The Master Production Schedule (MPS) is a plan for the production of individual final items. The MPS breaks down the production plan to show, in each period, the quantity to produce of each final article.
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Each final article is also called Stock Keeping Unit, usually using its acronym SKU. The Master Production Program, which is developed over a period of time, is called the planning horizon. The planning horizon generally extends between 3 and 18 months, depending on the manufacturing cycles of the item in question.
The information or input data feeding the MPS is the following:
- Aggregate production plan, in product units
- The forecast of each final article, in product units
- The current order portfolio
- The stock inventory level
- The available production capacity
The MPS must be verified at any time against the capacity constraints of the most critical resources. This process is called Rough-Cut Capacity Planning (RCCP). The RCCP identifies any instance of unfeasibility of production before the plan is operational. It is recommended to evaluate its manufacturing feasibility during the planning horizon. Once the MPS has been executed, the planner will carry out the plan for the next period.
The planning horizon should be as long as the longest cumulative delivery time plus a future visibility period. The cumulative delivery time is the longest period of time required to carry out the manufacturing activities of the product. It can be determined by the product time structure (BOM), looking for the longest performance time for each production step.
How is the MPS used in Manufacturing Company?
Considering today’s complexity in manufacturing, the MPS helps to decide:
- What to produce
- What batch sizes
- When to produce
- What sequence to adopt
To successfully implement an MPS, it must be understood that its purpose is not to state the quantities and delivery times of the products. The MPS is in fact a solid contract between Sales and Production. The MPS defines what Production will produce, and it’s not a forecast at all.
There are manufacturing variables that the planner has to consider when running the MPS. These variables are:
- Batch criteria
- Sequence constrains
- Set-up times
- Capacity over-saturation
Benefits of working with the MPS
There are multiple benefits when a manufacturing business introduces an MPS. They are described below:
- It provides a solid base to build, improve and track the sales forecast.
- It provides a solid base to determine the desired inventory levels.
- It provides a solid base to calculate the quantities of parts, subcomponents or raw materials to buy or produce, as part of the MRP next stage.
- It provides a solid base for calculating the required amount of labor and shifts, as part of the MRP next stage.
- It allows optimizing the installed capacity and balancing the load of the plant.
- Manufacturing can estimate the production and maintenance costs associated with the work centers.
- The financial department of the company can get income and expenses, derived from the MPS and generate a forecast of the cash flow in the company. It will help to build other financial statements, such as the Balance sheets, Profit and Loss statements, and the investment plans.
- The Department of Human Resources can take advantage of the MPS to anticipate the requirements of hiring labor.
The MPS should reflect the business plan as closely as possible. This requires a constant update by all departments of the company. If the Marketing department plans a sales promotion, the increase in demand must be reflected in the MPS and the forecast. If the sales team discourages the sale of a product line in favor of another new created line, the MPS and the forecast will be adjusted.
The MPS helps the Marketing and Sales departments when they embark on a promotional campaign. Thanks to this resource, it’s possible to discuss and confirm the actual plan with the Planning department.
The fact of achieving a high level of collaboration between the different departments of the company is, in itself, a great benefit. The MPS sets the basis for creating the Material Requirements Plan (MRP). The MRP operates at a higher level of detail, both in time and in item breakdown.
Remember that the MRP breaks down each item into its components or parts. Purchasing and Production departments may find possible to meet additional demand for products. They will be able to find enough quantities of the components and sub-assemblies needed for the product manufacturing.
Potential abnormal situations for individual items
There are potential undesirable situations that the planner has to deal in relationship to the individual items or SKUs. When working with the Master Production Schedule, the planner will consider:
- If there is material stock-out
- If there is any lack of material balance over the supply chain
- If there are bottlenecks, which means a constraint over the manufacturing supply chain.
- Any other contingencies
The difference between MPS and Production Scheduling
The term Master Planning comes from the recursive process of optimization. It means that the quantities to be produced of each unit are defined based on the aforementioned inputs and constraints. The final result will be the Production Master Plan. This plan will not be static, but renew weekly or monthly.
Remember that MPS involves planning, and it’s much more than simply scheduling.
Scheduling just gives answers to when, typically setting a timeline, in chronological order things to be done. The typical example is when a person schedules things to do. This will include the list of activities using a calendar and sometimes describing who will take responsibility.
Instead, the MPS involves planning activities and many categories, departments, resources and people. These categories can be broken down in higher levels of detail and deliver to multiple team members. Finally, the team members will coordinate and work simultaneously to achieve a common business goal.
On the other hand, consider that MPS is not the same as Production Planning (PP). Production Planning is a previous stage that defines the levels of production at higher levels and fewer details. They determine the amount of production in terms of families, not individual items.
For example, the PP will define the amount of chairs to be produced while the MPS will consider individual SKUs. The planning horizon in the case of PP is also the middle term, from 6 months up to 24 months. The PP helps determining the required resources and determines the inventory levels at higher levels.
It’s a powerful plan for the top management in which they can have visibility of the business from the manufacturing point of view.