Engineering Cost and Production Economics, 9 (1985) 261-289 Elsevier Science Publishers B.V., Amsterdam - Printed in The Netherlands

267

USING AN ORDERBOOK MODEL TO CO-ORDINATE BUSINESS PRIORITIES

Alastair Nicholson

London Business School, Sussex Place, Regents Park, London, NW1 4SA (U.K.)

‘ABSTRACT

This paper proposes a general data struc- ture for the management of priorities in business. It addresses the problem of the huge overload of data involved in the coordina- tion of the priorities arising in operational situations. It suggests that if the ke_v data on structure and status is set out in a speciallq, arranged list, the problems of interactions can be assessed without resort to complex

calculations. The list needs to be so arranged as to reflect both the nature of the company operations and to permit profiles of the situa- tion to be extracted for decision-making with the utmost simplicity. The list in this way becomes a map of the situation. The concepts are illustrated on an assemb1.v situation and on a producer of steel billet and its implemen- tation in practice is related to a wide variety 0 f contexts.

1. CONTRASTING PLANNING,AND

PRIORITY MANAGEMENT

Business priorities take many forms: pres- sures for delivery, bottlenecks on capacity,

constraints on cash, and the pursuit of output targets. In a business of any size these varied priorities are often responded to in isolation. The pressure of time forces individual mana- agers to take immediate action and “indepen- dent” priority management becomes a way of life, determined by the different compart- ments of responsibilities in the organisation. The difficult question for management is to see how action on one priority at one

Note: The concepts and their applications reported in this

paper have been developed through a research programme at the London Business School supported by the Science and

Engineering Research Council over the period 1979-1983.

point in time can create and affect other priorities, possibly at a later date and in dif- ferent departments. Typical examples of the way priority interactions occur are: ~ assigning a priority to one customer order

which unwittingly delays progress on an- other customer order.

- recognising how a bottleneck now at one department creates a further bottleneck elsewhere.

- realising how a pressure to reduce stocks to save cash may affect promised delivery times in the future.

The costs implied by these conflicts of prior- ity responses cannot be recorded or costed: they simply get absorbed by the actions taken.

The significance of priority management increases with the degree of interaction be- tween order flows and the tightness and multiplicity of targets which have to be met.

268

It might be argued that many companies can avoid the priority interactions by re- ducing the complexity of their operational situation: reducing variety, keeping produc- tion stages independent, being unwilling to tolerate changes in customer specification. But in today’s circumstances of volatile markets and with the pressure for filling capacity, a natural business strategy is to accept as many orders as possible and tolerate customer changes in order to fill and share the available resources as fully as possible. In this situation the skill of priority manage- ment becomes central to the effectiveness of the organisation and the repercussions of priority management need to be con- sidered right down the chain of supplies from purchasing through production to sales

[21. Priority management for many com-

panies may seem to be an admission of failure of the planning system. In principle, if estimates of order quantities and work content were known, and capacities could be exactly measured, if supplies came in on time and customers made up their minds and kept to their requests, the whole for- ward schedule of tasks might be exactly planned like a railway timetable. It is under these assumptions and with these aspira- tions that sophisticated computer systems have been developed for scheduling in manu- facturing environments. But in practice the detailed plans are constantly disturbed and the skill of operations management is to cope with these continuous disturbances [I].

There comes a point when the level of disturbances, combined with the oppor- tunities for resource reallocation, makes plan- ning, beyond a certain level of detail, a point- less exercise. Beyond this point the challenge is to respond to the current circumstances as effectively as possible and to minimise conflicts by seeing them in advance. The more effectively the priorities can be co-ordinated the more dramatic and substantial are the

priorities which can be handled. The task is to communicate the situation so that in- dividual managers, supervisors, salesmen, purchasers and progressing staff are able to see the situation and respond to it with a wider view of the business than is possible by reacting to the latest individual request on a “private” basis.

The problem of priority management is the huge overload of information involved in assessing the interactions between prior- ities and the great shortage of time avail- able before responses are necessary. In the following sections we develop a technique called orderbook modelling whereby a map of the operational status is developed in terms of order flows so that priorities can be discussed between the several departments involved and the progressing of individual order actions can be considered in terms of company-wide targets. The objective is a very simple one: to improve on the pure “ad hoc” impulse response to individual priorities as they hit individual departments.

