Planning of interrelated manufacturing processes and associated capacities is a complex task. Planning problems can be exacerbated by inaccurate forecasts, leading to either bottlenecks or under-utilization of capital or human resources. This can result in delays in customer deliveries, and potentially lost sales, or avoidable costs due to over-investment. Additionally, investing in sufficient capacity to match seasonal peaks is often not financially viable. In this instance inventories can be ‘pre-built’, ahead of demand.
The objectives of Production & Capacity Planning are twofold. To optimally balance the supply chain in terms of current of potential capacity investments and inventory holding cost, and to create a production plan that fulfills demand and minimizes inventory levels given capacity levels at various sites.
Key Questions
- What are the potential bottlenecks at each stage of the manufacturing process, due to new product introductions and the availability of resources?
- What is the most cost efficient way to resolve the bottlenecks - alternative supply, increased number of shifts, adding new resources, or transferring resources from another site?
- What if the optimal trade-off between inventory holding cost and capacity investments?
- How much line or tooling capacity should be in place at each manufacturing site / supplier?
- Does it make sense to expedite shipments during peak periods, if doing so leads to savings in capacity investments?
Production and Capacity Planning and SimFlex
Using SimFlex, the impact of an updated forecast can be gauged, and bottlenecks occurring at any stage in the supply chain can be easily identified. SimFlex considers real-world issues affecting production and capacity, such as operating hours, public holidays, number of shifts, cycle and batch times, production lines and special tooling. SimFlex determines the optimal capacity level, which minimizes investment while providing the inventory levels and flexibility needed to fulfill customer requirements. Adjustments are then made to eliminate bottlenecks or the under-utilization of assets, resulting in a feasible and cost optimal production plan.