Value Stream Operations Planning
SOFP Series Blog #4
In the 2 previous blogs I discussed why SOFP is important and how to approach the first step of the monthly SOFP process. Now we are ready to move onto Step Two.
The completed demand forecasts become the input to the operations plan. We need a plan to fulfill our customers’ demands. The primary concern is whether we have enough capacity to meet the customers’ needs, when they need them.
Capacity is determined by:
- How many units can flow through the bottleneck (or constraint) operation. This is the step in the value stream that has the least amount of capacity.
- Obstacles to value stream flow. These include scrap, rework, downtime, wait-time, material shortages, and so forth.
- Changes that are being made to the value stream. Kaizen events improving the flow. New machines and equipment. Staffing changes. New production processes. Standardized work.
- Capacity is also affected by product mix changes and new product introductions.
The operations leaders and planners create value stream production capacity forecasts for each month. They take account of the changes taking place within the value stream that affect the capacity over the 18 month horizon. As with the demand forecasts, the operations forecasts also contain the assumptions used in the calculations. The forecast accuracy and bias is calculated each month and there is a formal methods for the continuous improvement of the capacity forecasts. The capacity forecasts are entered into the SOFP Planning Sheet.
This planning sheet will show the operations people the months where they do not have enough capacity to meet the demand, and months where there is plenty of capacity. The purpose of this planning sheet is to highlight the problems so they can be resolved.
Value streams with significant seasonality will see that there are times in the year when they do not have enough capacity to fulfill the customers’ demands. But there are other times when they have “too much” capacity.
These issues are resolved on the 3rd day of the SOFP process when the value stream team comes together to jointly decide how to match production capacity to customer demand. That’s the topic for the next blog – coming soon !!!