How do the production plan and the MPS relate to sales and to the sales forecast?

A master production schedule (MPS) is a plan for individual commodities to be produced in each time period such as production, staffing, inventory, etc.[1] It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded.[2] This plan quantifies significant processes, parts, and other resources in order to optimize production, to identify bottlenecks, and to anticipate needs and completed goods. Since a MPS drives much factory activity, its accuracy and viability dramatically affect profitability. Typical MPSs are created by software with user tweaking.

Due to software limitations, but especially the intense work required by the "master production schedulers", schedules do not include every aspect of production, but only key elements that have proven their control effectivity, such as forecast demand, production costs, inventory costs, lead time, working hours, capacity, inventory levels, available storage, and parts supply. The choice of what to model varies among companies and factories. The MPS is a statement of what the company expects to produce and purchase (i.e. quantity to be produced, staffing levels, dates, available to promise, projected balance).[1][3]

The MPS translates the customer demand (sales orders, PIR’s), into a build plan using planned orders in a true component scheduling environment. Using MPS helps avoid shortages, costly expediting, last minute scheduling, and inefficient allocation of resources. Working with MPS allows businesses to consolidate planned parts, produce master schedules and forecasts for any level of the Bill of Material (BOM) for any type of part.

How an MPS works[edit]

By using many variables as inputs the MPS will generate a set of outputs used for decision making. Inputs may include forecast demand, production costs, inventory money, customer needs, inventory progress, supply, lot size, production lead time, and capacity. Inputs may be automatically generated by an ERP system that links a sales department with a production department. For instance, when the sales department records a sale, the forecast demand may be automatically shifted to meet the new demand. Inputs may also be inputted manually from forecasts that have also been calculated manually. Outputs may include amounts to be produced, staffing levels, quantity available to promise, and projected available balance. Outputs may be used to create a Material Requirements Planning (MRP) schedule.

A master production schedule may be necessary for organizations to synchronize their operations and become more efficient. An effective MPS ultimately will:

That’s why, in this article, we’re going to look into the master production schedule, its benefits, and the tools you can use to piece your master schedule together.

What is master production schedule?

Master production schedule (MPS) is a term used to describe a centralized document telling you what you need to produce, how much you need to produce, and when you need to produce it.

In short, everything related to production in your business, including time frames, such as your manufacturing lead time. Here is a quick overview of the master production schedule process steps you’ll need to follow when putting this together:

1. Map your demand and make a Demand Plan
2. Work out the raw materials you need and get your supply chain up and running with production planning processes
3. Now you’re ready to develop a master production schedule proposal. This is like a rough draft to see if your production schedule is workable
4. Use a rough-cut capacity planning technique to calculate if you can meet your proposed MPS manufacturing. Continue using this technique to continuously assess if your capacity can meet demand when your master production schedule is in action
5. If your master production schedule proposal is workable, you then evaluate it with regards to customer service, effective use of resources, and inventory investment

Once your master schedule is implemented, every employee on your shop floor is clear about what needs to be produced each week.

Your master production schedule makes sure everyone in your business is working towards the same goal. The master scheduler — the MPS architect — can then forecast relationships between demand and your supply, so you know when you need to increase or decrease production. The master production schedule is a crucial input into the aggregate operations plan, giving an overview of everything your business needs to do for 100% order fulfillment.

This is producing sales orders and having them delivered on time, without any problems or defects. This is known as a perfect order — and it’s what every business should strive for on all their sales channels.

The main functions of a master production  schedule

The purpose of a master production schedule is to save you time by making the hours you spend managing your production flow much more efficiently, giving you more space to scale your manufacturing business.

Once you understand the ultimate goal of the master schedule, you can realize that the other master production schedule objectives are all aligned towards achieving this goal. The other functions of a master production schedule are:

Translating Production Plans

How will you manage operations to strike a balance between demand, labor requirements, and equipment capability? The master production schedule will help you determine how many items you need to produce within a specific period.

Evaluating Alternative Schedules

A master production schedule should consider multiple manufacturing routes, to see which is the most efficient and take into account any problems which might occur along a production line.

Produce Capacity Requirements

Rough cut capacity planning with your master production schedule helps you figure out the realistic capacity you need to meet demand, increase profits, and minimize your costs.

Facilitating Information Processing

The master schedule helps you set your reorder points to make deliveries that need to be placed. You can do this by coordinating different management information systems such as marketing, finance, etc.

Utilization of Capacity

Finally, a master production schedule will help you establish the loads and utilization requirements for machines and equipment.

The other master production schedule objectives are:

1. Makes your demand flow smoother
2. Keeps your lead-time low
3. Standardizes communication across your business
4. Helps you to prioritize requirements
5. Help keep production stable
6. Generates workable plans for your manufacturing orders
7. Assists in making accurate purchases and transfer orders

Those are the desired outcomes of your master schedule. Now let’s look at the ingredients of the ideal master production schedule.

Parts of a master production schedule

When you put together your production calendar, you’ll need a demand plan.

To generate a demand plan, you need up-to-date and accurate historical sales data. You can use this to work out your projected demand for the upcoming weeks. Just make sure that you adjust this on a week-to-week basis.

