One of the challenges for the operations manager in any business is the scheduling of key production activities. There are numerous variables that need to be considered in this planning process. These factors include production capacity, customer demand, supplier performance, design completion, cash flow, and staffing (Heizer, 2011). All these factors come together to create a production plan that can fluctuate based on many external forces. The idea of the master production schedule and the sales and operations plan is to help forecast and meet the required production levels. The goal is to maximize efficiency and profitability through anticipating demand and adjusting production schedules accordingly. The Sales and Operations Plan (S&OP) and the Master Production Schedule (MPS) are two tools used in operations management to assist in the scheduling process.
Master Production Schedule (MPS)
The MPS is the overall timetable that outlines exactly what is to be made and when. The schedule follows the production plan which sets the overall level of output in broad terms. The MPS breaks down the more generic production plan and provides the specifics regarding exactly what is getting produced (Heizer, 2011). The production plan is derived from all the elements of the planning process and MPS must satisfy this production plan. One company that markets MPS solutions identifies inputs to MPS as forecast demand, production costs, inventory costs, customer orders, inventory levels, supply, lot size, production lead time and capacity. This translates to MPS outputs of amounts to be produced, staffing levels, quantity available to promise and projected available balance (Inventory Solution Logistics Corp, 2007). Successful MPS implementation provides the ability to efficiently manage operations in accordance with the business plan and forecast.
Sales and Operations Plan
Sales and operations planning is the integrated business management process to achieve focus, alignment and synchronization among all functions of the organization. The S&OP is a broader plan than the MPS and incorporates additional factors within the planning process. It is more of a decision making process that ensures each area of the business is following the common plan. The result of the S&OP process is a single operating plan identifying the allocation of company resources and is often enabled through technology. Companies can make large investments into software to implement the S&OP process. Companies that fully embrace S&OP processes operationally outperform companies that don’t use or fully employ S&OP processes (Lapide, 2004).
There are numerous benefits to implementing an S&OP process that can be both quantified and subjective. Some of the quantifiable benefits include improvement in on-time delivery to customers, improvement in inventory levels, improvement in plant efficiency, and improvement in transportation...