2. THE CONCEPT OF THE ORDERBOOK

MODEL

The formulation of all the knowledge on the current operational status of a company into a workable document for the discussion of priorities is not a subject which has been extensively researched. Faith in planning sys- tems has dominated the need for development of priority management methods. However, various schemes are used in practice for assessing the priority situation. Some com- panies develop bar charts or wall charts but they are limited in their scope and difficult to maintain. Computer listings of order status and stocks are generally too long and fail to provide insights into the interactions. In practice priorities are assessed more in- formally at meetings at which individuals from various departments bring their per- sonal knowledge of status (in their heads)

269

for the discussion of the most urgent needs. Often these discussions are supported by the “black books” and “private bibles” associ- ated with each department’s activities. But what we really need is a public bible which is the accepted statement on the current situa- tion which all parties can use for debate on current pressures.

We are looking for a layout of the orders and stocks position in relation to commit- ments, capacities and targets so that the sig- nificance of priorities can be assessed. The simplest possibility, in principle, would be to draw up a physical map of the layout of the organisation and identify the location and status of all orders on it. The orders might be represented by flags, and the details of the orders could be cross related to in- dividual cards in a filing cabinet. Technical- ly, however, this would be an unworkable analogue as it would be difficult to maintain and impossible to summarise. Another alter- native would be to try to develop a “represen- tation of the situation” but this, although attractive to look at, is surprisingly inef- ficient in terms of information content.

It is more efficient to develop the model in terms of an analogy of the status of or- ganisation as data layout. A good example of a data analogue is a stock list. If the stock list shows bin numbers and quantities in ad- dition to the usual details of identity descrip- tion and value it is, in effect, a map of the situation on the stock shelves. It is not an orderbook profile as it only shows one stage in the overall process, but it indicates the physical status in terms of structured data. For orderbook modelling purposes we need to think in terms of the multiple stages of an organisation, both stock-holding points and production stages, as well as pre-specifica- tion stages, and we need to portray the im- plications of the aggregation of orders and stocks against aggregate targets. The idea of a list, however, is so central to priority management that we will develop the concept

of an orderbook model in terms of a struc- tured data list.

The problem of developing the list is again the problem of data volumes. The source data of information that might be included in the list could consist of perhaps thirty data items taken from each of several thousand forms on which the total status of the orders and their characteristics are contained. We need to select out the essential data which indicate priorities, and interactions such that individu- al decisions can be made for progressing ac- tions to support the analysis of the most im- portant priorities. We must only choose data which relate to order flows and the inter- actions between flows. For example customer addresses and detailed product design features are not part of the orderbook model as these data have no significance in relation to deliv- ery commitments or queues on capacity. The proposition therefore is to develop the list in terms of flow lines ~ each line being the demand/supply position and the details on the line will be represented by the data drawn from the set of forms relating to them. The line is a demand/supply position in rela- tion to an order, an order group, or an output target.

The overall concept is set out in Fig. 1. The top of Fig. 1 illustrates how the status of the organisation is contained in numerous individual documents which can, in the first instance, be grouped as relating to individual orders or products. In the middle diagram of Fig. 1, each order or product will be rep- resented by a “flow line”, and the essential data from the documents on that order or product are picked out and written on that flow line. Having expressed the essential data as flow lines, the set of interconnections be- tween the flow lines are then defined: supplies orders feeding in-house orders which them- selves become assembled into end customer deliveries. The individual flow lines containing data are now fitted into a single structured list to show how capacity and stocks are shared

270

STEPS I?4 TEIE CONSTRUZ'ION OF AN OFDERBOOK MODEL

Order Processtig Documents

I Scheme of order Flows, demands I and supplies. I

i

Arranged under I

column headings 1

Acknowledgement

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HEADING _________________________

Order Identity and classification

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I Capacity Allocation

processes

StOCkS

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Permits orders tomove

&mar orders forward

lT Labour available in

each week

1 DATA LIST ____________________________

Planned dates for results

X X X

X X X

X X X

Achieving these dates depends on sufficient stocks and capacities.

Fig. 1.

