Home: Issue 1 2012 › Lead Story › Making plans
Making plans
03/05/2012 | Channel: Information Technology
Mike Straiton highlights why planning with spreadsheets is a gamble
For many food companies, irrespective of size, there is an increasing recognition of the role of the planner/planning team in the overall ability of the business to respond to the growing demands of customers and increasing pressures of suppliers. And while enterprise resource planning (ERP) software is rightly used by many larger companies to help planners deal with the industry’s production planning and scheduling challenges, many small to medium-sized businesses (SMBs) are left gambling hundreds of thousands of pounds worth of leading edge production equipment and potentially millions of pounds of business on the abilities of the humble spreadsheet.
This is because SMBs historically haven’t had access to global, corporate, high-cost and complexity manufacturing IT systems, supported by armies of dedicated IT professionals. Many have invested as best they can in lower to mid-level ERP systems that are affordable and designed to work at the lower production levels where these businesses operate. Where any planning and scheduling capabilities do exist, they tend to be generic, simplistic and lack the flexibility and visibility that food and beverage SMBs need to remain competitive. When this is coupled with there often being insufficient cost benefits in investing in a high-end, specialist planning and scheduling system, it’s understandable why the use of spreadsheets has remained so widespread.
This is despite the well-documented problems associated with using spreadsheets as a planning and scheduling tool. What may have started as a simple, time-saving document can quickly become a bloated, cumbersome, overly-complex document usable and understandable by a decreasing number of people. Moreover, there often comes a time where the majority of planner’s or planning team’s time is spent updating and manipulating spreadsheets instead of concentrating on maximising the company’s planning and scheduling capabilities. The consequence is that fire-fighting to keep meeting customer delivery promises takes over from looking at ways to deliver better service to customers as well as other opportunities to help the business grow and succeed.
Let’s consider a range of alltoo common scenarios faced by SMB companies in the food and beverage sector that spreadsheets are fundamentally ill equipped to deal with. Take the example of a major customer, potentially a supermarket, doubling its order size at short notice because of the success of an ongoing promotion. In today’s challenging business climate more than ever, saying you can’t supply or confirm your ability to supply on time may be enough to end that relationship there and then. But a spreadsheet, no matter how complex, provides no real visibility of a business’ potential production capacity or how close it might be to exceeding its capacity limits – either at a plant or human resource level. Accepting the order and making it a priority will clearly impact the rest of the plan but again, a spreadsheet cannot provide visibility of the extent of the impact across every other order. Nor can it provide in a timely way, if at all, the means to generate and review a number of alternative ‘what-if?’ scenarios in order to assess the best possible solution. Consequently any decision made using a spreadsheet will always be a gamble.
Submitting a new order
Consider the related example of a prospect/customer submitting a new order – how does the planner or planning team know if there is the capacity to handle this and still deliver on time and in full (OTIF)? Other examples include customers requiring a change in product mix, or demanding smaller batch sizes. Each of these impact the rest of the production plan and it stands to reason that the more orders there are, and the more often changes are having to be made, it becomes increasingly difficult for a planner or planning team using a spreadsheet to make the best planning decision for the business. It is not uncommon for the majority of a planner’s time to be spent manually updating spreadsheets only to find that before this has been completed, another change has already occurred rendering the plan out of date. In addition to the effects on delivery date adherence, continually out-of-date plans can lead to production teams and personnel having no confidence in the accuracy of the production plan, which in turn affects their willingness to adhere to it.
The last minute call
It’s the same when it comes to dealing with supplier management challenges. One typical challenge that planners have to deal with is the last minute call to say a delivery is running late and/or that an order will only be partially delivered. Again, this calls for the plan to be changed to examine the best response but as already noted, spreadsheets simply don’t provide the means to quick and easily do this, if at all. Focusing on the company’s own production/assembly areas – planners also have to do with the challenges of vital pieces of plant equipment breaking down as well as dealing with human resource allocation where different people have differing skill levels. And from a company perspective, what happens if the planner or person with the specialist skills needed to work with such complex spreadsheets is ill, injured or worse still leaves the company? In each case, far from being a benefit, planning spreadsheets can often represent a very real liability.
Fortunately there are now modern APS solutions developed for SMBs where their value and worth can be very easily and quickly demonstrated. Unlike larger, more complex systems that are heavily reliant on generic models of how a company ought to operate, solutions such as Orchestrate from Production Modelling can be quickly configured to replicate the exact way a company does work. Using actual data from the same spreadsheets that can act as a constraint, it’s quick and easy to construct a working model of your business. In many cases, this is enough to immediately highlight current planning and scheduling inefficiencies. It also serves as a means for planners to then apply various real life ‘what-if?’ scenarios, see the impact across the entire plan, and then make the best decision to help the company work
even better.
Investment working harder
In addition to the obvious cost savings of investing in APS systems designed with SMBs in mind, because they have also been designed to seamlessly integrate with low to mid- tier systems, they don’t just represent a wise investment in and of themselves - they enable existing investment to work harder, better and for longer. And when planners and planning teams are freed up from the wasted hours of updating and working with spreadsheets, that time can then be invested in looking for further planning and scheduling efficiencies to make the entire business more profitable. With competition among smaller food and beverage companies looking set to only intensify in 2012 and beyond, more than ever the most pressing question is less ‘Can we afford to invest in APS?’ and more ‘Can we afford not to invest
in APS?’
