Expediting versus planning?

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Most manufacturing enterprises have a formal approach to planning and executing production.  However, it seems that at a practical level, there is some combination of planning and executing as well as expediting (working to recover to meet late or potentially late demand). I think that most of us would agree that ideally, we would have a sound plan where there is accurate demand (forecast and/or actual), adequate resources and capacities are in place both in-house and at suppliers, and all the supply chain is on board and executing to the plan.  In reality, there is a lot of expediting that occurs, at least in my experience (the extent of which depends on the industry and the complexity of the products and the supply chain.)  A lot of manufacturing companies even have a formal position with a job title something like “Material Expediter” or “Production Expediter” (although the actual job descriptions can differ from what I am describing). What I have found in working with some customers who do a lot of expediting, is a basic lack of maintaining data accurately in their formal ERP/MRP system.  A lot of the “planning” tends to occur off-line in Excel spreadsheets or other tools.  This may work in some isolated areas, but from an overall enterprise perspective, much of the supply chain does not have visibility into these off-line plans.  I correlate this to Project Management on a large project where there is no up to date project schedule that the entire project team can work to.   Team members work tasks that they are directed based on meetings, phone calls and other types of somewhat ad-hoc communication.  This can be somewhat effective, but not having the formal MRP system reflecting the current plan disables the capability to orchestrate the entire supply chain and efficiently execute the plan.  This leads to a lot of expediting rather than planning and executing.  Why don’t we always keep the formal MRP system up to date?  There are lots of reasons, including:

  1. too time consuming;
  2. off-line tools are easier and more flexible; and
  3. certain processes or functionality is not supported in the formal system.

An example of # 3 above, is provided in a blog post from a colleague of mine called Do YOU have enough Supply?   This describes a process to allocate limited supply to demands that recently, seems to becoming more prevalent in certain industries.  A process like this may not be supported in the formal MRP system, so it is likely done off-line.  Changing or enhancing the MRP system to support new functionality generally takes some significant time and money, and usually has to compete for priority with other fixes and enhancements needed. I know that many of you will agree that this expediting approach is far from ideal, and also may say "not us, not me".  But I also know from experience that this occurs and sometimes with some very practical reasons.  In situations like this, what can help solve the problem is a system with capabilities in a couple of key areas:

  1. Detect and report data integrity issues in the MRP system for clean-up
  2. Easily configurable to support additional planning functionality
  3. Available for sharing and collaboration across the supply chain

I would like to hear any insights, experiences and suggestions you may have regarding this expediting versus planning situation.

Discussions

J Robinowitz
- May 27, 2010 at 10:01am
Based on the work I've done with purchasing clients, the biggest issue seems not to be a lack of planning transparency, but a lack of planning. In the majority of cases requiring expediting the end user did not alert purchasing of their needs until it was far too late to follow the established procurement process. This can result in not only paying for expedited shipping, but paying higher prices for products and services as well.

We often recommend enhanced linkages between user departments and purchasing to help alleviate some of the expediting risk; this goes hand-in-hand with better planning and increased transparency. I'd also caution any company with a "master expediter" to take a long hard look at their process; chances are they are spending a lot of money and time on a function that really should be eliminated.
Ron Freiberg
- May 28, 2010 at 10:12am
Speaking strictly from a supply chain practitioners approach, you will never entirely eliminate the need for some type of expediting. By changing processes, proceedures and methods you can eliminate significant amounts of expediting as well as the expediter positions but not eliminate expediting all together; every supply chain plan no matter how perfect it is deteriorates over time due to the constant barrage of negative events ocurring, the deeper and more complex the supply chain the easier and faster things can get out of control.

The processes and methods I have found that eliminate expediting sometimes come as a culture shock to the organization but many times if their really fed up with chasing parts people are more than happy to try something different. These processes include the following:
1. Continually watch what your selling as compared to what your building and your desired FG inventory levels.
2. Adjust the ERP plan frequently; this stuff of looking at the forecast a couple of times a year or quarterly and adjusting just doesn't work. Depending on volitility of the market place and product complexity it should be atleast bi weekly if not weekly.
3. Convert material input flow and interal work flow to some form of demand driven flow or pull process and away from hard scheduled transactional delivery dates. In onther words let the input and through put flow emmulate the demand on the organization.
4. Integrate a buffer planning process into this demand driven flow so there is up side and downside flexibility to cover a predetermined percentage of volitility.
5. Above all frequently communicate your forecasted and flow needs to your suppliers and internal workers alike. Use EDI kan ban signals if possible a couple of times per week if not daily again depending on the business.

So it all comes down to equal parts, frequently updated plan, demand driven flow techniques and a really top notch communications network with a little buffer thrown in to cover the unexpected. Like a good recipt, it works.
Emily
- May 31, 2010 at 6:03am
Based on the work I've done with purchasing clients, the biggest issue seems not to be a lack of planning transparency, but a lack of planning. In the majority of cases requiring expediting the end user did not alert purchasing of their needs until it was far too late to follow the established procurement process. This can result in not only paying for expedited shipping, but paying higher prices for products and services as well.

