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How to Define Products and Volumes

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Your product list is likely a table with a column for the product's part number and a column for the product's description. There will be a lot more data to be added to this table, so start thinking spreadsheet. You will be building a spreadsheet with the data necessary to calculate the number of resources for your line design. You just took the first steps.

Gathering this data may be as simple as identifying who owns the data - Marketing, Sales, Engineering? - and just asking for a product list. From there, the level of complexity will only go up. There may be products that do not yet exist, new products that replace old ones and many other scenarios that will require you to work with the owners of this data to reach the end goal of a table of all the products to be built on this line.

While you are working with the product data owners, ask them about volume expectations. For every product on this list what is the expectation of capacity? How big should the line be?

This is one data set you have to consider, but not the last word.

Graphing Sales History

The next part of your research is to ask for sales history for all the products on your line. If there is no specific data on one of your products, ask for data on a similar one to use as your baseline.

Start by looking at the data, and doing it graphically is always recommended. As you plot each individual product on the chart, you see the individual variations and they may be substantial.

Now look at what happens when the volume for all products is added together and displayed as a single line. There is still some variation, but the peaks and valleys have been smoothened out by the additive effect of the different products. This is one of the main reasons to mix models. This is not however a simple formula: “Mix models and all will work itself out” Absolutely not. There are many conditions that must be met to enable a line to function properly while building a mix of different products. We will study them all in future lessons. Right now, let's enjoy the fact that mixing products can smooth out overall demand and that is a good thing for the line.

Plotting Your Forecast Daily Volume

Your next challenge is to look beyond the trends and statistical analysis you may have done, and realize that a line's capacity is defined by the line's Forecast Daily Volume or FDV. When plotted on this chart, FDV looks like a flat line across the planning horizon. That one number is made up of single FDV values for each product on your product list.

You may not get the FDV data as a daily number from the data owners. You will have to convert the numbers you start from into daily values to use them for the upcoming line design calculations.

Planning for the Future

We said earlier that you are designing the line for the future, and as a line designer you should ask: which future?

Actually a better question is: How far into the future? Well, this is up to the products, the market conditions, your good judgment and your management's team decision. 

What are you designing your line to build? Combines? Is this a new breakthrough combine or one that has been built for the last 15 years in its current version? If you are looking at a breakthrough product, you may want to keep your design horizon short, maybe 3 to 5 years. If this is a well established product for which no major changes are expected, it might make more sense to consider a 7 to 10 year line. The more changes to the line's business environment, the shorter the line design horizon.

An extreme case of a short time horizon is an electronics company building the latest i-something that may be obsolete in just a few months.

Putting the Plan Together

You will do all the necessary research and analysis, you will put in lots of hours gathering the best information available and when you have it all together, you must work with your management team to help them make the best decision. In the end, the final determination of the line's Forecast Daily Volume is a negotiated decision at the management level. You, as a line designer, must provide all the best available data and analysis so that your management team can make the best informed decision.

Remember, FDV is an assumption of mix and volume which you will use to determine the right number of resources to support customer demand. It would be very rare to build exactly the FDV mix on any given day.

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