PlanMateAPS automatic production scheduling system application-safety inventory management

Safety stock includes several aspects: purchased raw materials, parts to be produced, and finished product inventory. This article takes PlanMateAPS as an example to introduce the application of the APS system in parts and finished product inventory management.
Some OEM companies produce completely according to orders and do not produce safety stocks. They only need to consider the inventory level of raw materials. There are also many companies that adopt a mixed production method, where production to order and production inventory coexist. To produce safety stock, the following aspects need to be considered:

1. Which products require production inventory:

Finished products: Products with large sales volume and sustainability that require production inventory. When shipping, the products are shipped directly from the warehouse inventory, and new products are produced and then put into the warehouse.

Parts: Parts shared by multiple products. As long as the production line has spare capacity, a certain amount of inventory can be produced.

2. Safety stock quantity: Usually the number of days available for sale is used as the safety stock level. The business department should count the historical sales records of each product, estimate future sales levels, calculate average daily sales, appropriately consider fluctuations, and determine safety stock levels.

3. Minimum production quantity: Every time you need to produce inventory, a minimum production quantity is required to ensure equipment production efficiency. The production quantity can take into account parameters such as equipment start-up time and procurement cycle. For example, if each start-up of production can produce 7 days of sales, one order will be generated every week on average. Products with small sales volume are produced every 2 weeks or every month.

4. Trigger conditions and production date:

When is production triggered? When will production start?
First, the raw material procurement cycle and production cycle should be considered. It takes a certain amount of time from the procurement of raw materials to the completion of production and storage. Assuming that raw material procurement takes 12 days and production takes three days, orders need to be placed at least 15 days in advance to prepare for production. Specific steps are as follows:

• Assuming the average daily sales of a product is 1,000 units, the safety stock should be maintained for 7 days.
• If the raw materials are not shared, each product needs to be purchased separately, which will take 12 days for procurement and 3 days for production, totaling 15 days.
• Assuming that the current date is July 1st, if the inventory is less than the salable quantity of 7+15 = 22 days, that is, when the inventory is <22000, a production order should be created.
• The delivery date of the production order is 15 days later, that is, 7/15. The purchase order will be placed on the same day, production will start on the 12th, and the goods will be put into storage on the 15th. This can meet the safety stock level of no less than 7 days.
• Production quantity: You can create a production work order based on the minimum production quantity. Assume that the daily production volume for a week is 7,000 units. In this way, the system can create a production order every week.
• If shared raw materials are used and the raw materials are purchased in batches without placing separate purchase orders, the 12-day material procurement time does not need to be considered. Just calculate the demand date based on the inventory quantity. As shown in the following table:

5. Inventory order urgency and delivery date

From the above analysis, it can be seen that inventory orders should be created based on current inventory and safety stock standards. The delivery date for an inventory order is determined by the sellable date of the current inventory. Priority will be given to those with a short marketable date.

6. Orders from customers

After receiving the customer’s order, the customer’s order is first shipped using inventory. After the inventory is deducted, Planmate creates an inventory production work order based on the inventory after deducting the customer’s order to maintain safety stock levels. If the inventory is insufficient for delivery, a production work order is created and production line production is arranged.

PlanMateAPS Solution:

The above analysis seems simple for a single product, but if there are many products, it is very difficult to manually accurately calculate the quantity and production date of the inventory order for each product and meet the demand for equipment production capacity. To maintain reasonable inventory levels, you need the help of APS.

The demand management module in PlanMateAPS can automatically create inventory work orders based on user-defined safety stock parameters.

After the order is created and after the initial trial scheduling, the user can appropriately adjust the quantity and delivery date of the work order based on the equipment load and delay shown in the Gantt chart. If production capacity is insufficient, the order quantity will be reduced and the delivery date will be modified. Excess capacity increases inventory production. If the overall situation is reasonable but the distribution is uneven, the demand dates can be adjusted back and forth appropriately. The adjustment work can be repeated several times until the result is satisfactory.