We often recommend enhanced linkages between user departments and purchasing to help alleviate some of the expediting risk; this goes hand-in-hand with better planning and increased transparency. I'd also caution any company with a "master expediter" to take a long hard look at their process; chances are they are spending a lot of money and time on a function that really should be eliminated.
Emily
- June 03, 2010 at 3:36pm
Speaking strictly from a supply chain practitioners approach, you will never entirely eliminate the need for some type of expediting. By changing processes, proceedures and methods you can eliminate significant amounts of expediting as well as the expediter positions but not eliminate expediting all together; every supply chain plan no matter how perfect it is deteriorates over time due to the constant barrage of negative events ocurring, the deeper and more complex the supply chain the easier and faster things can get out of control.

The processes and methods I have found that eliminate expediting sometimes come as a culture shock to the organization but many times if their really fed up with chasing parts people are more than happy to try something different. These processes include the following:
1. Continually watch what your selling as compared to what your building and your desired FG inventory levels.
2. Adjust the ERP plan frequently; this stuff of looking at the forecast a couple of times a year or quarterly and adjusting just doesn't work. Depending on volitility of the market place and product complexity it should be atleast bi weekly if not weekly.
3. Convert material input flow and interal work flow to some form of demand driven flow or pull process and away from hard scheduled transactional delivery dates. In onther words let the input and through put flow emmulate the demand on the organization.
4. Integrate a buffer planning process into this demand driven flow so there is up side and downside flexibility to cover a predetermined percentage of volitility.
5. Above all frequently communicate your forecasted and flow needs to your suppliers and internal workers alike. Use EDI kan ban signals if possible a couple of times per week if not daily again depending on the business.

So it all comes down to equal parts, frequently updated plan, demand driven flow techniques and a really top notch communications network with a little buffer thrown in to cover the unexpected. Like a good recipt, it works.
Max Jeffrey
- June 06, 2010 at 1:41pm
In reading responses to this blog from different individuals, I noticed that there seemed to be a couple of similar themes in many of the responses as to how to reduce "expediting". First, a lack of coordination or communication between "user" departments and purchasing. I find this interesting because you would think that today, with most organizations running an integrated ERP system that this would not be an issue. Second, it was recommended to collaborate more with suppliers. Again, you would think that today, a lot of this would be in place. There are many other suggestions, but just thought it interesting that these two were fairly common.
Ron Freiberg
- June 07, 2010 at 2:59pm
Albeit most mid size and larger companies have implemented some form of ERP system; that does not mean however they are using the data to make continuous improvements in cross functional and supply chain communications and collaboration, both of which are critical to functional transparency and operational excellence. Keep in mind that there are many companies out there that use automated data as nothing more than a faster way to dig themselves into the shortage and expediting hole. At the root of this is the perception that an individual or department must give up control to gain transparency, synchronization and collaboration. No one wants to give up control!
Jessica Dunlop
- July 01, 2010 at 3:31pm
Too often companies implement ERP or MRP with training only done at start up. In fact, training should be done a minimum of every 2 years. When someone is learning something new, they will generally only retain 30% of the training material. Refresh training will remind the user of missing or forgotten knowledge. Secondly there is staff turnover - as experienced system user leave, new people arrive who maybe don't know the systems or have their own way of using the system learned at another company which may or may not work at the new company. By arranging refresh training, there will be more consistent use of the system and higher user engagement.

The other thing is that companies typically don't understand the core importance of data integrity in ERP systems and deciding who will be responsible for maintaining various background item data held on the system, or who will be responsible for driving product life cycle management through all the various screens in the system, etc. So people load new items and don't fully understand all the fields where they may skip loading certain information. Or product is going to become obsolete and people don't understand BOM effectivity dates with coordinating component and finished goods inventory to balance with last sales and avoid excess stock.
Ron Freiberg
- July 07, 2010 at 12:54pm
Not surprisingly; it appears that my consulting colleagues in the supply chain business still have the idea that just by paying a consultant to help implement an ERP/MRP system in a company and then have the consultant train, train and retrain again, you magically get a perfect system. Nothing can be further from the truth. I really don't want to be considered a heretic by the consulting community specifically since I do a little consulting myself but someplace along the path the company that is implementing all this software has to grab the bull by the horns and say to themselves why do I have so many planners, expediters, inventory controllers etc. when the ERP/MRP/training system was supposed to take care of this? The simple answer is and has always been; if you as company management don't change the company's culture to ask the tough questions of yourself--not the consultants, and implement the processes of continuous improvement to get around the consulting view point that all problems are curable through standardized system implementation, the expediting hole will just keep getting deeper. ERP systems by themselves effectively do nothing more than take all the standardized business knowledge and practices and then automate them. The question really has to be asked, what about all this commonly accepted business knowledge and practice, now at hyper speed, is wrong; not necessarily what is wrong with the system, but what is wrong with the known and commonly accepted business practices. Then ask the question what about these practices we can change to improve ourselves.

In my experience most companies are not very willing to share updated forecasts, inventory levels, change information, or lean projects with supplier or internal workers until it's too late, then they end up in a severe expedite/over inventory mode. On the planning side it doesn't really take an extremely accurate long term forecast or plan. What is required is as I have stated previously, the admission that the forecast will always be wrong to some degree. Then implement the processes of frequent reforecast, system and supply chain flexibility, buffers to handle the unknowns, true collaboration between all business partners, team management between business partners, and the idea that internal department managers are there to support each other not to compete with each other. All of these processes strike at the heart of corporate culture, not necessarily at system implementation. Again, just by implementing a system into a company with poor business practices just means the company will dig itself into the hole faster; the system is not going to change anything.

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