TYPES OF COLUMN DEADINGS FOR AN ORDERBOOK MODEL

1.

Flow Lines on the

Orderbook List

(set out, one line

per task)

>

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-

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Fig. 2.

272

between orders. This is sketched out in the lower part of Fig. 1. The essence of this step is to formulate a list of distinct data item headings with very precise meanings which represent the total flows in the organisation. The various types of data item headings are set out in Fig. 2. It has been found that seven data types are sufficient.

The hypothesis is that it is possible to develop and to specify some thirty key data columns defining the key vital characteristics of the organisation, such that the total infor- mation set on order flows and stocks position can be represented sufficiently accurately for priority management purposes. The arrangement of the data is a crucial variable: it is a compromise between the image of the structure of the organisation with its various assembly stages, the state of progress to show the state of supply against demand commit- ments, and the total implications against aggregate targets. This list has to be so com- pact and so shrewdly arranged that without further computation it can reveal the relative significance and the priorities in hand. It must be easily maintained as it is a constantly changing situation and it must itself be a dis- cussion document for choosing and recording actions taken.

We will first illustrate the scheme on a small assembly context, follow this up with a description of a scheduling task in a steel works. and then generalise its application to a range of contexts where it has been applied and used successfully.

3. AN ORDERBOOK MODEL OF A SIMPLE ASSEMBLY SITUATION

Figure 3 shows a flow chart of the major stages of production in a vibration absorber factory. It is a classical material requirements planning situation. End customer orders are drawn off from finished goods stock; finished goods orders replenish stocks which them- selves draw-off a simple assembly of three

parts to make the vibration absorbers: tube ends, braid bands, and braizing braid.

The first step in orderbook modelling is to merge the horizontal flow chain into one vertical structure arranged so as to reflect the interactions. The schematic layout of this revised structure is shown in the lower half of Fig. 3. It implies an arrangement of flow lines to reflect the current order and stock positions. The headings of the columns of data also need to indicate the details of the orders and stocks giving their characteristics and status.

The flow lines shown in the bottom half of Fig. 3 can now be converted into current status and reality by writing the current situation onto the arrowed lines under the headings with one line per order or stock type. This is shown in Fig. 4.

The set of 137 lines is divided into 5 blocks in each 01

Block A:

Block B:

which lines have distinct roles: (one line) shows the physical stock on the 14 end items. (25 current customer orders) giv- ing order number. value, received week and requested week, fol- lowed by outstanding require- ments on each of the 14 end items. This block is arranged by Requested Week to indicate relative priority. For example: Order No. B3927 shows that “at the present time” this order requires 15 of Item 3, 45 of Item 4, etc. (one line) shows the total future requirement on each of the 14 end items. It is obtained by sub- tracting the total future require- ments from the physical stock currently available. Reading across this line gives a relative indication of priority for replen- ishing orders. (17 lines) is the current replen- ishment orders on hand. For

Block C:

Block D:

273

VIBRATION ABSORBERS AS A FLOW CHART

Parts Orders parts in Progress Stocks

n Assembly Orders in Progress

Finished Goods Stock

End Customer Orders Awaiting Allocation

The Flow Chart Organised as a Structured Orderbook List

END PRODDCTS

r 1 2 . . . . . . . . . . . . . . . . . . 147

4 Finished Goods Stock --- -- - - - - - - - r-- A Relative Priority for stock now

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End Item /] B c:':"e,",' '~~~~~::r

Future Requirement __ _ _ _ _ _ _ _ _ _ _ __ _ - C Relative Priority for future

I 1 3 Assembly Order Replenishment orders

in hand

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1 Parts order I

order with which to make replenishment I orders. Showing by SSSSS which parts are shared between end items

D Sorted by (Relative

1

Due Week Urgency)

Arranged so that stock/orders are adjacent lines for same part

TT E

Relative urgency for parts replenishment

Fig. 3.

