September 10, 2014 / agility, benchmarking, best practices, continuous improvement, customer delivery, lean manufacturing, predictive management, productivity, resource allocation, strategic planning
As customer demands for faster delivery increase, one of the biggest challenges fabricators face is scheduling. No matter how big or small an order, it is not uncommon for today’s customer to expect next-day or two-day turnaround. And, of course, there is almost always an expedited request thrown into the mix.
When it comes to scheduling, today’s managers need to be able to adapt on the fly, keep production moving, and still get everything out the door on time. As any manager will attest, this is no small feat. While 99 percent on-time delivery is always the goal, the reality is that a host of variables makes it almost impossible to achieve.
This is especially challenging for high-mix fabrication operations, where there are even more variables to consider. According to the annual Financial Ratios & Operational Benchmarking Survey from the Fabricators & Manufacturers Association International, many custom fabricators are achieving on-time delivery (OTD) rates between 85 and 88 percent. In other words, there is room for improvement.
As this white paper from the LENOX Institute of Technology (LIT) states, meeting delivery demands starts with having the right equipment and efficient production processes. However, it also means making sure your scheduling processes are helping—not hindering—your operation. Below are a few strategies to help today’s fabricators tackle their scheduling challenges and, hopefully, improve their OTD rates:
- Evaluate your current software system. If your scheduling software creates more headaches than assistance, it may be time to upgrade or make some necessary changes. “Some older systems are so unwieldy and cumbersome that the best description one can give them is just plain cruel,” states consultant Dick Kallage in a recent column on thefabricator.com. “They may have many screens, lots of interconnected pages, and no visual indicators of time buckets in the operations and their loading.” According to Kallage, complex and dated scheduling systems create a steep learning curve and increase the chance of error. Scheduling software should be easy to use, effective, and as this IndustryWeek article stresses, built specifically around your manufacturing needs
- Check your parameters. Kallage also believes that in most cases, the parameters going into the scheduling system are the real problem. Specifically, he feels most managers don’t correctly estimate their capacity and/or the time it takes for one or more operations. As a solution, Kallage suggest that managers focus on making time and capacity estimates more realistic and less optimistic. “You can keep the ‘targets’ the same, but targets should not have any part in actual scheduling,” Kallage states in thefabricator.com article. “Many companies do not update parameters in the system based on actual results. This means that not only is the current order schedule tanked, but so are the future ones.” The end result, he concludes, is a lower OTD rate.
- Follow First-in-First-Out (FIFO) Principles. One of the biggest scheduling challenges for managers is balancing last-minute orders from key customers. As a recent blog from consultant Kien Leong describes, all customers are born equal, but there are always some that are “more equal.” When last-minute orders come in and inventory is low, the question becomes: How do you decide on demand allocation of inventory to customer orders? In times of shortage risk, some manufacturers are tempted to hard allocate inventory (also known as “hard pegging”), which means stock is held against the sales order upon order confirmation. However, Leong says that hard allocation leads to lower performance and that inventory is best managed with first-in-first-out (FIFO) principles. “Hard allocation violates FIFO, because a long lead-time order can consume inventory, even though there may be some demand and supply that comes in between,” he says. In most cases, Leong says your best bet is to follow FIFO and keep the stock flexible. You can read the rest of Leong’s argument here, where he also offers a free, downloadable demand allocation tool.