No detailed planning helps against logistics consolidation
Do you plan your production orders against limited capacity? You probably don’t do this any more than most companies do. Planning processes are much more advanced today than they were 20 years ago; synchronized planning of material and limited capacity is certainly time-consuming, but that shouldn’t bother us; it’s done by the calculators.
So what, apart from the lack of functionality in most ERP systems, is holding us back from this supposedly better planning? Maybe it’s the fact that the planning isn’t necessarily getting any better …
“Production is a process that cannot be planned in detail,” said Hans-Peter Wiendahl from Hanover, the former head of company organization. We dream of material flows, manufacturing and assembly processes that mesh precisely like the gears of a clockwork mechanism. However, the faults that we have to deal with in practice are too extensive and unpredictable to be able to map them with sufficient reliability in more complex production processes.
In my experience, there is still something theoretical about detailed planning against limited capacity. In order to ensure the required data quality, a great deal of effort and high running costs are invested in observing all relevant restrictions, but ultimately it is always a question of fluctuating parameters and statistical correlations that defy deterministic planning.
Let’s assume for a moment that we could achieve clean, resilient planning against limited capacities. Would that be a breakthrough? I’m afraid not: The basic problem with planning against limited production capacity is that it recognizes limited production capacity.
However, limited capacities lead to bottlenecks and thus to postponements; even detailed planning systems can do little to change this. A few gaps in occupancy can probably still be filled by cleverly shifting work processes and production orders; experts told me that 5-10% are still possible in the best case scenario. In some industries – especially if the production facilities are very expensive – these 5-10% can be relevant to competition; however, postponements can hardly be avoided, but are often unacceptable in practice.
We live in a different production world today than we did 30 years ago: In the past, the product range was narrower, customer requirements were more regular, demand fluctuations were smaller and deadlines could be postponed.
Today, demand is becoming increasingly irregular: fluctuations in demand and seasonality
capacity requirements are fluctuating more and more, delivery times are getting shorter and shorter, but the delivery dates dictated by the market are now mostly fixed.
The omnipresent concentration of work in our offices corresponds to the concentration of logistics in our supply chains. If you want to keep up with the competition, you may still be able to compensate for some of the logistics consolidation with inventories and thus level out fluctuations in capacity utilization; but in most industries, it is almost impossible to postpone delivery dates.
What a pity, really. Now that computing power and calculation methods are slowly beginning to dominate integrated planning, we no longer seem to need them.
