At a Glance
- Effective resource planning is a necessity to navigate the complexity of manufacturing processes, to ensure business success
- Inadequate product management and planning often leads to broken delivery promises, resulting in legal penalties, production scheduling issues, and internal bureaucratic challenges
- The use of Manufacturing Resource Planning paves the way for success in business processes
As the saying goes, “If you fail to plan, you plan to fail”. It holds true, especially for manufacturing companies. Research found that companies with effective production planning strategies in place can reduce inventory levels up to 20%, according to the Manufacturing Enterprise Solutions Association (MESA).
According to a study by the Aberdeen Group, top-performing manufacturers experienced a 17% production cost reduction after the implementation of effective production planning practices.
Manufacturing is one of the most complex industries, involving many products, often hundreds, with multiple processing stages. Therefore, effective resource planning becomes a necessity to navigate this complexity, to ensure success in the manufacturing sector.
Planning effectively to improve your bottom line
Proper planning is a prerequisite for any business to achieve a viable output. It plays a crucial role and significantly improves the productivity performance of the business. The key to a productive workflow lies in planning initiatives, because effective planning and production control ensure that the business meets its demands efficiently to achieve pre-established targets.
In fact, inadequate product management and planning often leads to broken delivery promises, resulting in legal penalties, production scheduling issues, and internal bureaucratic challenges. Companies with inadequate planning exhibit the following classic symptoms:
- Companies that lack in planning or coordination between departments can lead to delays in production, resulting in incomplete orders for their customers.
- Companies with sub-optimal planning strategies tend to face inventory shortages, which cause bottlenecks in the production line, hindering a smooth workflow.
- Inefficient planning contributes to excessive Work In Progress (WIP) inventory between work centres, resulting in increased lead times and wasted resources.
- Companies with ineffective planning practices experience poor On Time, In Full (OTIF) performance, negatively affecting customers’ satisfaction and overall sales performance.
Identifying these issues is the first step in driving positive change within the manufacturing operations. The use of Manufacturing Resource Planning paves the way for success in business processes.
Manufacturing Resource Planning
Manufacturing Resource Planning (MRP II) is a method for effectively planning all of a manufacturing company’s resources. MRP II is essentially streamlined production scheduling used to reduce inefficiencies and improve growth.
Manufacturing Resource Planning (MRP II) is different from Materials Requirements Planning (MRP) – MRP is a subset of MRP II. MRP II focuses on centralisation and coordination, bringing together employees from different units to follow the same system.
The focus areas of MRP II are:
- Standards
Standards refer to the specified times for each stage of the manufacturing process. With hundreds of products and dozens of stages, there can be thousands of standards within an organisation. Most manufacturing companies have incomplete and inaccurate standards, which are often too generous. These generous standards include allowances and inefficiencies, meaning that performance gaps never surface.
By slowing down production to 80% capacity, rather than 100%, organisations can use standards to progressively identify and eliminate the causes of lost time. - Line balancing
Line balancing entails a meticulous examination of manufacturing lines, identifying inefficiencies like ‘bottlenecks’ hindering production speed. Manufacturers must implement strategies to reduce or eliminate these issues, such as removing unnecessary production steps or improving equipment. Balancing production lines is essential to match the production rate to the takt time, or the rate at which goods must be produced to meet demand. - Run durations
Run duration refers to the length of time to complete the manufacturing of one or more units. It is a valuable Key Performance Indicator (KPI) for assessing team productivity. Although many companies use shorter run lengths, longer run lengths might be more advantageous. Implementing longer run lengths can mean that a production line produces more output continuously and efficiently. However, a balancing act is needed to avoid having a surplus of inventory. - Pull-based planning
An example of an MRP II solution is a “pull-based” planning system such as Kanban. A conventional push-based planning system follows a forecast and pushes raw materials to the start of the process. Conversely, a pull-based planning system works backwards from current demand, triggering production from finished goods indents back through the process in a relay manner, using job cards, or empty bins or trolleys instead of relay batons. - Drum-buffer-rope planning
Drum-buffer-rope (DBR) planning, also known as asynchronous planning, is a pull-based planning system used to manage constraints in the production process. This approach involves creating a schedule for the constraint (Drum) that protects the constraint from starvation (Buffer) and setting up a release mechanism (Rope) that releases work into the system on time. Thus, DBR protects the constraint or ‘weak link’ in the production process against any mishaps and ensures that production continues smoothly. - Just In Time (JIT) planning
Just In Time (JIT) planning is a production strategy of buying supplies in limited batches and producing output at the rate of customer demand. With no surplus of inventory, JIT greater production flexibility and increased inventory optimization. JIT is especially valuable for companies that manufacture high-value, high-volume products, such as automobiles.
Manufacturers can implement some or all of these core areas in their MRP II strategy, for improved, smoother performance.
Renoir: Your partner for operational excellence
MRP II plays a crucial role in achieving operational excellence within manufacturing companies. Improving operational excellence is means delivering products or services faster, with better quality and at a lower cost than competitors. If you are looking to achieve a culture of continuous improvement to avoid losing momentum, Renoir can help by analysing your business to identify opportunities for improvement. We will work with you to develop a practical programme to implement sustainable solutions.
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