. We use six dependent operation plans. These authorize the creation of inventory at the component level, assess department staffing commitments, and help determine outsourcing requirements, if needed. The daily production goals in the dependent operations plans authorize action on material requirements planning (MRP) due dates, indicating starting and ending inventory based on consumption from the finished goods operation plan. This enables our planner to know exactly where the supply is in relationship to the actual consumption time needed. The advantage of this is predictable resource requirements, clear staffing, and an understanding of inventory holding costs over 12 months. The sum of the independent and dependent operations plans provides a 12-month inventory dollar plan. Using the cost of goods sold (COGS) from the AOP and inventory levels from the operations plans, we calculate inventory turns (COGS/average inventory) used in the yearly financial report.

Once the AOP, S&OP process, and all dependent operations plans are established, it is time to develop the MPS. Mathews Inc. schedules against planning bills of materials (BOM), which have percentages assigned to each component, thus making a complete model assembly in the product lineup. The sum of all planning BOMs’ daily, weekly, and monthly builds in the MPS need to be aggregated to match the monthly production plan from the independent operations plan. As the planning horizon is absorbed with real demand, stock orders, or scheduled production, the MPS assigned to each planning BOM is consumed, reduced, or deleted by the master scheduler.

One of the biggest challenges is synchronizing all component MRP dates using a MPS against multiple planning BOMs. As explained previously, the answer is to follow dependent operations plans. In scheduling dependent demand, you might be working on derived demand months, weeks, or days from now according to the MRP due date. Actions against create signals have been authorized by the 12-month AOP, S&OP process, and dependent operations plans. These plans authorize daily, weekly, and monthly inventory holding that is different from departments and at different component levels in the top-level BOM. We might be authorized three weeks out in one dependent operations plan and six weeks out in another plan when using backward scheduling from the MRP component due date. This process means never having past-due dates in MRP for any components and monthly production rates, as well as ending inventory totals being no greater than the dependent operations plans that are adjusted monthly.  

Repeating this process becomes even easier once outlines and a template have been established. At my company, it has enabled us to create a truly great MPS.

Jeremy Sauer, CIRM, is a master scheduler at Mathews Inc., a manufacturer of bows, apparel, hunting accessories, and bow accessories located in Sparta, Wisconsin. He may be contacted at jsauer@mathewsinc.com.

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