Improve Delivery Performance and Reduce Inventory Levels Through Proactive Operational and Executional Planning

By Vicky Hyde

November 20, 2002

Summary: In the last of her current series of articles on Advanced Planning and Scheduling (APS), Vicky Hyde explains how APS tools can help sewn products companies become proactive in their approach to operational and executional planning, providing better quality planning that delivers increased throughput, improved delivery performance and reduced inventory levels.

Sewn products companies generally agree that the majority of their planning time is taken up managing the ‘critical’ issues that arise on a day to day basis at the operational and executional levels. In a previous article, we looked at how many of these ‘short term’ issues can be prevented when companies spend more time on high level planning. However, this is not to suggest that ‘real’ operational problems do not inevitably occur on a daily basis and require speedy resolution. In this article we will look at how APS tools can help planners reduce the amount of time spent on operational fire fighting, enabling them to become proactive in identifying and managing potential problems before they occur. We will also see how APS tools provide better visibility of key issues, greater planning control and discipline, and more effective production throughput, all of which have a positive and measurable impact on delivery performance and the drive to reduce obsolescent inventory levels.

Effective operational planning is of vital importance to all sewn products companies, regardless of whether or not they undertake any manufacturing themselves. For example, a company may be sub contracting its manufacturing, but it may still have to deliver the necessary materials to the sub contractor or supplier and then receive the goods into the distribution centre and despatch them onwards. Even if the company is simply bringing finished goods into its distribution centre and then moving them on, the process still has to be planned and managed effectively.

Planning effectively at the executional level, particularly from a production scheduling point of view, is equally important, but only to those sewn products companies manufacturing in their own production plants.

Before looking more closely at how APS tools can add value to operational and executional planning, it is important to clarify what is involved in the planning process at these two levels.

Operational and executional planning
When a company plans operationally, it is looking at its overall network, which is frequently complex and may include various production units, suppliers, sub contractors, distribution facilities, etc. Based primarily on actual demand but also informed by forecast demand, it is deciding what it is going to do and when it is going to do it. For example:

• What materials it is going to buy and when.

• How it will move the materials.

• How it will manage the manufacturing process.

• What quantity of goods it is going to manufacture and when.

• How and when it will move the manufactured goods to the distribution centres and then on to its customers.

In other words, the company is planning how to move the various orders through its entire supply chain, from procurement through to end customer delivery. It is deciding how to control the process, how to see what is happening within the process and how to react when problems occur or issues arise.

In contrast, executional planning works with individual manufacturing orders at a detailed level, scheduling them as they are being released out to production, or as they are going through the plant.

Distribution and production planning
If we look more closely at how an APS distribution and production planning tool can support operational planning, we see that it has the ability to move orders effectively through the process, as well as to take into consideration all of the various constraints within the supply chain network. It is important to remember that constraints relate not only to production capacity but also to materials availability and distribution capacity. For example, sewn products companies are highly dependent upon receiving fabric and yarn on time and late delivery of materials can have a significant impact on delivery performance.

Distribution centres also suffer from constraints, in terms of their physical size and limitations on the numbers of goods they can receive and despatch. For example, the seasonal nature of the fashion industry dictates that a new collection has to be in the shops on a particular day. However, it is physically impossible for a company’s distribution facilities to despatch an entire collection in one day – the load on the distribution centre must be spread over time.

The seasonal nature of the fashion industry also has a major impact on production capacity. Taking the above scenario once again, we can see how: If a company were to undertake straight planning to ensure that all its orders for a new collection were available on a specific date, it would need to use many times its available capacity in one week out of, say, a three-month period. For the rest of that period, the manufacturing lines would remain idle.

So, to plan effectively at the operational level, a distribution and production planning tool does two main things. Firstly, it takes the planned orders, identifies the constraints within the network and proposes changes to the plans which will smooth out the plans taking constraints into account. Secondly, it synchronises the flow of materials throughout the supply chain, attempts to resolve any material shortage situations and identifies potential late orders on an exception basis.

Stepwise process
The most effective APS distribution and production planning tools support a Theory of Constraints-based (Goldratt) approach to the planning process to identify and resolve both material and capacity constraints. This is particularly valuable for planners because it provides them with a stepwise process to actually identify where the critical constraints are located within the network and what the consequences will be at the end item and customer order level. It also provides them with a decision-support environment that enables them to run as many detailed ‘what if’ scenarios as necessary before they decide on an appropriate course of action.

For example, a material supplier may have a serious problem in its production unit, which means delivery of a critical material order will be delayed for two weeks. With a distribution and production planning tool, planners can synchronise the material flow through the network and see what the impact will be on the company’s final ability to deliver to the customer. It can also simulate what the impact will be if another supplier is found or if a later order in the manufacturing process is brought forward and made earlier. Therefore, the tool gives a very early pointer of where problems delivering to the customer originate and what will be their likely impact, enabling the company to be much more proactive in terms of dealing with the delay. Either the problem can be resolved with the tool or the company can be proactive in terms of discussing the issue with the customer, or finding another source of supply.

