Production Planning
Production planning is the process of deciding what to produce, in what quantity, and when, to meet customer demand using available resources.
Production planning is a strategic process that aligns demand forecasts with production capacity. It determines the resources (materials, labor, equipment) needed to manufacture goods within a specific timeframe. The goal is to organize these resources efficiently to meet production targets and customer delivery dates.
The process begins with a demand plan, which can be based on sales forecasts, historical data, or firm customer orders. Planners then assess the factory's capacity, including machine availability and labor hours. They also check inventory levels for raw materials and components, often referencing a Bill of Materials (BOM). This information is used to create a high-level plan, frequently called a Master Production Schedule (MPS).
On the shop floor, a well-executed production plan prevents common problems. It helps avoid both stockouts and excess inventory. It ensures that materials arrive just in time for production, minimizing downtime. This leads to better on-time delivery performance and more predictable lead times for customers.
Manufacturers implement production planning using various tools. Small shops might start with spreadsheets and whiteboards. Larger operations often use Material Requirements Planning (MRP) systems or modules within an Enterprise Resource Planning (ERP) platform. These systems automate calculations and provide visibility across sales, purchasing, and production departments.
A furniture maker receives an order for 200 oak tables due in six weeks. The production planner checks the bill of materials and confirms they have enough oak but need to order more hardware. They then schedule 80 hours on the CNC router and 120 hours in the assembly cell to complete the order on time without disrupting other jobs.
What is the difference between production planning and production scheduling?
Production planning is the long-term view of what and how much to produce. Production scheduling is the short-term, detailed assignment of specific jobs to specific machines and operators on a daily or weekly basis.
What are the main inputs for a production plan?
The primary inputs are the demand forecast, current customer orders, raw material inventory levels, bill of materials (BOM), and data on available production capacity.
How often should a production plan be updated?
This depends on the industry and market stability. Many manufacturers review their plans monthly and make weekly adjustments based on new orders or supply chain changes.
What happens if a production plan is inaccurate?
An inaccurate plan can cause material shortages, missed delivery dates, and higher costs from expedited shipping. It can also lead to excess inventory or idle machines and workers.
Can a small shop do production planning without an ERP system?
Yes. Small shops can effectively manage production planning using spreadsheets and visual planning boards. The consistency of the process is more important than the tool used.
Master Production Schedule
MPSA detailed plan that specifies what end products to build, how many are needed, and when they are needed.
Material Requirements Planning
MRPMaterial Requirements Planning (MRP) is a system that calculates the materials and components needed to manufacture a product based on production schedules.
Demand Planning
Demand planning is the process of forecasting future customer demand for products to guide production and inventory decisions.
Capacity Utilization
Capacity utilization is a metric that measures the percentage of a facility's total potential production output that is actually being used.
Production Scheduling
Production scheduling is the process of assigning specific jobs to specific resources and work centers over a specific period of time.