The role of hierarchical production planning in food manufacturing SMEs

Abstract

Purpose – In recent years there has been an increasing interest in make-to-stock and make-to-order combined strategies in food manufacturing operations. However, most scholarly work to-date has neglected the role of hierarchical production planning (HPP) in guiding small- and medium-sized enterprise (SME) implementation of such strategies. The purpose of this paper is to address food SME manufacturers’ readiness to adopt such strategies, in terms of internal integration and their capability to adopt formalised planning approaches. Design/methodology/approach – This study adopted an action research methodology to explore the potential impact of HPP in SME food manufacturers. Selected companies had identified product variety management as a challenge and also had recognised the need to enhance internal integration. Given this, the research team, from a theoretical perspective, proposed the use of HPP set within a broader decision-making conceptual framework to improve internal integration and planning. Findings – This paper adopts the fundamental position that HPP provides a useful framework in the establishment of strategic and tactical level constraints and priorities which then act as specific guides at the operational level, and presents empirical evidence in a food SME manufacturing context. In the cases the authors studies, the cascading effect of this decision-making framework focused attention on key metrics, encouraged greater internal integration and delivered tangible, significant improvements in performance. This was greatly facilitated by the provision of new key data on the cost of certain managerial trade-offs which these firms faced. Originality/value – SMEs are of a scale that requires a formalised planning approach; however production planning systems are typically designed for large scale enterprises. This paper addresses the need of SMEs in this regard. Well-established supply chain metrics were used to establish the benefits of both HPP and resulting improvement in internal integration and beyond, in terms of improvement in the quality of planning decisions.