274

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Block E:

example it shows the order num- ber on the Assembly Depart- ments, coded by an AB prefix. The last order in this block, AB 429, was placed in Week 403, applies to Vibration Absorber No. 1 1 and is for 100, as in- dicated in the On Order column of Band 3. consists of the remaining lines giving parts stock in hand and replenishment orders for these parts across all items needed for the manufacture of the 14 end items. The parts which are required are indicated by the “S” symbol in the relevant column. By looking down a column for a particular end item the several tubes, tube ends, braid bands etc. can be picked out. It should be noted that the parts often go into several end items, this being indicated by a line of “S” occurring in several columns. The lines in Block E are arranged in Part No. order, the stock on hand being indicated by the first line and the feeder replenish- ment order immediately beneath it, using the same part number. For example :

Part No. 43240/3 is a tube item it has 145 units in stock and the line immediately beneath it has an Order No. VA190 due for completion in Week 408 with 500 on order. The timing of replenishment orders for parts stock is indicated by the re-order level column of Band 3. For example, Item 43240/3 should be re-ordered when the parts stock is below 300, as has hap- pened in this case.

This overall data layout therefore permits several dimensions of priorities to be assessed.

Block A:

Block B: Block C: Block D:

Block E:

relative priorities across product

types urgency of customer orders relative priority in the future the matching of current assembly orders to Blocks C and A the possibility of supporting the creation of new priorities under Block D, and the interconnec- tion between parts supporting Block E.

The table of data contained in this list thus provides a layout like the position of play on a draughts or chess board, showing coverage

and interconnections between parts and assemblies. It translates the supply position right through to the customer end position and permits the response to new end cus- tomer orders to be assessed as they occur. It is updated continuously as “moves are made” and reflects several units of consideration, including cash, delivery and valuation quan- tities. It is thus a geometric layout of the situation to assist priority management.

Of course it might well be argued that any materials requirements planning system has the capability to present all this data. How- ever, this data is not concerned with a cal- culation which is typical of the material requirements planning scene, but rather a positioning of essential information to permit the visual analysis of priorities. It is the interleaving of lines and the excellence of column arrangement which permits this to be possible.

It must also be recognised that there are alternative formats for representing the situa- tion in the Vibration Absorbers case. Each customer order for each product type could have been expressed on a single line. In that case there would be one product type column and it would have been in the nature of a line characteristic/classifier rather than in the nature of a process/progressing column. An

278

PRIORITY PROFILES FOR STEEL BILLET PRODUCTION

Customer orders

on hand Shared Primary Process

PROFILE A Summary load by Section

/

I Materials

\

Inspection and Classification

Finishing Processes

of output

PROFILE C

Sections

- - - .- - - -

_p 'ration' of pro- duction for this section /

PROFILE B

Which Process has the Current Bottleneck?

Pro- output WIP Forward cesses Load

- Planned - -

ProJected

>

Whichever orders have ‘\ been chosen check on bottlenecks in finishing processes.

I List of Order Status - one list per section

\ I- iL - Which Order to Progress Next?

- Where have the orders got to? Process - Route

- _ What reallocations are possible? x x - l-l What actions next week? -

- *:I I I

I ‘I I I I

Fig. 5.

279

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overall display. It is an art rather than a science. In the end it must be an image of the way the system controllers think.

4. USING PROFILES OF THE ORDERBOOK MODEL.

Most situations are much more complicated

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and much larger than has been suggested by the vibration absorbers example described in the previous section. The orders on hand may run into thousands, and the complexity of the processing of the orders and the sharing of parts may make the formulation of ap- propriate headings for the list structure a much more difficult task. In these larger con- texts the choice of the headings must be achieved by choosing appropriate approxima- tions such as: ~ identifying key gates for order progress

rather than identifying every process; ~ excluding from consideration small items

which can never create shortages; ~ representing only the major classificatic,ns

for marketing and production purposes as order characteristics.

Not only will the data incorporated on the orderbook model be more selectively chosen, but the working documents produced by the orderbook will be abbreviations or profiles of the fundamental list obtained by selection and summarisation. We will illustrate this in the case of a process company.

