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Model for Manufacturers

Model for Manufacturers

Manufacturing scenarios playing capabilities provide planners with functionality to investigate and optimize the way to meet demands from sales planning. Procurement planning functionality addresses the needs of raw material requirements planning for each manufacturing period and production center within different production schedules. Finished and semi-finished item’s manufacturing cost planning is based on BOM variants and production routes.
Item’s full cost calculations by fixed and variable overheads distribution on produced items. Material and overhead cost components analysis.

The model is addressing the planning needs of a manufacturing company in assessing different scenarios of production costs, manufacturing centers schedules and raw materials purchasing to meet sales demands.

The model is a good start for manufacturing companies which have requirements in:

  • Focusing on the financial results by interactive recalculation of P&L, AR, AP, and cash flow within each sales, production and purchasing scenarios.
  • Efficient assessing of manufacturing and supplying capabilities to meet sales demands in quantities and time.
  • Finding the optimal manufacturing routes to reduce production overheads and consider the strategies minimizing finished items and subassemblies stock in case of manufacturing in advance could not be avoided.
  • Making visible material and overheads cost components of manufacturing items and subassemblies to assess main cost drivers.
  • Optimizing procurement budgets while meeting production demand in raw materials.
  • Minimizing production centers unavailability impact during maintenance schedule planning.
  • Having strategic and operational planning capabilities within one system.

Prerequisites and features:

  • Sales plan is required to be setup by items and periods.
  • Bill of Materials should exist for each manufacturing item per each manufacturing center on which this item is planning to be produced.
  • Manufacturing center capacity parameter for each item produced on it is required information.
  • Two interconnected time scales allow planning of sales, purchasing and financial data in month for example (general scale) while having production plan in weeks, day or shifts (manufacturing scale).
  • Interactive form to activate and deactivate manufacturing center availability for producing particular item along manufacturing time scale is provided.
  • Special module "Configurator" has been developed for business users to configure and initialize the model core without Cognos TM1 experts.

Manufacturing model consists of modules which are interconnected with each other by means of system defined rules. The rules processing logic includes numerous parameters which could be entered via Configurator forms.

Each module consists in turn from interconnected data blocks storing and accumulating incoming and outgoing planning and actual data. Actual data could be keyed in or loaded by means of designed ETL processes.

Some modules which are used in the model can also be used within other models like Financial module which consolidates data from other modules into P&L, BS, CF and KPI reports.

The Model for Manufacturers consists of the modules:: 1 – Sales Planning, 2 – Manufacturing Planning, 3 – Purchasing and Stock Planning, 4 – Expenses (Overheads) Planning, 5 – Financial Planning.

Manufacturing Planning module consists of several blocks. Some of them could be interfaced with external modules to receive or submit required data. For example Production Demand by periods could get sales plan data from Sales Planning module while beginning stock balances could be loaded by means of ETL tools from ERP system. Otherwise sales plan data could be entered manually or loaded from any external Sales Planning system by the appropriate ETL process. In any case the calculation output of the block will be production requirement in quantity for each item and period. Manufacturing requirements is one of the main drivers for other blocks calculations such as manufacturing centers schedules along the item's manufacturing routes to supply required subassemblies at each stage. The same is for raw materials requirements by each manufacturing center.

While Production Demand block requires just quantities per item and period to be entered in the Sales Planning module offers much more functionality such as presenting sales plans within more dimensions like customers, salespersons, regions and etc., providing extrapolation functions to allow for sales statistics to be extended on the future periods, taking into account logistics parameters like customer's delivery time and minimum delivery quantity for stock availability planning calculations and other.

Raw materials and purchasing semi-finishes requirement is used by Purchasing and Stock Planning module as input data for further purchasing plans calculations. The module provides additional functionality in selecting alternative vendors and assigning their contribution percentages for each item as well as vendor's prices, delivery and payment terms.

The module output triggers the raw material costs calculations for finished goods and producing subassemblies within FG & Subassembly Cost Calculation block of Manufacturing Planning module.
Manufacturing overheads data is another block input which could be received from Expenses (Overheads) Planning module. Otherwise this data could be entered manually or imported in a simplified structure sufficient for overheads distribution rules.
One of the options could be to present variable overheads for each item by manufacturing centers with amounts calculated based on time spent by manufacturing center for producing particular item along its route.
The required production time is calculated by production scheduling functionality for each Item per Manufacturing Center taking into account maintenance manufacturing center availability schedule. Comprehensive list of item cost components related to raw materials spent and manufacturing overheads incurred during manufacturing route is calculated based on technological specifications on the machines rather than financial analyst assumptions. In this case derived from the Model cost standards could become more accountable and understandable for business managers and could be loaded into ERP system.

Financial planning module provides functionality to enter directly some summary financial data as loans and other profits and losses to consolidate all financial data from all other modules into company P&L and cash flow reports.

ETL and Configurator:

Configuration parameters entry forms. Data and hierarchies loading procedures. Loading sequence control and error logs.

Stock availability planning data is entered by periods using the general scale which is also used for purchasing and financial planning. The period could be any calendar period like month, week etc.
By means of scenarios Generator user could automate the process of producing new scenario on the base of any existing one. Scenarios represent different combinations of different plans and parameters influencing the dependent plans recalculations. For example, the same demand could be met by different production schemes which cause different scenarios the planner could consider for review.

Stock demand is calculated from stock availability plan and stock beginning balances on the first planning period. The result numbers show the item quantities which are going to be delivered to the customers at each planning period.
Scenarios Generator provides the functionality of scenarios multiplication. It helps planner to create and review different strategies in achieving company and departmental objectives. For example, one stock demand could be satisfied by different manufacturing schemes or how one manufacturing scheme could support different demands and so on.

The following tables demonstrate two manufacturing schemes setup principals. First scenario K assumes that 20% of Item1 is going to be produced at manufacturing center 1 (MU1) and 80 % at MU2, Item 2 is going to be produced completely at MU3 and Item 3 with the proportion of 40 % and 60 % at MU2 and MU3 respectively.
Second manufacturing scenario N demonstrates another version of production orders distribution of the same items among manufacturing centers which lead to another set of MU schedules, raw material requirements by the periods and, as a result, to the different items cost.

Within each scenario the model is calculating a production plan for the selected manufacturing scheme for that scenario. Production plan consists of interconnected manufacturing schedules by item and manufacturing center. One of the outcomes of the production plan is an estimate of what items/subassemblies should be produced in advance and what quantities should be kept on stock for future periods.
Planner could change the MU schedules synchronically by assigning one or another manufacturing period as MU maintenance period or free of production for particular item.
Raw material requirements are calculated for each manufacturing period and converted from manufacturing scale into general scale for purchasing plan and item cost calculations. Any changes of master production schedule reflect seamlessly into raw material requirements and all further dependant calculations.
Within each scenario for each finished item or subassembly material cost is calculated as well as each manufacturing center time spent on producing of that item or subassembly according to the selected routing scheme.


Special web application has been developed to provide user with convenient form for production schedules management.


On the presenting web form blue boxes signify that Manufacturing Center is not occupied by any job at particular period.
Green boxes signify that Manufacturing Center is busy for production of particular item. If Manufacturing Center is capable to complete item’s manufacturing requirement in time less than a period the number in the green box represents the portion of a period required to produce demanded item's quantity.
By this form user can allow or block production of particular item on particular manufacturing center by simple mouse clicks on the intersections of item and manufacturing period.

Scenarios interactive planning provides planner with a powerful tool for predictive analytics, insight and resources optimization.