Three Tools for Optimal Production Planning
By Jon Santavy, International Partner Manager
Published: December 21, 2016
Seasonal demand challenges have an effect on production planning throughout the year. I live in Pittsburgh where we have hot summers and harsh, cold winters. In May of this year, when the weather was turning warmer for summer, I became an avid runner. I needed some new gear to support this hobby, and headed to my local athletic store where the shelves were stocked with expensive clothes guaranteed to ‘keep you cool’ on the hottest summer days. Now, in December, the days are getting shorter and the weather is getting colder. I’ve had to turn back to the athletic store where I found the shelves are stocked with expensive clothes guaranteed to ‘keep me warm.’
Fashion and apparel are fiercely driven by seasonal demand, and this industry requires accurate planning to ensure the right products are on the shelves at the right time. Seasonal demand becomes really interesting after August – starting with “Back-to-School.” In October the stores are filled with Halloween decorations and costumes, and the supermarket shelves are weighed down with oversized bags of candy. In November these supermarkets turn to turkeys and cranberries, while the stores have Thanksgiving decorations, and December we see Happy Holidays, Merry Christmas, and a Happy New Year. With Arena, I’ve had the opportunity to work with some of the largest athletic apparel, food, and specialty manufacturing companies struggling to manage production planning in the face of seasonal/uneven demand.
Here are three tools leaders are using for optimal production planning.
- Distribution fitting tools – Production planning is managing inventory, capacity, and lead-time to meet organizational goals, and variability is the villain that makes this a challenge. Understanding the variability in your process helps you to manage it. A good distribution fitting tool allows you to make sense of your data, and put it to use. There are several good tools available, and we include one for free with Arena.
- Simulation – You probably have a scheduling tool that helps with planning, but what if there’s a hiccup in your supply chain and you don’t have the resources necessary to meet your throughput requirements? Schedulers and traditional planning tools fall short when it comes to managing the biggest risk in your supply chain (variability) and its effect on your production goals. Arena can simulate your production process to understand how various schedules will perform in the real world under capacity constraints, process variability, and system interactions. Learn why forward-thinking companies are using real-time data to create operational decision making models with Arena.
- Optimization – While simulation will help to analyze the risk and performance of various scenarios, optimization will allow you to understand the best way to operate under a given set of conditions. Arena allows you to use simulation and optimization to ensure operating decisions are made quantitatively in order to minimize the challenges of seasonal demand.
Now that we have discussed seasonal demand issues and tools with which to deal with those demands, let’s consider the following: 90% of the demand for gift wrapping occurs in a 90-day window between September, October, and November. See how one of the world’s largest manufacturers of gift wrapping paper, responsible for 30-40% of worldwide production, used Arena to meet the challenges of seasonal demand.
Nancy Zupick, Author and Arena Consulting Manager, introduces a few techniques for adding seasonality to your model, and in the Tips & Tricks we share a video from our partner, SimWell, on a new feature in Arena 15 that allows you to model more complexity in batching.
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