This week as I was trying to figure out what to talk about, I was really struggling to come up with a good topic. At first, I was trying to find a smaller company that excelled at managing their resources. Then I started looking for any company that was known for their exceptional planning ability. Without any luck, I decided to look at an overall industry: the furniture industry. The article that I found discusses three ways that furniture manufacturers can improve their production planning and management techniques.
Improve the Company’s Inventory Management
The first way is to improve the company’s inventory management. Controlling the inflow and outflow of inventory is key for an efficient furniture manufacturing company. Basically, the control of inventory is a balancing act that aligns the furniture production with the expected customer demand. This creates a lean manufacturing system that lowers the risk of product shortages and excessive inventory. This is very similar to a concept that we have covered in class: The Master Production Schedule (MPS). A MPS has many benefits. For starters, it helps management prioritize certain requirements. Because a MPS is regularly updated, it is easier for management to see the areas that require the most attention—such as an area that has a lower inventory level. Additionally, a MPS helps stabilize production by giving management the ability to form an expectation. This expectation allows management to predict how much furniture should be produced and in which period to produce it. This expectation also helps management forecast when the supplies should be ordered so that they can produce the necessary amount of furniture. At the end of the day, a MPS helps a furniture manufacturing company efficiently produce and sell their inventory.
Manufacture Similar Products Together
Another way that a company can improve their production management techniques is to manufacture similar products together. This will enhance communication across the manufacturing department and create a more efficient production process in all aspects of the company, which in turn will increase the company’s ability to meet customer demand. For a furniture manufacturing company, this would mean that leather products, such as living room furniture, should be produced together, while wooden products, such as dining room furniture, should be produced separately from the leather products.
Invest in an Enterprise Resource Planning System
Lastly, a company could invest in an Enterprise Resource Planning (ERP) system. An ERP system is a process by which a company manages and integrates the key components of their operations. An ERP management information system integrates areas such as planning, purchasing, inventory, sales team, marketing, and finance. The ERP software enables each department to share information and processes with other departments throughout the company. It basically acts as the central nervous system by receiving information and transmitting it to different parts of the company. In the case of a furniture manufacturing company, the production, purchasing, inventory, and sales departments will be able to share information with each other through the same system. This will allow the different teams to better understand what is needed in order to more efficiently satisfy the customer demand.
So what do you guys think about production planning and management techniques? Is the MPS the most beneficial way to forecast production levels? Should all companies invest in an ERP system? Let me know.