Figure 5 shows a sketch layout of the order flows in the manufacture of steel billet. The company concerned manufactured to customer order, in all sizes, for the motor car industry and other specialist applications. At any one time there were about 700 orders on hand. Orders were categorised into sec- tions (being the cross section of the square billet) and specified by material type, etc. Each order had a due date and quantity. The first real processing state for an order was to be allocated to a mill rolling programme. The mill rolled one section at a time, there being some 14 sections to consider. The orders had a distinct grade and process route, the route defining the particular finishing operations through which the steel would pass after the primary mill process. After rolling the steel was inspected for faults and any scrap or short lengths were separated from the “prime” billet which then moved on to the

finishing stages. An important finishing route, defined as the “old castle route” for the forg- ing type orders involved many finishing steps prior to dispatch. As in many process in- dustries, the yield and quality control was a key factor. On inspection after rolling, the billets could be downgraded and thus re- allocated to an order requiring a lower quality. The original order would then be postponed but another order would gain in time.

The full list of headings specifying the orderbook model contained some 30 columns designating material characteristics, processes required, volume produced so far out of each process, etc. Even with 30 columns, impor- tant approximations had been made in decid- ing what the essential data were for inclusion in the model: - the material availability situation was re-

garded as independent and not directly coupled.

- the load on the processes was assumed to be measured in tonnes, although it was ac- tually considered in hours.

- the dating at processes was not considered, but only the date of completion from one of the major “gates” and this approxima- tion was accepted in assessing the load at a process although it might mean some load had passed the process.

- the lengths of the particular steel billets on the order was not represented on the orderbook, nor the particular pens in which the steel was located. These were entered onto the orderbook documents as ap- propriate very temporary information.

These approximations were accepted by all the managers concerned as necessary to re- duce the volume of data to a suitable level for the consideration of priorities by visual analysis of the orderbook list.

This full orderbook model was not itself a decision document as it was too long. In- stead, lines were selected, columns chosen and simple projections done to assist manage- ment actions. Three particular documents

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were produced at regular twice weekly inter- vals to review priorities. These documents are labelled in the lower half of Fig. 5 indicat- ing their purposes and linkages between them; they provide different perspectives on the set of current priorities and are all linked to- gether. The documents are labelled A, B, C and their details are contained in Fig. 6 (a),

(b), (c). Document A in Fig. 6 (a) shows the relative

urgency of producing the different sections on the primary mill process at Week 932 (week 32 of 1979). This document looks down the outstanding loads by section and provides an additional perspective on the for- ward load through the planned dates out of the Mill. The loads are further classified by the re-roll and forging to provide a perspective by product class. It indicates that Section 115 should be rolled most urgently. This sheet was used by the mill planner to create intended capacity by section type.

Document B provides a list associated with a particular section type, e.g., this is Section 5 1. It classifies the set of orders on hand by order number and shows their state of pro- gress. Band 1 of the data gives the order details, Band 2 the progress so far, Band 3 is Action area. Included within Band 1 is “Item No.” This is the allocation to a Mill pro- gramme, the latter being the serial number followed by the week number. For example the first order allocated is FORD SDF as pro- gramme 5044. For orders which have been rolled the Band 2 date shows the state of progress giving the amount out of the Mill and this is broken down into Prime amount out of Despatch, Old Castle, together with the Short and Scrap material produced on that order which is now available for realloca- tion. Band 3 data gives the despatch require- ments to be discussed for action; the progress chaser identifies with the production con- troller what was going to happen each week and noted the pen number of the steel loca- tion.

Document C provided a perspective on the possible bottlenecks in Finishing. Each order on Document B had a process route (PR) and this related it to certain finishing pro- cesses. Document C shows the set of pro- cesses on the vertical axis. On the horizontal axis of the chart, Band 1 shows the output in the last four weeks at each process implied by completion of the stage to which that process belongs. Band 2 shows the work in progress position. Band 3 shows the forward load on the processes.

This report provided some sophisticated interpretation of both work in progress and the forward load. The work in progress posi- tion shown in the first column of Band 2, measuring the total tonnes on hand. This was analysed into: - visible arrears, i.e., the amount of current

work in progress which was late. - invisible arrears, i.e., the tonnage not at

its relevant process, but late relative to the planned date.

- surplus, i.e., over-rolling against orders cur- rently constituting work in progress in that area and now available for re-allocation. Band 3 shows two lines for the forward

load, indicating on the first line the load based on the planned “out of gate” dates and, on line 2, the load projected in the light of the current lateness of the order set on hand. It suggests for example that in “Scarf- ing” the load of 968 for the immediate week 846 is light, based on the original plans, but based on the projected position the overload is substantial, being 39 17 tonnes - well above the achievement of output in the previous three weeks.

