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One System of Record!

By David Carroll March 14, 2018 by David Carroll

Why Do Companies See the Std ECC Capacity Planning Reports, You Know CM01,04,05 Etc. and Think, What a Load of Rubbish?

Or that they can’t help. There ugly old and should have died with the dinosaurs. There is a general fundamental lack of understanding of Capacity Planning and how its role is core to achieving the greater plan. Businesses seem not to understand that without Capacity Planning embedded back into the core they will never be able to move forward and actually start to improve their business. A very bold statement I know, but it’s true!

I’ve been fixing clients Std ECC Capacity Planning now for over 7 years in the production space and taking them back to the basics in understanding the role of Capacity Planning. There are lots of reasons why it’s not used, it’s like being at school again although I haven’t heard the dog ate my homework excuse yet …

  • My spreadsheet is way better SAP can’t do what this baby can.
  • It’s too clunky and takes up too much time.
  • The data maintenance is just too much.
  • I just can’t trust the data it’s never right and it takes too long to get it changed. Your showing just how bad you are right there!!!
  • Production doesn’t do what they’re supposed too, nothing is real time. Silo time!!!

I have heard more than this on the excuse-o-meter. So, there is one problem on top of all this and it’s almost too simple to believe that’s it’s not done. You see it all starts with Demand. Yawn!!!!!!! What’s that got to do with Capacity, you ask? Well, you need to understand that planning independently of your One System of Record is FATAL.

ECC Capacity Planning

Do You Truly Really Have a Picture of Your True Demand?

I bet a lot of you say “yes”. Well, I’m going to challenge you and say you don’t. There is a very simple way to see it using your One System of Record and I bet you that you don’t know how and if you do you’re not doing it.

Do You Understand Why Planning Outside the System Just Doesn’t Work?

Over the next few months, I’m going to be talking about how important it is to get your Capacity Planning back into your One System of Record. I will show you benefits of doing so from a Business, Planning, Shop Floor and continuous improvement side. The potential to actually use your One System of record to run your business and make good decisions around the systematic evidence being generated by that crazy program MRP (You know the thing that also doesn’t work). It Just might seem crazy but it’s totally doable. I will dive into the topics of Machine and Labor Planning, Production Tools (Molds, Racks etc.) and lots more. We will talk about how you can use the Std Reports to see the future, make good planning decisions and help with the continuous improvement that helps reduce the time of Insite so that you’re not reacting.

Hold on to your hats people. Capacity Planning is the future and the key to massive process efficiency savings as well as at the same time a key element to help support business growth. I asked the question in my last article.

Do You Know What Your True Demand Is?

Capacity Planning
We need to understand why we have to actually do it and why as I say it is the core to pretty much everything that is Supply Chain based.

Capacity Planning is the process of determining the Production Capacity needed by an organization to meet changing demands for its products. In the context of Capacity Planning, “Design Capacity” is the maximum amount of work that an organization is capable of completing in a given period, “Effective Capacity” is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as Labor, Quality Problems, Delays and Material Handling.

From a systematic perspective, we need to set things up with the design capacity. If we don’t then we have no way of seeing our inefficiencies.

Its Purpose:

  • Maintain Balance Between Supply and Demand
  • Provide Vision and Information Across the Supply Chain
    • Provide Realistic Order Ship/Availability Dates to Customers
    • Improve Decision Making Based on Actual Work Center Information
  • Determine the Best Economic Use of Resources
    • It Is Essential to Long-Term Simulations for Optimal Use of Labor and Equipment
    • The Capacity Plan Feeds MRP
    • Procurement to a Capacity Constrained Plan Provides Better Delivery Dates and Therefore Controls Inventory More Effectively.

SAP-CRP

It is the very core as I have said to the internal supply chain driving at every level.  At the S&OP Level, it provides a rough-cut look at your high-level capabilities ensuring that the Forecast Demand don’t drown you and provides feedback at the strategic levels of the business. From an MPS/Production Planning perspective, it allows true vision at the Mix level taking into account true run times against work centers.  The Shop Floor benefits because they are able to have a vision and start to plan things such as Labor.

What Do We Need to Do to Truly See Actual Demand for Our Manufacturing Facilities?

Forecast, of course!

  • The forecast drives Supply Planning, Production Planning, Inventory Planning, Raw Material Planning, and Financial Forecasting

Sales Order Management

  • Timely order management using ATP correctly giving true availability dates back to your customers.

Exception Monitoring

  • Without the proper use of Exception Monitoring, you will never see a truly balanced capacity requirement.

Once all 3 are in and being used and executed properly then and only then can you see your true capacity requirements. In my next article, we’re going to talk about, “Why it’s Done Incorrectly and What it’s Going to Take to Put it Right?”.

 

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