Fixing the Disconnect: Rethinking the Planning-Scheduling Interface in Process Manufacturing

For several years, chemical companies (and other similar process companies) have operated under the assumption that effective supply chain planning is essential for achieving high OTIF performance, improving margins, minimizing expedites and freight costs, and optimizing working capital. They have invested millions of dollars in supply chain planning tools that churn out master production schedules (MPS) based on aggregate capacity and material constraints, and these plans are handed off to scheduling teams to "make it work."

This paradigm is not just outdated—it’s fundamentally flawed. But here’s the problem: it’s not working. The disconnect between planning and scheduling is costing companies money—lots of it. Missed OTIF targets, poor margin optimization, and unnecessary working capital tied up in excess inventory are just a few of the consequences.

At its core, this issue stems from two fundamental problems:

• A lack of clarity around the distinct value drivers that scheduling affects and the value drivers that planning impacts in chemical manufacturing. This has often resulted in companies underestimating the magnitude of the P&L drivers that poor scheduling decisions affect.
• An over-reliance on paradigms borrowed from discrete manufacturing. These paradigms, designed for industries with shorter changeovers and smaller production runs, fail to address the complexities of process manufacturing, where sequencing and product wheels dominate. Until companies rethink this flawed approach, they’ll continue to lose money and miss opportunities for efficiency and profitability.

The Root of the Planning Fallacy

At the heart of the problem is a fundamental misunderstanding about the relationship between planning and scheduling. Traditional planning assumes that if a plan is capacity-feasible, it will also be sequence-feasible. This assumption works in discrete industries like automotive or electronics, where:

• Weekly planning cycles align with short changeovers (minutes or hours).
• Run lengths are small, allowing flexibility to adjust sequences without disrupting capacity.

But in many chemical manufacturing environments, this assumption falls apart:

• Changeovers are long and complex, often spanning shifts or even days.
• Production run lengths are significant, with MBQs and product wheel cycles measured in days or weeks.
• Sequencing matters as much as capacity, yet planning tools are blind to these constraints.

Most of the big supply chain planning systems fail to address the complexities of process manufacturing because they were designed for a different world. Borrowing paradigms from discrete industries, they overlook key elements that make chemical manufacturing unique. Some examples:

Planning systems treat production capacity as a monolithic entity, ignoring the sequencing considerations that drive efficiency. A "feasible" plan might suggest producing Product A, then B, then C—but if moving from A to B requires a 24-hour changeover, and B to C requires another day. A monthly planning bucket may have just 2-3 long runs of specific product families and nothing else. Planning systems that operate in aggregate capacity buckets do not account for these important realties while creating MPS.

The result? Planning systems churn out schedules that look good on paper but are completely irrelevant to the realities of the plant floor. Schedulers are left to rewrite the plan, and executives wonder why "plan adherence is so low". Th reality is that MPS by itself is a meaningless input in this situation.

Scheduling, if Done Well, is a Critical Driver of Value

In the world of chemical manufacturing, scheduling is not just an operational detail—it’s a core driver of value. Unlike planning, scheduling deals directly with the messy, real-world constraints that define chemical production and delivers value by addressing key drivers of operational performance:

1. Optimizing Changeovers: Scheduling systems prioritize sequences that minimize changeover times and costs, ensuring that production assets are used efficiently. By reducing costly downtime, scheduling unlocks significant savings and improves overall plant productivity—something traditional planning systems fail to achieve.
2. Balancing Efficiency and Service Levels: Effective scheduling strikes the optimal balance between maximizing asset utilization and meeting customer service commitments. By dynamically adjusting run lengths, inventory levels, and production sequences, scheduling ensures that both efficiency and on-time delivery goals are met, even in the face of shifting demand or supply disruptions.
3. Maximizing Margin Velocity: When capacity is constrained, scheduling becomes a critical tool for maximizing margin velocity. By prioritizing high-margin products and aligning production sequences with demand urgency, scheduling helps chemical companies capture the greatest possible value from their available capacity.
4. Making Efficient Use of Working Capital: Scheduling drives smarter decisions around inventory and production timing, reducing excess stock and avoiding unnecessary capital tied up in working capital. By aligning production runs with demand and inventory policies, scheduling ensures working capital is deployed efficiently without sacrificing service levels.

Scheduling, if done well, can delivering operational excellence and financial impact far beyond what just traditional planning can achieve.

The Path Forward: Rethinking Planning and Scheduling

The classical handoff from planning to scheduling needs to be fundamentally redefined for the chemical industry. Instead of viewing planning as the "master" and scheduling as the "executor," companies must move to a model that clarifies the distinct roles of each and acknowledges the complexities of chemical operations. Without this clarity, integration efforts will falter, leaving companies with inefficiencies that erode margins, disrupt service levels, and inflate costs.

1. Clarify the Roles of Planning vs. Scheduling

The first step is to clearly define the distinct roles of planning and scheduling. Chemical manufacturing operates in a world of extended changeovers, long production runs, and product wheels—factors that discrete manufacturing paradigms cannot adequately address. Planning should focus on long-term and network-wide decisions, such as capacity allocation across plants and strategic procurement, while scheduling must handle the operational complexities of sequencing, run lengths, and immediate execution. Without this clarity, integration becomes superficial and ineffective.

2. Rethink Integration Around Value Drivers

Integration between planning and scheduling should be grounded in the specific value drivers each function impacts. Planning plays a critical role in longer-term drivers like optimizing freight, reducing overtime and tolling costs, and ensuring cost-efficient procurement. Scheduling, on the other hand, is essential for maximizing margin velocity, optimizing working capital, ensuring OTIF performance, and improving asset productivity. Viewing integration through this lens allows each function to contribute effectively to overall business outcomes.

3. Invest in Robust Scheduling Processes and Systems

Scheduling is often undervalued in chemical manufacturing, where manual product wheels and spreadsheet-based processes are still the norm. However, today’s volatile demand patterns and complex operational environments demand sophisticated scheduling systems. A robust scheduling process must:

• Evaluate Tradeoffs: Use advanced tools to balance efficiency, service levels, and margin velocity.
• Tie to KPIs: Demonstrate direct links between scheduling decisions and critical KPIs, such as cash flow, margins, and OTIF.
• Handle Complexity: Address chemical-specific challenges, such as sequence-dependent changeovers and product wheel dynamics.

By investing in proper scheduling systems and processes, companies can ensure their operations are agile, efficient, and aligned with business objectives.

Scheduling deserves the same level of attention as planning. Chemical environments are among the most complex manufacturing setups, and without giving scheduling its due importance, companies will struggle to achieve the operational excellence needed to compete in today’s market.