Introduction
Production planning is an essential process for optimizing manufacturing operations. The overall goal of production planning is to enhance customer satisfaction by minimizing storage costs and replenishment lead times. Effective production planning helps businesses balance inventory, reduce waste, and streamline processes for improved efficiency.What is the Overall Goal of Production Planning?
The primary goal of production planning is to better serve your customers by:- Reducing Storage Costs: Minimizing excess inventory to reduce warehouse and handling expenses.
- Decreasing Replenishment Lead Times: Ensuring materials are available when needed, thus speeding up the manufacturing process.
Material Grouping for Efficient Production Planning
Grouping materials effectively is a cornerstone of successful production planning. To simplify processes and enhance flexibility, you should:- Create as few groups as possible for improved transparency on the shop floor.
- Create as many groups as necessary for better flexibility and responsiveness.
Criteria for Grouping Materials
- Cheap Materials: These should be planned using consumption-based strategies. They need to be available at all times to avoid shortages. The planning effort should be minimal.
- Expensive Materials: Materials with high costs or long replenishment lead times require a more sophisticated planning approach.
Key Questions for Effective Production Planning
To select the most appropriate planning strategies, ask the following questions:1. Who is responsible for the production plan?
2. Are materials produced before or after sales orders are placed?
3. How should actual stock levels impact production?
4. When should planned quantities be consumed?
5. On what level of the product structure does your planning take place? (Finished product vs. subassembly)
Levels of Production Planning
1. Finished Product Level Planning
This type of planning is ideal when there is a stable and predictable demand pattern for the finished product sold in sales orders.2. Subassembly or Component Level Planning
Planning on this level is recommended when there is consistent demand for components or subassemblies used in production orders. Benefits include:- Handling unstable demand patterns at the finished product level.
- Managing similar variants of finished products requiring the same subassembly.
- Effective use of consumption-based planning for finished products.
3. Characteristics or Characteristics Value Level Planning
This level of planning applies to configurable products with predictable demand patterns for specific characteristics. It requires the use of a variant configurator to translate characteristics into component selection.Example: Planning for the characteristic “blue” paint will result in selecting the component “blue paint.”
Production Planning Strategies
Make-to-Stock Strategy
- Best used when the goal is to produce and store products before receiving sales orders.
- Examples: Strategies 10, 11, 40.
Make-to-Order Strategy
- Applied when production begins only after receiving sales orders.
- Examples: Strategies 20, 25, 26, 30, 52, 63, 54, 55, 56, 65, 89.
Component Procurement Strategies
1. Procuring Components Before Sales Orders
For complete product production before sales orders, use a make-to-stock strategy (e.g., 40, 10, 11). Components are procured in advance, ensuring availability.2. Procuring Subassemblies Before Sales Orders
Strategies without final assembly (e.g., 50, 52, 55, 60, 63, 65) are useful for planning on a finished product level without involving final assembly. Subassemblies are procured or produced based on independent plans.3. Procuring Subassemblies Based on Independent Planning
Strategies 70 or 59 apply when planning components independently from finished products. Useful when there is a separate production process for components or subassemblies.Responsibility for Production Planning
Understanding who is responsible for production quantities is crucial. If your production department takes full control of quantities and stock levels without relying on sales forecasts, using planning strategies for components can help decouple these departments for better efficiency.The Influence of Stock Levels on Production Quantities
Should stock levels impact production planning? It depends on your strategy:- Strategy 11: Allows production to rely solely on planned quantities without netting stock levels. This approach is helpful when dealing with seasonal demand patterns but requires consistent production.
Choosing the Right Production Planning Strategy
To determine the best strategy for your business, consider the following:- Whether you want to produce products before or after receiving sales orders.
- The level at which you plan your components (finished product, subassembly, or characteristics value).
- Whether stock levels should influence your production planning.
FAQs about Production Planning
1. What is the main purpose of production planning?
The main purpose is to improve customer satisfaction by minimizing storage costs and reducing replenishment lead times.2. How should materials be grouped for effective planning?
Materials should be grouped based on their cost, replenishment lead times, and production requirements for better efficiency and flexibility.3. What are the different levels of production planning?
Production planning can be done at the finished product level, subassembly level, or characteristics value level.4. What is the difference between make-to-stock and make-to-order strategies?
Make-to-stock involves producing goods in advance, while make-to-order starts production only after receiving a sales order.5. How do stock levels influence production planning?
Depending on your strategy, stock levels can either influence or remain independent of production planning decisions.6. Why is it important to define responsibilities in production planning?
Clearly defining responsibilities ensures smooth coordination between production departments and sales forecasting, improving overall efficiency.By following these guidelines, you can create an efficient
production planning strategy that minimizes costs and maximizes customer
satisfaction.
