If you’re an operations leader or a production planner in manufacturing, you might know how hard it is to get top management approval for production scheduling software. Where technology funding is concerned, senior executives will often question why the ERP system isn’t enough to keep the daily manufacturing schedule on track. However, the ERP system isn’t usually equipped to handle events that happen in real time on the shop floor. When everyday problems disrupt production orders, the people in charge of production scheduling and operations management can join forces to decide if production scheduling software is right for the manufacturing company. Building a business case for production scheduling software helps you quantify the financial impact, articulate how it impacts business goals, and create a powerful tool for engaging corporate executives.
You can build a business case for production scheduling software in three steps:
Identify Compelling Event
To a certain extent, trying to get management buy-in and funding for software to improve production scheduling is like selling. In this context, the business case is your sales pitch. Sales experts say that a compelling event is often part of the sales effort. They define it as a business influence or pressure that forces action or response which has a defined date and a business owner.
I once worked with a snack foods company that was expanding one of its facilities with a new production line. The vice president of engineering was spearheading the expansion, and the company had set a deadline of the following January 15 to launch operations on it. This is an example of a future compelling event. A past compelling event might be when operations management must satisfy an unexpected yet immense demand surge at a time when qualified worker availability was erratic.
The first example is an opportunity to proactively avoid problems and add value. The second provides concrete evidence of challenges that the production planner and operations leader may have already been aware of. Either way, a compelling event establishes a real-world use case. However, you’ll need evidence to prove the value of the use case, which is where data comes in.
Gather Relevant Data
In the earlier snack foods production example, the company was building the new line in a plant that ran 24x7. This facility was already experiencing growing product mix, ever-changing demand, and typical attrition among trained workers. However, the company wasn’t building the new line to address existing pressure — the additional capacity was specifically intended to meet demand from new clients and sales, commitments that were already in the ERP system. Therefore, the production planner and operations leader had no reason to believe the already-complicated conditions would change. In fact, they recognized that the new line would multiply the complexity around plant production scheduling.
In this instance, they would need specific data about the outcomes achieved with the existing processes and tools. That does not mean answering the question, “How long does it take to create the shop floor production schedule?” Instead, this scenario requires answering questions like:
- How many times did we miss ship dates or order quantities?
- How much do we pay for rush shipment charges?
- How much raw material inventory are we holding to cover unexpected scheduling errors?
- How many new orders did we have to turn away because of scheduling difficulties?
- How much safety stock are we holding to cover unexpected orders?
- How many orders were late because of unplanned downtime or no available qualified workers?
- How much machine capacity was wasted because of order cancellations or changes?
You might not be able to answer all these questions and you’ll probably think of others that are relevant to your organization. Collect enough information to make a compelling case, but don’t slow down the process trying to case every piece of data.
A successful business case needs a minimum of three months of data, but six or twelve months is preferable. A longer data sample will show that the problem or opportunity is persistent and not a temporary situation. These and similar questions will help you get a clear idea of the impact production scheduling has on on-time delivery and inventory. It’s information to convey the relationship between what happens in the plant and the company’s business goals.
Pinpoint the Right Financial Metrics
As you’re thinking about which metrics to use in your final business case, visit your company’s website, read the most recent annual report, revisit the mission and vision statements, and skim general marketing presentations. These materials will remind you what your company is most proud of, wants to be known for, wants to improve, and how it wants the market and buyers to perceive it. Some examples might be:
- Customer satisfaction
These categories are usually some of the most important business metrics for a company. Using the operations performance data you gathered, you can decide which of them support the company’s business goals. Analyze how improvement in any of the operations metrics will affect each of the business goals. At this juncture, you might want to enlist the help of the plant manager or a business analyst who has data about the impact of operations performance metrics on business goals and financial measures.
Finally, pare down the operations metrics and business goals to just the three or four highest impact elements. This is the ammunition to power your business case.
Making the Best Production Scheduling Software Decision (for Your Company)
A company that wants to pick the best production scheduling software should build a business case before making any choices about which product to buy. When you present to executive management, other data points that will improve your business case:
- Hard costs: purchase price, other technology or other investments required to support it, downtime needed for implementation, training, support, and others
- Soft cost: what will it cost the organization if it doesn’t move forward with the investment, now, one quarter from now, one year from now
- Time-to-value: point at which company achieves value beyond initial investment, expressed in time
Of course, the stronger your business case, the more enthusiasm it will create and potentially faster buy-in for your production scheduling software project.