Production planning refers to the process of creating a detailed strategy for the production of goods within an organization. It involves developing a plan about what type of products to produce, when to produce them, and the required quantity. The planning process involves developing a long-term view of overall production within the company.
Although it was initially developed for large manufacturing industries, small and middle-sized businesses across different industries have adopted a planning process for tracking their production processes with ease. The two main objectives of creating a production schedule include:
To make sure that the raw materials and equipment required for the manufacturing process are available in the right quantity and quality.
To ensure that the utilization of capacity is proportional to the expected market demand.
There are various elements that you need to consider when planning the production process. They include:
Availability of raw materials
In order to ensure that the material planning process goes well, the company needs to maintain an inventory of raw materials so that the manufacturing process can flow well. When a company has adequate primary commodities, it will likely produce high-quality products that will lead to customer satisfaction.
One of the main reasons why some companies produce low-quality products is due to insufficient feedstock. Therefore, if your company has a proper flow of basic materials, then you should be able to produce high-quality products that will add value to your customers.
Moreover, the availability of raw materials allows organizations to meet their customer's demands on time, which helps to reduce costs and wastage as well.
Another element to consider when developing a production schedule is the workforce capacity of your company. Are the number of workers and machines available at your company enough to meet the product demand? You need to make certain that your organization has an efficient resource of workers and machinery that will work for a specified period of time in order to produce and manufacture a specified amount of products to meet your market demand.
If your workforce capacity is inefficient, then your company will encounter delays in the production process, which will lead to increased costs, loss of customers, and poor company credibility in the market.
Before a company plans to produce and manufacture any products, it needs to ensure that it has sufficient customer demand first. If you begin a manufacturing process without determining demand efficiency, then your company will likely encounter massive losses from poor sales. Just because there are people or businesses in the market that use the type of products you manufacture, doesn't mean that they will purchase from your company.
This is why it is important for companies to focus on spreading brand awareness and creating a sales strategy before producing products in large quantities. Do potential customers know about your company? How will your product meet the needs of your customers? What causes your product to stand out from other competitive products in the market? What type of product is your ideal customer looking for?
Once you establish a customer base and identify who your ideal customer is and what they want in a product, you can now create and manufacture a product that will meet the customer demand.
If you want the delivery and distribution of your products to occur easily, ensure that you have enough time between the placement of purchase orders by your customers and the process of producing, packaging, and delivering the products to your customers. If you have a short lead time, you will not be able to produce and deliver the products in time to your customers.
Supply delays can hurt the sales of your company because customers will view your company as unreliable, which may cause them to prefer placing orders with other companies in the future. Additionally, if your company has delays in supply due to a short manufacturing time, it may cause delays in other businesses that rely on your products.
Who Plans the Production Process in a Factory?
There are a variety of people in charge of the production process in a company. They include:
They are in charge of developing a plan to schedule, coordinate, and monitor the products through the entire production cycle in order to always have an inventory that meets customer demand at optimal costs.
They are in charge of scheduling how materials will be used in order to ensure that a company achieves optimal levels of production. The planners evaluate the time required to produce the product, the availability of suppliers, and the availability of raw materials to ensure there are no shortages. This type of planner is also referred to as an industrial planner.
Some of the tools used in the manufacturing process include:
Advanced Planning System
The Advanced Planning System is commonly used by planners and schedulers to track costs based on manufacturing activities. The software optimally allocates the capacity of raw materials and machinery in order to balance customer demand with the capacity of the workers and the machines.
Enterprise Resource Planning (ERP) software is used in Supply Chain Management for job scheduling. The planner is able to track what type of products customers in the market are consuming, the best resources required to manufacture the product and the best delivery dates that provide ample lead time for the company.
Moreover, ERP software provides companies with advanced practices that allow them to become more efficient in material planning and manufacturing.
Key Steps of Production Planning
Here are the most important steps to be followed in a production process. They include:
Before creating a production schedule, a company needs to evaluate the demand for the product in the market first. If a product has high demand, then the company should produce the product in large quantities.
Check raw material availability and capacity constraints
The company should also ensure they have enough supply of raw materials and workforce capacity before beginning the production planning procedures. This will help the organization avoid delays in supplies and meet customer demands, which will lead to customer satisfaction.
Another important step in the material planning process is to ensure that the company first places orders with its clients. Once an order has been placed, the company can proceed to produce the goods. It is risky for companies to develop a production schedule with no order placements because they may incur massive losses.
Communicate to the distribution planners about any risks and shortages
In case your company experiences constraints such as shortages in raw materials, the workers going on strike, or some of the machines breaking down, we recommend communicating those issues with the distribution planners so that they can re-organize their schedule and communicate with other third parties involved as well.
Clear and concise communication will allow your company to maintain good relations with partners such as the distributors and create a better flow of products in the future once the shortages are sorted.
Monitor and adjust the plan on a continuous basis
It is important to have a flexible production schedule to ensure continuity in case your company encounters unexpected events during the work processes. For instance, if one of your machines becomes faulty or your workers decide to go on strike, your company needs to be able to adjust the plan to avoid delays that take too long.
Why is Production Planning Critical
Material planning is critical to companies because of the following reasons:
It helps to reduce the amount of investment a company spends on inventory
It allows high-quality products to be produced on time, which boosts customer satisfaction
By boosting efficiency, material planning helps to decrease the overall cost of production
Companies that have a comprehensive material planning process tend to thrive more in the market compared to companies that do not.
Importance of Using Expert Planners and Sensitizing Other Departments
When bringing together a team to create a production schedule, it is important to ensure that the planners you bring on board are well-trained for their jobs. Experienced planners know how to maneuver through the challenges that occur during material planning and they are best suited to identify problems that may cause delays in advance.
Additionally, companies need to sensibilize other departments crucial to the production process, such as the sales and marketing departments. As we stated earlier, customer demand is a key factor when developing a production schedule. The sales and marketing department will carry out market research to determine the demand for the product in the market, its price, why customers buy it, and which specific changes about the product customers desire.
This will allow the company to manufacture and produce the most ideal product for consumers in the market, thereby driving up the sales of the company and promoting its growth.
Get Started with Zensimu Today
Are you ready to develop a comprehensive production schedule for your company that will improve customer satisfaction, boost sales, and speed up your company's expansion? Zensimu is here to help.
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