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It would seem that the matter is simple - you know how many products you need to ship, how many are in stock in the finished goods warehouse, so you can easily calculate how much you need to produce for the customer to be satisfied.
What is it - production planning?
Production planning is an essential part of production management in any manufacturing company, regardless of the industry. It often determines the company's success, process efficiency or reduction of production costs. Production planning is a function of managing and regulating the flow of materials and information covering the production cycle, from determining the demand for raw materials to the delivery of the final product.
Why is knowledge of demand in production planning important?
The basis for starting the production planning process is the knowledge of demand - long, medium and short term. Long-term demand, most often within twelve months, is necessary to develop a strategy for the enterprise. Medium-term - from 6-3 months allows to specify the requirements for production resources, both machine and human. Short-term - within weeks or even days - allows for precise planning of works in the production area. It should be mentioned here that each company determines the horizon of long, medium and short-term demand on its own. Most often it depends on the industry and type of business of a given company.
determine whether the company has a sufficient machine park or additional investments will be necessary. It also allows you to review the level of employment and define possible additional recruitments.
Criteria for creating a production plan
The basic criterion for creating a production plan is demand. But other indicators are also necessary for proper production planning. The key is information about the current condition of a given product in stock and data on work in progress. In order to obtain reliable data, it is necessary to properly plan and account for production on individual resources. While long-term and medium-term planning is mainly used for cost and budget purposes, short-term planning must be very precise and accurately determine the volume of production in given units of time. After all, it depends on him whether the ordered goods will reach the customer on time. For accurate production planning, it is necessary to provide information about the current inventory of finished products. This is inextricably linked with production reporting.
Why is production planning important?
Regardless of the type of business, the same main principles of success apply. You only need to achieve two things:
- Good product
- Good service
That's all you really need to reach the hearts of your customers. The product you sell must be well-made, easy to use, good quality, attractive, etc. You must be caring about your approach to customers. Delivery must be on the promised date, invoices must be correct, etc. These two points ensure that every customer will be yours - for a long time.
But keeping it up isn't as easy as it sounds. For example, suddenly more items were ordered than usual. It's good news! Big order! You are happy to check your inventory and suddenly you don't have enough products to fulfill this order. You start contacting your supplier and other suppliers, but the earliest date that you will arrive on site was much earlier. In short, you failed and this customer will never contact you again.
How can you prevent this from happening?
Yes, right - production planning. It plays an important role in any successful business and it's hard to find a case where planning plays such a big role as in the case of manufacturing companies where poor production planning can cause a disaster or, on the contrary, proper planning can make the company strong and will have a competitive advantage.
The importance of production planning is that it gives you the knowledge of what you have, what you need to buy, when you need it, how long it will take to get it, and lots of other relevant information about your business. It gives you full control over the production process, which in turn gives you the strength to stop wasting time, avoid bottlenecks, effectively manage your crew and make the process run without downtime and problems. Does that sound like "performance" to you? This is what it is.
Production planning is a strategy for the entire production process. You create a map containing all the processes needed to produce the product. This map leads from nothing but the end product!