- Hemali Nandani

Introduction to Production planning

• Production planning is the future of production. It can help in
efficient manufacturing or setting up of a production site by
facilitating required needs. A production plan is made
periodically for a specific time period, called the planning
horizon.
• It can comprise the following activities:
• Determination of the required product mix and factory load
to satisfy customers needs.
• Matching the required level of production to the existing
resources.
• Scheduling and choosing the actual work to be started in the
manufacturing facility"
• Setting up and delivering production orders to production
facilities.
• In order to develop production plans, the production planner or
production planning department needs to work closely together
with the marketing department and sales department. They can
provide sales forecasts, or a listing of customer orders.“ The "work is
usually selected from a variety of product types which may require
different resources and serve different customers. Therefore, the
selection must optimize customer-independent performance
measures such as cycle time and customer-dependent performance
measures such as on-time delivery.“

• A critical factor in production planning is "the accurate estimation

of the productive capacity of available resources, yet this is one of
the most difficult tasks to perform well". Production planning
should always take "into account material availability, resource
availability and knowledge of future demand".
• Different types of production methods, such as single item
manufacturing, batch production, mass production, continuous
production etc. have their own type of production planning.
Production planning can be combined with production control into
production planning and control, or it can be combined
with enterprise resource planning.

• In simple terms, it is nothing but to fix the goals of production and

give an estimation of the resources which will be required to
achieve these production goals. A detailed plan is chalked out to
accomplish the production goals in a cost-efficient way as well as in
a given time.

• Production planning is
the planning of production and manufacturing modules in a
company or industry. It utilizes the resource allocation of activities
of employees, materials and production capacity, in order to serve
different customers.
 Definitions of Production planning
• “The planning of industrial operations involves four considerations,
namely, what work shall be done, In what manner the work shall be done
and lastly, when the work shall be done”.
– Kim bait and Kimball Jr.
• “The technique of forecasting or picturing ahead every step in a long
series of separate operations, each step to be taken in the right place of
the right degree and at the right time and each operation to be done at
maximum efficiency.
– Alford and Beatty
• “Production planning is a series of related and co-ordinated activities
performed by not one but a number of different departmental groups,
each activity being to systematize in advance the manufacturing efforts in
its area. ”
– Bethel, At water. Smith others

• By studying the above mentioned definitions it can be said that production

planning is concerned with thinking in advance what is to be produced,
how it is to be produced and by what time should it be produced?
 Minimize Improves
Helps to capture
Coordinates wastage the labour
the market
activities of of raw productivity
departments materials
Provides a
better work
Ensures environment
optimum
inventory
Facilitates
Estimate the quality
resources improvement

Reguler flow of Results in

production consumer
satisfaction

Effective
Objectives
of Reduces the
utilization of
Production production costs
resources
Planning
1. Effective utilization of resources
 Production planning results in effective utilization of resources, plant capacity and
equipment's. This results in low-cost and high returns for the organization. Thus,
the operations manager in charge, need to have discussion with various
departments – such as purchases, inventory, sales and human resources to arrive
better utilization of all the resources.
 Production Planning is required to achieve proper and predefined results. When
production is planned, it results in appropriate and effective utilization of available
resources and inputs which go into production. Avoiding wastage of available
resources and optimum use of required resources is one of the objectives of
production planning.

2. Steady flow of production

 Production planning ensures a regular and steady flow of production. Here, all the
machines are put to maximum use. This results in a regular production, which
helps to give a routine supply to customers. Moreover, to ensure the steady flow,
the plan should include an element of human resource plan to maintenance of all
the equipment's.
 Proper planning is ensured so that a continuous and steady production flow
of products is there in the factory. All machines are used to a maximum extent,
and a regular production will ensure consistent supply to the employees, workers,
as well as the customers.
3. Estimate the resources
 Production planning helps to estimate the resources like men, materials, etc. The
estimate is made based on sales forecast. So production is planned to meet sales
requirements.
 It will help to estimate the required resources of men and materials which are
necessary for the production process. This estimate will be used in
sales forecasting so that there is proper sync between production and sales. This
also affects inventory management directly.

