Production planning is the act of developing a guide for the design and production of a given product or service. Production planning helps organizations make the production process as efficient as possible. Production planning originated to optimize the manufacturing process, and today its general logic is applied in various forms to design, production and delivery of software as well. Show
Why is production planning important?Production planning is important because it creates an efficient process for production according to customer and organizational needs. It optimizes both customer-dependent processes -- such as on-time delivery -- and customer-independent processes, such as production cycle time. A good production plan minimizes lead time, which is the amount of time that passes between the placing of an order and the completion and delivery of that order. Depending on the company and the type of production planning necessary, the definition of lead time varies slightly. In supply chain management, for example, lead time includes the amount of time it takes for parts to ship from a supplier. This is included because the manufacturing business needs to know when the parts will arrive to properly execute material requirements planning (MRP). This is especially important with tight manufacturing constraints or just-in-time (JIT) manufacturing. Production planning processThe production planning process involves the following steps:
Types of production planningThere are many types of production planning that focus on various particulars of the production process. Some of these include:
There are also various planning types that apply the logic of production planning to areas other than manufacturing, or complementary areas. For example, human resources planning involves optimizing processes that allow a company to meet their hiring and talent demands. Other examples include:
Production schedulingProduction scheduling is like production control. Production scheduling is the allocation of available resources to production processes and events. It is essentially the mapping of actual resources to the production plan built for them. Scheduling is used to plan use of factory equipment and resources, human resources, and to plan processes and material purchasing. Scheduling is necessary to create a production plan. Production plans aim to ultimately deliver on customer demand. The goal of a production schedule is to create the most efficient production plan possible. History of production planningModern production planning has its roots in the first half of the 19th century. It developed out of a need for information around internal planning in control. Entities like railroads, textile mills and other factories needed internal administrative frameworks to guide the multiple processes involved in providing their basic product or service at a large scale. The first production plans were simple. Factories were relatively small and produced a limited number of products in large batch sizes. Factory foremen were technical experts in their field, and handled all planning and scheduling, which sometimes would include no more than a list of production orders and the date at which they were to be completed. As the production line and manufacturing efforts as a whole became bigger and more complex, more involved production planning was necessary. By the beginning of the 20th century, plans began focusing on not just delivering orders, but optimizing the processes required to do so, so that production process flow could be as even as possible at the minimum possible production cost. Today, as the nature of production methods and manufacturing has changed, so has production planning. The technology surrounding production has evolved, enabling more precise communication and monitoring of and around production. The products themselves, and customer expectations, have also evolved. Now, there is more information available than ever before for organizations to weigh when creating their production plans. This was last updated in November 2020 Continue Reading About production planning
Dig Deeper on Supply chain and manufacturing
Which of the following best describes operations management?Which of the following best describes operations management? the systematic direction and control of the process that transform resources into finished products that create value and provides benefits to customers.
Which of the following best describes the materials management activity of inventory control?Which of the following defines the materials management activity of inventory control? The process of receiving, storing, handling, and counting all raw materials, partly finished goods, and finished goods.
Which component of a master production schedule acts as a boundary between periods in the planning horizon?In a master production schedule, time buckets serve as boundaries between periods in the planning horizon.
Which of the following terms describes the process of finding reliable suppliers?Simply put, sourcing is the process of selecting suppliers to provide the goods and services you need to run your business. It may sound uncomplicated, but the process can be complex. Sourcing involves the following: Finding quality sources of goods and services.
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