Improving Planning Stability : A case study of Planning at AstraZeneca

Abstract: To provide high service level, an organisation must maintain flexibility in production planning. This allows them to react to changes in demand and supply information. Changes in production plan decreases planning stability. Low stability has knock on effect on supply of material. This causes disruptions in production and delivery as well as increased cost due to higher inventory cost, stockout costs, expediting cost and sub optimal setups cost. This study aims to determine the methods to improve planning stability. The factors that influence stability like planning horizon, safety stock, inventory policies are examined in detail in a real world setting. Literature review of existing work on planning stability was carried out. Single case study was used to study this phenomenon in depth at a pharmaceutical manufacturing company. Qualitative data regarding planning method, flow of information, interaction between departments, time horizons were studied. Quantitative data includes the production plans across different planning cycles. Existing stability levels were computed to determine the future levels of stability required. The literature was compared with existing working methods to find improvements. Plans away from the frozen period will have low stability due to forecast volatility. But as we move closer to frozen period, higher stability should be achieved. Low planning horizon in the immediate periods are due to material supply uncertainty which can be prevented by having responsible suppliers and increasing safety stocks. Using a stabilisation parameter can prevent rescheduling when small changes in demand occurs. This ensures unnecessary reaction to small changes are prevented.  Increasing the planning horizon will provide suppliers with accurate information regarding quantity and timing which will in turn help them plan better. Lastly, safety capacity in production can help towards handling unexpected production loses and thereby prevent re-planning.