The Renewed Importance Of Production Planning And Operational Excellence In The New Normal

The following blog is the second in a joint thought leadership series in collaboration with Supply Chain Matters.

This series provides a specific focus for the now growing importance for increased operational excellence and efficiencies for companies whose products are anchored in process and batch manufacturing process environments.

Click here for Part One.

Background and Key Insights

Amid persistent pandemic-driven disruptions and ongoing economic uncertainties, supply chain and manufacturing management teams are shifting their focus to Adaptation, Realignment, and Response. Company CEOs are prioritising efficiency and profitability to streamline operations, adapt to changing workforce dynamics, and meet strategic objectives.

To thrive in this environment, manufacturing and supply chain processes must become more proactive in sensing and responding to market changes. Eliminating manual processes enhances agility and resilience at the production level, critical for overcoming market disruptions.

The Importance of Operational Efficiencies

Companies relying on continuous or batch production are increasingly focused on operational excellence, elevated customer service, and optimised asset utilisation. With the uncertainty of economic outlooks and the looming threat of recession in 2023, businesses are placing a greater emphasis on operational efficiencies.

Efforts to improve working capital efficiencies, inventory and capacity management, and asset utilization are paramount. Opportunities for enhancement span various planning levels, from monthly tactical planning to daily or shift-level planning, involving specific products and their constraint-based variations.

Improvements rely on timely constraint identification and effective decision-making, which may encompass inventory management, demand fulfilment, changeover minimisation, or inventory consumption. Sustainability considerations, driven by customer, consumer, investor, and regulatory scrutiny, are integrated into production and resource planning efforts.

Scenario planning, facilitated by data collection and digital twin technologies, offers insights into the impact of changing product demand plans on operational and financial performance metrics.

Realigning with Operational Excellence

To embark on operational efficiency improvements, businesses and their supply chain and manufacturing teams should first identify metrics requiring enhancement at the supply chain or plant level. Recognising bottlenecks, constraints, or performance misalignments is crucial before pursuing technology-enabled transformations. External specialists or consultants with experience in successful approaches can provide valuable guidance.

Understanding and addressing business objectives across strategic, tactical, and daily operational planning and control processes is essential. Capacity, materials, and resource decisions must align with business goals to create an integrated planning approach. Strategic planning encompasses long-term decisions, while tactical planning focuses on product family or attribute levels. Operational planning and scheduling occur at the product SKU level, considering specifics like container sizing and production yield.

Identifying, remediating, and rationalising constraints where they impact plan performance most significantly is key. Tactical planning can address material constraints like supplier lead times or planned inventory availability, while seasonal product peaks may involve third-party contract manufacturing.

Leveraging Technology for Efficiency

In uncertain times, technology solutions should minimise disruption. Supply chain-focused cloud platform technology offerings, such as those by providers like Replan, enhance process synchronisation and decision-making. Operating above existing ERP and specialised supply chain software, these platforms extract and augment critical analytics and insights.

Upon identifying KPIs and constraints needing improvement, digital tools optimize operational processes by pinpointing bottleneck resources and balancing production to alleviate constraints. They also facilitate detailed scenario planning for ROI maximisation on continuous improvement or CapEx activities, leveraging available data for operational efficiency enhancements.

Summary and Takeaways

As we navigate an uncertain economic landscape in 2023 and beyond, process manufacturers should intensify their efforts to achieve operational efficiencies, including improvements in tactical and operational planning. Sustainability objectives are now closely linked to planning decisions to reduce carbon emissions and resource waste.

To refocus on operational excellence, businesses must understand their supply chain and production processes needing enhancement, along with identifying bottleneck constraints and misaligned performance indicators. Seeking the expertise of specialists, consultants, or technology companies experienced in process manufacturing can be invaluable.

In today’s dynamic business environment, where change is constant and supply chain and production processes remain critical, businesses should adopt technology solutions that minimise disruption.

In upcoming articles in this educational series, we will delve deeper into the changing talent and skill requirements associated with technology-enabled transformations in production planning and scheduling practices.