The final band, Band 4, shows the total forward load and the implied week’s worth of load ahead by process. It is interesting to contrast how the overall queue of 5 weeks on the “dressing load” indicated in the bottom line contrasts with’ the queues on individual processes. This emphasises how the model provides a basis for comparing and contrast- ing aggregates with the details.

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This example illustrates how a very com- plex situation is simplified through the orderbook modelling scheme and enables priorities to be assessed at various levels with- out losing contact with the details and with- out involving any complex mathematics in the assessment of forward loads. Because of the grip that sales and production were able to obtain over order flows through this order- book model, their delivery improved from 10% of orders on this to nearly 90%

going out on time, within a period of nine months. This was achieved without increasing capacity but through the controllers being able to consider and debate the total set of orders every week, being able to interpret capacity bottlenecks more shrewdly, and being able to set realistic internal lead times for discussion of order intake promises with sales. They were thus able to act with author- ity over the situation rather than endlessly chasing the individual requests which had arisen in a haphazard manner and responding to them on a one at a time basis without regard to their “knock-on” effects.

5. FORMATS FOR DIFFERENT APPLICATIONS

The previous two sections have outlined two example orderbook models for a simple assembly situation and a steel works schedul- ing problem. However, the orderbook model- ling approach has been developed for sixteen companies varying across a wide range of in- dustries. Figure 7 lists the various companies and describes their differing contexts. The range of operations includes the classical types: make to order, make to forecast and assembly and item production, together with alternative routing patterns (see [3] ). The process of formulating orderbooks for this wide variety of contexts has proved its generality and a methodology has been for- mulated for the construction of appropriate orderbook models. This is outlined below:

Step I: Divide the Supply chain up into appropriate flow blocks - each block forms a ‘homogeneous’

set of lines either makes to order or make to stock (see Fig. 8)

- connect the flow lines into the blocks to show entry progress and completion.

- relate the lines between boxes to show the assembly structure.

Step 2: Set out the minimal necessary head- ings for characterising the status of orders and stock within each block ~ arrange the headings to reflect the

flow and decision sequence: iden- tity; specification/categorisation; routing requirements; units; planned dates/volumes decisions/ allocations/status; progress/actual quantities.

Step 3: Merge the horizontally arranged boxes into one unified vertically

structured set of lines (see Fig. 1) ~ sharing as many columns as pos-

sible - using reference codes to inter-

connect lines or assemblies - showing allocations between lines. This simple list will provide a map of the capacity allocation position.

Step 4: Establish procedures for mainte- nance of all the entries on the order- book list from the various docu- ments used in the organisation. In this way the orderbook model be- comes the central document through which the implications of all sub- sidiary documents are assessed. The orderbook model needs to be main- tained on a continuous basis.

Step 5: Establish the use of the orderbook model for decisions through ap- propriate summarisation and sorting for specific management meetings and appraisals of the situation, see Fig. 5.

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287

Figure 7 suggests the major characteristics of the orderbook models which have been designed for a variety of situations. It reports the type of operating context (steps 1 and 2), the focus of the capacity allocation pro- cess forming the fulcrum of the system (step 3), and the intensity of the updating pro- cedure (step 4).

It would be impossible in this paper to illustrate all the orderbook modelling layouts represented by the examples. All are data lists and can in that sense appear similar, but it is the flows of the data implied by the flow lines and their inter-relationships which are the central picture in the mind of the user. Figure 8 illustrates these background flow forms for two typical contexts of make-to- order and make-to-stock.

Being simply a “piece of paper” as a map of the situation, the implementation and evaluation of the orderbook models has been a much smoother task than the efforts in- volved in traditional computer systems. Al- though a spread-sheet microcomputer scheme may be used for editing the orderbook sheet and resorting it, it is essentially a map written at a date. It can be developed out of the existing paperwork or computer based schemes as the study of the right minimal information to be used for priority management, and it can be evaluated and changed as circumstances alter. The development of a system based around the process of forcing managers col- lectively to decide “what is the right and essential set of data to reflect the operational status” has been a constructive process in all the companies involved. It has ensured that the organisational responsibilities are included in the system design process which is a vital and often neglected dimension [4].

