A company’s approach to planning and scheduling will be determined, to a great extent, by the nature of its business, markets and customers. The most important consideration is to use the appropriate scheduling process to support the business and customer service objectives.
The decoupling point is where supply meets demand. For make-to-stock (ship-from-stock) products, the decoupling point is finished goods inventory. Demand dictates the rate at which finished goods leave inventory, supply is in control of resupply so scheduling of production can be focused on efficiency and cost savings.
For pure make-to-order manufacturing (nothing started until the order is in-hand), the decoupling point is at raw material and component inventory. Production schedules are dictated by demand. Raw materials can be acquired at the convenience (and efficiency) of the plant. Note that many products are started through production based on a forecast but finished to-order. Technically, this is still make-to-order (or assemble to order) and the decoupling point is somewhere in work-in-process. Computerized scheduling is important to avoid material shortages and load balancing. Computerized scheduling and net requirements calculation becomes even more important in assemble-to-order environments, where strategic materials have long supply lead times. In these cases, materials needs to be forecasted from the need date of the make-to-stock level to meet customer service levels and to level capacity.
For make-to-stock plants, the focus of scheduling will be batch size and throughput. Make to order plants will be more concerned with input-output balancing and backlog management. Both will want to make the most of available resources through effective management of work flow to get orders completed on time.
Scheduling approach is also dictated by volume and variety. The above paragraphs apply to traditional batch production – the way most plants operate, most of the time. For high volume, low variety situations (many consumer goods, for example), the company might opt for a continuous production (cell or line) arrangement and rely on “pull” tools like kanban to keep parts and materials moving smoothly. In these situations, computerized scheduling takes a back seat while planning is focused on leveling production so the flow lines can operate effectively. This is not to say that scheduling is not important – scheduling just takes a different form, focused on ensuring the steady flow of work that pull systems need.
Remember that scheduling and flow management are execution functions, and both rely on planning to provide the right amount of work for the resources available—as well as to ensure that all needed materials are on-hand when they are needed.