Improvement Report

Computers; plant machinery; printers and conveyor belts; these are the hard systems to be found in most manufacturing organisations. Soft systems involve people who interface with and operate those resources. Achieving an equitable balance between the two, enabling them to work together in meeting a business’s goals, is the ideal.

However, we do not live in an ideal world; both hard and soft systems have failings. And perhaps it could be argued that there is a third element in the organisational mix: Computers. IT has introduced the biggest revolution in industry – and everything generally – since the steam locomotive.

There have been several business management packages on the market now for several decades and they still have their part to play in today’s IT rich workplace.

Dating to the 1980s, the purpose of S&OP is to keep a business’s activities on track (Sales & Operations Planning constantly refers to the organisation’s current business or game plan). It is able to explain in a simplified, easy-to-understand way, why functions within a business exist. This type of management ‘short-hand’ is a great aid in helping keep activity focussed on the business in hand.

Sales and Operations Planning is very much function orientated. As an integrated management package it looks to match operations and production with sales. It provides management with information on current and projected sales, on customer demand for particular products and services and issues relating to lead-time and delivery ability. The great strength of S&OP is that it can keep your business on the shortest path to achieving your objectives, rather than allowing various functions to meander on a less than efficient path.

S&OP is not only used for measuring state-of-play regarding a business’s current performance. It is a powerful tool for assessing future market trends. This type of intelligence is invaluable in ensuring that products and services meet customer demands and therefore has a broader role in aiding a business to meet its strategic goals.

Key Point: Sales and Operations Planning is not a passive system that simply provides information or runs resources. It should be used by a management team to review how well the business is meeting customer demand, and by assessing future trends, re-plan and change direction to meet new circumstances, quickly and effectively. 

Master Production Scheduling (MPS) can be traced back to the 1970s and is mostly used in the Manufacturing Industry. As an operational planning tool, MPS is used in day-to-day business activities.

It enables the smooth running of production processes, through which managers can use the information provided to deploy staff, manage resources and maximise production. MPS serves both a strategic role, in that it offers an overall view of a production process but it is also able to offer effective micro management; production line log jams, inventory of materials, storage management, staff rotas, production planning.

MPS most obviously lends itself to manufacturing environments but the principle of understanding what the loading in your business looks like can apply to any type of company. MPS is another tool that has heritage and often appears within current business management software packages.

Many businesses don't appreciate the use of such a tool, however, and end up overloading their businesses with work; not understanding how their sales and order fulfilment processes function and can best work together; not achieving their performance levels because they spend so much time running around fire-fighting problems.

Key Point: A good Master Production Schedule enables the delivery of products and services on-time and the effective management of resources and materials en-route. 

Both S&OP and MPS are available as software packages and as such are powerful tools though in many cases an organisation will not need to buy in such sophisticated packages. Spreadsheets and database applications can do the job just as well in many cases. What is for certain however is that new technology has revolutionised the workplace and over time, more and more faith has been put into computerised systems.

These systems have improved over that time and are now indispensable for most organisations.With regards to S&OP, forecasting sales, customer demand and running a whole range of What If scenarios can be deployed, on a computer screen and at the touch of a button.

But if the people who use those systems don’t understand how they work, what their potential is, organisations will suffer.

IT systems should fit an organisation’s needs and not the other way round. Technology is racing ahead and it is all too easy to forget about people: their concerns, their need to have knowledge and insight into systems and processes; their ability to use the technological tools they have been given.

Most workplaces are now heavily dependant on IT but it is people who use the technology who achieve given goals.

This fact sometimes gets lost in the daily hurly burly of decision making and planning. An organisation can have the most glittering IT systems in the world but if its people don’t fully understand how they work, what their roles are in relation to those systems, how to use the technology, then there is a disconnect between people and systems. This results in dysfunctional business processes and poor performance.

Key Point: Returning to the issue raised at the beginning of this feature, the concern of any manager is optimal performance. To achieve that however, he/she has to work with both hard and soft systems, with people and machines. The potency of packages such as MPS and S&OP is in improvement of production and product delivery, in managing and increasing sales. Use of these programmes however needs to be integrated into other functions, particularly Human Resources, with particular reference to staff training and development.    

The problems of Information Overload have been with us for some time, as most business managers will be able to wearily testify to.

Organisations have all sorts of systems in place to gather information but how much of it really helps? Can that information be turned into knowledge that will aid a business process?

Powerful management tools like Sales & Operation Planning and Master Production Scheduling produce phenomenal amounts of information but if that is not used wisely, then it is less than helpful.

Take time to step back and think: ‘What is this information actually telling us? What can we learn from it?’

Key point: Use relevant information to answer mission critical questions like: Are we too busy? Are we too quiet? Do we need extra labour? Are we using the system properly and following the rules?

Both Master Production Scheduling and Sales & Operation Planning have their place in the modern business world. Many things have changed since their introduction in the 1970s and 80s but a flexible application of both is in many cases all it takes to solve problems and so aid business performance.

Key point: Modern software packages can do some amazing things but if people don't understand what is / should be happening then bad decisions can – and are - still made.

Organisations need to be better than ever at delivering high quality products and services at great value and on-time. MPS / S&OP, and even the humble spreadsheet, can help ensure that your business 'machine' is working the way it should be. Each function within an organisation has a purpose, a reason for existing, and there will be some fundamental process / control that can guide it. By understanding what these processes are, you can make the business machine work even better.

Key point: MPS & S&OP are two fantastic tools that have been around for many years but they are often overlooked as being something that is old, past its sell by date. This however, is a mistaken view. A little imagination and a little exploration is all it takes to apply MPS and S&OP successfully to new circumstances.