In this article I highlight the benefits of master production scheduling to supply chain management and production planning. I provide an exemplary case of master production scheduling in manufacturing industry, using the aluminium production process as an example. You will find that master production scheduling improves manufacturing operations by contributing to optimized inventory levels and increased profitability, delivery performance, customer satisfaction, and throughput.
The challenge of managing complex supply chains
Supply chains have to operate in an increasingly complex, volatile and unpredictable environment. They must face challenges such as new types of consumers, increasingly restrictive regulations, high competitiveness, pressure for profit margins, social demands for sustainability, etc.
I would like to focus on three very important points that companies must take into account in order to meet these challenges:
- Companies need continuous optimization. The industry is getting more demanding, more complex and evolving at a rapid pace.
- Supply chains are becoming more complex. Companies are accessing the right inventory strategies.
- Speed is key. The need to respond fast is ever more critical, and customer expectations are rising.
In order to plan production operations optimally and quickly, and to be able to replan in real time in the best possible way, powerful intelligent planning tools are key.
The importance of master production scheduling
Among all the existing planning levels (strategic, tactical, detailed…), in this article I would like to focus on master production scheduling.
Master production scheduling balances production capacity and order intake. By linking bottle-neck resources and promised delivery dates, the available capacity is used in an optimal way and a high delivery performance is guaranteed.
This type of planning allows you to:
- Accept orders and promise delivery dates in real-time.
- Balance between MTO (make-to-order) and MTS (make-to-stock) to reduce inventory levels.
- Fulfil every order on time in full.
- Ensure adequate material supply.
This way, you can guarantee order delivery and service quality, reduce inventory levels and increase customer satisfaction.
Now let’s look at a concrete case. How master production scheduling is applied in aluminum manufacturing.
Master production scheduling in aluminum production
In this specific case we will see the manufacturing process of aluminum coils. What you can see below are the different steps in the manufacturing process of these coils.
- The first step is melting, in which the different raw materials are melted.
- Once they are liquid, they are casted into the ingots (forms that we can see in the second step).
- Then these ingots are being scalped, the surface of the ingots is treated to make them smoother.
- The next step is to put these ingots into large furnaces, which will be heated to a temperature between 800 and 1000 degrees.
- Immediately after, the ingots pass through a hot roll where they are flattened and rolled into coils.
- Afterwards, the coil goes to cold rolls where they make the sheets even thinner.
- Finally, there are some final steps.
Complexity of the aluminium production process
Explained in a simplified way, it looks like an easy process, but the reality is much more complex. Although it looks like a linear process, it is not.
There are a multitude of different raw materials, alloys, aluminum blocks, recycled aluminum, and many others. This means that the melts are different, use different components and these differences will affect the process further downstream.
In addition, there may be intermediate products from different companies, for example ingots from other factories.
There can also be different levels of inventory, inventory of raw materials, of intermediate products, or of final products. Inventories that we want to minimize to avoid an unnecessary use of capital. Although safety stock is required, a minimum quantity of these materials to ensure that you can produce the items you need for your orders. There is also a maximum that cannot be exceeded, because warehouses have a certain space limit.
Of course, there is no single machine or production unit for each of the steps. There can be different scalping machines, furnaces, rolls, with different characteristics, speeds, temperatures, etc.
Finally, we must not forget the customers, each with different needs. They need a specific product at a particular time in a certain quantity and quality.
Applying master production scheduling to aluminium production
Master production scheduling takes into account the different stock levels (all raw materials, the time it will take to order and get new raw materials, etc.), the different possible routes, the limitations and constraints of the production units, and all customer orders, to balance and calculate the best way to plan the supply chain focusing on four main points:
- Capacity planning. Plans entire order book and forecast orders against finite capacity.
- Lead times. Factor in expected waiting, cooling, production and transport times for realistic lead times.
- Material management. Links supplies to demands and manages desired inventory levels.
- Order promising. Determines accurate and reliable due dates by considering lead times, available material, resource capacity and sales plan.
It also allows to quickly compare different possibilities and select the option with the best impact on the KPIs. Because it’s not just about having a plan, it’s about having the best plan.
Impact and benefits of master production scheduling
The result is a plan that tells you exactly how to use capacities and enables you not only to make promises to customers, but to keep them. Therefore, if we promise a customer that his products will be delivered on a certain date and we give him a guarantee, we will actually do it every time.
Then, what are the benefits of master production scheduling? To sum it up, we could keep five main benefits:
- Increased profitability. Optimized scenarios help maximize fulfilment, minimize lost sales and decide lowest cost source order to maximize profitability.
- Increased delivery performance. Determine what and when to produce to ensure customers get their delivery on time.
- Increased customer satisfaction. Order acceptance ensures you are able to meet contractual agreements and customer expectations.
- Reduced inventory. Minimize unnecessary inventory and work in progress to better utilize working capital improve cash flow.
- Increased throughput. Supply chain visibility enables early detection of disruption to the flow of the supply chain, be it supply shortage or resource availability. Resource utilization can be maximized by ensuring sufficient material is available at all times.
If you want to know more about master production planning or how this solution can help you please contact me.
Other articles related to scheduling and planning
If you are interested in production planning and production scheduling you might also find the following SCDA blog articles interesting:
- Link: Flow shop scheduling with PuLP in Python
- Link: Single machine scheduling with PuLP in Python
- Link: Open-pit mine simulation for better planning
- Link: Constraint programming for work scheduling with Google OR-tools
- Link: Simulation-based capacity planning
- Link: Production planning process in SAP
- Link: Odoo open-source ERP software
Arjen Heeres has extensive experience in leading multinational companies specializing in planning and AI solutions. Regarded as one of the most respected executives in the optimization and advanced analytics software industry.
Arjen co-founded Quintiq, a leading software company in the field of resource optimization and supply chain planning. During his 15 years as COO at Quintiq, he led the company’s global expansion and was responsible for the commercialization of its advanced planning solutions.
In 2014 Quintiq was acquired by Dassault Systems, a world leader in the software development industry. At that time, Quintiq had over 800 employees, more than 400 customers and was present in 13 countries in Europe, the Americas, Asia and Oceania. As CEO of DECIDE, Arjen leads the expansion phase of the company, taking it to the next level of growth and development both internationally and in the Spanish domestic market.