1

Session 9Master Production Schedulinghttp://www.pom.edu/mpc/lectures_in_manufacturing_planning.htm

lecture session 8

Mr. Tim LoarManager, Production Planning

Ross Products Division of Abbott Laboratories

2

Agenda

• Ross/Abbott background

• Operations structure at Ross

• Production planning: theory

• Production drivers

• Production planning: reality

• Inventory Management

• Conclusion

3

Ross Productions Division: Primary Focus

• Nutritionals– Infant formula– Adult nutritionals

• Pharmaceuticals– Growth area

• Feeding devices– Pumps and sets

4

Ross Products Division: Manufacturing

• Five manufacturing plants– Produce 888 sku’s– 27 different mfg. lines

• Third party manufacturers– For expertise/capabilities don’t have in-house– Product 674 sku’s– 33 different mfg. lines

• 87% of Ross sales produced in Ross Plants

5

Ross Products Division: Operations

6

Ross Products Division: Production Planning

7

Production Planning: Theory

8

Production Planning: Theory

9

Ross Products Division: Production Drivers

• Forecasting

• Customer service

• Inventory days-on-hand

• Plant SVP (stnd. value of production)

• Warehouse space

• Sales history

• Mfg. lead times

10

Daily Case Shipments Report

11

Aggregate Forecast Accuracy

12

Forecast Accuracy – September, xxxx

13

Production Planning: Reality

• Ongoing products– Compiling the “realistic” forecast

• Monthly meetings with Marketing• Sku by sku review• Agree to forecast for next 6-12 months• (2 financial plans look out further, up to 18 months)

Marketing forecast Forecast administrator Finance

Operations forecast

14

Production Planning: Reality

• New products/Promotions– Strong reliance on Marketing/Sales

• No history for a forecast base• Consumer research

– Bi-weekly/monthly promotions meetings• Review planned promotions• Understand demand impact on promotion item and

cannibalization of other sku’s

Marketing forecast Forecast administrator Finance

Operations forecast

15

Production Planning: Reality

• MPS generation: most trouble-free portion– Base Accounting system is 17 years old– MPS module is 10 years old

• Numerous limitations

• Driven by forecasts and target levels

Bill-of-Material Forecasting system

MPS

Production Plan by plant/TPM

Plan passed to plants

16

Production Planning: Reality

• Tough decisions– Production trade-offs

• Limited capacity• Long commodity lead times• Management anxiety over backorders potential in

competitive environment• Overall game plan• High levels of MPS interaction/“what-ifs”

Reality…

Plant fills product

Product is incubated

Product is released

17

MPS Planning Horizon Detail

18

Production Planning: Reality

• Tough decisions– prioritization

• Which customer base has biggest impact• When to contact the customer• Which unaffected products can survive a period of neglect?

– Fallout• Daily attention to detail put on hold

Plant fills product

Product is incubated

Product is released

19

Production Planning: Reality

• Developing recovery game plan– True RPD team effort

• Must be a team player• Supply chain perspective• What’s best for entire organization

…not Production Planning, not Purchasing, etc.

– MPS is the tool to facilitate trade-off decisions• Foundation for recovery projections

Plant fills product

Product is incubated

Product is released

20

Production Planning: Reality

• Performance measures– Production to Schedule

• +/- 2% to frozen schedule• Reported monthly

– Batch Release Tracking• % of on-time releases• Reported monthly

– Batch Delivery Performance• Based on one week frozen schedule

Plant fills product

Product is incubated

Product is released

21

Production Planning: Reality

• Very close interaction with MPS– Logistics manages inventory by DC/warehouse site– Logistics utilizes MPS to determine deployment plan

• For example, short supply out West:– Move product from the East (high trans. $’s)

– Evaluate MPS (& finite plant schedule) to determine next production run and product release timing

Product is deployed

22

Production Planning: Reality

• Biggest daily impact on MPS management– Variance to forecasted sales– Pull production forward for oversells– Push production out for undersells

Orders Received

Sales results feedBack into MPS

23

Inventory Management and MPS

• The focus is on DOH• Two budget processes per year

– MPS generates projected inventory value• Based on established target levels

– Forms basis for inventory investment accountability– MPS used to assure compliance with the inventory plan

Inventory Plan MPS

Production plan by plant/TPM

24

Inventory Management and MPS (continued)

• MPS-related issues with inventory plan– Tendency is to want to keep lines running– MPS data allows for monitoring of adherence to plan– Production must move with sales to forecast

variances– MPS keeps planner appraised of variances to

inventory target levels based on sales results

Inventory Plan MPS

Production plan by plant/TPM

25

Inventory Management Tools

• Data Warehouse– Comparisons of actuals vs. projections– Comparisons of current future projections to plan– Variance detail down to sku level– …or aggregated up for an entire line

Inventory Plan MPS

Production plan by plant/TPM

26

DOH By Year (1989 – 2002 Plan)Ross Products Division