In this post, you will get a complete idea of, what are production plan, production planning, and production planning ERP module.
A Production plan is derived from the detailed sales forecast, it balances market demand with company resources.
Production planning is the cross-functional process of devising an aggregate, family-level plan for a month or quarter based on,
- Management targets for production.
- Sales and inventory levels.
It meets operating requirements for fulfilling basic business profitability and market goals. And it provides the desired framework in developing the master production schedule.
What does it actually mean?
Production planning in simple terms is the first and foremost planning and estimation that any production and manufacturing firm would organize. Things like
- What will be the production capacity of the unit
- How much raw material is needed to generate that amount
- What must be the process of production
- Whether it is economical or not
- How much labor is needed
- What kind of skills they may possess
- Whether there is any wastage
- And if yes, then how to reduce it so herein comes the plan B of production- any alternate method of production.
All these concepts and questions should arise whilst in production planning, to overcome the glitches and generate a continuous workflow.
A sound production plan must consider all the aspects of manufacturing an item from scratch.
It must be able to predict where things might go wrong and how to get through it without harming the smooth functioning of the firm once it begins.
Hence, the production plan is designed far ahead in time, even before the firm starts manufacturing properly.
Production planning and controlling
Both planning and controlling the production are crucial for the smooth production process in the organization.
Planning is about resource and capacity planning whereas controlling is about holding on production process system.
Planning consists of the following steps
- Planning: Plan and arrange resources so that you can do on-time delivery of products.
- Routing: Determine a proper path to materials so that it helps to minimize wastages.
- Scheduling: Schedule production equipment, labor, and processes to the easy flow of the production line.
- Loading: Little bit increases the production line load to make maximum usage of resources.
Controlling consists of the following steps
- Follow up: Once you are done with the production planning, some problems may occur in the production line. At that time managers or supervisors should follow up on the solution to eradicate the problem and make sure that the process is going as per the plan.
- Send off: After the planning, you need to implement it by sending off the material in and out of the production line. Record the time consumption for each activity.
- Examination: Check out the production process daily to ensure the proper processing of materials. This is not a quality inspection.
- Correction: Take corrective actions to improve the production process by reviewing routing and scheduling.
Objectives of Production Planning
Let’s now get into the detailed description of the objectives of production planning that need to be kept in mind while designing the production plan for an organization,
Determining the production capacity
The first and foremost thing to be planned out is the full capacity that your firm is targeting to produce. This is a crucial step for all production planning strategies.
A lot of other things are to be considered like availability of raw materials, proper infrastructure to handle every procedure, good and efficient labor, the time required to process one batch of finished goods without any setbacks, and so on.
Forcasting the demand and specifying the audience
This objective is a very important one. Only when you have a targeted audience for whom you are producing, you can assess the market demands of the product you are generating and how long will the demand keep you running.
It takes a really good planner to assess all this properly but once done it’s a failsafe against production hazards.
Proper inventory control
Any organization trying to make it big, and targeting a smooth, uninterrupted workflow must stock p its inventory on time.
Detailed computer-generated programs are used like MPS and MRP in high-end firms for production planning and scheduling.
These help to properly manage and synchronize the inflow of materials, and also on time to not hinder the work process.
Generation of waste
Any well-managed firm would generate some waste. The target must be to keep a tab on the amounts of waste generated and to try and reduce them by any parallel process.
The waste generated can be used up as raw material in some other process through the production line, which improves the stability of the firm as well as makes it an economical project.
Risk assessment and proper control
A production plan must have a risk assessment done. This procedure highlights all the glitches in the plan, what could go wrong, and how.
It studies historical projects of a similar dimension and tries to forecast the risk areas that need to be tackled carefully.
This requires setting up a control system, which highlights the production line without the risky spots, and assesses the results to grasp the magnitude of the risk, properly.
This type of study is very common in manufacturing firms.
Key performance indicators for production planning
Key Performance Indicators(KPIs) help to review the production planning. Below are a few KPIs for production planning.
- Production Expenses: Keep one eye on production expenses that include raw material costs, rent, employees salary, equipment, electricity, etc.
- Usability rate of capacity: It is calculated by taking the percentage of actual production process output against possible production process output. Always plan the production so that you can use the maximum capacity of machines and man powers.
- Actual time against planned time: Monitor and review the planned time and actual time is taken for the production plan. It helps to set the accurate planned hours next time.
- Productivity of employees: It is one of the important KPIs. Employees have to be punctual and have to work at least seven hours out of eight hours.
- Takt time: It is the time needed to manufacture a single unit. Generally, it is crucial in lean manufacturing.
