The following blog is the first in a joint thought leadership series in collaboration with Supply Chain Matters.
The Ferrari Consulting and Research Group has just published its research advisory 2023 Predictions for Industry and Global Supply Chains. In Part One of a snapshot of our prediction themes for the coming year, our 2023 view indicated the following summary highlights:
- Supply chain management teams needing to focus on Adaptation, Realignment and Response to continued economic uncertainty, geopolitical forces and added supply chain related disruptions.
- Anticipates a period of constrained product demand, economic recession in certain regions. Added downside risks will translate to needs for cash preservation, higher productivity and efficiency levels for businesses large and small. Maintaining or reinforcing customer and brand loyalty, preserving cash and instilling added efficiencies and agility across production and supply chain operations further taking center stage.
- Reinforces movements to instill more direct control of supply and production networks including domestic sourcing or nearshoring of key materials, components or production.
- Senior business executives keenly focused on overcoming and instilling prior supply more agility in existing business and supply chain processes. This includes the ability to be better able to respond and overcome unanticipated delays in supplier materials deliveries, changes in key customer needs or ongoing unplanned disruptive events
- Targeting more managed-scope transformation of supply chain tactical and operational planning processes with quicker time-to-value, and added productivity and efficiency benefits.
Changing Dimensions of Production Capacity Planning and Scheduling
A clear opportunity to be addressed remains the shifting of prior focus on just-in-time driven, end-to-end efficiency flow of materials, inventory and resources, which exposed vulnerabilities with cascading and vulnerable disruption. The opportunity remains to transform to an outside-in driven flow of information, materials, resources and more scenario-based, forward looking decision making capabilities that support added resiliency and agility in production and supply network capabilities.
Planning and management of production capacity, whether discrete or continuous process, has traditionally taken on a . Once capacity is deployed, especially in continuous or batch process production environments where highest efficiency in production cost is essential, capacity becomes relatively fixed and must be optimized and balanced to both, customer delivery and other needs.
To gain competitive differentiation, added agility as well as efficiencies, companies need to be able to leverage Industry or Manufacturing 4.0 production automation capabilities to effectively balance productivity gains or labor cost savings with decision effectiveness and control. Such capabilities can provide the means to enable decisions to move production to different regions where labor costs are higher.
In order to deliver on the Industry/Manufacturing 4.0 efficiencies, companies have to improve their capacity planning. For process or batch companies, time or capacity lost to changeovers from one product to another on a line can be significant. A capacity planning model and algorithm that doesn’t consider such changeover time/cost during the tactical planning horizon itself, and waits until Scheduling to account for it, risks significantly misstating (over/under) capacity availability and consumption. This misstatement results in significant plan-schedule gaps, resulting in poor plan adherence, wasted capacity, missed demand and overall reduced responsiveness.
Added Opportunities for Digital Transformation
For companies that control their own production or for contract manufacturing providers, enhancing the integration of constrained based tactical planning with optimized production planning and scheduling can be a foundation for broader supply chain digital transformation efforts. This opportunity especially concerns a focus toward the value for facility level planning and the consequent hand-off to production scheduling.
The opportunity can overcome market or supply chain driven disruptions by augmenting planning and scheduling at the production level, instilling more effective synchronized planning and tightening the feedback loop between planning, scheduling and operational execution processes.
The focus is on leveraging today’s Cloud based technology, overcoming existing processes that involve manually intensive data assimilation at the factory level. This involves information gathering from existing ERP or supply chain planning systems leading to human generated spreadsheets as the predominate information assimilation tool. Instead, the ability to continuously support a two-way integration of information from existing systems, and add additional information relative to capacity opportunities, provides for more enhanced decision making. The goal is to automate and optimize midterm/tactical plans. Removing predominate manual efforts means that companies can plan better and faster. When changes are warranted, companies can respond more quickly by instilling more supply chain agility and resilience at the production level. This enhances the ability for production to be able to pivot while still adhering to planned production needs.
An expanded benefit is instilling abilities to be better able to initiate and leverage scenario-based planning capabilities, to garner the impact to supplier or transportation disruption, meet unplanned or changed customer product needs or to market or customer opportunities.
Summary and Reader Takeaways
Senior business, supply chain and production executives remain keenly focused on the means for instilling more agility in existing production and supply chain processes. This includes the ability to be better respond, overcome or pivot production resources toward unanticipated delays in either supplier materials deliveries, key customer changes or ongoing unplanned disruptive events.
Challenges at the production level often are the ability to integrate the most-timely information relative to customer product needs with ever changing constrained based tactical planning at the facility level. Removing predominate manual efforts at this level allows companies Additionally it instills more supply chain agility and resilience at the production level, enhancing the ability for production to be able to pivot while still adhering to planned production needs.
The opportunity is to overcome these market or supply chain driven disruptions by augmenting planning and scheduling at the production level, instilling more effective synchronized planning while reducing the feedback loop between planning, scheduling and operational execution processes.
In our next instalment in this series, we will further address operational excellence and efficiencies in continuous and batch production processes.
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