Why Integrated Planning and Demand-based Scheduling are an Option for Better Performance
Today’s cost pressures and market volatility present a serious challenge to meeting shareholder expectations. The long practiced responses are scheduling based on maximizing equipment utilization; large buffer stockpiles; and oversimplification of planning by focusing on single key performance indicators. But are these traditional approaches the right ones?
The white paper “Mining in the Global Supply Chain” argues that an alternative approach to unlock greater performance is to integrate the mine plan across all horizons of the business. Strategic planning should not simply push the plan down to the lower horizons. Feedback needs to exist such that short-term decisions can be realized in the longer term to ensure that the decision being made is not only the best decision within the given horizon, but also is the best possible decision for the long term. Too often short-term remedies are made that set a business down a path in the long term that directly impacts return.
An integrated plan should connect the different functional domains within a single horizon. Ensuring that data is available for all aspects of the plan means that decisions in one silo of the business can be reflected in another domains to ensure the right decisions to drive the business to the next level of success are achieved. This effectively breaks down the silos.
The traditional method of scheduling drives the mine to produce as much material as it can by maximising equipment utilisation. While this has the benefit of ensuring there is stock when disruptions occur, this can have a potentially detrimental effect in that the cost is borne based on one commodity price and the realized value applies to an updated price which can be higher or lower and this represents a risk.
Demand-based planning is a better solution. Demand-based planning means that the market (or a leading place in the supply chain) determines what needs to be mined and when. For this, mining must be agile and responsive so that the material, within specification, can be delivered to the demand point on time.
Planning based on bottlenecks should be considered because it drives the value of your schedule. The LEAN process for Theory of constraints can be used to exploit the constraint and determine a course of action to eliminate or mitigate the constraint. Do not oversimplify or ignore complexity with proxy key performance indicators. Use real ones to improve the overall productive of the supply chain and not just improving the individual output of each part of the chain. If you do not account for complexity, operational performance will stagnate.
If you can break the silos between scheduling functions across multiple time horizons, learn how to reduce bottlenecks and employ real key performance indicators as opposed to proxies and rules of thumb, you will attain more stable, agile business performance.
Extracted from “Mining in the Global Supply Chain: The Case for Integrated Planning Based on Business Key Performance Indicators” by Aaron Loffler, Senior Business Consultant, Natural Resources, Dassault Systèmes.