4. Ensures optimum inventory

 Production planning ensures optimum inventory. It prevents over-stocking and
under-stocking. Necessary stocks are maintained. Stock of raw material is
maintained at a proper level in order to meet the production demands. Stock of
finished goods is also maintained to meet regular demands from customers.
 A planned production will ensure optimum inventory and always avoid under or
overstocking. Required stocks are still maintained, and because the production
supply is steady, the production demands are met. Required inventory is always
available for customers because of continuous production in a planned way, which
is happening in the factory.
5. Co-ordinates activities of departments
• Production planning helps to co-ordinate the activities of different departments.
For instance, the department has to coordinate with marketing department to set
the targets / goals for production department to sell the goods. This results in
profit to the organization.
• Many departments come together to coordinate. For instance, the marketing
department coordinates with the production department as well as the sales
department.
• The marketing department will ask for a projection from the sales department,
which, if appropriately done, goes to the production department and the
production can be planned accordingly. Senior management is also involved in
planning since their knowledge of the market, and a deep understanding will add
up and make necessary changes in the sales forecast.

6. Minimize wastage of raw materials

• Production planning minimizes wastage of raw materials. It ensures proper
inventory of raw materials and materials handling. This helps to minimize wastages
of raw material and ensures production of quality goods. This will result in
minimum rejections; thus, proper production planning and control results in
minimum wastage.
• Proper planning ensures minimum wastage of raw materials. It is also involved in
the adequate utilization of inventory in material management. This not only
minimizes the wastage of raw materials but also ensures that the right quality
products are produced.
7. Improves the labour productivity
 Production planning improves the labour productivity. Here, there is maximum
utilization of manpower. Training is provided to the workers. The profits are shared
with the workers in form of increased wages and other incentives. Workers are
motivated to perform their best. This results in improved labour efficiency.
 It is directly associated with improving labor productivity. Maximum utilization of
the workforce is done, and workers are trained. Since the production does not
stop, the profits are earned continuously, and the workers get increased wages
and incentives.
 Motivated workers perform and improve the production process further which
results in labor efficiency and an increase in productivity

8. Helps to capture the market

 Production planning helps to give delivery of goods to customers in time. This is
because of regular flow of quality production. So the company can face
competition effectively, and it can capture the market.
 It helps to give on-time delivery of products to the customers, which is because of
the continuous flow of good quality production. The company can face the
competition effectively because the output does not stop, and it can beat the
competition and get a competitive edge based on market availability.
9. Provides a better work environment
 Production planning provides a better work environment to the workers.
Workers get improved working conditions, proper working hours, leave
and holidays, increased wages and other incentives. This is because the
company is working very efficiently.
 Since all of the production is planned in planning, there is no excessive
pressure on the workers. There are no untimely notices, and the workers
are not overworked. This results in improved working conditions for the
workers since they can plan their leaves and working hours and also
holidays.

10. Facilitates quality improvement

 Production planning facilitates quality improvement because the
production is checked regularly. Quality consciousness is developed
among the employees through training, suggestion schemes, quality
circles, etc.
 It helps to improve the quality of the production. Quality consciousness is
promoted among the employees, and the production is planned
accordingly.
11. Results in consumer satisfaction
 Production planning helps to give a regular supply of goods and services to the
consumers at far prices. It results in consumer satisfaction. If the product / brand
are not available regularly in the market, it will create lot of chaos in the market
and in the consumer mind. Also, there is a scope for the firm to lose the market
share to the competitors.
 A consistent and regular supply of goods is maintained to the customers at a
reasonable price, which results in improved customer satisfaction.

12. Reduces the production costs

 Production planning makes optimum utilization of resources, and it minimizes
wastage. It also maintains optimum size of inventories. All this reduces the
production costs. Thus, in the planning, elements of financial implications are also
involved
 Since optimum utilization of resources is the primary objective, and it reduces the
wastage of natural resources and other raw materials, it automatically results in
lower production costs. With lower production costs, the company can have
improved profit margins.
 Scope of Production Planning
1. Identify and state the purpose of production—This should include the item
name and code of the product, the quantity, volume or lot sizes, and raw
material specifications, etc.

2. Sequential list of operations—This should include cycle time for completing

the production process

3. List of technical specifications, for the different manufacturing stages as

well as for quality control

4. List of equipment, machines, tools, gauges, jigs, dies, fixtures, etc., required
for the different stages of production

5. List of specifications to be followed to achieve optimum performance

standard, e.g., cycle time, set-up time, output level, etc.
• Materials
• Planning for procurement of raw materials, components and spare parts in
the right quantities and specifications at the right time, from the right
source and at the right price .Purchasing, storage, inventory control,
standardization, variety reduction, value analysis and inspection are the
other activities associated with materials.
• We need to plan the purchase of components, spare parts and raw
materials in the right quantities. Planning for specifications at the right
price, time and from the right price is also required. Some other activities
related to materials are storage, variety reduction, purchasing, value
analysis, standardization, inventory control and inspection.

