Master scheduling is the detailed planning process that tracks manufacturing output and matches this against customer orders that have been placed. The master schedule is the next step in planning after the sales and operations planning (S&OP).
The figures from a sales and operations planning exercise, i.e. at a higher level, will flow through to master scheduling where the planning is at a lower level and at the product group level.
The master scheduling will determine when specific product groups will be made when customer orders will be filled, and what manufacturing capacity is still available for new customer demand.
The master schedule will be further planned in the Materials Requirement Planning (MRP) system, which calculates the quantity and timing of purchase and production orders needed to satisfy the master schedule.
Master Schedule Record
The master schedule record will vary based on your company’s planning systems and specific products, but it will contain a number of required pieces of information. The record should contain the forecasted demand, the number of booked orders, the projected inventory levels, the production quantities, and the quantity available for promise.
The master schedule record is shown over a period of time which is called the planning horizon. This can be a few days to a number of months, which will depend on the particular finished item.
Complex finished goods such as aircraft and customized conveyor systems will have a lead time in months, while products that can be manufactured and delivered in a few days will have a planning horizon that is short.
Available to Promise
As well as producing information on the timing and size of production quantities required, the master schedule gives the marketing department information that can be used when they have to work with customers on final delivery dates.
When the sales department takes orders from customers they can offer them final delivery dates based on the quantity of the available-to-promise (ATP) inventory.
The ATP is calculated as the difference between the booked sales orders and the quantity that the manufacturing department has scheduled to produce. When the sales team takes a new order, the available to promise quantity is reduced by the amount on the sales order. Therefore the next order that is received may require that the customer is given a different final delivery date based on the available to promise quantity.
The ATP quantity is not a real figure but an estimated figure based on the customer sales orders and the estimated production. If a customer calls to cancel an order or the manufacturing department plans a new run, then the available to promise quantity will change, allowing delivery dates to be reduced.
However, the opposite is true if the customer calls to change the sales order to a larger amount or the manufacturing department fails to manufacture the quantity of parts planned. An available to promise inventory is associated with each master scheduling quantity because the master scheduling quantity specifies the timing and size of new finished goods that can be allocated to meet future sales orders.
If the master schedule is changed for any reason this can be expensive to the company as additional production can cause delays in shipments to customers, or reducing the number of sales orders can mean raw materials are not being used and accruing storage costs in the warehouse.
To manage the master schedule, a company can freeze a specific period called the Demand Time Fence. This is the number of periods, from the current period, where very few or no changes can be made to the master schedule.
The number of periods can be decided upon based on the cost involved in making changes to the master schedule. If it is extremely costly to make changes then the demand time fence can be a number of weeks, but if the cost of adjustments to the master schedule is minor, then the demand time fence can be a day or two.
If changes are made beyond the demand time fence, they are therefore less costly to the company, but will still impose some costs.
This period is called the Planning Time Fence and during this number of periods the master scheduler can:
- Make changes to the schedule
- Take into account customer requirements
- Take into account manufacturing changes
This article has been updated by Gary Marion, Logistics/Supply Chain Expert.