WEBVTT Kind: captions Language: en 00:00:09.040 --> 00:00:13.680 This operations planning and control  model is a centerpiece of this course   00:00:13.680 --> 00:00:16.800 because it shows how supply  and demand get aligned.  00:00:18.320 --> 00:00:25.520 Demand-side activities include demand management.  Demand management includes forecasting but it   00:00:25.520 --> 00:00:30.800 and distribution requirements planning  are key inputs to the overall process.   00:00:31.920 --> 00:00:38.160 Forecasting estimates demand while DRP  consolidates distribution center orders.  00:00:39.760 --> 00:00:43.040 Demand management involves  planning, communicating,   00:00:43.040 --> 00:00:50.480 influencing, and managing and prioritizing demand. Demand information is provided at the summary   00:00:50.480 --> 00:00:55.440 level for strategic planning, at the  aggregate product family level for Sales   00:00:55.440 --> 00:01:02.480 and Operations Planning or S and OP, and at the  individual unit level for master scheduling.  00:01:04.160 --> 00:01:08.480 On the supply side, each planning  stage has a capacity check.   00:01:09.280 --> 00:01:15.920 Resource planning checks production plan capacity  at the S and OP level. Resource planning looks at   00:01:15.920 --> 00:01:22.000 long-term capacity needs and may also plan  capital investments per the strategic plan.   00:01:23.360 --> 00:01:29.200 At the master scheduling level, the master  production schedule is validated using rough-cut   00:01:29.200 --> 00:01:36.480 capacity planning. This process checks  bottlenecks for feasibility. At the material   00:01:36.480 --> 00:01:43.120 requirements planning level, capacity requirements  planning is a full check of production capacity.  00:01:45.200 --> 00:01:50.160 The center column is where alignment  occurs. This starts with alignment with   00:01:50.160 --> 00:01:57.840 the organization’s strategic plan. S and OP makes  a production plan that aligns supply and demand   00:01:57.840 --> 00:02:04.880 at the product family level. Master scheduling  aligns supply and demand at the end unit level.  00:02:06.960 --> 00:02:12.720 The last priority planning step, material  requirements planning, involves detailed   00:02:12.720 --> 00:02:19.440 planning for materials. Purchasing and  production activity control are execution steps. 00:02:20.960 --> 00:02:27.840 Part of this process is called master planning.  It includes demand management, resource planning,   00:02:27.840 --> 00:02:33.680 S and OP, and master scheduling. These  last two are discussed more next. 00:02:35.840 --> 00:02:40.720 S and OP is a monthly cycle  with a 12- to 18-month horizon.   00:02:41.600 --> 00:02:46.400 Each month, the most replanning  attention is given to upcoming periods. 00:02:47.520 --> 00:02:53.920 A product review goes over product performance.  Data is gathered to update the forecast. 00:02:55.840 --> 00:03:01.280 Next, demand professionals meet to  evaluate demand. This is called the   00:03:01.280 --> 00:03:07.680 marketing/sales handshake. Agreeing on  what to request from supply may be hard,   00:03:08.240 --> 00:03:12.240 but it clarifies priorities,  such as on marketing spend. 00:03:14.560 --> 00:03:21.360 Here we see a demand plan. The prior demand  plan, the plan revisions from the current month,   00:03:21.920 --> 00:03:26.080 and the annual business plan  are shown to enable comparisons.  00:03:27.680 --> 00:03:34.560 Here the plan was revised downward due to low  actual demand, but they also revise the plan   00:03:34.560 --> 00:03:40.240 upward starting six months out to give  them time to plan tactics to grow demand. 00:03:41.520 --> 00:03:44.880 A request for product is then sent to supply,   00:03:44.880 --> 00:03:51.440 who assess whether the demand plan can be executed  or if capacity or plan changes are needed.   00:03:52.480 --> 00:03:58.000 This is called the operations handshake  because agreement may take a few iterations. 00:03:59.680 --> 00:04:05.200 Three more meetings help reconcile  demand, supply, and financial plans.   00:04:05.920 --> 00:04:09.680 The financial review verifies  if the plans will be profitable. 00:04:11.440 --> 00:04:17.440 The pre-meeting is about finding areas of  consensus and exceptions for executives to review. 00:04:18.960 --> 00:04:23.280 The executive meeting is where  VPs meet to make final decisions. 00:04:24.880 --> 00:04:28.960 If supply and demand are in  balance, the process ends. 00:04:30.480 --> 00:04:37.760 If not, executives might decide to overproduce  early or increase short-term capacity such   00:04:37.760 --> 00:04:44.080 as by using overtime. As a last resort,  they might also reduce the demand plan. 00:04:45.600 --> 00:04:48.720 Master scheduling converts the production plan in   00:04:48.720 --> 00:04:53.520 product families into a master  production schedule for end items. 00:04:54.880 --> 00:05:00.720 Here is a master scheduling grid. The horizon is based on the cumulative lead   00:05:00.720 --> 00:05:06.880 time for getting and using the raw materials  and components, plus a few extra periods.  00:05:08.400 --> 00:05:13.760 The planning time fence is based on this  cumulative lead time and marks where   00:05:13.760 --> 00:05:20.640 the master scheduler needs to approve changes  inside this fence to avoid costly rescheduling.  00:05:21.920 --> 00:05:29.040 The demand time fence is even closer to production  and marks where the materials have been received   00:05:29.040 --> 00:05:34.560 and resources have been committed.  The master scheduler’s supervisor   00:05:34.560 --> 00:05:40.560 approves changes in this area. The first two rows show demand.   00:05:41.680 --> 00:05:47.520 The forecast estimates demand while  customer orders are orders already received.  00:05:49.840 --> 00:05:55.120 The projected available balance is the  inventory that should exist in each period.  00:05:56.640 --> 00:06:03.760 Available-to-promise shows how many units can  be promised to customers. Inside the demand   00:06:03.760 --> 00:06:10.960 time fence, this is purely based on customer  orders. After this fence, it is based on the   00:06:10.960 --> 00:06:17.920 higher of customer orders or the forecast. The master production schedule is the   00:06:17.920 --> 00:06:24.400 anticipated build schedule. It may set  a batch size such as 50 units per batch.   00:06:25.360 --> 00:06:31.520 In the materials, you will learn how master  scheduling systems calculate these line items.   00:06:32.880 --> 00:06:43.920 We hope you enjoyed this overview  of operations planning and control.