Furthermore, it’s a good idea to keep some safety stock around in case you receive an unusually large or uncommon order.

If your demand grows, you need to increase your order policy, so it does not frequently eat into your safety stock.

So as each week passes, you update your demand plan to create a more accurate production calendar. This feeds into your master production schedule. Your MPS manufacturing may be a work-in-progress for a while, but you will fine-tune it, making it a valuable tool for your business’ order fulfillment.

The correct procedure for developing a master production schedule is to include the following elements:

• Product List — All product models you produce. After you have completed your ABC analysis, you can order them by popularity, so the items you produce the most are at the top of the list
• Variation Sub-Lists for Each Product — Have a field for each product variation. One for each SKU. For example, you can split backpacks into S, M, and L for size. You can further split these into other variations like color
• Year, month, and week — This is useful for planning and keeping records, which is necessary for accurate demand forecasting. Split up your schedule into months and weeks. The aim is to have a solid plan of what you will produce for the next few months. You can reassess your projected demand every few months. Don’t be afraid to make adjustments sooner if the demand calls for it
• Production quantities — This is the number of units you decide to manufacture each week. Say, after analyzing your demand plan, you decide to manufacture 200 units of product in a week. You then add the number 200 to the bottom of each weekly column. But don’t stop there, as you now need to allocate how many of each product variation will make up the 200 total. This depends on what you already have in stock and what the projected demand is. For example, one week, all 200 units could be of one SKU, whereas the following production could be evenly distributed across product models.

How do manufacturers use a master production schedule

So, what kind of manufacturers can use a master production schedule?

Well, no matter the size of your manufacturing business, the sooner you start, the better. This is because it fosters good business habits, so things like master schedule become second nature when you do scale up. Your business habits are a key predictor of long-term success.

The master production schedule is compatible with different production workflows:

Master production scheduling focuses on the production of finished goods or components (if you have an ATO workflow).

The goods that are the most profitable for your business are likely to make up most of the resources needed for production. Ultimately, manufacturers use their master production schedule to help them:

• Understand what needs to be produced
• How big should a batch be
• When should they be scheduled
• The manufacturing route should their products follow

So, when you’re putting together your master production schedule, you also need to consider these other important variants when utilizing your MPS:

• What are your batch criteria?
• What are your sequence constraints?
• What are your set-up times?
• What’s the capacity over-saturation?

The benefits of getting set up with a master production schedule

What are the benefits you can expect to reap once you implement a master production schedule into your business planning?

1. You can build, optimize, and track your demand planning more efficiently since you’ll have a better understanding of your production runs
2. You can determine what your ideal inventory level is with an overview of the production requirements
3. Your HR department can see in advance what are the requirements ahead of production
4. You can optimize your capacity of materials and be sure to avoid stockouts
5. You can estimate the total amount of necessary labor for upcoming production runs
6. Knowing ahead of time how much production that’ll be taking place allows you to perform predictive maintenance along your manufacturing lines
7. Your master production schedule helps you calculate how much inventory you’ll need in the future, improving your procurement process
8. Your finance department can also benefit from a master production schedule, by using this document to create a cash flow forecast for the company

A master production schedule example

Let’s go through a master production example for a leather manufacturer selling bags.

To keep this production schedule example simple, we will look at just two products, with two variations each, making four SKUs in total.

• Their on-hand inventory is displayed at the top
• The projected demand is added below
• The production quantity is then calculated based on current inventory, demand, and capacity

First, let’s see how this looks in a run-of-the-mill master production schedule that thousands of businesses currently use.

Hard on the eyes, right? One downside to this approach, apart from it being hard on the eyes, is that the master production schedule is not dynamic.

It doesn’t change based on actual orders and capacity. You have to update it yourself as it is based on a spreadsheet program. Excel is inefficient and vulnerable to business-harming errors.

That’s why manufacturers, especially scaling ones, turn to MES software to help them put together a more visually appealing and dynamic master production schedule.

But before we look into a master production schedule being used within an ERP system, let’s quickly look into the difference between master production schedule and production scheduling, both very important steps in manufacturing.

Difference between the master production schedule and production scheduling

There can be confusion between a master production schedule and a production schedule since the processes to develop the two can be similar.

So, to tell them apart here is the difference between an MPS and a production schedule:

Master production schedule

The continuous optimization process that businesses need to carry out, determining the number of finished goods they need to produce based upon the inputs and constraints of their production.

Production planning  

Production planning, on the other hand, is the early stages of your manufacturing process where you’ll define the production levels, with limited and fewer details. The purpose of production planning is to determine the production of items, in terms of families or groups.

Now you’re updated on what is a master production schedule, and the difference between production planning, you might be realizing that to put together an MPS is a lot of work.

Fortunately, there is software on the market that can automate this process for you, so you can put together your master production schedule in no time, and get right back to growing your business.

What is MPS How is it related to forecast and production?

What functions does the master production schedule MPS perform between sales and production?

What functions does the MPS perform in the production planning system?

What is the relationship between the MPS and MRP?