One of the biggest pressures on Planning (PCP) and Supply Chain personnel occurs when there are missing products, also called “back order”, impacting the company's service level with its customers. On the other hand, even to complicate things a little more and for the defense of the PCP staff, the accuracy of the sales plan (forecast accuracy) is not accurate and does not help the people who plan the production.
This is a classic dilemma in the industry, as well known and strong as conflicts of the type: sales and marketing or maintenance and production.
When we lose sales due to service level problems, we will be losing the opportunity to generate business and even worse, giving the competition the opportunity to enter and take a slice of our market (Market share), which can be a much greater loss than the immediate lack of product and be a permanent or long-term loss. Therefore, it is necessary to be very aware that as much as quality or a competitive cost, the level of service has to be among the great objectives of the industrial area.
We cannot neglect the fact that we have an industrial complex endowed with resources that need to be well managed and produce clear visibility of how and how well they are being used. If we have adequate visibility, we create the systemic vision and the opportunity to take care of quality, costs and the level of service, correctly starting the fundamental journey towards increasing productivity and levels of excellence for best practices. With the importance of competitiveness and market globalization, it is expected and in fact already widely observed the increasing entry of foreign competitors with very competitive costs and with the most up-to-date and advanced practices and management systems. It is no longer possible to “play” with the threats of loss of market and competitiveness.
On October 1, 2019, one of the main newspapers in Brazil (front page article) made the headlines about the huge problem facing Brazilian industry compared to other industrialized countries. One of the main reasons (obviously there are many and very complex) is the question of productivity, including the lack of investment in new technologies.
Production planning and control (PCP) personnel, in addition to being concerned with the level of service (back orders), must, together with the finance department, be concerned with the level of absorption of available resources. If this is not done, parts of the available resources will be wasted and simply considered "throw away", negatively impacting the unit cost of products produced in that period and the company's profitability/competitiveness.
We need to remember that costs exist and are present, so “someone” always has to foot the bill. In this case, it will be the products produced in the period that there is a “surplus of resources”. It is always worth opening the discussion if we should not process some raw material that is in storage to take advantage of this available resource. Obviously, the discussion should consider HIGH TURN products, products that are known to have sales approaching or we will create other problems, which can be: storage space, high cost of low turnover inventory, cash flow, among others.
Also remembering that a product with a high unit cost can be the reason for the low turnover, that is, lack of competitiveness against competitors and that, if made available at a lower cost, can generate commercial opportunities for sale and faster turnover of the product, maintaining an adequate and competitive margin.
Anyway, we repeat with these examples the need for a global and systemic view of production costs and production processes and that we need to better see the whole in order to build the best strategy.
What does not seem reasonable is not putting the subject under constant evaluation and discussion due to lack of information and missing the opportunity for better productivity management.
These articles are purposely “provocative” to generate a reflection of the reader, but they do not intend nor do they have the presumption to give all the answers to the problems, only to give a direction or a more systemic way to identify and face the usual problems that every administrator of Industrial Operations are faced daily.
PGI Farma has tools and know-how to implement administration and performance improvement tools in Industrial Operations in several large companies and offers implementation services to companies that want to improve costs, increase productivity and optimize their stages of the production process.
Contact us for a technical conversation and assessment of your needs and opportunities.
By Izidoro Vignola and Roberto Darienzo
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Co-Founder PGIFarma and Visus Integrate Formação Acadêmica: Conselheiro de administração pelo Instituto Brasileiro de Governança Corporativa MBA (fechado para Rhone Poulenc) em gestão estratégica, na Cranfield University (Inglaterra) Especialização em Administração Industrial (Vanzolini) Engenheiro Mecânico pela FEI Experiencias (33 anos de experiencia na área industrial): Co- Fundador do Portal de Gestão Industrial Farma Co- Fundador Visus Integrate Consultor há 10 anos Diretor de estratégia e tecnologia industrial na AVENTIS FARMA Diretor de projeto de transferência de fabricas Diretor industrial Gerente de produção Gerente de manutenção Gerente de projetos
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