There are a number of issues to look at here here, so what I will do is to briefly address each one of the issues and I suggest you come back to me for a more detailed discussion on some or all of points.
Forecasting
Forecasting the expected volumes you are likely to sell is crucial. Sales people are most reluctant to make an attempt at forecasting but it is a vital part of the production planning process. You can’t dodge or dilute the process; it has to be done. Accept that there will be inaccuracies but if it is 80% right that is better than 0% right.
- Start by listing all the parts that are supplied and then estimate the volume that is likely to be sold by part by week for the next twelve weeks. You may decide more or less frequent is appropriate.
- History will help so look at the records over the past weeks and also the same period last year and the year before.
- Then ask the question “what is likely to change over the forecast period”: changes such as new customers, new part, competitor activity, seasonally and so on.
- This part by part by week forecasts is then subject to the production planning process which will check on the available manufacturing capacity and/or the supplier lead time.
What to hold in stock
The drive today is to hold as little in stock as possible and react quickly to customer requirements. This approach places a requirement for short production runs and fast change-over of machines which then goes on to make special demands upon tool care, machine care and supplier lead times. (Contact me if you need help and support on these issues).
I suggest you set a minimum and a maximum stock holding per part with a safety stock on top of both the minimum and maximum. Your forecast will determine your stock holding per part. The minimum will be the point at which you re-order and/or remake and the maximum represents the number in the production batch.
I have assumed that you do not have either a Materials Resource Planning System (MRP) or a Manufacturing Resource Planning System (MRP11) operational. If you do and are, as you put it, not on the ball, then you have inaccurate information built into either the family trees or the numbers.
What to make and when
Having established a part by part forecast and a min/max. Stock holding the production plan is set for you plus or minus the variations in the customer requirements. The more accurate the forecast and min/max. the fewer the variations. A tip here - never make parts simply to fill up production capacity because:
- You have to be prepared for a sudden variation in customer requirements.
- You are making parts that may take a long time to sell and you may damage them in the meantime.
- You are filling up the stores and containers.
- You are using up valuable resources
Completing customers Orders
Here I will introduce the concept of Hit-Rate. Order Hit-Rate is the percentage of customer orders each day that are completed first time and dispatched on time. Line Item Hit Rate is the percentage of line items each day that are completed first time and dispatched on time. Also note the parts that are not available. Measure and record these hit rates daily and encourage honesty even if the numbers are poor.
Your hit rates should improve as you get better at forecasting, setting levels of stock holding (min/max.) and your production operation improves its reaction time via fast changeovers. However, by recording the parts that are not available you can focus in on specific problems for resolution.
We do have available a manual containing instructions and forms that can help you in the process. We can also provide one to one support in establishing lean logistics processes. You can access further details on this site via Manufacturing Norms.