• Methods
• Choosing the best method of processing from several alternatives .It also
includes determining the best sequence of operations (process plans) and
planning for tooling, jigs and fixtures etc.
• Selecting the most appropriate method of processing from several options
available is also the role and scope of production planning and control.
• Machines and equipment's
• Manufacturing methods are related to production facilities available in the
production system. It involves facilities such as planning, capacity planning,
allocation and utilization of plant and equipment's, machines etc.
• It also involves equipment replacement policy, maintenance policy and
maintenance schedules, tools manufacture and maintenance of tools etc.
• Manufacturing methods include production facilities like utilization and allocation
of machines, plant and equipment, capacity planning etc.
• Manpower
• Planning for manpower (labor, supervisory and managerial levels) having
appropriate skills and expertise.
• Planning is also required for the managerial, labor, and supervisory levels to
possess proper skills and expertise.
• Routing
• Determining the flow of work, material handling in the plant and sequence of
operations or processing steps. This is related to considerations of appropriate
shop layout and plant layout temporary storage locations for raw materials,
components and semi-finished goods and of materials handling systems.
• Role and scope of production, planning and control also includes determination of
workflow, processing steps or operations sequence and material handling in the
plant.
• Estimating
• Establishing operation times leading to fixation of performance standards
both for workers and machines.
• Setting up operation times resulting in performance standards fixation for
both machines and workers is also the role and scope of production,
planning and control.
• Loading and scheduling
• Machine loading is allocation of jobs to machines in conjunction with
routing and with due consideration for capacity of machines and priority
for jobs in order to utilize the machines to the maximum possible extent.
• Scheduling ensures that parts, sub-assemblies and finished products are
completed as per the required delivery dates. It provides a time table of
manufacturing activities .It ensures a balanced load on all work centers
and ensures even flow of work through the manufacturing facilities.
• Loading refers to allocation of jobs to machines in combination with
routing while giving importance to priority jobs and machines capacity for
maximum utilization of machines. Scheduling makes sure that sub-
assemblies, finished products and parts are finished according to the
needed delivery dates.
• Dispatching
• This is concerned with the execution of the planning functions. It gives necessary
authority to start a particular work which has already been planned under routing
and scheduling functions. Dispatching is the release of orders and instructions for
the starting of production in accordance with the route-sheets and schedule
charts.
• This refers to the discharge of instructions and orders for beginning production as
per schedule charts and route sheets.

• Expediting
Means chasing, follow up progressing which is done after the dispatching function.
It keeps a close liaison with scheduling in order to provide an efficient feed-back
and prompt review of targets and schedules.
• This refers to follow up which is conducted after the dispatching function.

• Inspection
• This function is related to maintenance of quality in production and of evaluating
the efficiency of the processes, methods and labor so that improvements can be
made to achieve the quality standards set by product design.
• This refers to quality maintenance in production, efficiency evaluation of the labor,
processes and methods so that quality standards can be met by making
improvements.
• Evaluating
• The objective of evaluation is to improve performance.
Performance of machines, processes and labor is evaluated
to improve the same.
• Evaluation is necessary for improvement of performance.
Labor, machines and processes’ performances are assessed
to make improvements.

• Cost Control
• Manufacturing cost is controlled by wastage reduction,
value analysis, inventory control and efficient utilization of
all resources.
• Role and scope of production, planning and control is also
required for controlling efficient utilization of all resources,
value analysis, waste reduction and inventory control.
 Advantages Of The Production Planning
• Because everything is planned in case of production, the
organization can have improved profitability. Better profitability is
always appreciated by all the elements involved in the organization
right from labor up until the top management.
• The organization can still avoid the risk of overproduction or
underproduction. This also prevents the unnecessary cost and
expenditure which the organization may incur because of a Lack of
production management.
• There is a reduction in uncertainty, which may cause additional
costs for the organization.
• The more precise the production planning, the better is the
utilization of resources and production processes. The entire
organization can benefit from proper planning since almost all
departments are involved in the same.
 Disadvantages Of The Production Planning

• It is considered as an accident process for efficient preparation of

production. But if there is even a margin of error in the prediction of
production planning, then it will cause a ripple effect, and all of the
processes will be affected. The production planning, if done incorrectly,
will cost a lot more to the organization then if never done at all.
• Talented staff is required to plan the production process, and not every
organization can afford to have such dedicated people in their company.
Although followed in every organization, may not be extremely accurate.
• Unforeseen circumstances such as natural disasters or industrial changes
can affect the production even though it is carefully planned.
• Governmental or Political factors affect production planning since if the
Governance is non-conducive, then the planned production has to change
to meet requirements, which will be cumbersome(difficult to carry) for the
organization.