Mike Straiton is MD of Production Modelling. Production Modelling has 20 years’ experience in supplying state-of-the-art planning, scheduling and simulation solutions that deliver tangible benefits including improved equipment utilisation and delivery performance.
Designed to work with other systems or standalone, they are quick to implement, easy to use and provide day-to-day scheduling, capacity planning and ‘what-if’ analysis.
For further information, visit: www.simulation.co.uk
This is because SMBs historically haven’t had access to global, corporate, high-cost and complexity manufacturing IT systems, supported by armies of dedicated IT professionals. Many have invested as best they can in lower to mid-level ERP systems that are affordable and designed to work at the lower production levels where these businesses operate. Where any planning and scheduling capabilities do exist, they tend to be generic, simplistic and lack the flexibility and visibility that food and beverage SMBs need to remain competitive. When this is coupled with there often being insufficient cost benefits in investing in a high-end, specialist planning and scheduling system, it’s understandable why the use of spreadsheets has remained so widespread.
This is despite the well-documented problems associated with using spreadsheets as a planning and scheduling tool. What may have started as a simple, time-saving document can quickly become a bloated, cumbersome, overly-complex document usable and understandable by a decreasing number of people. Moreover, there often comes a time where the majority of planner’s or planning team’s time is spent updating and manipulating spreadsheets instead of concentrating on maximising the company’s planning and scheduling capabilities. The consequence is that fire-fighting to keep meeting customer delivery promises takes over from looking at ways to deliver better service to customers as well as other opportunities to help the business grow and succeed.
Let’s consider a range of alltoo common scenarios faced by SMB companies in the food and beverage sector that spreadsheets are fundamentally ill equipped to deal with. Take the example of a major customer, potentially a supermarket, doubling its order size at short notice because of the success of an ongoing promotion. In today’s challenging business climate more than ever, saying you can’t supply or confirm your ability to supply on time may be enough to end that relationship there and then. But a spreadsheet, no matter how complex, provides no real visibility of a business’ potential production capacity or how close it might be to exceeding its capacity limits – either at a plant or human resource level. Accepting the order and making it a priority will clearly impact the rest of the plan but again, a spreadsheet cannot provide visibility of the extent of the impact across every other order. Nor can it provide in a timely way, if at all, the means to generate and review a number of alternative ‘what-if?’ scenarios in order to assess the best possible solution. Consequently any decision made using a spreadsheet will always be a gamble.
Submitting a new order
Consider the related example of a prospect/customer submitting a new order – how does the planner or planning team know if there is the capacity to handle this and still deliver on time and in full (OTIF)? Other examples include customers requiring a change in product mix, or demanding smaller batch sizes. Each of these impact the rest of the production plan and it stands to reason that the more orders there are, and the more often changes are having to be made, it becomes increasingly difficult for a planner or planning team using a spreadsheet to make the best planning decision for the business. It is not uncommon for the majority of a planner’s time to be spent manually updating spreadsheets only to find that before this has been completed, another change has already occurred rendering the plan out of date. In addition to the effects on delivery date adherence, continually out-of-date plans can lead to production teams and personnel having no confidence in the accuracy of the production plan, which in turn affects their willingness to adhere to it.
The last minute call
It’s the same when it comes to dealing with supplier management challenges. One typical challenge that planners have to deal with is the last minute call to say a delivery is running late and/or that an order will only be partially delivered. Again, this calls for the plan to be changed to examine the best response but as already noted, spreadsheets simply don’t provide the means to quick and easily do this, if at all. Focusing on the company’s own production/assembly areas – planners also have to do with the challenges of vital pieces of plant equipment breaking down as well as dealing with human resource allocation where different people have differing skill levels. And from a company perspective, what happens if the planner or person with the specialist skills needed to work with such complex spreadsheets is ill, injured or worse still leaves the company? In each case, far from being a benefit, planning spreadsheets can often represent a very real liability.
Fortunately there are now modern APS solutions developed for SMBs where their value and worth can be very easily and quickly demonstrated. Unlike larger, more complex systems that are heavily reliant on generic models of how a company ought to operate, solutions such as Orchestrate from Production Modelling can be quickly configured to replicate the exact way a company does work. Using actual data from the same spreadsheets that can act as a constraint, it’s quick and easy to construct a working model of your business. In many cases, this is enough to immediately highlight current planning and scheduling inefficiencies. It also serves as a means for planners to then apply various real life ‘what-if?’ scenarios, see the impact across the entire plan, and then make the best decision to help the company work
even better.
Investment working harder
In addition to the obvious cost savings of investing in APS systems designed with SMBs in mind, because they have also been designed to seamlessly integrate with low to mid- tier systems, they don’t just represent a wise investment in and of themselves - they enable existing investment to work harder, better and for longer. And when planners and planning teams are freed up from the wasted hours of updating and working with spreadsheets, that time can then be invested in looking for further planning and scheduling efficiencies to make the entire business more profitable. With competition among smaller food and beverage companies looking set to only intensify in 2012 and beyond, more than ever the most pressing question is less ‘Can we afford to invest in APS?’ and more ‘Can we afford not to invest
in APS?’
Mike Straiton is MD of Production Modelling. Production Modelling has 20 years’ experience in supplying state-of-the-art planning, scheduling and simulation solutions that deliver tangible benefits including improved equipment utilisation and delivery performance.
Designed to work with other systems or standalone, they are quick to implement, easy to use and provide day-to-day scheduling, capacity planning and ‘what-if’ analysis.
For further information, visit: www.simulation.co.uk