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What Is Production Planning?

    Every factory, however simple, has a production plan. It can be as simple as “first we assemble this order this week, and then we assemble the next batch next week. We should have all the components for the next batch by Friday in our warehouse”. Or it could be much more complex.

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    When the typical factory grows in size and in complexity, there comes a time when the production manager can still hold most of the elements in his head but he is incapable of doing two things:

    1. Optimizing the way all resources (people, equipment…) are used for maximum productivity;
    2. Keeping track of which orders are on time or are behind schedule

    Hence the need to document the production plan. And to set up a system to manage the information of all the moving parts in and around a factory.

    It can be based in Excel. That’s usually how we start to implement a production planning system. This way we see what data need to be collected and “cleaned”. In a simplistic form, it can look like this for each order:


    Obviously, many other pieces of information need to be in the database – order size, changeover times, bill of material, pieces of equipment, manpower, and so on.

    Why does a planning system help reduce shipment delays?

    For several reasons:

    The manufacturer can use the system to give more realistic estimates to customers;

    Alerts can avoid many last-minute surprises and focus the right people on the right things – for example the purchasers are told they should expedite 3 orders from suppliers;

    Production factors are used with higher efficiency, resulting in faster production.

    A smart planning system keeps the size of batches as small as possible in order to reduce all the hidden costs of excessive inventory, as explained in a previous article on the topic of inventory control methods.

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