Optimize your load-capacity balance or Master Production Schedule (MPS)
29/11/2023
Reading time: 2 min 30
This article invites you to consider several important points that will help you maximize your PDP as well as the overall productivity of your company.
If you are new to the industry, the first part of this article summarizes the objectives of the PDP as well as those of the PIC.
If you are already familiar with these topics, proceed to the second part regarding the optimization of the load-capacity balance.
What is the PDP?
The PDP is a medium-term program of 1 to 6 months (2 to 3 production cycles). It allows defining the production needs for each individual and finished product (taking into account management rules and the schedule of various needs) to meet demand and anticipate balancing decisions based on available resources and load. It must be updated on a daily basis to take into account stock levels and new logistical constraints such as supplier lead times.
The Master Production Schedule (MPS) is based on the Industrial and Commercial Plan (PIC). The PIC is a long-term vision of 1 to 3 years depending on the business area and is updated monthly or quarterly. It defines broader objectives for product families.
Once the PIC is established, the PDP allows specifying item by item the needs for finished products consistent with past production. Such production planning brings together production and supply chain teams around a common goal for the weeks and months ahead. This production or load objective being known thanks to the PDP, one can verify that it balances with production capacity. Thus, a good master production schedule will prevent not only significant costs such as machine rentals or moving labor at the last minute if the load is too high, but also a substantial loss of earnings if capacity is too high and units are not used.
How to achieve a good balance between workload and capacity?
As you know, load/capacity balancing involves estimating the resources needed to meet production requirements for a given period.
Accurate planning and forecasting
So before you look into capacities, you absolutely must estimate your load. Over a given period, often quite short, you have a clear view of the demand, but if you establish a load plan for more than 3 months, you may not have a precise idea of how demand will evolve. You will then need to create demand forecasts using statistical methods based on historical data to anticipate future needs and adjust capacity accordingly.
→ Learn more about best planning practices
Capacity flexibility
Your PDP typically covers a period of 3 to 12 months, and you will agree, a lot can happen in 12 months. Therefore, developing your company's ability to quickly adapt to changes in demand, for example by using modular equipment, training employees to be versatile, or establishing partnerships with third-party suppliers to increase or decrease capacity as needed, proves to be a good strategy.
But don't stop there. Capacity must also be able to adapt to unforeseen events that are not necessarily related to demand. This may involve integrating and reacting to machine breakdowns, absences, etc. However, without having undergone a digital transition, it will still be extremely complex for you to achieve such agility.
Inventory management
Still on the capacity side, managing your inventory can protect you from stockouts, incidents whose resolution often depends on a third party, depriving you of autonomy.
Optimize your inventory management to maintain an appropriate level of finished products and raw materials, taking delivery times and fluctuations in demand into account, as much as possible.
Continuous improvement
Once you have managed your capacity, you will need to optimize it to increase it.
To do this, identify and eliminate bottlenecks and inefficiencies at every stage of your production process to increase capacity without investing in new equipment or facilities.
Communication and collaboration
While at first glance recommending effective cross-communication among all departments of your company may seem like stating the obvious, we assure you that many industrial groups still silo information and key figures.
Ensuring effective communication between different departments of the company is a start, but ideally, it is still best to ensure end-to-end communication across the entire supply chain. This allows for greater visibility, rapid and flexible deliveries, customized products, better quality, and traceability, etc. After all, it is the entire supply chain that creates a value chain.
→ Learn more about end-to-end supply chain
Tracking and control
Door number 2, implementing key performance indicators (KPIs) to monitor and evaluate the balance between load and capacity, and adjust production plans based on results. But to go further, especially to work on demand predictability, you will need to collect and store this data.
Ideally, if you have already undergone your digital transformation, these KPIs will be calculated automatically in the tool you have carefully selected based on your needs, allowing you to share them with the various departments.
The new PDP optimization tools
The optimization of your Production Plan will therefore depend on your ability to integrate and optimize all the variables mentioned above… with Excel and your ERP.
Excel is an extremely powerful tool with multiple features; however, it is not an intuitive, truly ergonomic, and collaborative tool. Most production sites often depend on a single Excel Master, and updates must therefore be done manually, most of the time once a week, by this person. And you will agree, we are certain, that it is blocking and very frustrating.
As for the ERP, it is a wonderful recording system that relies on structured and structuring but non-dynamic data, a bit trapped.
Today, several solutions exist, 4.0 planning solutions, that easily connect to your ERP and allow you to carry out capacity load simulations to consider several scenarios, clearly visualize the impact of production assumptions, and thus optimize your PDP in advance.
These solutions, like Oplit, can also report various incidents that modify your capabilities accordingly.
These solutions represent the future of industrial planning and support companies that are initiating their digital transformation very well.
