Keeping Things Humming Smoothly

Advanced planning can help fight the unexpected.

Manufacturing executives are well acquainted with "Murphy's Law" -- the time-honored axiom that declares: "Anything that can go wrong will go wrong." No matter how diligently they try to plan all the activities required to keep things humming smoothly on the shop floor -- job assignments, equipment usage, and the flow of parts and materials -- experienced plant managers realize that they constantly have to expect the unexpected. Machines break down. Workers with critical skills call in sick. Parts deliveries arrive late. Perhaps even more vexing to shop-floor planners are unanticipated shifts in demand, including last-minute "rush" orders that must be accommodated to keep important customers happy. Sometimes the level of chaos is escalated by an edict from the sales vice president to quickly double the output of a product that has suddenly become a hot item in the marketplace. It's little wonder that, for years, one of the critical functions in many manufacturing firms has been "expediting," even if it isn't a function that shows up on the official company organization chart. (Have you ever met anyone with the title "vice president in charge of expediting" on his or her business card?) Expediting is a costly non-value-added activity. Not only does it consume manpower, but it diverts managers and other employees from more productive tasks that potentially might increase throughput -- and bottom-line revenues. Moreover, because half-finished, lower-priority work is shunted aside in favor of the latest "hot" order, it results in the buildup of expensive work-in-process inventory. Need a scapegoat? Just blame it all on that gremlin Murphy. Seasoned manufacturing veterans typically keep that will-o'-the-wisp troublemaker in mind at all times. They stock a bit of excess finished-goods inventory to handle unexpected orders or to provide a buffer in the event of equipment failures. If their capital budgets permit, they install extra equipment, giving them excess capacity that can be brought online when demand surges. But to keep their cost structures from getting out of whack, they try to be as nimble as possible in their production planning and scheduling. That's one reason for the growing interest in advanced planning and scheduling (APS) solutions, the fastest-growing segment of the manufacturing software market. More powerful than traditional MRP-based schedulers, APS systems take multiple constraints, including material availability, machine capacity, and labor resources, into account simultaneously in cranking out achievable production plans. And because these systems are so fast, they enable rapid "what-if" analysis to help planners optimize the use of available resources while keeping important business goals in mind. The ability to quickly revise shop-floor plans can be potent medicine for what ails a manufacturing business. But as with most medicines, there is always the danger of overdosing. "The manufacturing environment can be very complex," observes Sanjeev Gupta, president of Thru-Put Technologies, a San Jose, Calif.-based vendor of APS software for complex discrete manufacturing. "And the problem is made worse by the fact that Murphy is always present on the plant floor. Murphy will jump up and bite you, so you continuously have to go back and replan and replan." While APS systems make frequent replanning possible, it is unwise to overuse this capability. "If you are replanning by the minute to respond to Murphy, all you are doing is causing more chaos on the plant floor," asserts Gupta, formerly a production planner for a $200 million-a-year Xerox Corp. plant. The Thru-Put software tries to minimize the need for replanning, he says, by building time buffers into the schedules it creates. The approach is based on the drum-buffer-rope concept popularized by Dr. Eliyahu M. Goldratt, author of The Goal (1992, North River Press) and Theory of Constraints (1990, North River Press). "Instead of optimizing to the nth degree," Gupta says, "the drum-buffer-rope approach focuses on your major constraints, and the time buffer allows you to absorb Murphy on the shop floor." Installing extra equipment to create capacity buffers also can help a plant handle swings in demand. But excess capacity often is costly. "Intelligent use of time buffers minimizes the amount of capacity buffer you need," Gupta stresses. Could it be that Murphy has finally met his match?

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