The term ‘Master Production Schedule’ appears to be one of the simplest within the Supply Chain / ERP field. ‘Master’ implies that this is the top-level plan, the driver of everything else. Within ERP systems, this means that the MPS is the primary input to Material Requirements Planning (MRP). It is ‘exploded’ into lower level requirements and as such it highlights one of the major benefits of MRP as first proposed back in the nineteen-seventies.

  • Oliver Wight, Joe Orlicky and the other pioneers of the approach explained that in business of even moderate size the number of components to manage is considerable. Managing all is extremely difficult and time-consuming; managing all independently and coming up with a cohesive total is impossible in all but the simplest cases. 
  • “But,” they said, “if you can set the top level plan for maybe a couple of hundred end items, then the system can do the rest for you. After all, the bills of material exist to convert planned output at the finished product level into total demand for each and every assembly, sub-assembly, component and raw material. Isn’t that so much easier?”

In the early days of MRP systems, people agreed, but perhaps dived in just a little too quickly. MRP quickly and efficiently explodes any plan but if the ‘plan’ is not realistic then the system is a dangerous tool. There are a number of fundamental points to understand about this key process.

    Where MPS Sits Within The Framework

    Within the standard Supply Chain theory, planning begins with the Sales & Operations Planning, described elsewhere in this site <click here>. This is the management tool for bringing the Sales and Operations functions together to establish medium to long-term plans – typically at the family level rather than by stock-keeping unit (SKU), the actual product to be manufactured. In this scenario, the plan is agreed within the monthly S&OP meeting and the volumes by family are then broken down to the actual products to be made.

    As ever, this generic model sits less than comfortably in some environments. The people establishing processes within a business need to understand the principles of the subject in order to understand which elements of the model lend themselves to their own environment. For example, suppliers to the Original Equipment (OE) automotive market receive schedules at the SKU level from customers and the role of the S&OP process is to accumulate total demand by family and ensure that the plan can be met. There is no need to break an aggregate family plan down into finished products.

    The principle, of course, remains firm. Sales & Operations Planning is the senior management tool for agreeing the plan and this must happen before the MPS is set and MRP allowed to establish production plans for materials, components and assemblies.

    Items Within The MPS

    The standard model clearly makes sense – a plan from S&OP at the family level broken down to end items within the MPS process. This implies some rules for apportionment within each family (30% model A, 25% model B, and so on) and MLG have worked with several businesses where this approach would be suitable. However, other companies choose to use some form of statistical forecasting at the SKU level.  

    In businesses making entirely to order, the MPS for the short term will usually be a refection of the sales orders, with varying offsets for transit lead times and perhaps some early production to smooth out any spikes in the demand plan. If the business offers many product variants the later parts of the MPS may well be generic reflections of families or product types with bills of material (‘planning bills’) set to break the MPS into modules or components.

    • The easiest example to consider is the motor car. The short term MPS is actually the assembly schedule with each item fully defined (saloon, 2-litre petrol engine, manual gearbox, 2 wheel drive, left hand drive, GL trim, with electric sunroof, leather seats, sports steering wheel, and so on). Further out the MPS could be set at this level, but is that realistic?
    • How many SKUs might have to be set up? Saloon or estate, 4 different sizes of petrol engine and 2 of diesel, manual, automatic and semi-automatic gearboxes, left and right hand drive in 4 basic trim levels gives 288 options. If we have 3 ‘optional extra’ versions of the sunroof (manual, electric, full length electric) for the lower specification models we have probably just increased this by another 120. Then we have electric windows (front only or front and rear) for these same lower specifications, manual or electric seat adjustments (with or without memory), several versions of radio with or without CD, MP3 interface, before we even begin to think about numerous colour options!

    Within a planning bill, we can manage all the component requirements by one part number if we wish. We can then set up all the options with the quantities reflecting the relative frequency of each option. In practice, we would actually set up different items for the various broad categories. For example, people choosing the 3-litre engine may be more likely to choose the automatic gearbox, which will be a different automatic unit than that supplied with the 1.8-litre diesel.

    Again, the actual approach taken within any business must be selected by people who know their own business and its requirements, together with the details and implications of the generic approaches available.

    Rough Cut Capacity Planning (RCCP)

    The standard theory of Manufacturing Resource Planning (MRPII) established the concept of Rough Cut Capacity Planning as the means by which the resource requirements of the MPS were assessed. We need to look at capacity, of course, because if we load a plan that we can’t achieve MRP will suck materials into the business that will sit around untouched – if we are lucky! If we are not lucky we will start trying to make everything in the plan and cause nothing but chaos.

