Manufacturing wood products is not for the faint of heart. As if seasonal and economy-based demand variability weren’t enough, working with organic raw materials such as wood inherently leads to manufacturing process variability. Skilled workers and robust processes are needed to ensure sustainable operations despite thin margins in this highly competitive market.
This post explores the manufacturing challenges faced by wood products manufacturers and shows how SyncManufacturing® and the Master Item Planner module address these issues.
Wood Products Manufacturing Challenges
If you’re a production scheduler in the wood products industry, you know how challenging your role can be. No matter what the Master Production Schedule produced by your ERP system says, you no doubt spend hours adjusting schedules to real-world constraints, such as the quantity and quality of raw materials available, current workforce skills and availability, and the inevitable supply chain delays. Despite all your efforts, your production schedule can become instantly obsolete when things change, such as discovering that one of your raw materials shipments wasn’t up to the promised quality standards.
But the wood products production planner’s challenges do not stop there. As an example, take the challenge of manufacturing engineered wood products such as an LVL beam. LVL, short for laminated veneer lumber, is manufactured as a large panel often referred to as a “billet.” This panel is then cut lengthwise to achieve the desired height of the final product before being trimmed crosswise to the required length. Twenty or more finished products can be cut from one billet. The production planner’s challenge becomes how best to fulfill customer orders while minimizing material waste and maximizing plant capacity.
4 Steps to Minimizing Waste and Maximizing Resource Utilization
To help our wood products customers address this challenge, we added a feature called the Master Item Planner to SyncManufacturing. The Master Item Planner evaluates countless production scenarios against customer demand and identifies the most effective approach. From this optimized solution, SyncManufacturing generates a detailed plan, complete with electronic work orders.
Since most manufacturers we work with love details, let me dig a bit deeper into that process, providing more specifics on each of the steps:
Step #1 – Based on customer demand, SyncManufacturing generates order suggestions based on desired inventory levels and minimum order quantities. This step is not unique to wood manufacturers. Aggregating customer demand into order suggestions is a fundamental function of SyncManufacturing Advanced Planning and Scheduling (APS).
Step #2 – Here’s where the Master Item Planner addresses the unique needs of wood product manufacturers. SyncManufacturing determines the optimal billet size as well as rip (lengthwise) and cut (crosswise) operations needed to produce the finished products most efficiently.
Step #3 – While SyncManufacturing automatically generates optimized production schedules, no one knows their business like production planners and schedulers do. Once they’re happy with the production plan, they tell SyncManufacturing to generate the electronic work orders necessary to execute it.
Step #4 – Lastly, SyncManufacturing schedules the electronic work orders, optimizing changeovers, batching, and material flow through the plant.
“SyncManufacturing’s Master Item Planner has enabled us to schedule our plant operations more effectively, reducing changeovers and minimizing waste. We appreciate Synchrono’s efforts in building this tool.”
Ryan West, Scheduling and Optimization Manager, SIOP at Roseburg Forest Products
4 Benefits of Master Item Planner
Master Item Planner helps wood products manufacturers optimize their operations and achieve greater productivity and production efficiency. Let’s dig a bit deeper into these key benefits.
Minimize material waste – By evaluating all possible options, the Master Item Planner creates a low-waste plan that ensures materials are used most effectively. The Master Item Planner can also be configured to meet the needs of individual facilities, such as prioritizing filler products based on historical demand, preferring certain billet lengths, or focusing on full bundle or unit sizes of finished products.
Maximize plant productivity – Because the Master Item Planner creates electronic work orders and aggregates customer demand into stock order suggestions, plant productivity can be calculated and forecasted. Instead of booking to approximations of capacity, like linear or cubic feet, SyncManufacturing can direct the sales team to book new orders directly against machine hours.
Increase production efficiency and agility – Instead of manually determining plans using spreadsheets and institutional knowledge, the Master Item Planner can calculate a plan in seconds. The time difference between tweaking a pre-made plan and manually creating a plan from scratch is significant. Automated production scheduling software also allows the business to be more responsive to last-minute rush orders from customers.
Improve workforce utilization and retention – Hiring and retention issues frequently come up in our discussions with customers. Production schedulers and planners are often seasoned employees with a lot riding on how well they perform their role. Standardized, automated production scheduling processes reduce burnout by making the planning and scheduling roles less stressful and making it easier for others to fill in. Standardized processes can also make it easier to onboard new people when current staff members retire.
