Production Scheduling for short shelf-life food products
Production scheduling for food products with a short shelf life provides an interesting challenge when making product to stock is often not a viable option. Here we will look at an example of a food production company, the challenges in scheduling, and the solutions.
The example environment
Let’s use a company that provides salad / vegetable packs to retail chains.
- Customer orders are received daily.
- The order must be shipped that day by a cut off-time.
- The shelf life of raw materials is short e.g. heads last longer than separate leaves, but not forever.
- The shelf life of the packed product is short. The actual time depends on the product mix and handling in the supply chain.
- The customer expects products to have a minimum shelf life in their hands, preventing the supplier from building buffer stocks to ship from.
- The supplier is measured on their ability to meet the customer’s requirements.
- The raw supply comes from a farming activity and limited control ability exists to pull product earlier or delay picking to a later date.
The operating system requirements
- The system must know what raw, sub-assembly and finished goods are available when customer orders are received.
- Using the availability of stock, the system must determine how raw materials must be converted to intermediate stocks, to finished packs.
- This calculation must happen as quickly as possible.
- Work activities must be sequenced e.g. don’t start packing until all ingredients are available.
- Work activities must include activities required to support future days e.g. what processes must be started today to have required materials available tomorrow.
- Requirements can include the pulling forward or delaying of picking operations which provide raw materials to the packing house.
The operating solution can be thought of as having 4 components: a forecasting process, a planning process, a scheduling process and a tracking capability.
The forecasting Process
- This process determines an expected shipment quantity by day by pack type.
The Planning Process
- The planning process uses the expected shipment quantity to determines how much stock can be pre-built in expectation of receipt of an actual order.
- This allows the packing house to start the packing process on day 1 in expectation of shipment in day 2.
- The planning process could include an MRP process to trigger the order of raw and packing materials due for a week.
The Scheduling Process
- This process considers the receipt of actual orders together with future demand to determine what activity is required at level of the BOM to meet actual requirements e.g. how raw materials must be processed into packable parts e.g. keep lettuces whole or break into leaves.
- Schedules are generated in the correct sequence to meet actual demands and preparation for future sales.
- The scheduling process may need to be run multiple times in the day to take into account the actual conversion results against demands e.g. due to quality issues the yield of a process delivers less product than expected.
- The scheduling process will determine actual dates of need of raw materials as these may change based on the receipt of actual orders and yield losses during conversion processes.
- It is possible to include in the scheduling process a Linear Programming requirement to decide the most profitable use of an ingredient in short supply.
- The LP solution would be run once customer orders have been received and a irrecoverable shortage identified.
- The LP solution will advise how best to allocate the limited supply of raw material to maximize profitability, units shipped etc.
The tracking activity
- The tracking system records activities at each level together with resulting outputs.
- Tracking is a fundamental support system to the scheduling activity.
- Without knowledge of the quantities of stocks and production activities the scheduling solution will not be able to determine what activities are required.
The Benefits of using this approach vs. managing the process manually are the following:
- The ability to co-ordinate all activities in the packing house relative to both what activities are required and in what sequence they must be completed.
- The ability to determine the manpower levels required or how best to allocate the workforce to meet the required deliveries.
- Reduced labour requirements as a result of improved co-ordination and early insight into labour requirements.
- The ability to improve customer service by delivering actual requirements more frequently, this as a result of improved decision making.
- Reduced operational stress and expediting.
Return on Investment
- Reduced scrapping of raw or processed materials as a result of calculated use of ingredients.
- Improved Customer service as a result of improved shipment of full delivery quantities with resulting increase in profitability.
- Reduced labour costs as a result of more effective use of labour.
- Reduced employee and management stress.
- Formalisation of the packing process.
- Trapping of knowledge in a system vs. retention of the information in people.