However, a great deal of challenges manufacturers face on a daily basis arise due to the non-optimal usage of production equipment, such as extended idle times or overproduction.
Excessive idle time
Most production companies have idle times periodically, but in some cases, this might go out of control and incur significant financial losses. One of the primary causes for excessive idle time is ineffective production planning, which, in turn, is often due to the lack of automation.
Depending on the production model (make-to-order or make-to-stock) manufacturers might either rely on forecasting demand based on historical records and real-time market data or on actual order data.
If the components' availability analysis and resource planning are done manually, this inevitably leads to mistakes and incorrect estimates of the resources required to produce a batch of items. The situation might get even trickier if the planning process is assigned to a single manager—thus, the company’s performance and revenue get largely contingent on that particular employee.
Besides, it is difficult to quickly react to possible changes in the project, which causes either waste or lack of materials and might result in delayed shipments and unhappy clients.
Automation of the planning process can help avoid raw material shortages and insufficient resources, and thus, minimize equipment idle times and increase ROI.
Non-availability of equipment
Manual planning and lack of automation can also lead to the situation when the production schedule fails to accommodate sudden changes in workload or in current orders. In this case, the equipment is often stopped in order to undergo readjustments, and this postpones or even cancels order fulfillment and might lead to customer dissatisfaction and financial losses.
For large manufacturers, different production departments can have trouble syncing their production schedules and deadlines, which might also result in equipment non-availability. With the implementation of a unified ERP system, the production planning process becomes much more transparent and efficient, allowing for the optimal usage of production capacities.
Excessive production
Lack of an automated planning process might also lead to excessive production. Such a situation might occur if the customer has modified or even canceled the order, but, for some reason, this information got lost, and the order was sent to production in its initial form. As a result, the manufacturer produces goods no longer needed, spends extra resources, and gets no revenue.
A similar situation occurs even more often if an enterprise uses the make-to-stock production model. In this case, it’s crucial that the production volume estimates are accurate and rely on multiple data sources rather than simply on the gut sense of the employee responsible for planning. Otherwise, you may end up stocking up your warehouse with unclaimed goods. Using ERP tools can help analyze the gaps to determine the optimal amount of items to be produced and minimize waste and losses due to excessive production, order changes or cancelations.
How 1C:Drive helps deal with these issues
1C:Drive is an all-in-one solution for efficient production planning, processes management, accounting, reporting, and more. It includes all the necessary tools a manufacturer might need to streamline and automate the entire production chain, from procurement to production planning to sales to order fulfillment. Among them are:
- order management system;
- production scheduling;
- supply chain planning;
- BOM management;
- subcontracting;
- materials planning and control, etc.
For example, the shared production schedule shows the complete picture of the workload for all divisions or production units, which helps solve the issue of equipment availability.
If some orders are being changed or canceled, you can update the original production plan based on new information, depending on which production stages have already started, and thus, prevent excessive production. In case the equipment is unavailable at the moment, you can also quickly delegate the order fulfillment—whether entirely or partly — to subcontractors.
With a multi-level bill of materials (BOM), you can access the complete list of operations and components required to fulfill the order and plan your procurement well in advance, so that the production process is smooth and idle time is minimized.
Final thoughts
Manufacturing companies need to keep up-to-date in order to stay competitive, which entails adopting new technology and automating processes. The adverse effects of lacking automation, such as ineffective production planning, slow reaction to changing circumstances, and error-prone manual labor result in financial losses and customer churn.
1C:Drive provides a single solution for tackling these and many other issues manufacturers face on a daily basis, such as planning, scheduling, order tracking, monitoring the equipment, materials and components availability, and so on.
How to Manage Production Resources in 1C:Drive ERP
How to Plan Production of Order in 1C:Drive ERP
How to Manage Bills of Materials (BOM) in 1C:Drive ERP