Production Planning and Control

Chapter II
Objectives, Scope, and Importance of Production
Planning and Control

Learning Objectives:
Reading this chapter would enable you to understand
• The Objectives of production planning control
• The Scope of Production planning and control
• The Importance of production planning and control
• The Limitations of production planning and control
• The Comparing Production planning with Production control

Contents
2.1 Objectives of Production Planning and Control
2.2 Scope of Production Planning and Control
2.3 Importance of Production Planning and Control
2.4 Limitations of Production Planning and Control
2.5 Comparing Production Planning with Production Control
2.6 Establishing a Production Planning and Control Department
Summing Up
Self-assessment

2.1 Objectives of Production Planning and Control

Production planning and control consists of planning production in a

manufacturing organization before production activities take place and
exercising control actions to ensure that the planned production is realized in
terms of quantity, quality, delivery schedule and cost of production. The main
objectives are:
1. To attain maximum utilization of resources.
2. To produce quality products.
3. To minimize manufacturing cycle time.
4. To maintain optimum inventory levels.
5. To maintain flexibility in operations.
6. To achieve coordination between labour, machines, and other supporting
departments.
7. To remove bottle-necks at all levels of production.
8. To achieve cost-reduction and cost control.
9. To prepare and maintain the production schedules.
10. To achieve the goals at minimum cost.

2.2 Scope of Production Planning and Control

Production planning and control covers the following activities.

1. Procurement of raw materials, components and spare parts in right
quantities at right time from the right source at the right prices.

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 Objectives, Scope, and Importance of Production Planning and Control

2. Selecting the best method of processing and finding out the best sequence
of operations.
3. To determine the nature and magnitude of the output in consultation
with marketing department.
4. To plan the layout of the different operations to be performed.
5. To prepare and maintain the time schedule.
6. To ensure continuous inspection over products produced.
7. To impose controls over costs and to get work done according to the
plan.

On account of such a wide and important scope of production planning and

control, it is considered as an integral part of the corporate planning process
in modern multi-product manufacturing organizations.

2.3 Importance of Production Planning and Control

Production planning and control function is held as a nerve centre or heart of

the production function, because of several reasons
i) It coordinates all phases of the production / operating system.
ii) An efficient system of production planning and control results into better
quality, optimum utilization resources, lower level of inventories,
reduction in production cycle time, faster delivery, more efficient
customer service, lower costs of production, lower capital investment,
etc.
iii) It also leads to more efficient use of resources which results into higher
productivity, economy in production, quality of goods or services, timely
delivery etc.
iv) It results into higher sales, more profits, increase in market share,
increase in competitive advantage etc.
v) As a result of systematic planning and control, machinery breakdowns
are minimized, maintenance is improved, excess capacity and idle time
is minimized an steady flow of goods is maintained.
vi) It contributes significantly increasing the good will and image of the
organization.

2.4 Limitations of Production Planning and Control

In spite of several benefits of production planning and control, it has certain

limitations. These are as follows-
i) Production planning and control is based upon certain assumptions or
forecasts about level of demand, availability of materials, technological
progress, govt. policies etc. If these assumptions go wrong the
production planning and control function may turn out ineffective.
ii) It is costly and time-consuming exercise.
iii) It becomes a difficult exercise especially when external environmental
factors changes very rapidly.
iv) The employees may resist changes when planning involves several
changes.

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Production Planning and Control

2.5 Comparing Production Planning with Production Control

Production Planning
i) It deals with planning the work.
ii) Planning involves collection of data on materials, machines, tools and
equipments, drawings, layouts etc.
iii) Planning is basically a thinking process so, it involves lot of paper work,
preparing necessary forms etc.
iv) Planning needs feedback so as to know whether the actual performance
is taking place according to plan or not.

