Production Planning

Managing disruption in production planning

Highly complex business operations such as production planning are always prone to disruption. Exactly how deep their impact can be depends not only on the severity of the disruption itself, but also on how well equipped companies are in order to respond to the situation fast and flexibly. In this article, we will examine the extent to which various disruptions can effect production and supply chains and explain how businesses can take pre-emptive action to prepare themselves for worst-case scenarios.

Disruption in Production Planning

Disruptions come in all shapes and sizes

As the saying goes: “Anything that can possibly go wrong, does”. In other words, disruptions, no matter how critical, are inevitable in all areas of life. In production planning and supply chains, these can lead to breaks in the workflows in production processes, and therefore have a negative effect on profitability and weaken a company’s market position. Classic disruptions can be:

  • internal: machine breakdowns, staff shortages, product recalls
  • external and man-made:  problems at the supplier end (delays in delivery), hazards such as fire, explosions, breakdown in public services, (e.g. water, communications, electricity, etc.) and the infrastruture
  • Natural catastrophes:  floods, earthquakes, wildfires
  • socio-geopolitical: trade wars, labor strikes, border closures, regional upheavals

Many of the above are considered as temporary disruptions yet can still have a significant impact on production.  In the last decade or so, however, the business world has been experiencing “shocks”, namely unforeseen circumstances on a large scale which have a ripple effect and long-lasting effects. Noteowrthy examples here include:

  • the earthquake and subsequent tsunami which led to the Fukushima nuclear accident
  • Brexit
  •  and  –most recently – the blockage by a container ship of one of the world’S busiest trade routes, the Suez Canal.
Are you interested in our factsheet: “The Benefits of Mathematical Optimization”?

But, of course, it was the outbreak of the COVID-19 pandemic that sent shockwaves throughout the global economy, the ramifications of which will continue to be felt for a long time to come. Due to panic-buying and hoarding, the health, hygiene and food sectors were unable to keep pace with the over-demand for their products which considerably disrupted any production planning processes and played havoc with supply chains.

At the other extreme, some industries experienced quite different disruptions – like a plummet in demand  for their products due to restrictions and lockdowns. Some sectors, like the travel and tourism industry, even ground to a temporary halt. These are all impacts which will reverberate for a long time to come. Even companies which had sound disruption management processes in place beforehand will not emerge entirely unscathed – and companies that had not started focusing more on resilience and risk planning, certainly are now.

Turning disruption into opportunity

Disruptions may cause havoc initially, but they are not necessarily a bad thing in the long run. As CISCO’s CEO, John T. Chambers, once said:

 “When you’re a large company with a significant market share, it’s tempting to view market disruptions as a threat, but we view them as an opportunity.”

 This need not only apply to large companies. Any company that is willing to take advantage of a disruption and find ways to make production planning and supply chains more resilient can only benefit. There will always be disruptions of some sort, but by planning ahead and identifying any risks thereof and mitigating these as early as possible strengthens a company’s position in the market.

Disruption in Production Planning

The pandemic has led many companies to re-evaluate their production and supply chain strategies. This involves reconsidering single sourcing and moving towards multiple sourcing instead. In this way they are less reliant on one supplier and better able to react to changes or disruption which could jeopardize capacities. Local manufacturing will likely become more preferable instead of relying on production facilities at the other end of the world. This serves to eliminate hold-ups caused by delays at customs and in overseas shipment.  Production processes must also become more flexible and agile in order to respond to demand fluctuations.

Finally, and probably most importantly, investing in new technology is critical to help businesses plan ahead far more efficiently, identify risks early on and make pre-emptive decisions. The options available here are varied and companies need to choose an application that is best suited to the business at hand.  For operations such as production planning, which often involves having to solve a whole range of complex problems, mathematical optimization technology is a wise choice.

Disruption in Production Planning

Better decisions with scenario planning

With OPTANO, production planners can very easily create what-if analyses (scenarios). These are ideal for planning and further developing the above-mentioned strategies. Scenarios contain all the relevant data needed for the analysis and optimization. Just like in a sandbox, you can change data and test the possibilities without it having any influence on your valuable productive data. When comparing scenarios, the effects of the changes are instantly clear. This enables the anaylsis of countless possibilities and gives planners a better decision-making basis to help them with their planning challenges. In this way, they get the best results for any strategic or operational planning problem.

Mathematical optimization – a powerful optimization tool

Mathematical optimization is an AI technology which can be used to find optimal solutions to a wide variety of very complex business problems, thus helping businesses get the best out of their available resources and data.

Using Prescriptive Analytics, mathematical optimization applications capture your real-world business problem in a mathematical model which contains your company’s objectives, variables and constraints. With the use of special solvers, it can then generate optimal solutions to your business problems. You can learn more about how mathematical optimization works in our factsheet.

An optimization application like OPTANO – now with a Predictive Blueprint – is a powerful mathematical optimization tool that can find solutions to your most challenging problems and support you in your decision-making processes. It is highly customized to suit your specific requirements, such as the optimization of your supply chain or production plans, even your entire network. OPTANO makes all your planning processes efficient, fast and flexible so that disruptions in the future no longer hit you unaware.

>Is it worth deploying mathematical optimization in your business? Find the answers in our factsheet.