A “Master Production Schedule” (or MPS) refers to the major plan that is used to assess the production of finalized items. An MPS displays the varying amounts that firms need to produce for each period of business in terms of final articles.
Final articles are also known as ‘SKUs’ (Stock Keeping Units). The development of the MPS is called the ‘Master Production Program’, and this development period is known as the ‘planning horizon’.
This planning horizon typically ranges between 3-18 months, and usually varies in accordance with the manufacturing cycles for the final articles.
The following information and data is inputted into an MPS:
- A forecast for every final article (via units of products)
- The current order portfolio
- The aggregate production plan (via units of products)
- Stock inventory levels
- Production capacity (in terms of availability)
Check out this free Master Production template that you can use for free!
How do manufacturing companies use an MPS?
Since manufacturing in today’s world is somewhat complex, the MPS is useful for helping manufacturers to figure out:
- Which things they should produce
- How large batch sizes should be
- What times they should produce
- Which sequence they should use
In order for a firm to implement an MPS successfully, it is important for them to understand that the purpose of an MPS is not to provide the amounts and delivery times for items.
The MPS is actually a form of contract and a communication line between production and sales. Furthermore, the MPS helps firms to understand what the production facet of a business will create, therefore, it is not a forecast in the traditional sense.
In addition, there are some important variables that manufacturers must consider when they are utilizing an MPS, such as:
- Batch criteria
- Sequence constraints
- Set-up times
- Capacity over-saturation
The advantages of using an MPS
Here are some of the key benefits that a manufacturer may receive if they use an MPS:
It enables firms to build, optimize, and track their sales forecast with a solid plan to refer to
It allows firms to decide what they would like their inventory levels to be
It means that the HR department within a firm can also benefit, as they can foresee potential upcoming labour requirements, and then act ahead of time
It provides the means to optimize the capacity of materials and helps with maintaining the balance of loads in a plant
It allows manufacturers to predict (or estimate) the total amount of necessary labour they will require for an upcoming period
It provides a way to figure out how much the maintenance and production expenses are likely to be in the various work centers of the firm
It provides a strong foundation for calculating parts quantities, as well as the subcomponents or raw materials that will be needed to purchase or create.
The finance department in a firm may also benefit, as they can get the information they need for ingoings and outgoings, which they can then use to create a cashflow forecast for the company. Additionally, it can help with creating other important financial documents, like balance sheets, profit & loss statements and more.
An MPS should be able to display exactly what the company wants to achieve (as it would appear in their business plan). It should follow it as much as possible.
This therefore means that all company departments need to provide continual updates. For instance, if the marketing team begin to plan a sales campaign, this would also mean that the associated demand increase would need to be indicated in the MPS and the subsequent forecast.
Achieving greater levels of communication between different company departments is of course, a major benefit for any organization. What’s more, the MPS also provides the foundation for manufacturers to create their Material Requirements Plan (MRP).
Potential irregular occurrences for individual items
Inevitably, there are also certain potential situations in relation to individual items or SKUs that planners may have to tackle which are not desirable. For example, when utilizing an MPS, the planner must keep in mind:
- Any instances where materials are not in stock
- Situations where there might be a lack of material balance over the supply chain
- If bottlenecks occur, and how this might place constraints on the supply chain
What is the difference between an MPS and Production Scheduling?
Master Planning is derived from the repetitive optimization process that firms are faced with. This means that the amount of units to be produced is determined and based upon the inputs and constraints that we mentioned in the previous section.
This leads us to the Production Master Plan. It is also important to note that this plan does not remain static, and is in fact renewed monthly or weekly.
The MPS requires planning, and is not simply comprised of scheduling.
Moreover, scheduling provides the answers for when things need to be achieved, and in what order they need to be completed. A good example of this is when someone schedules tasks that they need to complete.
This typically involves the use of a calendar that lists upcoming activities, as well as an occasional description of who will assume responsibility for the activities.
The MPS actually involves a range of tasks that must be planned, together with a range of different departments, people, resources, and categories that need to be taken into account.
Categories need to be developed into much more detailed versions, which are deliverable to a range of team members. Additionally, the team members will then organize their work and coordinate one another at the same time in order to achieve their goals.
Consider also, that MPS differs from Production Planning. Production Planning refers to an earlier stage in the manufacturing process whereby production levels are defined at higher levels, and with fewer details. They determine how much production is required in terms of families, and not individual items.