Production Planning is a pre-production function intended to match the production capacity (machine, labor) with the estimated market demand (forecast) in the most feasible and cost efficient manner. Production Planning is based on the forecast in terms of the quantity and quality requirements of the product. These forecast /targeted volumes and quality levels are to be achieved within the budgeted cost allocated for producing the products. So it is essential to understand the importance of forecast in relation to production planning.
Production Planning is a managerial function which deals with the following important issues.
• Product selection and design - Selection of the most suitable product that fulfils the market demand and the design of the product to meet the customer requirements. This involves cross function like Sales and Marketing for product selection and R&D for design and finance for resource availability. SCM will play anchor role in getting the product and design.
• Process selection and Planning – Selection of the appropriate process that includes choosing the right kind of technology, equipment, machines, material handling system (conveyors, fork lift etc), mechanization and automation involved in the production of a product. Also perform efficient process planning by specifying different process involved in resource conversion and the order of occurrence in the process.
• Facility Location – Finding the appropriate location for establishing manufacturing plant in order to minimize the production cost and distribution cost. SCM will play main role in deciding facility location and we will explore more about this in latter session.
• Facility layout and material handling – This involves determining the optimal distance between different department like Welding, Grinding, Soldering , Assembling etc. This facilitates the transfer of material and processing of a product in a most efficient way through the shortest possible distance with minimal wastage of time.
• Capacity Planning – Is a process that helps in identifying the capacity of production unit to meet the changing customer demand for its product. We will learn more about capacity planning in latter session.
• Estimation – Involves determining the quantity to be produced (Sales forecast) and cost associated in manufacturing the quantity. Also helps in determining the machine capacity, manpower and raw material requirement to meet the production objective.
• Routing, Scheduling and Loading – We will see in latter session.
Production plan is dynamic in nature and always remains in fluid state as production plans may have to be changed in line with the change in circumstances. Production plan can change due to change in customer requirements, uncertainty in production line due to breakdown and raw material availability.
In the next session we will learn more about production planning Hierarchy and their time horizon with Unit of Measure.
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