production planning

Using Prescriptive Analytics in Production Planning

Production planning is one of the most essential activities in a company. It ensures that an efficient process for production is in place which is based on customer and organizational needs. This includes determining that your company has the right product mix and capacities, adapting production levels to available resources so that these are utilized efficiently, scheduling manufacturing processes as well as deliveries so that lead times are minimized, etc.

Production planning – a tricky balancing act

In its humble beginnings, production planning was a simple process, thanks to small factories and the fact that only a limited number of products were sold in bulk. Over time, however, products as well as customers’ expectations have changed and businesses have had to adapt to these. Thus, modern-day production planning has become a highly complex process in which the focus is not just on simply delivering the product but on ensuring that the production process flows as fast and as (cost-) optimally as possible.

Today, production costs must be kept at a minimum, but quality should still remain the be-all and end-all, machines must be kept running at full capacity and reliable deliveries must be guaranteed. Everybody wants to have their cake and eat it – from customers to suppliers and internal departments such as sales, production and HR.

But then the delivery of raw materials is delayed, there is unforeseen down-time and costly repairs, or even a global pandemic emerges to bring everything to a temporary halt… This is where production planners come in: their challenge is to keep all the players happy, for example by liaising between all those involved and ensuring that the production and distribution of products also runs smoothly under the new conditions. And if that weren’t challenging enough –  they also have to estimate future demand as accurately as possible – no enviable task!

To manage this balancing act, it is critical that production planners have the right tools at their disposal. Having to filter vast amounts of data and monitor entire processes, costs and demand fluctuations to make future decisions are tasks that a human planner cannot undertake alone.

Analytics – but which ones?

Over the past few decades, companies have begun to deploy analytics in order to optimize their production planning. There are various types to choose from, which we have outlined in detail in our factsheet.

While descriptive or predictive analytics can certainly produce good results, they are not necessarily suitable for every field. Production planning is such a large and complex field in which you have to respond to change and fluctuations as fast and as flexibly as possible. Planners could respond far more effectively if they had a system in place that not only provided accurate forecasts but also advised them on the best course of action to take. You might argue that nobody can predict the future, let alone tell you how to prepare for it and you would be right; there is never a 100% guarantee, but prescriptive analytics is definitely the next best thing.

Are you interested in our  Factsheet: “Business Analytics by Gartner”?

Prescriptive Analytics –turning problems into solutions you can work with

Even though companies have long been aware of the value of deploying advanced analytics, they have been hesitant to do so for various reasons: some are reluctant to make the financial investment and some think it will just be too complex and create more work in the end.

Before we continue, let us consider the following questions:

  • How can we optimally utilize our facilities, labor and materials to cut costs and boost profit?
  • How can bottlenecks be avoided?
  • Which orders should be prioritized?
  • When is the optimal time to produce a certain product, in which quantity and where?
  • Is it worth investing in new machinery?
  • Can our lead times be reduced?

These are questions that companies have to contemplate all too often. Deploying prescriptive analytics in production planning can provide the solution to these problems. It is an investment that pays off and from which your business can only benefit in the long run. Let us explain how:

How does Prescriptive Analytics work?

First of all, Prescriptive Analytics requires data – the more, the better! Fortunately, there is an abundance of this in production planning systems such as MRP and ERP. Then, by applying mathematical techniques such as linear and non-linear, mixed integer and constraint-based programming, a flexible performance model (sometimes described as the digital twin) of your business is created which accurately reflects how it performs.  

Special software, such as that of OPTANO, which deploys Prescriptive Analytics, models even the most complex business problems which can have hundreds or thousands – even millions – of constraints and variables. It then evaluates multiple future scenarios, so-called what-if scenarios, that can be compared with one another quite easily. With these so-called what-if scenarios the best results can then be found. Based on these, it can recommend the best course of action your business should take. There are also other advantages: OPTANO, for example, can generate accurate results extremely fast and efficiently, thus saving you valuable time. It is also highly customizable so that it can be tailored to your individual requirements. Best of all, it is highly intuitive. All you have to do is provide the data for it  to work with.

It is safe to say that by relying on such optimization solutions for production planning processes, businesses can get the best answers to the questions we listed earlier to help them make sound decisions for the future.

Are you interested in our Factsheet: “Business Analytics by Gartner?”

What-if scenarios enable the user to test what could happen if this or that were to change. Imagine a sandbox in which you can play and experiment as you wish. The data is the sand with which you can build the castles and waterways and tunnels or even just a sandpie … in other words: you can change everything (or also just little things) and see what happens. You can simply experiment without having to worry about the consequences. The good thing  is that it has absolutely no effect on the result that is currently being applied. If you’re happy with the new result and want to apply it, then go ahead! Just substitute the plan you’ve been using so far. And if the result turns out to be a disaster, no worries! You can delete the scenario and it’s as if nothing had ever happened. Scenarios offer you the opportunity to try everything  – no limits, no consequences – apart from the fact that you can find solutions which you hadn’t reckoned with beforehand.

 What are the long-term benefits?

The benefits of deploying Prescriptive Analytics for your production planning are evident:

You can utilize your resources and employees far more efficiently, minimize costs and downtime and be able to guarantee on-time delivery. And, most importantly, being able to make the right decisions and plan ahead effectively gives you a valuable edge in today’s competitive markets.

You want the information on this topic summarized as a factsheet? No problem, you can download it here.

Factsheet

In our factsheet “Business Analytics by Gartner” we explain more closely  how Prescriptive Analytics, and other types of analytics work and how they can benefit your business.

To obtain our factsheet, all you need to do is enter your name and e-mail address in the space below. You will then receive an email with a link to the download. 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.