Optimize inventory management with APS production planning software

Material issues for manufacturing companies:

Material condition is one of the key factors that troubles enterprise production. The procurement lead time of some materials is very long. Suppliers’ material supplies often fail to meet production needs. If 100 materials are needed to produce a product, production will not be possible as long as one is missing. The other 99 materials will occupy inventory and funds. Therefore, if the materials for product orders cannot be collected at a similar time, on the one hand, the warehouse will be full and a large amount of funds will be occupied. On the other hand, production and delivery cannot be made on time due to lack of materials, causing customer dissatisfaction.

The problem of shortage of materials has also caused the production efficiency of the production line to decrease. Urgent orders cannot be produced due to lack of materials, so we have to make orders that are not urgent first. Once the materials arrive, emergency switching is required, resulting in wasted production line man-hours and extended WIP.

If a company maintains an excessively high inventory level in order to avoid the occurrence of material shortages, it will buy back materials long in advance. On the one hand, it will occupy inventory funds and increase warehouse costs. On the other hand, because customer orders are constantly changing, premature purchasing may result in dead materials that have to be scrapped, which also results in financial losses.

Not only are there inventory issues with purchased materials, but there are also inventory issues with semi-finished products manufactured within the company. If the inventory is too high, it may result in dead materials. No production stock, urgent orders cannot be fulfilled. The management of semi-finished products in many companies is chaotic. Semi-finished products are piled up everywhere in the workshop. There are no accounts and no one to manage them. Employees use them based on experience, and a lot of them have to be scrapped during the year. In the era of meager profits in manufacturing, this kind of waste should be avoided. Corporate profits not only come from sales, but reducing waste is also an important part.

APS production scheduling system helps companies optimize inventory management:

Inventory optimization needs to start from two aspects:

How can we satisfy the above two aspects at the same time and maintain a reasonable inventory level? The answer is just-in-time production and just-in-time procurement

How can we achieve on-time production and on-time procurement?

Accurate long-term production planning optimizes procurement material inventory management levels

The most critical factor is the accuracy of long-term production planning. Let’s take a make-to-order company as an example. The currently commonly used material procurement strategy is MRP, which means placing purchase orders based on the needs of customer orders and production plans, taking into account the procurement lead time of materials, so that materials can be delivered at the required time.

Because the procurement lead time for some materials is as long as several months, the supplier will arrange production after receiving the order. Without the assistance of APS, companies cannot produce accurate long-term production plans, and ERP only generates material purchase orders based on order delivery dates. When ERP determines the order delivery date, it does not conduct detailed planning according to the equipment production capacity, but assumes unlimited production capacity, which will inevitably lead to inaccurate planning time.

Only with accurate planning can we produce accurate purchasing plans, reduce invalid inventory, reduce material shortages, and thereby improve on-time delivery rates. To formulate accurate long-term production plans requires the support of the APS advanced planning and scheduling system, which cannot be achieved manually.

The long-term scheduling in PlanMateAPS can schedule production for the next 1-6 months.

In theory, there is no fundamental difference between short-term scheduling and long-term planning. The main difficulty in long-term scheduling is the optimization time. PlanMate long-term scheduling uses a fast simplified algorithm. The scheduling results are basically the same as those of the complete optimization algorithm in terms of order production time. Only the equipment selection is different.

Scheduling speed:

APS automatic production scheduling system optimizes parts inventory management

In principle, the production of components should be arranged according to the finished product assembly plan. But in fact, because parts are produced ahead of final assembly, there are often cases where they cannot be matched. There are many reasons for excessive parts inventory or dead materials, including the following:

1. The final assembly plan changed due to lack of materials. The product originally scheduled to be assembled was temporarily postponed due to lack of materials, but half of the order has been produced. Later work orders were advanced, but the production of half-finished products was not completed and assembly could not be carried out. Plans were revised several times, causing confusion.

Solution: Inventory-constrained scheduling in PlanMateAPS can completely avoid this situation. The production plan of the assembly process is formulated based on the constraints of in-stock and in-transit inventory. All orders are scheduled after the material collection time, so there will be no temporary delays due to lack of materials. The inventory of half-finished products and the output plan for the next few days are also used as constraints in the final assembly schedule. Collaborative scheduling avoids frequent modifications to the plan.

2. The buffer time of the front and back processes is too long, the overall production cycle of the work order is too long, and the ability to cope with changes is weakened.
3. The longer the component production lead time, the greater the possibility of changes in the assembly segment plan.
4. The delay time between operations is directly proportional to the quantity of work in process. A large number of half-finished products are piled up in the workshop, which can easily cause confusion and damage.

Solution: Import the automatic scheduling system. The first change is that the buffer time between processes is greatly shortened. In manual scheduling, because it is difficult to modify the plan, planners simplify calculations by extending the buffer time between processes, generally maintaining a delay of at least one shift (12 hours). After the introduction of PlanMateAPS, the delay time between processes was shortened to 2-4 hours, and the overall production cycle was shortened. After using APS scheduling, half-product production is quickly transferred to the next process after one process is completed, and the quantity and time spent on the production line in the workshop are greatly reduced. At the same time, the time interval between semi-product production and finished product assembly is also very short, and the probability of changes to finished product orders is greatly reduced.

5. Semi-product workshops produce excess inventory

Safety stocks are produced for high-volume parts. However, the production of safety stocks should be strictly managed and cannot rely on employees’ personal experience. Safety stock should consider various factors such as the average consumption rate of parts and components, future orders, etc. After strict calculation, the inventory production plan is formally generated and cannot be determined based on experience. The demand management module of PlanMateAPS provides a solution for the management of safety stock orders. For details, please refer to another article on the website: Safety Stock Management.