It’s all a question of gut feeling

Quick question: Do you know this?
Your production department receives a production order with a drawing for a specific part. The worker who is to manufacture the part looks at the drawing. As he considers some diameters and radii to be unsuitable and lacks an important tool, he simply changes the workpiece contour as he considers it to be better and feasible.

The next time the same part is produced, some time later, the same worker is back at work. This time, however, he has different ideas about the correct appearance of the part and produces a second variant.

You don’t know that? That’s good! Because this scenario would be a disaster.

You are probably familiar with the following situation: an employee in materials planning or production control receives quantities and requirements for various parts via their ERP system. As he considers the batch size to be unsuitable and the completion date to be incorrect, he modifies the system proposals with regard to quantity and deadline. For later, renewed requirements for the same parts, he changes the quantities and proposed dates again – but differently to the previous time.

This corresponds to the usual day-to-day business of scheduling and production control – and is also a real disaster!

In the production of parts, we work to ensure process stability as a matter of course: The parts must be manufactured identically again and again – with low tolerances. But why do we just as naturally accept in the scheduling process that the ERP systems’ scheduling suggestions are tinkered with “according to gut feeling”? Does process stability not play a role here? Not to mention the amounts that are tied up here in “dead” capital.

That can’t be the right strategy! The smarter way is to take the following two steps:

1. listen less to your gut
First of all, we need to ensure that individual dispatchers have less of a “gut feeling” when making scheduling decisions. As we know from numerous analyses, the gut feeling of dispatchers is one of the biggest inventory drivers.

This reveals a dangerous side effect of so-called MRP cockpits, which are currently in vogue: The supposed visualization of interrelationships leads to users changing more of the ERP system’s scheduling suggestions than before. The disposition cockpits therefore act as a gut feeling and overstocking booster. A survey we conducted last year as part of a project with users of such scheduling cockpits for different ERP systems showed that two-thirds of companies are dissatisfied with their scheduling cockpits because the results they expected from them have not materialized.
We should therefore listen less to our gut and rely more on reliable figures when making planning decisions.

2. tune the ERP system
In order to obtain these, we work on the parameterization of the ERP system in the second step so that it develops “better” suggestions that can then be implemented.

Many companies try to “tune” the systems by optimizing the scheduling parameters for specific items so that the ERP systems spit out “better” scheduling suggestions. However, as with cars, not all tuning is the same: some people fine-tune their engines and chassis and are among the front runners in every race, while others tinker with the ignition and improve, but fall far short of their potential. The direct comparison of the two cars in the car race makes it immediately clear to everyone who has actually been successfully tuned. Many companies, on the other hand, don’t even realize how bad their scheduling results are because they only know how they compare to their own performance, which was even worse before.

A direct comparison of their own scheduling performance with other companies, which shows them the missed opportunities, is practically impossible. However, the difference between good and bad scheduling parameter optimization can quickly amount to several hundred thousand euros per year, even for medium-sized companies! What does your gut feeling say?

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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