In the ERPs of most factories, at any given time, there are many production orders with an end date in the past.
A production order in the past means: “We will produce this product last week”. Spoiler alert: it won’t happen!… Unless you have the secret to going back in time, or a De Lorean.
By way of example, one of our customers has across its plants a total of over 5,000 manufacturing backlog orders in the past, representing a past material requirement of over €4 million.
These material requirements in the past generate stocks, and often emergencies – we fly in components that we won’t be using last week or last month, neither right away, because we can’t make up for the delay immediately.
Note that it makes sense: we should have received this material, and we should have manufactured these products.
But that’s not a realistic picture of what we’ll be able to make.
The solution is simple and common sense: we need to forward production schedule orders in the future, starting today, at the pace at which we’ll be able to manufacture them.
So why isn’t this done in most factories?
There may be psychological resistance or a lack of training: “We should have made this, it’s normal to show delays”. Dealing with delays is a good thing, but it must be done through a requested date – in other words, you have to set a promised date, which is in the future, and which is the most realistic vision.
My experience is quite simply that WOs are not forward scheduled because of a lack of resources, processes, or clarity in the operating model.
Why invest energy, team time, and money in forward scheduling production orders, a tedious administrative task?
In the example cited above, the challenge is to free up €4 million in cash, so there’s plenty to think about, isn’t there? Moreover, being able to promise a realistic date for these 5,000 production orders should help in the dialogue with customers…
The difficulty is that our ERP systems don’t have the “reset my WOs in the future at realistic dates” button…
To be able to carry out this operation, we need to have a correct definition of our main manufacturing constraints which pace the flow, to project a realistic finite-capacity load – without turning it into a gas factory, like too many APS on the market… We also need to organize a set of stock decoupling points and controlled queues so that the promised finite-capacity dates are achievable, as they are protected by correctly positioned, sized, and controlled buffers.
A little homework when you get back to the factory: extract from your ERP any production orders with due dates in the past. If there are any, and you’re not sure how to solve the problem, let’s get in touch!
