December 2, 2024
An ideal production plan? Excel alone won’t cut it. Most companies are unable to respond flexibly to market fluctuations or changes in the supply chain. The costs of poorly optimized production planning, as self-reported by these companies, amount to millions of crowns annually. Artificial intelligence and effective data governance can provide much-needed relief.
Manufacturing Leaders Acknowledge Suboptimal Production Planning
Production directors, planning managers, IT managers, plant managers, and C-level executives from major Czech manufacturing companies agree: their production is not aligned with an ideal production plan. These insights come from a survey conducted during Adastra’s manufacturing workshop, focused on the topic of optimizing production plans. Only a small fraction of companies (16%) create long-term production plans.
“The vast majority plan production for no more than a month ahead, with 45% planning for less than a week,” says Martina Tichá, Optimization Competency Lead at Adastra.
Key Challenges in Production Planning: Supply Chain Disruptions and Changing Customer Preferences
Production plans are often disrupted by demand fluctuations, supply chain issues, technical or manufacturing challenges, and external factors impacting production and delivery. Many companies revise their production plans weekly, with some adjusting them even more frequently.
Top challenges faced by companies in production planning:
- 5% of companies frequently struggle with sudden changes in the supply chain.
- 22% of companies report that changing customer preferences for specific products or variants significantly impacts their production.
- 10% of companies cite challenges with innovation and the need to modernize manufacturing technologies.
- An additional 10% of companies point to frequent logistical and transportation constraints.
Outdated Technology Prevents Companies from Achieving Optimal Production Plans
Only 31% of companies can create an operational production plan in less than an hour. For 28%, the process takes over four hours.
“The reality of the market shows that companies cannot replan as often as they need to,” explains Martina Tichá. “Due to the complexity of the production process and the outdated technologies they use, they are unable to respond flexibly to customer demands, market fluctuations, or supply chain changes. This prevents them from achieving optimal production plans.”
As a result, companies incur significant additional costs, amounting to millions of crowns annually.
- 65% of companies report additional costs of up to CZK 10,000 per day due to poor production planning. With approximately 250 production days per year, this adds up to CZK 2.5 million annually.
- 26% of companies face additional costs of up to CZK 100,000 per day, resulting in up to CZK 25 million in extra expenses annually.
Market Reality: Most Companies Still Rely on Excel for Planning
What’s the solution for achieving an ideal production plan resilient to fluctuations in customer demand and the supply chain? “The answer lies in the right optimization tool that can assist with planning,” says Martina Tichá.
However, Adastra’s survey reveals that 71% of companies still rely on traditional planning methods like Excel spreadsheets. Additionally:
- 83% use ERP systems
- 46% use MES (Manufacturing Execution Systems)
- Many companies combine these methods
“Currently, only 11% of companies use predictive planning tools powered by artificial intelligence. However, our experience shows that data- and AI-driven production planning can reduce operating costs by up to 70% and cut the time needed for operational planning from hours to minutes,” adds Martina Tichá.
She has been implementing modern optimization tools, such as OptiSuite, in companies for seven years as Adastra’s Optimization Competency Lead.
