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KPI Driven Production Planning: How to Optimize a Supply Chain? - TechTalks

13 Sep 2018 - Production

Running a metals plant means to manage a variety of interactions between many options. Hundreds of decisions based on production data, reports and Key Performance Indicators (KPIs) have to be made daily by different stake holders. Production planning expert Robert Jäger introduces a practical approach and a supporting tool for planners to help with these tasks.

TechTalks: Robert Jäger on KPI Driven Production Planning

Production Planning: Three Steps to a Production Plan

Fundamentally, in order to achieve an optimal production plan the metal producer has to apply the three-step-approach: 

  • define business goals

  • describe strategy and positioning

  • be agile

Business Goals Definition

The definition of business goals is the first and probably the most important step on the way to the optimal production plan. In a metal plant, common business goals are usually translated into the so-called Key Performance Indicators, by which the quality of plans or schedules is measured. These include on time in full delivery, capacity utilization and inventory performance.

KPI Driven Production Planning © PSI Metals
KPI Driven Production Planning © PSI Metals

Consequently, each plant must identify relevant KPIs for its specific supply chain conditions and precisely define the formula for measuring them. By defining these production parameters, objectives for KPI quality assessment can be set.

Strategy and Positioning Description

While some KPIs go hand in hand, others go in opposite directions and are therefore in conflict with each other. Thus, the second step is to understand how these KPIs interact with each other and make a decision about how to position oneself strategically in the space defined by these KPIs.

Be agile!

The only thing that never changes is change itself and at some point you will be facing new conditions such as new market situations, new competitors, and so on. The third step on the way to an optimal production plan is therefore agility! By facing change, you must be able to reassess the relative priorities between your goals and sometimes even review the goals themselves.

How would you implement this approach?

To implement such a three-step approach, you need a supporting tool that helps you to be flexible when changes are needed. This system would help you to define, calculate and analyze KPIs in a user-friendly way. Moreover, it would support you in visualizing the interactions and conflicts of existing KPIs and enable you to carry out simulations. 

At PSI we call this approach - KPI-driven production planning. It enables the optimization of plans and schedules based on dynamic business objectives that cover the entire life cycle from sales and production orders to the finished product at all stages of the metal production process. Its high degree of automation with tried-and-tested algorithms ensures that complex planning tasks can be mastered in real time. This makes planning activities more transparent while providing information straight to the point. 

PSImetals KPI Tuning Dashboard © PSI Metals
PSImetals KPI Tuning Dashboard © PSI Metals

Embedded management of tuning profiles as well as advanced reporting and scenarios benchmarking, further support decision makers in finding the best balance between conflicting goals. The access to KPI Monitoring can be adapted to each organizational level of the plant down to the shop floor. Experience has shown that feedback information such as KPIs can significantly increase the motivation of production teams.

What are your benefits?

    • Reduce throughput times and WIP inventory levels
    • Improve product qualities through better respect of scheduling constraints
    • Optimize order combinations and maximize through-process yield
    • Increase efficiency in the planning processes
    • Edit plans and schedules easily
    • React fast to plan deviations 

    Jörg Hackmann, Head of Product Development PSI Metals

    The graduate mathematician Jörg Hackmann crossed paths with PSI in 1991. Today Jörg is Director Products & Methodology. Many years of experience and an extensive knowledge base about our product make him the right person to chat with about such topics as PSImetals product, methodology, planning and mobile apps.

    +49 211 60219 - 204

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