Delivering good customer service in a manufacturing or distribution business requires a good plan. Part of creating a good plan is validating that the organization has the capacity to execute the plan. For some resources, this can be difficult to measure. For sales & operations planning (S&OP) and master production scheduling (MPS) one effective tool for validating capacity is bill of resources.
According to the online Business Dictionary, a bill of resource is:
List of resources (men, machines, material) required for a certain rate and units of output. It generally highlights the critical resources (those in short supply or having long lead times) to help in capacity planning.
As a master scheduler, I have found this tool to be a great way to answer all sorts of capacity questions. Listed below are some actual examples that I have used in my career.
Final Assembly Space
At a make to order manufacturing facility that made large, food-processing capital equipment, the square footage of available space was a critical resource. Final assembly square footage was part of the bill of resources. I knew the total area available and used the bill of resource for each type of equipment planned to avoid overloading the final assembly area.
At the same facility as used in the above example, the shipping dock was a one-truck-at-a-time arrangement. This limited the amount of equipment to three truckloads per day. Factoring this into my capacity plan, I was able to avoid a shipping problem by moving scheduled ship dates in or out as required.
At an electronic assembly facility that utilized temporary labor to buffer against overloads, you guessed it-bills of resources for each product family helped to determine the amount of extra labor was required each week. Each of the fifteen different families had a labor capacity require per unit. The unit of measure for this was labor hours per unit. Changing the mix and number for each product family allowed me to adjust to the available labor. It also allowed me to forecast the labor required in the next 2-4 weeks.
Raw Material Processing in a Sheet Metal Facility
In a sheet metal fabrication facility, the number of number of sheets of material to process varied by product family. I knew the weekly capacity in sheets. Determining the total number of sheets required by the MPS allow me to determine if the plan was realistic.
Continuous Spiral Freezer
A colleague worked at a high-volume commercial bakery. One of the critical resources was a spiral freezer. It was also a bottleneck. Using a bill of resources, my colleague was able to avoid creating an unrealistic MPS.
Other Resource Examples
The beauty of this tool is that it is flexible and adaptable. For example, you can use it to validate your S&OP or MPS when you have a limited about of a waste stream to manage. Determine the capacity limit and then the resource profile for each product family or finished product and you can validate that your plan does not exceed the limits of waste stream limitation.
Specialized software is not required to use this tool. Any spreadsheet program will work. No engineering or IT support to create and change bill of resource profiles is required. Simple but effective, bill of resources is a great capacity management tool.
Additional Content by Garrison
What is Sales and Operations Planning?
Infinite and Finite Loading and Capacity Contraints
Business Dictionary website, http://www.businessdictionary.com/definition/bill-of-resources.html, retrieved 10/2/2013.