The four fundamentals of Master Scheduling are demand, supply, volume and mix. The primary function of a Master Scheduler is to balance demand and supply at the aggregate volume level with that at the detail mix level. Demand is commonly expressed as customer orders, sales forecasts, interplant transfers, DC transfers and so on. Demand is categorized into two groups referred to as dependent demand and independent demand. Supply is commonly expressed as the resources used to fulfill demand like materials, manpower, machinery, capacity, storage space, time, money and so on. Supply is categorized into three main groups identified as inventory, capacity and lead-time.
Volume refers to the question of “How Much”. Volume is usually stated in units and dollars and includes groupings such as product families, customer orders, production resources and so on. Volume typically deals with aggregate rates of sales & production more of a big picture view of the business. Mix refers to the question of “Which Ones”. Mix is more often stated in units but can be dollarized when needed. Mix usually includes things like specific products, items or customer orders more of a detail view of the business. The common relationship of these four fundamentals are represented in the below diagram.
Demand and supply must be balanced at both the aggregate volume and detailed mix levels. The need to balance these fundamentals led to the creation of a model referred to as the Resource Planning Model (RPM). The design of the RPM was engineered to help define the relationship of the four fundamentals to organizations internal business processes. The model needed to clearly define which specific business processes would address these fundamentals. For example, Sales & Operations Planning was identified as the driver of balancing demand and supply at the volume level while Master Scheduling was identified as the driver of balancing demand and supply at the mix level. On the demand side, Forecasting and Demand Management is the primary feed into both Sales & Operations Planning and Master Scheduling while on the supply side Capacity Planning is the primary feed. The RPM diagram is represented below.
Sales & Operations Planning is the primary linkage that connects the strategic plan to the tactical plan. Without this business process there becomes a disconnect between the desired outcome and the actual outcome. Kind of like a ship’s wheel that has a linkage connecting it to the rudder and that linkage is broken. You can steer all you want but the ship will be adrift at the mercy of the tides.
One of the primary outputs from the Sales & Operations Plan is the Production Plan or Operations Plan. This plan is basically the marching orders for the Master Scheduler. The Master Scheduler must ensure that the sum of the individual items in Master Schedule matches the Production Plan. Accomplishing this closes the loop between the business plan and the company’s daily & weekly activities.
Forecasting & Demand Management has the responsibility for providing the primary input of total demand to Production Planning and ultimately Master Scheduling. In order for Master Scheduling to perform its job effectively, it must have visibility of total demand including all demand types. Any missing demand means that some items may not be represented in the Master Schedule. This scenario can lead to expediting and scrambling to fulfill those needs creating a bullwhip effect on the entire Supply Chain and impacting manufacturing efficiencies.
As stated earlier, the objective of Master Scheduling is to balance demand & supply at the aggregate volume level with that at the detailed mix level. Capacity Planning is the primary resource used to determine whether the Master Schedule is realistically achievable or not. As the old saying goes “You can’t fit ten pounds of potatoes into a five pound bag”. With an effective capacity planning process and the discipline not to change the Master Schedule for trivial reasons without full consensus, the Master Schedule can be kept valid. It then represents a plan that is achievable and that manufacturing can buy into.
The plant schedule, line schedule, shop floor schedule or whatever it is called in your organization is a subset of the Master Production Schedule and is usually stated in much greater detail. This is the schedule that is issued to the manufacturing floor for execution. It is typically expressed in hourly, shift, daily or weekly time buckets and is logically sequenced accounting for optimization of equipment utilization and changeovers. Work orders are typically issued with the plant schedule that provides detail to assist in the routing thru various work centers in the plant and describe in much greater detail the work to be accomplished.
There are two methodologies used in capacity planning which are Level Loading and Chase. Level Loading is a method that refers to maintaining a constant repetitive rate and load across your resources. This method is often used when demand peaks in business outstrip available capacity. Level Loading allows manufacturing to build inventories during slow demand periods (Demand Valleys) that are stored in inventory and later used to offset capacity constraints during peak demand periods (Demand Peaks). This allows capacity constrained companies to meet demand service levels but has the negative impact of building and holding inventory. On the positive side, Level Loading allows your organization to get into a Supply Chain rhythm and stabilizes labor force utilization (no layoffs).
There are three methodologies used in Production Planning and they are Make-To-Stock (MTS), Make-To-Order (MTO) and Finish-To-Order (FTO). Make-To-Stock is a methodology that refers to building product in anticipation of demand usually building to a forecast. Items are assigned as MTS are typically higher volume repetitive bread & butter items with no risk of obsolescence. Make-To-Order is a methodology that refers to not building product in anticipation of demand but rather waiting for demand prior to building anything. Items assigned as MTO are typically going to be the low volume, sporadic or intermittent items or items that may only be ordered once or twice per year and run a high risk of obsolescence. The assumption here is that these items will cost more to hold in inventory than the expense associated with accommodating an expedited offline process for reacting to their demand.
Master Schedulers should work with manufacturing to reserve a certain percentage of capacity each day/week to absorb this MTO volume and try to have an offline process for building these items rather than interrupting normal production. Then there is Finish-To-Order which is a hybrid of the first two methods. FTO refers to building subassemblies and holding them in stock in anticipation for demand and then finishing the build to meet demand. This method is often employed when the subassembly is used in a large variety of finished products and gives more flexibility to build as needed.
There are two methodologies used in Master Scheduling which are Forward and Backward Scheduling. Forward scheduling refers to establishing a start date and then allowing the manufacturing lead time to determine the completion date. Backward Scheduling refers to establishing a completion date and then allowing the manufacturing lead time to determine the start date. There are really no advantages of one over the other so it comes down to how your scheduling system works and personal preference.
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