”Many of our clients in manufacturing businesses are trying to cope with variability in both demand and production by providing their production departments with a so-called frozen plan. The aim of such a plan is to provide the production department with a predictable horizon of work and to provide the supply chain organization with reliable information on upcoming production volumes to confirm customer orders and to prevent too much nervousness in the system.
At the end of the frozen plan horizon, actual production is compared to the plan resulting in a percentage that supposedly indicates the capability to execute a plan.
If in your business:
• you consistently report a performance of 99% or better against the frozen plan;
• your customers continue to compliment you on your on timely delivery performance or;
• no production schedule or sequence is ever changed during the frozen horizon Asking your people to change their behaviour is the same as asking them to take a risk. The fear of taking risks is a natural human emotion, because it saves us from all kinds of frightening situations.
Two examples of changes to a frozen plan
What we observe in daily reality is usually very different. Here are two examples to illustrate the behavior to microwave a frozen plan or defrost the plan, apply changes and then freeze the plan again:
1. The weekly frozen plan is updated –sometimes daily- to accommodate changes in customer demand while performance is measured against the original frozen plan. When customer orders are made to order and no inventory exists to buffer against daily variations in demand, producing a weekly frozen schedule could easily become a daily activity. The demand-supply system needs degrees of freedom to deal with variability.
If you want to reduce changes to a frozen plan, we have two suggestions for you. First, take a close look at the causes of demand variation: is this truly and only customer driven? To what extent do our internal processes create issues rather than preventing them? Second, ask yourself what logic was applied to come up with the time horizon for the frozen plan. This horizon does not have to be measured in weeks necessarily. How does your planning department survive weekends? Perhaps a three-day frozen plan is a much better match for the rhythm in your demand.
2. In production “anything goes” as long as the weekly total equals the total of the weekly frozen plan, so any sequence is ok. A carefully planned and sequenced frozen plan for a week is merely taken as a high level guideline by the manufacturing department. Production KPIs are green because the overall number at the end of the week matches the cumulative daily plans. At a daily level, the supply chain re-organizes work, re-sequences logistics, re-confirms orders – and regularly updates the frozen plan to keep up with manufacturing opinions and preferences.
In this example the main cause for execution variability is a lack of standards. Where are you on the continuum from running according to what worked last time to running according to a set of standards?
We often see that companies think they operate their manufacturing processes against a set of standards only to find that their reality is different when following up what is happening real time.
So what is your excuse to microwave your frozen plan?
Of course there are more reasons than customer demand variability or a lack in standards that might cause you to rework the plan that you declared frozen. I look forward to receiving your examples. And if they don’t happen to come with a clue on how to reduce changes to the frozen plan, I challenge everyone within our LinkedIn community to provide a hint.
Jan Martens is Senior Business Process Consultant at R&G Global Consultants in The Netherlands.