Master Scheduling Performance Metrics & KPIs: A Key to Supply Chain and Operational Excellence

In the fast-paced world of supply chain management and operational excellence, the effectiveness of master scheduling is critical to the smooth operation of manufacturing and distribution processes. The master production schedule (MPS) serves as a key link between sales, production, and procurement, ensuring that production aligns with customer demand while optimizing resources. Key performance indicators (KPIs) are essential for monitoring and improving master scheduling processes, allowing businesses to make data-driven decisions. This article discusses the performance metrics and KPIs that should be tracked to improve MPS effectiveness, highlights common problem indicators, and provides policies to mitigate them.

1. MPS Aggregate Performance Metrics

a. Variance of Sum of MPSs from Production Plan by Family

This metric measures the difference between the aggregated MPS for a family of products and the corresponding production plan. By evaluating the variance, companies can assess how well the master schedule aligns with the broader production goals.

Formula:

Variance?(Family)=[(Sum?of?MPS?for?Family?Production?Plan)/Production?Plan]×100

Example:

• Production plan for family A: 1000 units
• MPS for family A: 950 units

Variance = [(950?1000)/1000]×100=?5%

b. Variance of RCCP from Resource Plan at S&OP Level

Rough-Cut Capacity Planning (RCCP) measures the alignment of the resource plan (i.e., capacity) with the production plan. This variance helps identify if production capacity will meet the demand.

Formula:

Variance (RCCP) = [(RCCP Resource Plan - S&OP Resource Plan)/S&OP Resource Plan]*100

Example:

• RCCP resource plan: 850 hours
• S&OP resource plan: 800 hours

Variance = [(850?800)/800]×100=6.25%

c. Variance of Master Schedule from Financial Plan or Budget

This variance tracks whether the master schedule’s output matches the company’s financial expectations, ensuring that the financial and operational plans are aligned.

Formula:

Variance?(Financial?Plan)=[(Master?Schedule?Revenue?Financial?Plan?Revenue)/Financial?Plan?Revenue]×100

Example:

• Master schedule revenue: $500,000
• Financial plan revenue: $480,000

Variance = [(500,000?480,000)/480,000]×100=4.17%

2. MPS Stability Metrics

a. % of MPS Orders That Change

This KPI measures the degree of stability in the MPS. Frequent changes to orders can indicate instability in production planning.

Formula:

%?MPS?Orders?that?Change=(Orders?Changed/Total?MPS?Orders)×100

Example:

• Orders changed: 20
• Total orders: 100

Percentage = (20/100)×100=20%

b. % of Orders Past Due

This metric tracks the percentage of orders that are delayed beyond the scheduled delivery time. It is an indicator of supply chain inefficiencies.

Formula:

%?Orders?Past?Due=(Past?Due?Orders/Total?Orders)×100

Example:

• Past due orders: 15
• Total orders: 100

Percentage = (15/100)×100=15%

3. MPS Lead Time Metrics

a. % of Planned Orders Violating Time Fence Rules

Time fences help prevent unnecessary changes to the schedule, ensuring production stability. This metric tracks orders violating the rules for changes within the designated time fence.

Formula:

%?Violating?Time?Fence?Rules=(Violating?Orders/Total?Planned?Orders)×100

Example:

• Violating orders: 5
• Total planned orders: 50

Percentage = (5/50)×100=10%

b. Reduction in Customer Lead Times Over Time

This metric tracks improvements in customer lead times, which directly impact customer satisfaction and operational efficiency.

Formula:

Reduction?in?Lead?Time=[(Previous?Lead?Time?Current?Lead?Time)/Previous?Lead?Time]×100

Example:

• Previous lead time: 15 days
• Current lead time: 10 days

Reduction = [(15?10)/15]×100=33.33%

4. MPS Execution Metrics

a. % of Perfect Orders

This KPI measures the percentage of orders delivered without any issues, such as defects, late deliveries, or incorrect quantities.

Formula:

%?Perfect?Orders=(Perfect?Orders/Total?Orders)×100

Example:

• Perfect orders: 90
• Total orders: 100

Percentage = (90/100)×100=90%

b. Line Item Fill Rate %

This metric tracks the percentage of line items delivered on time and in full.

Formula:

%?Line?Item?Fill?Rate=(Line?Items?Delivered?On?Time/Total?Line?Items)×100

Example:

• Line items delivered on time: 95
• Total line items: 100

Percentage = (95/100)×100=95%

5. Problem Indicators

While monitoring MPS KPIs, businesses should look out for the following problem indicators:

• Unreliable Delivery Promises: Frequent missed deadlines or shifting promises signal issues in scheduling and capacity planning.
• Persistent Past Due Orders: Consistent delays are a sign of resource shortages or improper planning.
• Excess Inventory: Inefficient MPS leads to overstocking, tying up capital and increasing storage costs.
• Many Schedule Changes: Excessive changes to the MPS can signal poor forecasting or unstable planning.
• Top Management Intervention: When senior management constantly intervenes, it indicates a lack of confidence in the master scheduler’s ability to manage the process.

6. Key Policies & Procedures to Mitigate Issues

To address these challenges, organizations must implement the following policies and procedures:

• Clearly Defined Master Scheduler Role: A dedicated role with a focus on ensuring accurate scheduling and monitoring KPIs.
• Disaggregate Role: Assign specific responsibilities for different areas of scheduling to reduce confusion and increase accountability.
• Senior Management Collaboration: Senior management should work closely with the master scheduler to ensure alignment between production, resources, and financial goals.
• Time Fences Reinforced: Strict time fences should be enforced to prevent frequent changes to the MPS once production has started.
• Lot Size Optimization: Proper lot sizing reduces excessive inventory and ensures better control over production scheduling.
• Safety Stock Management: Review and adjust safety stock levels regularly to ensure they are in line with the forecast and demand variability.
• Lead Time Updates: Regularly review and update lead times based on production efficiency and supply chain performance.
• RCCP and APS: Use Rough-Cut Capacity Planning and Advanced Planning Systems to align the resource plan with demand.

Conclusion

Master scheduling is a cornerstone of efficient supply chain management, and monitoring the right performance metrics is essential to ensure that processes are aligned with business goals. By focusing on aggregate performance, stability, lead times, and execution metrics, businesses can drive operational excellence. Monitoring problem indicators and adopting the appropriate policies and procedures will enable organizations to enhance their MPS and meet customer expectations effectively.

Tables Summary:

By continuously tracking these metrics and applying the right policies, businesses can optimize their master scheduling, ensuring operational excellence and customer satisfaction.