Part II: From production planning to people planning

		An interview with Nils Marstrand Nils Marstrand is administrative director of the Danish IT firm, Marstrand Innovation A/S. He earned his Master of Science in Operations Research from DTU and has an MBA from INSEAD. He began his career at Danish shipping giant AP Møller Mærsk. Since 1977, he has run his own firms, offering consulting services and solutions for production planning, supply chain management and project management.

Together with Jan Bonde, Nils developed the planning software, PMSIM, which he sold to Intentia in 1998 (who marketed the solution under the name Movex).  Today Intentia is owned by US- based Lawson, who sells the solution as Lawson APP (Advanced Production Planner) and Lawson MSP (Multi-site Planner). They are among the world’s most widely used and respected planning and simulation tools for complex production and supply chain planning.

Marstrand Innovation developed the technology for People Planner, and we talked to Nils about the growing trend in the professional services industries towards better resource and project planning.

Nils, your own career has followed an evolving path, from providing tools for production planning, to solutions for planning people, their time, projects and priorities. Could you explain what you see as some of the key characteristics of this evolution?

The early software solutions in the 1960s were made to support material requirements planning in production and the warehouse. In parallel, project planning tools were developed based on the  Program Evaluation and Review Technique (PERT) planning method, which is a network model (developed by the U.S. Navy)  that allows for randomness in activity completion time. The private sector increasingly employed PERT, which involves the following basic steps:
1.      Identify the specific activities and milestones
2.      Determine the proper sequence of the activities.
3.      Construct a network diagram
4.      Estimate the time required for each activity.
5.      Determine the critical path and adjust the timing of all activities to it.
6.      Update the PERT chart as the project progresses.

You find this method in all project planning tools, such as Microsoft Project (MSP). The method does not directly include resource capacity constraints.

In fact, our fundamental idea when we first started developing PMSIM in 1979 was to use PERT planning philosophy to optimize manufacturing planning; linking production processes (routings) and material requirements (BOM, bill of materials) into synchronized networks and adding resource planning for machines, equipment and people across the many thousands of orders and tasks you are typically dealing with in industrial manufacturing. In this way we could find the best balance between shortest possible lead time, best possible utilization of capacity bottlenecks and minimized stock levels of materials, manufactured, as well as purchased.

The other fundamental idea was to include all planning horizons in one system, from operational, to tactical, and then, strategic planning, to give full flexibility and avoid the difficulty of transferring data between separate systems.

Now, with people planning, we are taking essential elements and experiences from our many years with advanced production planning and applying them to what I call a “multi-project people planning solution” that facilitates operational, tactical and strategic planning.

Could you explain what you mean by these three levels of planning?
Operational planning involves using the resources you already have to reach your goal, a “make do with what we have” approach. The strategic approach is where you have time to acquire the needed resources. Tactical planning is a combination of the two, where you plan with the resources you have, but leave room for change, for perhaps hiring more resources through outsourcing, and so on.