A simple introduction to the master plan

In a world where access to raw materials and resources is becoming increasingly scarce, the requirements for sustainability and traceability are increasing, and margins are narrowing, data and quality are suddenly alpha and omega for profitability. If you want to succeed in today's market, you need to take a strategic approach. Quite simply, no more gut feelings and happy-go-lucky strategies. You need knowledge.

 

Probably the easiest and shortest way to get this knowledge is the strategic tool called the master plan. This article will give you a simple introduction to what the main plan is and what benefits you can gain by adopting it.

 

What is the master plan?

 

The master plan can perhaps best be described as a strategic planning tool – a kind of guide to your business. It is based on the company's overall goals and vision and includes concrete objectives, action plans and resource allocation with these goals in mind. It gives the company a holistic view of the business and enables data-driven decisions.

 

The purpose of a master plan is to optimize the value associated with the flow of goods. It's about ensuring that resources are available when they are needed and avoiding unnecessary purchases of goods. By combining order intake and budget, the master plan gives your business a clear picture of what you can produce if the number of orders increases or the supply of raw materials decreases. It helps you adjust capacity and understand the costs needed to meet market pressures.

 

For example, let's say you experience a sudden increase in demand for a particular product. Using the master plan, you can identify the capacity of your production lines and see if you have enough labor and raw materials to meet the increasing demand. The master plan also gives you a clear view of the additional costs that meeting the increased demand will entail.

 

How the main plan reduces your risk

 

Resource allocation is, and will remain, a risky affair. Whether you decide to reduce staffing for a given period of time or increase the order for a given raw material, there are risks associated with deviating from the original plan. Although the master plan itself will never be able to eliminate the risk of making mistakes, it can provide you with an up-to-date and valid data source for making a decision with the least possible risk.

By taking resource capacity and potential production stoppages into account, the company can plan proactively to minimize damage to projects and productions. This includes identifying which resources can be moved or reprioritized to avoid delays and reduce production stoppages.

For example, if an important machine in production is down, you can use the master plan to quickly get an overview of what other resources are available and allocate them to cover demand. In this way, damage can be minimized and you can ensure that the project continues to be delivered on time.

 

Economic predictability also in volatile markets

 

It is very good to be able to plan with a view to optimal production, but in the end, it must also be profitable. Therefore, it is good to know that those who are financially responsible can also use the master plan to simulate cash flows.

 

In an optimal master plan, budgets are adjusted according to purchases, operations and sales. This allows you to predict cash flows in a much more accurate way than before. A master plan allows you to better plan financial resources and avoid unforeseen financial challenges, even when demand or commodity prices fluctuate.

 

Are you considering investing in a new or updated production facility? The master plan helps you analyze the production costs and compare them to the operating costs. This gives you an understanding of how much money you can save by moving or modernizing production – and how quickly.

 

Master plan and staffing

 

How does the production volume affect staffing? Do I produce as efficiently on the Monday after a long weekend as on any Wednesday in October? The master plan provides insight into which adjustments you can, and should, make to maintain efficiency, even in the event of deviations.

Let's use the example again of the manufacturing company that is experiencing a temporary increase in demand for a particular product. How much do you need to increase the staffing on the given production line to meet the demand? Can you reallocate resources from another line? The master plan gives you a clear picture of production efficiency and helps ensure that you can deliver the product on time.

 

Rubbish in, rubbish out?

 

Bad data results in unreliable knowledge. Therefore, it requires a high degree of data discipline to get the most out of the master plan, where you must continuously monitor deviations and adjust the plan based on actual data.

The master plan is not a magic tool that solves every problem, but by taking a long-term approach and adjusting it based on deviations, the company can achieve significant improvements in profitability and efficiency.

But in the lack of data discipline, there is also room for opportunity. Full dedication to the master plan at the executive level provides unique insight into the company's performance as a whole and at the departmental level. In other words, the data from the master plan also allows you to identify where there may be gaps in your data. The master plan is in many ways a self-disciplining tool that "notifies you" when your data is insufficient.

 

How to get started with the master plan

 

Implementing a master plan can seem overwhelming, but in reality, it doesn't take much more than discipline and a process of systematizing the data you already have. 

 

The master plan is based on your ERP system. For example, if you're using Dynamics 365, setting up the master plan requires just a little consulting. The rest is up to you and your business.

 

After implementation, your company will have a tool that gives you a holistic overview and supports you in making data-driven decisions regarding optimization at all stages.

 

Do you want to know more about how we work with the master plan in Cepheo, or how a master plan can be adapted to your company? Contact us today.

 

Cepheo has over 30 years of experience in the manufacturing industry. We specialize in solving our customers' challenges with well-chosen IT. Read more here to know how our expertise drives success for your manufacturing business.