How to overcome challenges in production

How to overcome challenges in production

Ensuring that your production runs like clockwork


My great-grandfather always carried a pocket watch which was attached to his waistcoat by a chain. I loved to admire the fanciful engraving on the cover and the white clock face with gold numbers and hands. When I learned how the watch actually worked, I discovered that its inner components  were equally as fascinating as the exterior. A pocket watch is powered by mechanical energy, hence it has a mechanical component consisting of a mainstring, a gear train, a balance wheel, an escapement and, of course, a clock face. Each of these parts has its own function to make the watch work efficiently, or, as the saying goes “run like clockwork”. My grandfather would wind his pocket watch daily and ensure it was kept free of dust and dirt since the tiniest speck in the mechanism could damage the watch.
 
Production is very much like a pocket watch. It consists of different parts, each of which is responsible for a certain function to ensure a smooth production process. Just one little technical hitch, planning problem or change can mean that production can slow down or even come to a standstill, just like a pocket watch that isn’t wound daily.

 

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Advanced production planning

Challenges in production

Nowadays modern production has to continuously juggle many issues at once which require constant evaluation and improvement so that it continues to work efficiently.  In this article we look at the main challenges that production planners face and explain how they can be overcome:

Demand forecasts

Today production planners have immense difficulty in forecasting demand for their products. Planning horizons can be as short as two weeks and manufacturers cannot say with absolute certainty what they will be producing a few weeks or months down the line.
 
The reasons for this are simple: product life cycles are becoming increasingly shorter as different versions and updated  models of the same product are being released, sometimes just several months after the release of the previous version. Consumers want more individualized products (see our previous blog) and, to exacerbate matters further, they want these at a low price and as fast as possible. It is no wonder that foresighted production planning is becoming ever more complex and consequently a major headache for planners.
 
Inventory management should help a company meet fluctuating demand  and mitigate any problems or delays which may occur during the production process, however, this is a challenge in itself…
 
 

Inventory management

It is becoming increasingly more difficult to make the right decisions on how to manage inventory. Having too many materials, semi-finished or finished products in stock runs up high storage costs and ties up capital. Furthermore, you can never be certain if the demand for the goods in stock will suddenly fall and you find yourself sitting on goods or materials that can no longer be sold. On the other hand, maintaining low inventory levels also entails risks. What if there is a sudden increase in demand for a certain product and the goods and materials are not in stock? In view of the demand for shorter delivery times, this can also be detrimental. How can manufacturers supply in time if they do not have sufficient materials to produce them? This inevitably leads to delays in delivery which can damage your delivery reliability.

Plant efficiency

How can a company keep  costs low yet keep efficiency high without cutting corners in product quality?

Maintaining plant efficiency is challenging, particularly in view of fluctuating consumer demand and problems elsewehere in the supply chain which can negatively affect production workflows and cause bottlenecks. Processes require constant evaluation in order to identify areas in need of improvement.
 
However, it is not just external circumstances which pose the only challenge to plant efficiency but also internal factors. Outdated machines or technologies can quickly run up unnecessary energy costs, take up valuable production time as they run more slowly or are prone to breakdowns, thus leading to downtime.
 

Finally, one of the biggest contributors towards plant inefficiency is material waste in production. Wastage – often a consequence of poor planning and inventory management  – can lead to high losses and also high overhead.
 

Lack of skilled employees

Companies nowadays are finding it increasingly difficult to employee workers with the necessary skills and qualifications in manufacturing. This lack of skilled employees means that work is not performed properly and product quality suffers as a result. The finished goods have flaws and must be reproduced, which leads to delays and bottlenecks.

(Still) too much reliance on manual solutions

Too many companies still rely on manual planning (e.g. spreadsheets) in production, even though it is glaringly obvious that advanced technology and automated solutions based on AI and analytics can greatly facilitate production planning processes.
 

The unwillingness or inability to effect digital transformation can be attributed to several aspects: it is expensive to implement the new technology, existing workers require training to work with new software or there are simply not enough workers in the company with the necessary skills to apply it.

Yet, if businesses fail to make the transformation towards digitization, they will only lag behind those who have and be unable to compete in their respective markets.

And, returning to the issue of skilled employees – or rather the lack thereof: Businesses which have dated, error-prone, manual processes in place are highly unattractive to technology graduates. They will go to companies with smart manufacturing processes which require their valuable skills to optimize production methods. And, as we explained above, the lack of a skilled workforce only serves to damage a company in the long run.

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Mathematical optimzation for effective production processes

Applying analytical methods such as mathematical optimization is especially recommended when it comes to complex procedures such as production planning. With the help of Predictive and Prescriptive Analytics, production plans can be created based on a model which maps the entire production process – taking into consideration all objectives, resources, variables and constraints. Special solvers are used to help come up with the optimal solutions to the production problem.

Production does run like clockwork - with OPTANO production

Planning software such as OPTANO applies mathematical optimization methods to create the necessary transparency in planning which can help you make informed decisions on the best course of action to take.

With OPTANO production it is possible to identify the right measures in order to achieve your objectives –after sound analysis of all your available business data. In this way, alternatives can be analyzed and compared with one another in what-if scenarios in order to find the proven best solution. For example, by using the same data in multiple scenarios to analyze you can make long and short-term demand forecasts and prepare and respond quickly to unexpected disruptions by being able to reschedule in good time. By analyzing your inventory management you can identify which steps to take in order to prevent surplus or deficit inventory and be confident that a smooth production workflow is in place, that you can fulfil customer orders as planned, reduce levels of wastage and improve your plant efficiency.

Whether it is tactical or operational planning, with OPTANO production plans can be generated quickly and easily in line with your requirements. Do you want to learn more? Then why wait? Contact us today. Our consultants are at hand to answer any questions you may have.

And is the pocket watch still ticking?

Pocket watches have long been superseded by  wristwatches, and now smartwatches and smartphones.. However, they are popular collectors’ items and my grandfather’s pocket watch has become a family heirloom, even though it is no longer in use. According to Gartner, by the end of 2024, 75% of organizations will be using artificial intelligence techniques, including optimization, to improve their planning processes, predict future trends and identify risks. Whether  manual planning will have become a cherished collectors’ item is highly doubtful…

 

Have you already got your factsheet on this topic?

In our factsheet Advanced Production Planning we present some of the use cases of Predictive and Prescriptive Analytics in modern production planning which you can download here.

To obtain our factsheet, all you need to do is enter your contact details in the space below. A pop-up window will then open to download the whitepaper. Please note that by providing us with your email address, you agree that we may contact you on this topic. You may revoke this agreement at any time by contacting privacy@optano.com.

Alisa Temme
Alisa Temme

Do you have any questions?

Dr. Dominik Hollmann
Analytics Senior Consultant