The glue that holds this whole reliable deliver process all together, as well as the last part of the process, is the reconciliation processes. At the top level, the sales and operations planning (S&OP) process integrates the demand and capacity planning for the business. The schedule approval process is the key to getting buy-in, ensuring timely decisions are made and early action is taken to satisfy the customer.
The processes are owned by the process owners – production for the execution schedules and the general manager for the sales and operations plan. The master scheduler manages the processes, being accountable to the process owners.
The essence of the process is to have management reconcile the demand forecast to the planned capacity, making adjustments as the business requires, BEFORE the customer is adversely affected.
Producing a demand forecast allows you to build a model of your business. Producing a forecast of capacity requirements allows you to see what types and approximately how much capacity you’ll need. Once you have a demand forecast, you can identify what types of equipment and skills you’ll need to satisfy the market.
Having a forecast is not the same as having a plan. The forecast and your ability to respond to it have to be reconciled. Some trade-offs are inevitable. You can’t build a new plant in a day; you can’t open a new market in a month. Therefore, a process must be implemented to rationally reconcile the demands of the market with the availability of the capacity.
Now that we have finished discussing all the parts of a reliable delivery process, I need to give some advice about implementation. The Maximum Flow System has been proven in plants all over the world. However, it is a radical change in how the process is managed. Not everyone gets the results.
There are two prerequisites for a successful implementation:
Management maturity: management must be prepared to make the commitment to change and see it through. They must be able to lead the implementation through word and deed.
Mature sales organization: the organization must be ready to capitalize on the improvement in operations. The sales organization must be ready to be aggressive in capturing the additional orders based on shorter lead times and improved reliability.
Traditionally, managers devote little attention to how the order fulfillment process is managed. As a result, the process is chaotic, inefficient and simply doesn’t do its main job of delivering product to customers on time.
The Maximum Flow System causes people to synchronize their day to day efforts towards the delivery requirements of the customer, which results in on time delivery of the customer’s order, with less effort and management intervention.
In addition, the system delivers significant financial benefits. Other benefits include increased throughput, reduction of lead times, improved labor productivity, more sales, and improved cash flow.
This is the end of my blog series focused on building a reliable delivery system. Check out the full white paper titled “How to Build a Reliable Delivery Process” here.