6. THE ROLE OF THE ORDERBOOK

MODEL

The principal achievement of the order- book model is its ability to simplify and to share knowledge of the situation. It provides a common and idealised document of task status through which most intelligence is brought to bear on the changing and often conflicting commitments. The idea is very simple:

(a) set out a series of headings across a sheet of paper representing character- istics of variety, flow stages and deci- sion points covering the full supply chain.

(b) identify the types of “lines” which are order flows, sequence them and inter- leave them to reflect interactions and allocations.

(c) summarise the list for decision making within an organised set of procedures for decisions and file maintenance.

The simplicity of the scheme can disguise its significance and subtlety. Its significance lies in the achievement of selecting and ar- ranging only the necessary and sufficient data to see the interactions between priorities. It questions the need for the enormous volumes of paperwork which managers receive in pursuit of “control”, especially in the con- texts with high levels of disturbance and inter- ruptions. Its subtlety is the cleverness with which the structuring of headings and the choice and arrangement of columns can simul- taneously represent multiple facets of the or- ganisation: ~ a structure of the company and its physical

flows

288

~ a map of capacity and the decisions used in allocating the capacity

- an implied programme and priority of work against commitments acknowledging con- straints

- a record of achievement after the event which enables performance to be evaluated in multiple dimensions.

The orderbook is not therefore just a piece of paper set out with data lines. It is a struc- turing of the facts to provide insights into multiple aspects of the business covering at least the following four viewpoints: - the characteristics of all orders on hand

(both internal and external) especially noting their variety types and their degree of specification and confirmation

- the status of orders relative to their time commitments, such as delivery dates

- the implication of order flows relative to capacity constraints throughout all depart- ments

~ the ability to fulfill output targets and company objectives. It is important to distinguish an orderbook

model from traditional management docu- ments such as planning sheets. A plan is a prediction or an instruction about what to do. It considers intentions. An orderbook model is an impression of the state of progress and its implications relative to commitments. Its role is to encourage appropriate responses and it depends on intelligent use of the informa- tion. The spirit of planning lies in forecasting and the making of assumptions and calcula- tions leading on to a means of control. There is no “control” in orderbook modelling in the traditional sense. The objective of the orderbook modelling technique is to select, arrange and sort the data about order status so as to optimally represent the situation for priority responses. The “control” lies in the fact that the information is sufficiently struc- tured and compact for everyone to see it and use it.

The orderbook model is also a means of integrating the organisation because it forces compromises to be established across the dif- ferent departments. The power of the model- ling process is achieved because it forces dif- ferent management functions to pick out the several key classifications of the organisation, to recognise conflicting viewpoints on clas- sification, alternative units of measurement and relevant priorities. By limiting the descrip- tion of the organisation to some 30 key characteristics set out on one piece of paper, the formulation process forces the real model of the organisation to emerge - the model which the managers think about rather than the model implied by the morass of data on the paperwork. By interleaving the columns on the orderbook model and the types of order lines, covering the marketing viewpoint, the design viewpoint, the production view- point and the accounting viewpoint, a total corporate model is obtained of the opera- tional position. Ironically, because it is not exact, or performance orientated, it en- courages debate between departments with potentially conflicting interests, because it leaves some of the specification details and systems to the individual department man- ager. It provides a means of structuring and relating decisions from the fine detail of which order to progress next to the decisions about overall capacity.

The orderbook model therefore fulfills a unique role conceptually as well as practial- ly and operationally. Undoubtedly the suc- cess it has achieved in practical use has oc- curred because of the new dimensions of modelling in terms of data definition, data selection and data arrangement. The data it- self is the model of the situation rather than the consequence of an abstract model con- tained in mathematics, computers or flow charts, because it can be developed out of existing practices and paperwork. It over-

289

comes the gulf between control system design REFERENCES and operational practice, which is so laborious- ly bridged with lengthy systems analysis ’ procedures (see [ 51). For businesses with continuously changing circumstances which 2

have to respond spontaneously to pressures, the orderbook model aims to be the best representation of “now” for responding to 3

these pressures in a coordinated and effective 4 way.

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