Management
at your agricultural chemicals corporation has been dissatisfied
with production planning. Production plans are created using best
guesses of demand for each product, which are based on how much of
each product has been ordered in the past. If a customer places an
unexpected order or requests a change to an existing order after it
has been placed, there is no way to adjust production plans. The
company may have to tell customers it can't fill their orders, or it
may run up extra costs maintaining additional inventory to prevent
stockouts.
At the end of each month, orders are totaled and manually keyed
into the company's production planning system. Data from the past
month's production and inventory systems are manually entered into
the firm's order management system. Analysts from the sales
department and from the production department analyze the data from
their respective systems to determine what the sales targets and
production targets should be for the next month. These estimates are
usually different. The analysts then get together at a high-level
planning meeting to revise the production and sales targets to take
into account senior management's goals for market share, revenues,
and profits. The outcome of the meeting is a finalized production
master schedule.
The entire production planning process takes 17 business days to
complete. Nine of these days are required to entire and validate the
data. The remaining days are spent developing and reconciling the
production and sales targets and finalizing the production master
schedule.
- Draw a diagram of the production planning process.
- Analyze the problems this process creates for the company.
- How could an enterprise system solve these problems? In what
ways could it lower costs? Diagram what the production planning
process might look like if the company implemented enterprise
software.
