2. Intent of Session
• Explain what production planning means for the company,
for the site and for the customer.
• Explain the difference between Push and Pull systems.
• Clarify what runners, repeaters and strangers mean and
how to segregate products into the three categories.
3. Why Plan?
The ultimate aim of planning is to produce goods that
satisfy the demand from the customers.
This needs to be done as efficiently as possible to minimise
production costs, warehouse costs and
transport/distribution costs so that it makes the goods
available to the consumer when they want it at the quality
and price they are willing to pay for it.
4. What is Planning Optimisation?
• Match production sequence to demand as much as possible
• Keep stock levels low due to expensive and restrictive warehouse
costs
• Minimise overall changeovers at site to maximise availability
• Understand the correct sequence of product changeovers to reduce
times between changing products therefore maximising availability
Note: By optimising buffer (stock) quantities and product changeover
sequence, the production volume can be maximised, as the time to
produce (availability) of the line is increased.
5. Creating an Optimised Plan
• Understand what product types are runners, repeaters and
strangers
• Decide on minimum buffer (stock) quantity for each product type
• Determine production batch size of each when minimum stock
quantity is reached – this may vary on future demand and
seasonality
• Put together a production plan to make products that have reached
their minimum stock quantity – decide between product mix and
volume required by taking into account plant/line capability with a
view to maximise plant/line availability
6. Information required for a Plan
Decide What to make When:
• Line’s true production efficiency (products/hour)
• Changeover times between product types
• Minimum batch size production capability
• Demand profile of all product types
• Frequency of orders
• Total warehouse (stock holding) capacity
• Shelf life of products
• Lead time of products, decided once a runners, repeaters and
strangers analysis is done
7. Push vs Pull Systems
• Traditional view of industry
Push the products out into the market
– Keep producing even when there is no demand
– Keep the factory running all the time
– Keep lots of stock
• Lean approach
Demand from the market pulls products
– Only produce what you can sell
– Don’t produce to hold in stock
– Keep minimum/no stock levels
8. Push Systems
• Benefits
– Products available in storage when required by the customer
– Large production runs possible
– Factory can keep on running
• Disadvantages
– Cost of land for the warehouse
– Cost of utilities and labour for the warehouse
– Cost of the products at their highest level as they have progressed through all
processes of manufacture
– Double handling of products and transportation costs
– Risk of expiration or deterioration of the products if not sold within the allowable
timeframe leading to write-offs and disposal costs
9. Pull Systems
• Benefits
– Low/nil warehouse costs
– Low working capital
– No risk of products expiring leading to high write-off costs
• Disadvantages
– Difficult to satisfy sudden peaks in demand if there is no capacity to produce
– Overall availability to produce is reduced due to large number of changeovers
• Requirements
– Very flexible production facility
– Very efficient changeovers with good running efficiencies
– Accurate sales forecasts
– Low lead times to produce
10. Approach
“To keep a balance between reducing overall
warehousing costs and be able to satisfy varying
demand (e.g. seasonal) as well as maximise availability
at the production facility companies utilise both the push
and pull approach”
For this reason it is necessary to pay particular
importance to optimising production planning
11. Inputs to Plan Production
• Sales forecasting (from traders)
• Demand forecasting (from history)
• Actual orders received
• Warehouse/Stock levels
• Weather/Seasonal demands – can generate a sudden unexpected peak
12. Company Planning vs Site Planning
To reduce overall costs, the company may have a strategy to lower
their warehousing (stock holding capacity) impacting the overall
capability to produce to meet demand
The impact on the production facility is:
– Increase in the type of products made in the timeframe compared to before
– Increased number of changeovers reducing the overall availability
– Reduced production efficiency due to start up and end production run rates
– Greater vigilance on quantities made as time to produce becomes more of a
premium
– Getting it right first time is critical to meet the customer demand on time and in
full (OTIF)
13. Strategy
• Site scheduling
– Group together same products to be made at the different times (e.g. in one
week) to schedule longer runs
– Schedule running order to minimise changeover times by developing a
changeover matrix (i.e. going from one product to another)
– Use current actual line efficiencies and changeover times to ensure that the plan
is delivered
• Increase in factory/line flexibility
– Optimise changeovers by using quick changeover (SMED) techniques
– Innovate and use technology to completely eliminate to minimise changeovers
between products (e.g. blow and go)
