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An Overview: Managing Uncertainty & Keeping Promises (Sample of Full-Text)

The planning and control functions required for production and inventory management (PIM) are briefly delineated below. Also included is a description of various production and distribution environments that may be relevant to every manufacturing company's needs. This material is provided to better define the methods used, or planned to be used, by various teams, traditional examples are provided below for team members to review and adapt as needed for their purposes. Many examples may not be oriented to your company products. But a team that reviews and comes to consensus about how a tool or framework can be applied to resolve production or development problems will have gained a lot from the effort!


Manufacturing & production enterprises are classified by their product positioning strategy and by their production process. Product positioning strategies are make-to-stock, assemble-to-order, and make-to-order, Production processes are classified as flow shop, job shop, and fixed site. Product positioning strategies and production process design are both influenced by product volume. Products with high volume and standard design tend to be make-to-stock and are usually made in flow shops. Products with low volume and/or high customization tend to be make-to-order and usually are made in job shops or batch flow shops. Most Organizations have some variety in both the product positioning and production process dimension. The most common situation is an organization that fabricates components in a job shop area and assembles finished products in a final assembly area. The organization makes its most popular products to stock and assembles less popular alternatives to order.

There are critical technological choices all companies must make. Your company must lay out a clear plan for where it wants to be in 5 years and look at the space, people, and equipment required to get there. Technology is changing rapidly. Computer assistance is now essential to any fabrication process. These systems must be evaluated after an understanding and agreement is reached about what the company’s needs will be over the next 5 years.

Computer technology is now available in the design of the product, in the design of the production process, in the production scheduling and material planning process, and in the interchange of data with Suppliers and customers. In addition, microprocessors in manufacturing equipment increasingly communicate with a central computer to create a capability for quick programming of many distinct tasks.

The specific actions common to all manufacturers are forecasting, long-range planning to manage plant and major equipment matters, medium-range planning to manage staffing and materials management matters, short-range planning to schedule production activities, and production control activities to ensure that the plans are met. To manage production and Inventory Systems requires a broad range of knowledge. Rapid changes are occurring in the processes used to make market-driven items, and in the procedures used to plan and control their manufacture. Manufacturing management requires constantly learning new techniques. The work is as rewarding and it is challenging when a team, or group of teams, can see a tangible product created and delivered.


From a production and inventory management viewpoint, YOUR COMPANY must perform certain necessary planning functions. All companies must forecast demand for their products. All must determine when to increase facility size, how to staff the facilities, when to make or buy items, and how many to make or buy. In the sections that follow, we discuss the planning cycle and introduce the concepts that are used throughout the rest of the text.


For every action there was a planned intent. The ability to clearly establish a plan the results in cohesive action is an art, not a science. Planning is the first step in the management of any process. When done correctly, it consists of selecting measurable objectives and deciding how to achieve them. Planning is a Prerequisite for action and control. Without plans there is no basis for action and no basis for evaluating the results achieved. Planning not only provides the path for action, it also enables management to evaluate the probability of successfully completing the journey.

Action is the carrying out (Performance) of plans. Control is comparing actual results with desired results and deciding whether to revise objectives or methods of action,

Planning, action, and control are iterative processes that should occur continuously. Initiation of control does not require that plans actually be executed---only that their results be simulated and evaluated. Thus, at times it is difficult to identify an activity as uniquely planning or uniquely control. However, describing planning, action, and control separately leads to a better understanding of these activities.

Length of the Planning Horizon

Plans can be long range, medium range, or short range depending on the time required to complete the action. The time spans of these different ranges depend on the operational environment of the organization. The long-range planning horizon should exceed the time required to acquire new facilities and equipment. This may require 10 years or longer for organizations involved in the extraction process where new mines must be developed. It may be as short as 18 months for the machine shop where facilities and equipment are catalog items,

Medium-range planning is the development of the aggregate production rates and aggregate levels of inventory for product groups within the constraints of a given facility. Expansion of capacity within the medium-range planning period is limited to increasing personnel or shifts, scheduling overtime, acquiring more efficient tooling, subcontracting, and perhaps adding some types of equipment that can be obtained on short notice.

Medium-range planning usually covers a period beginning 1 to 2 months in the future and ending 12 to 18 months in the future. Its exact boundaries depend on the time constraints for changing levels of production in a particular situation. The planning horizon for medium-range planning is usually at least as long as the longest product lead time. In this context, we define lead time as the time from recognizing that an order for material must be placed until that material is present in a finished good. If medium-term planning uses a horizon shorter than this, material planning cannot properly be performed.

There is no precise definition for the length of the short-term planning horizon. Although detailed schedules and assignments of people and machines to tasks usually do not occur until well within the short-range period, the development of the production schedule frequently bridges the medium- and short-range planning periods. Planning is a continuous activity, and refinement of medium-range forecasts and plans to the detail required in preparing the first draft of a short-range version of the production schedule may take place gradually over a number of weeks.

Some interactions of PIM activities frequently take place in more than one time frame. For example, resource requirements planning for facilities may be performed years in advance of production, while some equipment purchases can be initiated a few months before needed. In addition, the master production schedule frequently covers both the medium-range and short-range planning periods. A brief overview of these activities is presented here before we examine them in detail in subsequent chapters... (there's much more!)

eBook: Managing Uncertainty — $3.00 Buy Now;

eBook Topics: An Integrated Set of Useful Articles
How to Test and Fine-Tune Strategic and Tactical Plans so that Resources are Only Expended on Achievable Results.
Making and Keeping Promises that are Realistic and Achievable is a Vital Skill Needed at Every Organizational Level.
Available-To-Promise Inventory can be Strategically Projected Using the Tools of Master Scheduling by Aligning Production Plans and Sales Plans.
Projected Resource Constraints are used to Modify Production Schedules to Assure that Available-To-Promise Inventory will Meet Customer Demands.
Detailed Capacity and Material Plans become Actionable, Unanticipated Constraints are Communicated Immediately to the Scheduler.
When the Goal is Zero Inventory, the Method is JIT. Only Buy or Build to Match Real Orders. Inventory Backlog must be Zero as well!
TOC can be seen as Similar to JIT but has a much Wider Application. Once Identified, Constraints are Exploited until it is Aleviated.
Developing Effective Work Relationships is Essential when Communication is central to the Success of Management Metrics.




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