Diagnosing problems in your Manufacturing Planning and Control (MPC) systems and permanently fixing them

Part 2. Planning the improvement, implementing it and making it stick

This second of two articles on permanently solving problems in MPC systems discusses the methods of prioritising the issues arising from the analysis and solving the problems permanently. The symptoms of your problem may have been: Excess inventory, stock obsolescence, on time delivery, supplier performance, assembly shortages, the need to reduce poor lead-times, or shortage of working capital. You should by now know the real underlying reasons, particularly if you have undertaken our two principle training courses on this subject (below).

Links to further best practice articles and training at bottom of page

Back to Part 1 Diagnosing the problems

Planning the Improvement

I hope you have resisted the temptation to dive in and start fixing your 100 or more problems arising from the diagnosis. (See Diagnosing Manufacturing Planning & Control Problems)

There are two problems here:

1. Determining the causes?
2. How do you sequence the fixes?

Determining the Causes?

Dealing with providing the appropriate solution first. As I said in the first article the solution is often self evident if the analysis is done properly. In particular the root cause of the problem must be sought for each problem, so that the cause (and not the symptom) is being tackled. The "5 why's" and Pareto techniques described in the first article, (Pareto Analysis is further described in Previous Technique of the Week 006: "Pareto Analysis") are particularly valuable in this, as are a number of other problem-solving techniques. Sampling case histories and a post-mortem after a problem is also useful, provided recrimination is not the motivation for doing it. As an example if the diagnosis reveals amongst other things that stock accuracy is inadequate, it obviously needs to be improved by implementing improved facilities, disciplines and procedures. Or if a procedure is missing for example "capacity availability recording", it needs to be implemented.

It is not the purpose of this article to finesse the application of appropriate best practices, but to ensure that all the major building blocks for effective MPC systems are present. Often we find finesse being applied to situations where there are other glaring omissions in other areas that will overwhelm the finesse being attempted (often at great cost). Before any finesse is attempted all the questions in the first article must be answered positively. This issue is particularly relevant to computerisation, where solutions to the wrong problem or over-sophistication are commonplace. Shuffling deck chairs on the Titanic to improve the view, springs to mind at this point. The outcome of this stage is a list of root causes or significant causes.

Often the analysis also reveals the same root cause for a number of symptoms. This will emphasise the need for change in this area. The outcome of this stage is a consolidated list of root causes or significant causes.

How do you sequence the fixes?

We consider a number of factors guided by our experience in this area as follows:

• Impact / Ease (impact on the situation verses the difficulty of influencing it)
• Quality / Delivery / Cost Impact
• Policies before procedures
• Top down before bottom up
• Control before Planning
• Omissions before Finesse
• Keep it Simple

Impact / Ease Analysis (See also Previous Technique of the Week 030: Impact / Ease Analysis)

We use a simple technique by asking two questions:

1. What is the impact of the problem / fix on the strategic objectives of the business?
2. How easy is it to fix? ("Ease" can be defined as simple, cheap, quick, or not requiring much resource.) Then we draw a matrix:

Then we populate the matrix with the issues:

• High impact / easy-to-do should be assigned to an individual and done straight away.
• High impact / hard-to-do will need a project to get done.
• Low impact / easy-to-do can be done provided it does not detract from the high impact work.
• Low impact / hard-to-do is usually what I find are being actively pursued because this is the chairman's pet project. The skill is how to persuade them that perhaps we should be doing something more important instead!

Quality / Delivery / Cost Implications

There are basically two approaches here, short-term expediency or lasting long term improvements. Whilst these are not always in conflict they can be. The following arguments may help you to decide:

If you are bleeding to death, stop the bleeding by tackling the high impact / easy to do things, yesterday. (No conflict of priority here.) However if there is a conflict of interests or resources the following could be used as a guide:

• Priority 1: Product quality without which you will not have customers for long and lack of which causes major disruption to the supply chain as well as significant administration costs (all of which are usually ignored in "cost of quality" calculations).
• Priority 2: On time delivery without which you are storing up a dissatisfied customer.
• Priority 3: Stock/cost reduction which you can effect without impacting delivery performance fairly easily, but which should be addressed later if you have the above problems, provided you will not be bankrupted in the process.

