A master schedule is an effective and powerful means of gaining and maintaining control of a manufacturing operation. It deals with the product demand and the supply of resources to furnish the product. The application of productive capacity to satisfy demand has powerful, indeed, life or death implications for a company. Many companies do not pay enough attention to this tool, or ignore it altogether. This essay will look at the potential for profitability from the master schedule; the key components of a master schedule; and the common mistakes and pitfalls that prevent companies from getting the most benefit from this scheduling tool.
The proper utilization of a master schedule will bring coordination and direction to a production operation. It is best to understand a master schedule as a balance. On one side is the demand for products as measured by the sales volume. This is balanced by the productive capacity to supply the products in a specific time period. Having too much demand forces the company to ration its production to the most important customers. Having too little demand means the production operations will have to reduce the work force.
The APICS Dictionary (9th Edition) defines master schedule as the planned production expressed in specific configurations, quantities and dates. Everything that requires production resources should be considered as demand. You can’t “half –schedule” a plant. Include all manner of products (customer demand, rework and service part demand) in the demand side of the master schedule.
Capacity of a production facility is measured in terms of the number of units or hours of work that are available in a specific time period. Many firms do not have a clear understanding of their production capacity. By simply measuring the output over a period of time you will have a surprisingly good estimate of true productive capacity. This initial estimate can be refined as you implement a master schedule and track the output from the plant. In many plants the capacity is really the capacity of a bottleneck work center. In other situations the capacity is the output from the final plant work center.
Every master schedule should have three phases. Each phase is defined by the amount of resources that have been committed to the customer orders and the level of management that has the authority to make adjustments. In the initial phase of “planned” orders, the sales orders are grouped into a time period based on the customer required delivery date and the available capacity in that time period. Changes to planned orders will not have a significant impact on material purchases or production facilities.
In the next phase, the order crosses the “firm order time fence”. In the “firm order” phase, material has been ordered for delivery in time to start production. Because the company has made a commitment to buy material, the cost of changing a firm order is higher than for a planned order. Firm orders may be moved backward on the schedule; but moving them forward on the schedule timeline will require expediting the purchased material or committing the order to production without all the material being available.
The last phase of a master schedule occurs when the order is moved by the scheduler across the “frozen order time fence” in the frozen zone. These orders have all their required materials on-hand and are ready to be sent to production. By sending them to the first production operation you are now committing more resources (labor resources) and the costs associated with the order are increasing. To change a frozen order that is in the production process means that a larger amount of resources (and money) is being affected and the justification for changing a frozen order has a higher level of management involvement. Usually, the final decision to send a sales order into the frozen phase requires management attention because this decision can not be easily retracted and will cost money to change. It is a good policy not to stop an order in the frozen phase to insert a new order. Rather, insert the new order in the master schedule at the earliest place in line and send it through production when the material has arrived in the plant.
The process of developing a master schedule takes several iterations. The schedule is typically built by adding new orders in the planned phase, moving planned orders to the firm phase (starting the purchase of material) and moving firm orders to the frozen phase (sending the order to the production floor). Because customer orders come in house at various times, there must be a cut-off time to the schedule development. At this cut-off time, the schedule is reviewed and finalized for all departments. Then everyone starts to work based on the schedule. Any late arriving customer orders are placed in the queue for the next schedule iteration. Depending on the volume of orders received in a day or week, the master schedule should be revised and updated on a daily or weekly basis. You don’t want customer orders to lie dormant for too long while you prepare the next schedule.
What part numbers do you include on your schedule? This is an uncommon question but the answer can have great impact on the style and efficiency of your master schedule. In general, you should be scheduling with the portion of your bill of materials with the smallest number of parts. This could be the raw materials, a set of common sub-assemblies, or the final end product part numbers depending on your manufacturing style and type of product. This rule is not well know and may require a review of your sales and production operations to be applied properly.
There are several rules that should be followed when using a master schedule:
- Never over-schedule the production facility. Only schedule what the plant can realistically make in a given time period. Anything else is just telling yourself a lie.
- Schedule using realistic lead times. Don’t indulge in wishful thinking. If you feel your lead times are too long that is a problem that should be addressed outside of the scheduling function. Again, don’t lie to yourself.
- Schedule the smallest number of part numbers. This makes it easier to track production.
- Include in the demand everything that uses production resources.
- Only release to production (frozen phase) those orders with all the material on hand. No one has every saved time by releasing an order with only part of the material. Chasing material and directing it to the production floor where it is needed is incredibly costly.
- Changes will occur. Things happen to delay plans and dispute schedules. Have a procedure for handling these problems (late material, machine down time, snow days, etc.). The change procedures should include the level of management with the decision authority to accept the corrective action. Remember, the further along the time schedule line an order has progressed, the more costly any change will be.
To implement a master scheduling system you must first develop the form and format of the master schedule. This includes defining the procedures and processes for assembling orders, for measuring the potential capacity of the plant, and for issuing instructions to various departments to make sure everyone is working to complete the scheduled production.
The second part of master schedule implementation is to establish the discipline to follow the schedule. Many supervisors and managers will follow a schedule until there is a problem and then throw away the schedule as “unworkable”. If senior management is serious about controlling the operations, they must insist that the schedule be followed and adjustments made only with their authority.
Any business activity should have a means of measuring its effectiveness. This includes the master schedule. Establish a simple measure of the effectiveness of the schedule and review this measure at least monthly to see if corrections or improvements are necessary.
There are common pitfalls in the use of a master schedule. The most frequent mistakes are:
- Failure to stay within capacity constraints or material lead times.
- Failure to manage schedule changes.
- Failure to use the schedule consistently and regularly.
- Failure of senior management to support the schedule effort and discipline.
This essay is a brief overview of master scheduling. However, it should be clear to all manufacturing professionals that a master schedule is a powerful tool for coordinating and controlling a manufacturing facility. Please contact Cogent Management Resources if you have questions or would like more details on the establishment or improvement of a master schedule.
{ 1 comment }
Nice information. I am not in this area but it helps when discussing. Knowledge is power.
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