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September 14, 2017
High production and inventory costs and still missing customer orders?
By: Doug Thomas

As a leader in your manufacturing company, you want to delight your customers while minimizing production and inventory costs. If you sell from finished goods stock, you can manufacture at a steady rate to keep labor and capacity costs low, but this approach requires an investment in inventory. Alternatively, you can vary production over time by utilizing expensive overtime labor and keep inventory costs lower. If you configure your products to customer orders rather than selling them from stock, storing finished goods inventory is not possible. You can either invest in production capacity or offer long lead times to customers, which may not be desirable.

When an industry offers many varieties of product, and product mix constrains the resources, the master scheduling techniques enable the organization to meet those challenges while making best use of its resources. As global business practices increase and companies face stiffer competition, these techniques will be more in demand than ever before.

As a leader, you will be responsible for several decisions and may need to find answers for several questions:

  • Should you adopt an approach that tries to keep production level over time to best utilize capacity?

  • Should you adopt an approach where production levels vary to try to best meet customer requirements?

  • How do you adjust the production schedule and forecasted customer requirements as customer orders are received?

  • How do you use your production schedule to determine what is available to be promised to new customer orders?

  • How do you schedule production in a make-to-order or configure-to-order environment when you do not precisely know what items will be needed until the customer places an order?

How can you easily visualize the production schedule to understand inventory and customer service implications? For either a make-to-stock or configure-to-order manufacturing operation, master scheduling is needed to connect the sales and operations plan (S&OP) to the shop floor. The Accenture Academy courses Generating a Master Schedule, Master Schedule Updates Based on Received Customer Orders, Available-to-Promise Methods, and Multiple-Level Scheduling provide the information you need to create the best balance between capacity, inventory, and customer service needs.

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