Policy / procedures

Policies are usually far reaching, often constraints on the business, but often easier to change than procedures. However the author of the policy (and their reputation) is high in the organisation, so that aspect of the change process must be handled carefully. Examples might include a review of make vs. buy, or make for stock vs. make to order.

Top down / bottom up procedures

Generally it is better to start at the top and work down if there is a conflict of interests or resources, because the top things usually have the most impact and could make some lower level actions unnecessary. For example a detailed shop scheduling system will not work if there is simply insufficient capacity. You will simply be creating a bottleneck and sucking in raw materials for products you do not have the capacity to make. This can be determined by Master Production Scheduling (see Participative Sales and Operations Planning) much more easily and far earlier than detailed shop scheduling which could then be greatly simplified.

Planning / Control

Generally quicker effects can be seen by taking short-term control actions first, before fixing faults in the planning process, as this tends to be easier to implement. As an example: It is relatively easy to reduce WIP and lead-times by progressively restricting the issue of components from raw materials store before the planned start date of the order, until productivity is adversely affected, then back off a little. This technique rarely affects customer delivery performance and often removes scheduling problems completely because there is less WIP to schedule.

Omissions

Omitted processes have a higher priority than all other issues. This is simply because the absence of these will probably cause your other efforts to fail.

Keep it simple stupid (KISS)

Avoid sophistication at all costs until all the processes (however crude) are all in place, and the need for further sophistication has been justified.

Planning Summary

Determine root causes

Consolidate

Prioritise / Sequence

KISS

Act (Implementing the Improvement)

Take the necessary actions to solve the problems. But do the analysis first. Control systems can give misleading symptoms, and you could be doing the wrong thing, or the right thing in the wrong sequence, which could make things (fatally) worse. As I said at the beginning, often the fix is simple provided you have done the analysis and prioritising first. But be very clear and focused:

• Do not fight too many alligators at one time. You will fail.
• Fully drain the swamp.  Finish what you start. Do not be tempted to move on to the next crisis until you have made the change stick.

Making the change stick

• All change must be preceded by education. If people understand why the change is needed they will probably not resist, they may co-operate and they could even help.
• Participation of the stakeholders is essential not only in the implementation but also in the design of the new way of working. Then it becomes their system not yours.
• Major changes require project management.
• Often change requires extra resource. Sometimes the skills required must be sought from outside the organisation. You must have sufficient of the right type.
• The new process needs to be designed as a control system (see the first article) not just thrown together.
• The new process needs to be documented as a basis for auditing it's effective operation in the future.
• The old system or way of working must be destroyed, so that it is difficult for people to revert back to their comfort zone, (provided of course that the new system is working effectively first).

So you have solved the problem. Stop congratulating yourself. You have not finished yet!

Adapt

Unfortunately this aspect of the change is often viewed as "Low impact / hard-to-do" using my words, and is often not done because some other crisis diverts management attention, or the champion is seen a saviour and is instantly promoted before the job is finished. But without it, all your previous accomplishments will slowly degenerate and have to be repeated later.

• Set up the missing measurement and control systems to act as a spur to continuous review and improvement of performance. (E.g. Measuring On time delivery) View all problems as opportunities for improvement not a stick with which to beat people, and find the root cause.
• Ensure there is an ongoing education and training programme on best MPC practices and how to apply them.
• Conduct a strategic review either:
  • at least every 2 years but preferably in harmony with and as a part of your long term strategic business planning
  • Or preceding every major strategic shift or policy review (A repeat of a problem may signify that your environment has changed and trigger a strategic review or a repeat of the diagnosis phase as described in the previous article)

This review should cover:

• A review of your environment:

  • Volume

  • Mix

  • Customer demands

  • Supplier constraints

  • Internal constraints

• A policy review

• A process review, including ownership, roles and responsibilities

• A control systems review

Now you have completed the cycle below, permanently solved the problem and have finished!

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The following further best practice articles were also mentioned in this paper:

The following public training courses and in-house workshops provides solutions to diagnosing manufacturing planning and control problems:

SSC04 Production Planning & Control Back To Basics (Includes our unique 180 point self diagnostic health check which you should be able to complete following the course to determine your development needs.)

You may also be interested in the following related courses:

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© SM Thacker & Associates (Consultancy and Training Specialists) April 2000 version 3 August 2007