by Bill Gaw

When shipments can't keep up with an upturn in business, sales people point to production efficiency as the problem, production people point to material shortages as the problem, and the materials people point to poor forecasting and scheduling as the problem.

These problems cause significant negative impact on shipments and usually result in a company's failure to capitalize on business recovery opportunities.

Managers fail to get the job done because they don't have the proper resources in place to deal with the day-to-day challenges of meeting schedules. Most production managers will tell you all they need to meet their schedules is the parts. In many cases, they are absolutely correct. 

Herein lies a business dilemma: When the parts finally arrive, schedules still aren't met. The problem shifts to a lack of requisite resources.

Although most production managers see the need for adding resources earlier, they are unable to persuade their executive leaders to authorize additional labor.

"Why add to your team's unfavorable labor variance. First, resolve your parts shortage problem and then we'll talk about adding people!" 

That is called the standard executive rebuttal. 

Overcoming this parts vs. resources availability dilemma is a prime responsibility of all production managers, and the inability to do so is a common cause of their downfall.

To deal with the capacity planning delayed reaction syndrome, production managers must become experts at resource planning: typical units vs. requisite resource analysis.

Production managers will never convince executive leadership of their resource requirements based on standard ERP and financial data because it is always too little, too late. They must gain a time-phased, in-depth understanding of their resource and capital equipment requirements and develop programs and systems that will help them convince executive leadership that they are in control and timely action is essential.

Credible, short-term resource planning requires that production managers take control of their destiny. They must work with their financial people and salespeople to develop unsophisticated, high-integrity processes to monitor, forecast and control four primary resource Planning activities: sales forecasts, people skills, capacity-planning systems and workload outsourcing.

Sales forecasts
There is one thing everyone should know about forecasts: They're always wrong. Production managers must be fully aware of how their portion of the forecast is generated and be cognizant of past performance to plan. 

There are two primary techniques to help improve the integrity of forecasts:
• Establish time fences to control when products can be added and when they must be dropped from the forecast.
• Develop forecasted bills of materials commonly referred to as planning BOMs to provide sales with the booking and scheduling flexibility they require.

People skills
People are a company's most precious resource. Production managers must ensure their people are on a continuous learning curve or they will become complacent and their skills will become obsolete.

A sound approach to developing and increasing people skills is to continuously perform technical and professional skills "needs vs. availability" inventories and establish an aggressive program to achieve compatibility.

The goal is workforce flexibility. Such human resource inventories are crucial in protecting core competencies and high achievers during business downturns.

Capacity-planning systems
Long-term capacity planning is normally accomplished by Enterprise Requirement Planning (ERP) and Capacity Planning (CP) computerized systems. The results can be used as an input to strategic planning activity.

Short-term capacity planning is usually a home-grown manufacturing spreadsheet system that uses a laborized typical unit method of forecasting. It produces real-time labor and skills requirements.

Workload outsourcing
Manufacturing flexibility, production agility and reduced product costs are challenges that must be met and achieved by manufacturing managers. Effective outsourcing of processes that focus on company non-core business can be a worthwhile program.

To be successful, the program should consist of a target pricing strategy, special material-handling techniques, product-focused logistics and strong supplier chain partnerships.

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