Production planning types
You may find several types of production planning that concentrate on various aspects of the production process.
- Master Production Schedule (MPS): It helps to schedule the particular material or product to produce in a given time. They are created by the software and customized by the user.
- Material Requirement Planning (MRP): This system is useful for production planning and scheduling. It helps to know about the availability of raw materials. This system can be handled fully manually or automated by software.
- Capacity Planning: It helps to find out the capacity of the organization to manufacture the products as per the demand.
Types of production process methods
- Project-based or work-based production planning: This type of planning method mainly concentrates on the production of a single product usually handled by a single worker, sometimes handled by a group of workers. An example of this type of production is any customized product like a set of earrings or customized interiors for a flat. It allows you to manufacture the product as per your customer’s need. You can make it without interrupting the usual production process.
- Flow production method: In this method, products flow through the production line continuously. Products like electronic items such as mobile handsets, televisions, and home appliances. This method helps the manufacturer to reduce the lead time and costs.
- Mass production method: This method is the same as the flow production method. When you need to manufacture a large number of products in less time period this method is good. Usually, automated production processes will be used in this method. It helps the manufacturer by reducing the change over time.
- Process-production method: This technique is the same as the flow and mass production method. But the difference is products manufactured by this method will not be countable. Products like liquids, chemicals, and gases are produced by this method.
- Batch production method: In this production method, product manufacturing takes place in batch. Products like cookies, chocolates will produce in this method.
What are the mistakes that we make during production planning?
Generally, we make some common mistakes while doing production planning. By knowing them we can avoid or prevent them. Here I am listing them.
- No consideration of unexpected issues: Normally we do production planning without considering the changes and issues. We need to consider these two factors so that we can be ready to face problems when they arise.
- Considering only software: Sometimes we will be overconfident about the tools or software which we are using. If you sit in front of the desktop for production planning and are not involved personally to check the resource and all then, no matter how efficient the software is, the final result will not be your desired result. Hence it is important to combine both person and software involvement to get the best result.
- Abandoning equipment: Generally, we will not give much importance to the maintenance of equipment. But to get efficient service from the equipment it is necessary to service it regularly. If we neglect the equipment that leads to problems in the production process.
ERP Production planning module
ERP production planning module handles the business process related to the production of a company.
Production planning optimizes the use of manufacturing capacity, parts, components, and material resources. It is done by using historical production data and sales forecasting.
The evolution of manufacturing requirements planning (MRP) II into ERP happened. In this process, vendors have developed more robust software for production planning.
Consulting firms have accumulated a vast knowledge of implementing ERP production planning modules.
ERP production module will handle a tiny part of the production. The module begins with Product creation. There will be a component master and stage master.
This module is designed to track day-to-day production progress. On completion of any work order information will be sent for delivery. Reports on the delivery schedule will be available in this module.
Production Planning helps an organization in planning production. Planning with the best use of all available resources.
Material requirement planning is done based on the advice generated by the sales department.
The feasibility of production is evaluated using details like
- Raw material availability and procurement time.
- Machine availability and capacity.
A production schedule is generated for all machines. Scheduling is done in an optimized fashion based on the priorities of production.
Features of the ERP production planning module
- Process definition with inputs, outputs, by-products, and overheads
- Definition of Bill of Materials (BOM) for all products up to any number of levels.
- Planning based on customer-wise production advice and sales forecast.
- Material requirement planning: MRP based on machine capacity and availability. Machine efficiency, raw material availability, lead time. It gives a workable quantity for production.
- Production plan for machines with the best use of all available resources. Resource like raw materials and machines.
- Option to revoke production plan to change input parameters, production priority, or quantity. This is done using fresh production advice.
- Generation of the production schedule for machines detailing inputs and outputs.
- Analysis of machine efficiency and utilization.
- Automatic generation of MRS and purchase requisitions on finalization of the plan.
- Generation of process requisition for processes that have to be subcontracted.
- Reserving quantity for production.
- Automatic generation of job orders for production.
- Option to make daily plans for production.
- Generating reports related to production.
What are the advantages of an efficient production plan?
- Maintaining a smooth workflow improves the work environment due to a reduction in labor and production costs.
- A properly designed production plan will reduce inventory costs and risks of misinterpreting and running a huge loss.
- Increased customer service level due to on-time and high-quality deliveries.
- Increase in production capacity due to synchronized functioning of the production line and thus increased sales rate.
Hence, an efficient and smart production plan is like the groundwork for success. Using the production planning module in ERP makes this process better.