– Use techniques such as modular maintenance to increase overall availability of
the line
15. What does this Mean?
• Runners
– The products in this category typically represent 20% of the total demand volume
– The type of products in this category is low with high volumes required
– Demand (order quantities) and Frequency of orders for these products is high
• Repeaters
– The products in this category typically represent 60% of the total demand volume
– Demand of these products is less than the runners and include more product types
– Frequency of orders for these products can vary between large orders on less frequent basis or
more frequent orders with low order quantities
• Strangers
– The products in this category typically represent 20% of the total demand volume
– The demand of these products is low
– The number of products within this category can be quite high with low volumes required
– The Frequency of orders can vary between a high order quantity (amount is typically less than
repeaters) on low frequency or more frequent order with a very low order quantity
16. Product Details
After an analysis of Runners, Repeaters and Strangers
is done, for each product type look at:
– Frequency of Orders
– Batch size or Quantity ordered
– Storage Space
– Plant/Line Production Capability (true current OEE and not the
budget number)
17. Suggestions for Site Plan
• Runners
– To be produced every week
– High production volumes
• Repeaters
– Mixture of products in this category are produced week by week and cycle
repeated every 2-4 weeks
– Medium to high production volumes
• Strangers
– Only produced to replenish buffers or when there is an order requirement to
produce
– Low production volumes
Note: The greater the mix of products, the less the volume that can be produced.
The total volume will depend on the plant/line capability (OEE) which will vary
depending on the changeovers required.
Maximising Flexibility vs Maximising Volume
18. Stock Replenishment
• Stock to hold will depend on total stock holding capability
• Minimum Stock level to hold depends on Demand (frequency & quantity) of
orders and the Leadtime to produce/replenish the stock
• Once the Minimum trigger is reached, Production trigger is activated
• Quantity to produce depends on
– Site capability (line efficiency and availability)
– Demand profile of the product
– Mix of products to produce in any one week
– Minimum batch requirement by the site
Note: Different products could have a different minimum stock level and batch
quantity to produce when the minimum stock level is reached.
19. Stock Level to Hold
Quantity of product/pallets =
Demand x (Leadtime + Safety Leadtime)
Bin Quantity
Minimum stock levels take into consideration average demand and
peaks depending on leadtime to replenish
– Demand – average demand, can be adjusted due to seasonal variations
– Leadtime – production Leadtime dependant on runners, repeaters and strangers
– Safety Leadtime – time that it could take to replenish if there is a sudden peak in
demand or line efficiency falls below average
– Bin Quantity – amount per bin (or space location)
20. Stock Level Calculations
Runners – Product 3
Average Demand is 100 pallets
Leadtime is 1 week
Safety Leadtime is 2 weeks
Bin quantity of 1 pallet
Repeaters – Product 12
Average Demand is 50 pallets
Leadtime is 2 weeks
Safety Leadtime is 2 weeks
Bin quantity of 1 pallet
Strangers – Product 2
Average Demand is 10 pallets
Leadtime is 4 weeks
Safety Leadtime is 1 weeks
Bin quantity of 1 pallet
Min Qty of Pallets =
100 x (1+2)
1
= 200 pallets
Min Qty of Pallets =
50 x (2+2)
1
= 200 pallets
Min Qty of Pallets =
10 x (4+1)
1
= 50 pallets
21. Production Batch Size
• Minimum Quantity of product that can be produced will depend on volume of
product that needs to be mixed to make a batch
• Multiples of this amount can be produced depending on predicted demand
profile
• Standard production quantity should be decided and flexed by a certain
percentage depending on demand profile
• The mix of products will depend on how many products have reached their
minimum levels, flagging up production triggers
• A sensible mix of number of product types and maximising production volume
has be decided depending on the Line’s OEE (production capability)
