OPERATIONAL PLANNING
Operational planning requires a great deal of alignment between demand forecasting, contract reviews, inventory management and production planning teams.
Accurate demand forecasts
Accurate demand forecasts can add substantial profits to your bottom line!
Many organisations don’t forecast demand due to them following a manufacture to order strategy. I have witnessed how such thinking led to the near termination of a manufacturing business.
If you are only ordering materials and components on the receipt of a customer order the order cycle times will be extremely long. Your company will not be competitive if your competitors practice standard MTO processes, meaning production starts on receipt of a customer order?
Demand forecasts need to be performed to ensure the right materials are available on receipt of the customer’s order. That is not to say it needs to be on site!
The accuracy of your demand forecast can be further enhanced through integrating your forecasting processes throughout your supply chain.
We have been able to consistently achieve high accuracy levels of demand forecasts through focusing on items essential to the business.
Unless your forecast is ensuring that the right items are available at the time orders are placed, your production facility could experience high volumes of downtime and backorders.
PRODUCTION PLANNING
Production planning is not a difficult practice to perform, yet so many organisations don’t have firm production plans in place.
On receipt of a customer’s order the contract review meeting members need to convene to determine whether the business can achieve the due date requested or whether the order confirmation should suggest an alternative date that will be achievable. If demand is accurately forecast then the required materials and the necessary resources available should be available to ensure the due dates agreed can be met.
Production planning can be initiated on receipt of acknowledged dates of material purchase orders from suppliers, if suppliers are being managed at a senior/strategic level.
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Accurate demand forecasts can add massive amounts of profit to your bottom line