Understanding the Complexity of Production Planning in Modern Supply Chains
In modern supply chains, production planning is about achieving seamless coordination across a fully integrated value chain. The challenge lies in managing the upstream and downstream impacts of unplanned changes—fluctuating demand, supply chain disruptions, regulatory shifts, and technological advancements—all of which can introduce inefficiencies if not properly addressed.
For businesses aiming to maintain operational efficiency and resilience, the ability to plan and execute cohesively across the value chain is essential to staying competitive in today’s complex and dynamic marketplace.
Production Planning: Navigating the Complexities of Modern Supply Chains
Production planning, the process of coordinating resources, scheduling tasks and aligning operations to meet demand, is no longer simply a case of scheduling labour efficiently or ensuring that raw materials arrive at the right place at the right time.
With globalisation now a reality rather than an academic exposition, production planning requires balancing many factors, from fluctuating consumer demands to supply chain disruptions to technological advancements and regulatory compliance. Relying on outdated processes no longer cuts it: this complexity demands a strategic approach to manage resources effectively and maintain operational agility.
Let’s look at the core challenges businesses face as they tackle production planning and how they can navigate these complexities to ensure long-term operational and financial resilience.
Demand Volatility
Demand volatility- a sudden and unexpected product demand- can lead to excess stock, stockouts, inefficiencies in the supply chain and overall inflation of carrying costs. This unpredictability complicates production as businesses look to balance the risks of overproduction with those of understocking.
The COVID-19 pandemic highlighted the business risks associated with demand volatility. The skyrocketing demand for hand sanitisers, PPE, and toilet paper saw widespread global stockouts. At the same time, sectors such as apparel and automotive saw demand plummet and were stuck with surplus inventory and unpredictable financial losses.
A Business Continuity Institute (BCI) report found that 27% of organisations identified demand fluctuations as a critical factor in supply chain disruptions during the pandemic. While the intensity of these disruptions has decreased in the last couple of years, demand volatility will continue to present challenges. Factors such as shifting consumer preferences, seasonal trends, and economic uncertainty continue to create fluctuations, albeit at more manageable levels.
Supply Chain Disruptions
Even the most systemised supply chain can fall victim to unexpected supply chain disruptions. Geo-political tensions, natural disasters and pandemics can disrupt the flow of goods and materials, making agile and responsive planning systems an operational necessity.
Technological Integration
Studies by Statista predict that global supply chain management will grow from $15.85 billion in 2020 to $31.00 billion by 2026, indicating a substantial shift towards technological solutions.
While technologies like automation, artificial intelligence and advanced analytics play a vital role in supply chain optimisation, their integration requires significant investment and expertise, presenting both opportunities and challenges as businesses seek to use a streamlined set of technologies for production planning activities.
Regulatory Compliance
For businesses operating across multiple regions, adhering to both international and local standards adds another layer of complexity. These regulations cover everything from environmental standards to labour laws. Each jurisdiction carries its own requirements, and non-compliance can result in delays, fines and reputational damage. A report by the Productivity Commission highlights how supply chains that span multiple countries are more vulnerable to changes in regulations, import/export restrictions and shifting requirements around environmental compliance.
Addressing Challenges in Production Planning
Advanced Planning and Scheduling (APS): Streamlining Complexity
Advanced Planning and Scheduling (APS) is now considered essential for covering production planning issues. These systems use intelligent data analysis to optimise resource allocation, improve scheduling efficiency and help to balance production rates with market demand. By automating workflows and providing real-time adaptability, Biarri’s APS systems have helped our customers reduce planning time by up to 80% and deliver savings of 4-11% in labour costs.
Driven by advanced mathematical optimisation, The Biarri Workbench automates planning and has the ability to adapt in real-time. Our solution is proven to reduce inefficiencies, improve cost control and enhance operational scalability.
Biarri in Action
When a large fuel producerapproached Biarri, they grappled with managing complex production schedules across their extensive operations, especially as they shifted toward renewable diesel production. Their existing manual processes were inefficient and failed to adapt quickly to changing production needs. Biarri’s custom-built APS solutions automated their scheduling processes, drastically reducing planning time and aligning production outputs with demand. This allowed them to streamline operations and maintain efficiency during a significant operational transition.
Data-Driven Decision-Making for Intelligent Choices
Data-driven decision-making now lies at the heart of modern production planning. By looking at historical and real-time data, businesses can gain insights into market trends, anticipate disruptions, and proactively respond to challenges as they occur, ensuring their production planning decisions are integrated and optimised across the value chain. By transforming raw data into actionable insights, businesses gain improved forecasting accuracy, reduce waste and streamline operational efficiency.
Biarri in Action
The petroleum company faced the complex task of selecting optimal feedstocks, such as corn, soy, and tallow, for use in renewable diesel production. Their existing systems struggled to provide the concise data required to properly manage crude feedstocks in order to maximise profitability. Biarri’s data-driven solutions enabled the company to evaluate feedstock options against market conditions and operational requirements, resulting in an increase to annualised profitability of more than $40 million.
Supply Chain Integration: Strengthening Connections
Supply chain integration fosters transparency and coordination across the supply chain to optimise the collective performance of all people and functions creation, distribution, and support of an end product. By leveraging advanced tools, businesses can enable seamless collaboration between suppliers, manufacturers and distributors.
Biarri in Action
When this company engaged Biarri, they were seeking a way to optimise their supply chain operations, which stretched across procurement, production, and distribution in 12 states. Their processes were disjointed, leading to inefficiencies and delays.
Biarri’s tools enabled them to align critical inputs from across the business, breaking down barriers between information silos. With data integrated across the value chain, Biarri’s algorithms could support informed, globally-optimal decision-making. This improved coordination, reduced inefficiencies, and enhanced overall performance, even in the face of disruptions.
Agile Manufacturing Practices: Adapting to Change
Agile manufacturing practices allow the flexibility to adjust production volumes, switch product lines, and modify schedules quickly. This adaptability is crucial for meeting evolving market demands while minimising downtime and waste.
Biarri in Action
The petroleum manufacturer faced a significant challenge transitioning to renewable fuels while maintaining production efficiency. The process required reconfiguring workflows and quickly adapting to new policies and market demands. Biarri’s agile optimisation tools allowed this large organisation to adjust production schedules and resource allocation dynamically. This ensured they could respond to changing requirements without sacrificing profitability or operational efficiency.
Would you like to learn more about how Biarri solutions can help your organisation optimise production planning? Book a discovery session today and unlock the power of your supply chain.