Which is funny because oftentimes when management makes a push to improve metrics there are always a cadre of homegrown materials people armed with excuses why the textbook approach won’t work in the real world.

The secret: The fastest way to reduce inventory on-hand balances is to ship it.

With regard to production scheduling, it is critical to know capacity and lead time. Many companies simply schedule to maximize revenue or achieve the customer’s need date regardless of what it means for operational excellence. Knowing capacity means you can assess and manage risk when outside forces require production schedules in excess of capacity. Contingency plans can be made to increase capacity and buy material inside lead time. With regard to our schedule, we were several months late starting due to redesigns from our customer. This required our manufacturing and test engineers to get creative and solve some capacity issues.

As far as material availability, I managed my “A” items tightly – super-tight. But I didn’t worry about the “B” and “C” items beyond ensuring I had enough on hand to build the schedule. That’s the whole point of inventory stratification: focus where the dollars lie. After that, it’s all about execution from the team: purchasing managing the supplier deliveries, and production control getting the material to manufacturing with enough lead time to build and ship quality product. In a prior post I stated:

As a Master Scheduler, I control much of the front-end of the manufacturing process – any variation on my part bullwhips through the organization. Variation isn’t something that can be avoided, however, but as a professional I need to be diligent about controlling those factors under my control… I track demands over time, supply exceptions over time, excess/obsolete over time… well, you notice “over time” is the critical factor. After each MRP run (we run weekly), I export all of my data and review several critical factors: has my backlog changed, is my planned order report correct, has my excess/obsolete moved unexpectedly in either direction, and has the exception report changed positively or negatively. There are many other items I track, but I start with these and use them to uncover issues and troubleshoot them prior to someone else asking me that dreaded question, “What happened?

So, by focusing on demand stability and material availability over time in a structured and disciplined manner, I did my part as Master Scheduler to maximize inventory turnover. When a team maximizes the inventory going out the front door, good things happen.

Among my career experiences I was fortunate to work in marketing for a period of time when a new VP was hired to bring organizational leadership to the business development process. The first thing he did was hunker down in his office with several members of his staff, dissecting the business development status of the company. After a couple weeks he emerged from his office to give a presentation to the staff, explaining that the first thing he does when he takes on new responsibilities is to put the challenge into perspective.

As I mentioned, this is a mature program with significant challenges. Taking my cue from this former manager, I pulled my usual post-MRP-run reports: Backlog, Planned Orders, Open Orders, On-Hand Inventory. I normally lay the data out in Excel and do the math: how many units have to be built, how many units are on-hand, how many units are being built in the open orders, and how many units remain to be built. Simply put, the way production scheduling and MRP work is:

On-Hand Inventory + Open Orders + Planned Orders = Backlog

Anything else, and you have a problem.

So, I pulled the data expecting to see everything balance and my challenge would be a function of lead time and material availability. Except, the data wasn’t adding up correctly.

By the end of the first 14-hr day I’d found some major human errors that had contributed to a portion of the problem. Once corrected and MRP was re-run, the numbers still weren’t adding up. By the end of the second day I’d found an open order that wasn’t consuming material properly. Once I showed it to my manager, she diagnosed the specific problem in about 30 seconds. I won’t go into it here because it was human error, not system error (although it would have been nice if the system hadn’t allowed the error).

So, my “normal” process for getting my arms around program materials responsibilities has been short-circuited. Fixing the issues in the system are beyond my abilities, but I’m fortunate to have a manager with the technical skills to do so and the integrity to shoulder that responsibility rather than pawn it off on me. Even so, this will be the biggest challenge of my career thus far.

I have many weeks of long hours ahead while I try to make sense of the situation from a schedule, capacity, and availability perspective. But as I tell my team, when the system is used properly, time is your friend – eventually, material is ordered properly, arrives on time, and you recover and stabilize.

photo credit: David G. Romero