See Master Item Planner in Action
We’re excited to introduce the Master Item Planner module within SyncManufacturing® and would like to thank Roseburg Forest Products for their support throughout the development process. Based on their input, Master Item Planner continues to maximize the value, such as reducing waste and maximizing manufacturing efficiency and productivity. For more information and to see the Master Item Planner in action, schedule a demo with one of our specialists.
A few years ago, Aberdeen Group did a study that showed that 63% of “best in class” manufacturers still used spreadsheets for planning. With percentages this high, it’s probably safe to say that there is a lack of trust in planning tools like ERP and MRP even in the best-run companies.
Of course, spreadsheets come with their own set of issues. You may have a certain amount of confidence in the spreadsheets you’ve created, but what about those from your colleagues? Do you know what formulas they use to arrive at their conclusions? Where did they get their data? If the creator of the spreadsheet goes on vacation or worse – leaves the company – how quickly could a new planner take over their role using the existing planning tools and methodologies?
Spreadsheets also contain computational and data errors. Forbes published an article quoting “various studies” that put the rate of significant errors at 88%. Though no specific studies were named, you probably don’t need that extra level of validation. You know the spreadsheets you use have errors in them. Otherwise, why would you still be having such a hard time synchronizing inventory and production to demand?
The Problem Lies in the Basis of the Plan
Actually, spreadsheets are pretty powerful tools, even with the occasional error that creeps in. Likewise, MRP and ERP usually do exactly what they are supposed to do. They create time-phased material requirements and production plans based on the parameters entered into the system: forecasts, reorder points, capacity and so on. The calculations are so basic that even the most rudimentary software applications get them right.
The problem lies in the basis for the plans themselves. At the root of all production and material requirements plans lies the forecast, often generated by the sales or marketing department. Even when calculations are based on an analysis of historical data, it’s still a forecast. And, as we are all painfully aware, there is no such thing as an “accurate forecast.”
Not trusting what they’ve been handed, inventory and production planners use spreadsheets to massage the forecast data before it is entered into the system. Some of these comments might sound familiar:
“We always see a bump in demand for these items in June, so we need to increase production now.”
“I know sales has a quota on this new product, but I think they’re being overly optimistic. If we cut the requirements by about 10%, we can deal with it later if they actually manage to reach their quota.”
“I read in the news that there may be shortages of this material. Let’s order extra now so we can stay ahead of the problem.”
At the end of the day, the forecast is still a forecast, even with the wisdom of inventory and production planners added in. Unfortunately, the new forecast may not represent reality any better than the original forecast received from sales, and ERP and MRP have no choice but to translate those erroneous assumptions into equally flawed material requirements and production plans. In turn, these flawed plans translate into all sorts of issues: expediting orders, late nights, increased overtime, missed deadlines, angry salespeople, angrier customers, inflated inventory levels, blown budgets, tense meetings in the executive conference room and bland food diets to prevent your indigestion from turning into a full-blown ulcer.
Grounding Planning in Reality
Since there is no such thing as a crystal ball that shows future demand, manufacturers who want to break free from this vicious cycle need to replace forecast-based planning with reality-based planning. In short, ditch ERP, MRP and spreadsheets (at least for replenishment and production planning) once and for all.
The only way to do that is to synchronize production and material requirements to actual demand and supply as well as what is happening on the factory floor. It’s called Demand-Driven Manufacturing, and here’s a quick definition:
Demand–Driven Manufacturing is a method of manufacturing where production is based on actual customer orders (demand) rather than a forecast. This process is accelerated by technology that automates, digitizes data and connects every function within the demand-driven organization and to every layer of the supply chain.
We created an entire platform called the Synchrono® Demand-Driven Manufacturing Platform that sits on top of your current ERP system and synchronizes all elements of production to demand and supply. There is no need to rip out your current ERP or MRP applications; our tools use actual customer demand, supply status and the reality of the factory floor to synchronize production. The methods used, such as eKanban, Lean Six Sigma, Theory of Constraints, are no doubt familiar to you.
If this is the first time you’ve taken a close look at Demand-Driven Manufacturing, we have several resources which can help you build a solid foundation for discussions with others in your organization:
