Modelling lateness and schedule reliability: How companies can produce on time

Schedule reliability is a very important target in operations management: if a company cannot produce and deliver on time, it has to make up for it by incurring a penalty on delays and using high cost express delivery. If that option is not available, customer dissatisfaction is inevitable. When the customer's production system operates with low inventories and just-in-time deliveries, low schedule reliability of the suppliers will eventually ruin that customer's schedule reliability as well. In spite of this high importance, industry analyses show that the schedule reliability of many factories is quite low: a part of the orders is completed late and endangers the delivery reliability of the company; other orders are completed before the scheduled date and increase finished goods inventories. This article shows how lateness can be modelled and it describes the application of the models using an industry example. Appropriate measures to enhance schedule reliability result from the analysis.