    ‘Rough Cut’ differed from the detailed approach (Capacity Requirements Planning, or CRP) to managing capacity in various ways. 

    • CRP is based on detailed routings against each item being planned. Coming after MRP, it looks at existing and planned works orders for each item and accumulates the standard hours for each resource within each routing.
    • At the MPS level, we need more than this. The routing for each item in the MPS may include nothing more than, say, assembly, test and paint. If we could guarantee that one of these would always be the ultimate constraint (‘bottleneck’) this would suffice but can we ever take this chance? If we need to take account of demand on pieces of plant used to produce components then we need more than just the finished product routings.
    • Of course, we need to allow some offset for when a resource may be required for various products. The first step in producing a key component, required for all end items, may be carried out on a heavily-loaded machining centre. For some of these products the assembly may take roughly ten days after this operation, but others may require an additional week for some specialist off-site service. 
    • Since the MPS may be set an aggregate level, and since the actual resource requirements are going to be amended by MRP (which will net stocks, seek to replenish safety levels and create works orders according to batching rules) we can’t get a truly accurate handle on capacity v demand at this stage. We are simply looking to get an early warning before MRP starts pulling in materials. We therefore don’t need to set up all resources within RCCP – we can limit this activity to the known constraints within the business. In some cases this may be a specific piece of plant like the machining centre above; in others it may be a generic such as ‘paint’, ‘arc welding’, ‘horizontal boring’.

    One final point relating to Rough Cut – the standard texts show the S&OP plan being assessed by something called ‘Resource Planning’ and the MPS by RCCP. The distinction – though not always – would be described as arising from S&OP working at the family level whereas the MPS is established by SKU. As noted above this will not always be the case. In practice, these may well be the same tool – either within a company’s ERP system or in a spreadsheet if people feel happier with this. 

    The Master Production Scheduler

    As with the roles within S&OP, the Master Production Scheduler may exist as a job title within a business, or it may not. It may be a function carried out by a production planner, or by several. In some companies, the Production Planning Manager fulfils this role. What matters, as always, that the duties are undertaken by somebody who knows what they are doing. This is an essential position within the planning and order fulfilment processes and must not be neglected.

    Having said that, it may not always be an attractive position. One MLG client, several months into the role, commented that he was “nobody’s friend”. He explained that as well as managing the longer-term plan he was responsible for dates being set on sales orders in the business, which designed and made engineered units to order. In most cases the customer requirements could be accommodated within the existing plan but sometimes the demand required special action.

    “You know, how it is,” he explained. “Sometimes I have to tell the manufacturing and purchasing teams that this order is too important and that they’ve got to pull out all the stops so just get on it. Sometimes I understand that we just can’t do it and I tell the sales engineers that they have to tell the customer that the best we can do is actually 3 weeks later than they want. Of course, the production boys never remember the ones where I was on their side; all I get is complaints about the ones where I accepted the short lead time. The sales people are just the same, saying that we are going to lose these customers and it’s all my fault. Apparently I never move an inch to help them!”

    Software Package Facilities

    All today’s ERP systems offer MPS modules – some offer S&OP though since the hard part of all master planning is actually the decision-making which requires judgement, a quality not yet seen in any package, we have to remember that systems suppliers never give solutions. They may give tools to help towards solutions but we can never pretend that a system can solve our problems.

    • In visiting a supplier on behalf of a client one of our team was appalled to hear the supplier claim to now have S&OP, which would guarantee on-time performance in the future, and then be shown a system introduced without management controls. What the company had was an ERP system which had an interface to an external statistical forecasting system. This generated a brand new statement of demand every month (from scratch, without anybody looking to ask “what’s changed?”) and passed this into ERP, which automatically updated the MPS and triggered exception messages in MRP.

    As ever, the rule about applying a computer tool to a business need is simple – understand what you are trying to achieve, understand the management techniques available and decide on the best approach to meet your goals. Then and only then should you look at the system, asking your in-house or external specialists on the package in question to show you how to do what you have identified as your requirement. To start with the bells and whistles of a package is to compromise ‘best practice’ from the outset.

There are many good books available on the subject of MPS, which explain all of the above, and far more, in considerable detail. This page, like the others of its kind within the MLG site, is designed to offer an overview of the key points and of the MLG approach to the subject.