How to Optimize Production Scheduling to Reduce Cost and Increase Throughput
Even companies that do a good job of week-by-week production scheduling can see an increase in profitability by truly optimizing the scheduling process. Product Wheel Scheduling is a thorough, clearly defined, proven way to do that, enabling companies to reach higher levels of optimization and greater profitability. This approach uncovers and has the ability to leverage hidden capacity, the extent of which is often an unexpected, but a welcome surprise! By adopting this methodology, companies have seen millions of dollars of enhanced profitability.
Too Good to Be True?
We recognize that the significant impact we claim for Product Wheels may be difficult to grasp. But time and time again, we’ve seen their ability to bring substantial value to companies.
Nature’s Bounty (NB) is one example. Through a collaborative design process with Zinata Inc. and NB schedulers and operations specialists, Wheels took Overall Equipment Effectiveness (OEE) or line efficiency from 36% to 48%, increasing capacity by 33%. That enabled total production requirements to be made on fewer lines, reducing COGS at one plant by $1.5 million!
What Are Product Wheels?
A Product Wheel is a regularly repeating cycle of all the products made on a production line or major asset. The fundamental cycle time is fixed, and is based on the optimum balance of economic factors, such as the cost of various kinds of changeovers and the cost of carrying inventory, consistent with shelf life, minimum batch size and available inventory space constraints. The sequence is fixed to give the lowest cost path through all the changeovers required. Low volume products are not made every cycle, only frequently enough to justify the cost of the changeover. Make to Order products can co-exist with Make to Stock products on any appropriate cycle.
Busting the Myths
There are a few common misconceptions we hear about Product Wheels. To fully explore how wheels could impact your bottom line, it’s critical to have a clear sense of what they are and how they can add real value to production scheduling.
We already do this. Many people think they incorporate Product Wheel scheduling concepts already, but most often, we quickly come to find they haven’t followed a clearly defined, structured, comprehensive, analytical design process and have missed a large portion of the financial opportunity.
We tried it, and it didn’t work for very long. In instances where Product Wheel attempts fail, it’s often because a thorough, comprehensive design process wasn’t employed, and some critical steps were missing. Or existing scheduling tools weren’t modified to incorporate Wheel logic. Either can result in things spiraling downward, and initial gains not being sustained.
Product Wheels won’t work for me; there’s too much variation in my order patterns. Product Wheels are based on a design process which takes variation and forecast error into account, and includes sufficient countermeasures. Even when there is great variation in order patterns, a steady rhythm can be established that introduces a new level of predictability and efficiency.
My production strategy is strictly Make to Order (MTO), so Product Wheels will be ineffective. Most MTO businesses have a few high volume, predictable products that could be make-to-stock (MTS). These products can be the basis for Wheels that enhance predictability and stability, and provide tolerance for variation in the MTO products.
Key Value Drivers
We’ve pulled together the top 12 ways Product Wheel scheduling offers substantial value:
1. Enhanced predictability by establishing regular repeating production patterns. Everyone gets on the same page and adopts the rhythm that the Wheels set.
2. Simplified changeovers by grouping similar products into families and dedicating each family to a specific production line (known in the trade as Group Technology) in-family changes are much easier to manage than family-to-family changes.
3. Reduced COGS by making each product in the right amount, at the right frequency.
4. Fewer, more efficient changeovers by making each product in a quantity that justifies a changeover.
5. Simplifying changeovers by scheduling products in the optimum sequence.
6. Leveled production to eliminate peaks and valleys, which waste resources in the valleys and require extra resources during the peaks (aka Heijunka).
7. Clarity of which products should be Make to Stock and Make to Order. An MTO strategy for the appropriate products will reduce inventory, and MTS for the appropriate products will enhance stability and predictability.
8. Optimized inventory based on predictable production patterns and frequencies.
9. Increased customer delivery performance by right sizing inventories based on production frequencies and forecast accuracy.
10. Enhancing stability be establishing production schedules that have a reasonable tolerance for variation. Enhancing stability by establishing production schedules that have a reasonable tolerance for variation.
11. A stable base from which any necessary day-to-day adjustments are easier. Wheels clarify the best courses of action and illustrate the ramifications of any changes.
12. Simplified process for schedulers by setting routine patterns for most scheduling decisions.
Unless you are doing a nearly perfect job of production scheduling, Product Wheels will get you closer to perfection and greater profitability.
To learn more, and discover how to put this into action at your plant, contact one of the authors, visit our Product Wheels webpage, or schedule a call here:
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Peter L. King, Principal Consultant Planning and Scheduling, CSCP, is specialized in the application of lean concepts to process manufacturing and global supply chains. He previously spent 42 years at DuPont where he transformed manufacturing operations and global supply chains through Value Stream Mapping, Supply Chain Mapping, inventory optimization, and other Lean tools. King is the author of several books including The Product Wheel Handbook.
Alan H. Nall is the Head of Customer Success for Phenix, and has extensive in manufacturing improvement and program and project management. Prior to Phenix, he spent 32 years working for and with companies like P&G, DuPont, Eli Lilly & Co., Pioneer Hi-Bred, MillerCoors and NB, consistently identifying and executing change that improved results, saved money and built capability.
About Phenix Software
Changeovers and incorrect inventory levels waste significant time and money and affect customer service. Phenix planning and scheduling software uses Aligned Product Wheels to minimize waste and align production with the business’s customer service, cost and working capital goals.