Sales Planning Meets Production Planning

dycimanns · November 2018

Planning complexity in manufacturing and order fulfillment stems from the attempt to “fit” forecasted demand with available production machines while hoping to leverage an algorithm that will provide the best “**** for the buck.” This algorithm normally incorporates Level 2 production machine metrics like run-rate, machine efficiency, and scrap rate to achieve an optimal mix. However, disparate operating schedules across plants, outages, availability, and lead-times of required packaging material, as well as dependent (i.e. tolling) external processes can make the creation of reliable, time-phased production schedules challenging.

Furthermore, for many organizations, sales and production work as two independent business units that share information via e-mail messages and spreadsheets is challenging. The communication gap and operational lag caused by this method of “collaboration” does not support the need for highly inter-related sales forecasting and production planning and makes it even harder to create a reliable schedule. Many companies have found that spreadsheets are not able to keep up with the constant flux in demand and are wrought with errors, leading to the creation of a production schedule that garners little trust from users and does not properly support business needs. The production planning application developed by Akili on the Anaplan platform provides a cloud-based tool that uses real-time data and connected planning experience to provide a solution to common production planning challenges.

Introduction

As globalization increases and markets continue to shrink, supply chains will become ever more complex, and with over 60 percent of companies currently considering Excel as their supply chain system, many companies will be left behind if they do not begin to leverage planning tools and cloud solutions, as do their best-in-class competitors. Gone are the days of planning in functional silos and seeking only to minimize costs. In order to remain competitive, companies need to adopt more collaborative processes that include cross-functional, connected planning-based interactions, as well as external partner integration where customer requirements drive strategic decisions.

While process improvement is an admirable goal, realizing a mature, competitive supply chain also requires a technology solution that can fully support business processes without restricting users to an out-of-the-box solution—especially one that either restricts planners or forces organizations to pay for a plethora of unnecessary features that will never be used. Anaplan is the ideal tool to help organizations usher in a new day of truly connected planning and technological competitive advantage. It allows organizations to build multiple applications (apps), or models, that support varied business planning processes from supply chain to financial planning, sales and marketing, and IT.

Supporting Business Processes with Anaplan

Organizations with mature planning processes, in our case the fictional ACME & Co., will begin with a consensus forecast generated via collaborative meetings and cross-functional Sales and Operations Planning (S&OP) sessions involving sales, marketing, finance, and operations. The final forecast, including assumptions and notes from each department, is maintained in Anaplan for access to real-time changes and updates visible to everyone involved in the planning process. This forecast is then ‘married’ with open sales orders in the production planning model, used daily by production planners.

Using a customizable, dynamic algorithm, we’ve developed the Anaplan “backend” to compare forecasted weekly volume with actual sales order data and to choose the greater of the two. It also accounts for on-hand inventory, including safety stock, and WIP as it determines and prioritizes the true production requirement. The production planner can flex demand figures against available machines and run what-if scenarios to create multiple, comparable versions of the Anaplan-generated production schedule based on current conditions outlined above. Because it always uses real-time data, the production schedule can be run and published as frequently as is required by the business.

The Model

Organizations can perform true modeling and scenario planning by leveraging Anaplan’s capability to create and recommend production schedules by analyzing resource availability and capacity and demand. Anaplan arrives at a different “best fit” according to resource availability, including displaying an “overcapacity” error if demand exceeds capacity.

The model also provides the added flexibility of integrating subsequent processes, gaining full visibility to the supply chain. For example, the packing schedule and warehouse labor and inventory (not detailed here) schedules are always synchronized with changes made by the production planner.

Detailed Design View — Production Planning Solution

The Anaplan model developed for ACME & Co. has three main components:

Data Hub integrated with an enterprise ERP system to be used as the source of truth for sales and production data.
Sales planning dashboard with sales orders and customer and production distribution.
Production planning dashboards to be used as the core function of the application.

As shown below, the model uses demand data as an input and several multi-dimensional calculation modules to generate the final production schedule.

Production Planning Dashboards

Machine and Product Setup and Analytics

This dashboard displays product and machine compatibility and dependence, also known as “fitting,” since not every product can be produced on every machine. It also visually indicates portions of the algorithm that consider machine run-rate and efficiency, scrap percentage and mold limit per run as it determines at the best-fit.

Capacity and Production Analysis

This dashboard sums the fitting analysis from the previous dashboard and compares capacity, including visibility to excess capacity, to planned production (output).

Production Schedules

Planners can use this dashboard to indicate machine uptime/status and create a printable/exportable production schedule. The Anaplan generated production schedule is determined heavily by planner indication of resources being up (running) or down (outage).

Production Planning Model Demonstration

https://www.youtube.com/watch?v=CiSDpL9edbg

More About Connected Planning:

Conclusion

Supplier diversification and outsourcing mean increasingly complex spreadsheets that require hours of manipulation to arrive at superficial solutions that only consider two-dimensional data and linear modeling. Anaplan, however, allows for multi-dimensional modeling with real-time data from across the supply chain network providing actionable insights to planners, giving them the ability to analyze multiple what-if scenarios in minutes. As you’ve witnessed, the Akili ACME & Co. production planning model demonstrates the utility of scenario planning and data visibility from internal departments and external partners.

About the Author

Dyci Sfregola is a supply chain consultant at Akili. She holds an APICS Certified Supply Chain Professional (CSCP) certification and has been in consulting for five years. Her experience is in supply chain process improvement, digital transformation and change management primarily focused on external partner integration and collaboration, sales and operations planning, demand planning, inventory control and management, and logistics.

Akili, a gold level implementation partner of Anaplan, is the ideal firm to assist organizations with long-term development plans and process improvement. For more information about the production planning model or to schedule a demo of the full model, contact Sean Granfield. At Akili, our Financial Planning & Analysis (FP&A) and supply chain expertise places us in a category of Anaplan partners with an ability to not only develop and configure the technical aspect of Anaplan models, but to also guide our customers through business process improvement that allows them to bridge the gap between functional areas and external partnerships, creating a true Sales and Operations Planning (S&OP) process supported by a cloud solution that gives a new meaning to connected planning.

shaiftazir · February 2021

Very informative article Dyci !

Would you be able to tell me if Client wishes to have the setup of Production planning along with Set up of Project planning , what would be the ballpark estimate in terms of timelines or effort ?