Production Control
i) It deals with implementing the plan.
ii) Control involves utilization of data, reporting about output, efficiency of
labour and machines, inventory control, quality control, etc.
iii) Control involves actual use of thee forms for reporting about production
activities to the higher authorities.
iv) Control aims at keeping control over actual properness to take place as
per plan. If any deviation is observed then corrective action is taken
v) Planning is forward thinking.
v) Control involves looking backwards and taking steps to maintain time
schedule.
vi) Control is a decentralized activity that takes place in shop floors.
vi) Planning is basically centralized activity controlled by the top
management.
vii) The main functions of production planning include estimative output to
be produced, routing or determine sequence of operations, scheduling
and loading.
Thus it may be observed that production planning and control are not
only complementary to each other but they are so interrelated that
they are often considered as being one function.
viii) Production control includes the functions of dispatching expediting
follow up, progressing.

2.6 Establishing a Production Planning and Control Department

Establishing a PPC department includes decisions related to

1. Its status in the company

2. Extent of centralization desirable
3. The appropriate internal structure.

1. Its status in the company

The status of PPC department in the company is dependent on the

manufacturing processes that the company intends to perform.

When repetitive work is involved and the number of workmen is small,

planning is performed directly by the line staff.

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 Objectives, Scope, and Importance of Production Planning and Control

In manufacturing units where plant and machinery is laid out as per

sequence of operations the PPC acts as a part of the manufacturing
department.

The PPC is set-up as a separate department in firms, where a number

of products are produced or where machine capacities are vary for
different products.

2. The extent of centralization

The extent of centralization means the degree of control between the

top management and the autonomy provided. These can be of two types.
Centralized planning and control of production and planning is done by
specialists.

Decentralized planning in which the line staff-plan the work to be carried

out in their own departments.

Each of the above types of planning has their merits and demerits.

In centralized planning, the line staff are relieved the load of planning
from thus allowing them freedom to effectively handle both men and
machines.

Decentralized planning allows the line staff to participate and use their
experience in performing their tasks. It unfortunately consumes their
time in planning the functions.

The degree of centralization needed is greater if the number of products

manufactured is ver y large. With large number of workmen and
machines with different capacities centralization is necessary.

In contrast a de-centralization is desirable when there are small group

of operators the end product can produced with much complex
operations and cooperation between departments is possible.

3. The appropriate internal structure

These are the functions that are given to the PPC department .This is
related to
a. The nature of industry
b. Size of the company and the management’s policies.

Some of the common functions related to the PPC department are:

i. Preparation of Order
ii. Control of Materials
iii. Control over the required tools
iv. Process Planning
v. Scheduling
vi. Dispatching
vii. Monitoring the Progress
viii. Improving the process efficiency

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Production Planning and Control

The additional functions possible are

a. Estimation of Costs
b. Measurement of Work
c. Demand forecasting
d. Sub-contracting
e. Capacity planning

The Production department can have the following subdivisions for better
functioning Materials Control, Tools Control, Process Planning, Scheduling,
Dispatching, Progressing, Cost Estimation, Sub-contract Work Measurement
Each cell is staffed by a senior engineer and has additionally by clerks for
planning.

Summing Up

The production and control are two important processes that ensure that
manufacturing of products takes place according to a pre-determined schedule.
Both complement and support each other.

Self-assessment

1. The main objectives production planning and control are:

a) To minimize manufacturing cycle time
b) To attain maximum utilization of resources
c) To produce quality products.
d) All of the above

2. Control in production planning means

a) Ensuring feedback to maintain optimal levels of production
b) Helps in maintaining production time schedules by a backwards
looking approach
c) Both the above
d) None the above

3. The limitations of production control are

a) It is based upon certain assumptions or forecasts.
b) External conditions cannot be controlled
c) It is costly and time-consuming exercise
d) All of the above

4. Production planning and control are

a) One and the same thing
b) Are supportive to each other
c) Are antagonistic to each other
d) None of the above.

5. The limitations of planning production and control are

a) It is not a completely predictable process
b) It is an expensive affair
c) Both of the above
d) None of the above

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