The above example is a very simple one based on a single order. In reality, planners within the fashion industry are frequently dealing with hundreds of thousands of orders flowing through the process. The beauty of a good APS distribution and production planning tool is that it synchronises the entire material flow and then shows planners, on a scoreboard, where the critical problems occur. The tool also allows planners to predefine the criteria, for example, ‘which end orders may suffer a delay of more than two days’, so that they can rapidly access the key operational issues to be managed on an exception basis.

Dynamic material synchronisation
The ability to perform dynamic material synchronisation is particularly critical for sewn products companies. This is because the industry’s supply chains are highly complex and the lead times particularly long, both of which contribute to companies building up inventory at various points within the supply chain. Companies tend to do this to avoid missing delivery dates. However, there is an overall cost in building inventory in this way, because it leads to increased levels of obsolescence. Dynamic material synchronisation provides planners with the visibility to respond to issues proactively, rather than reactively. In other words they are able to solve problems before they occur, or at least manage an issue’s impact on the customer more effectively and at an earlier stage.

Before we look at how production scheduling tools can transform the manner in which executional planning is handled, it is worth briefly summarising the main functions that a planner should expect to find in a leading edge APS distribution and production planning tool. These include:

• A system that respects the full internal supply chain, because it is impossible to plan effectively if part of that chain is missing

• The ability to extract proposed distribution, manufacturing and purchase orders from the company’s Enterprise Resource Planning (ERP) system

• The ability to perform automatic material shortages checking throughout the supply chain

• Dynamic material synchronisation

• Effective bottleneck management, through the adoption of a stepwise approach to the identification of critical constraints

• The ability to see delivery consequences at the final warehouse or customer order level, enabling planners to proactively handle delays

• Stock level analyses to monitor how stock is handled across multiple warehouses

• User defined scoreboards to cut through the mass of data and transform it into valuable information

• The ability to feed decisions back into the ERP executional system

The benefits delivered are significant and include the ability to keep inventory as low as possible, effective utilisation of constraints and resources, coherent synchronisation throughout the supply chain, visibility of the key issues and their consequences at the delivery end, early and proactive problem solving, and stepwise decision-making to deliver better quality planning. At the end of the day, if a company carries out effective operational planning, it gains visibility, control and discipline; ultimately, what is released through to production is what production can actually produce.

Production scheduling
As mentioned earlier, APS systems can also provide significant benefits for those sewn products companies operating production plants, through production scheduling tools, which assist the planning process at the detailed executional level. In simplistic terms, a production plan for a particular period of time generally has a number of horizons. These include a ‘frozen’ element (for example, the plan for tomorrow, which generally cannot and should not be changed), a ‘slushy’ element (which relates to firmed up orders, but which can still be adjusted if the situation on the production floor changes), and a ‘liquid’ phase (during which planners can allow the system to propose changes).

As production moves through the frozen period, a production scheduling tool provides planners with feedback, which enables them to reassess the effectiveness of the existing plan in terms of current constraints, firm order proposals and the choice of sequencing used, and then to redo the plan for the next day. In other words, the tool gives planners the ability to react quickly and effectively to the current production situation. Like the distribution and production planning tool, a production scheduling tool gives planners the ability to see the key problems and issues from amongst the mass of data about individual orders flying through the system.

The beauty of an APS production scheduling tool is that it enables sewn products companies to have a feasible schedule always in production, i.e. a schedule that is realisable and executable. It provides essential discipline during the production process, as well as improved flexibility and productivity. The ability to perform sequence optimisation leads to high utilisation of bottleneck resources, respect for practical scheduling rules, minimisation of non-productive lines and stability within the production environment.

In summary, it is clear that having the right APS tools within an integrated ERP system can help sewn product companies maximise their efficiency at the operational and executional planning levels. Specifically, APS tools provide companies with the ability to synchronise the flow of materials through the supply chain, take proactive action where any problems are encountered, increase throughput, and minimise the time spent reacting to unforeseen events. This is the path to improving delivery performance, increasing profitability and meeting customers’ highest expectations.

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Vicky Hyde is a highly experienced fashion industry consultant who focuses on the business issues faced by companies and the ramifications of change. Formerly with IBM, she has worked with a range of fashion and related companies, from yarn spinning and textiles to apparel. She has been engaged in the industry as a project management leader, developer and presenter of educational programs. As Movex Fashion Industry Application Center Director for Intentia, Vicky Hyde has conducted numerous seminars and given presentations extensively throughout Europe and around the globe. Ms. Hyde’s email address is vicky.hyde@intentia.co.uk.

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