Production Planning

Production Planning is a critical solution that helps organizations determine the right balance between Demand and Supply. It enables businesses to respond quickly to changing customer needs and synchronize plans, whether in manufacturing, distribution, or purchasing.

Companies today face lot of challenges in today’s market with increase in product mix and volume, rising customer expectation, stiff competition and reduced margin. On top of that, there are some complex production operations. Problems are encountered everyday like delay from supplier, cycle time variation, material rejection, resource breakdown and so on. This is further compounded by demand from customer who could change the due date or quantity of order. So, any production plan cannot be fixed as it becomes infeasible the very next day.

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Production Planning

At that time if capacity is not available, then the material sits idle till capacity is freed up. This could cause delay in order or excess work-in-progress. To overcome the problem that the order is not delayed, a safety factor is added to the fixed lead time during explosion of BOM. This unnecessarily increases the inventory and cycle time

Planvisage Advanced Planning solution takes into account both material and capacity constraints during planning. This gives a feasible solution which is closer to optimal solution. Materials arrive at the right time when the capacity is free. This will reduce WIP and also will reduce the cycle time. Planvisage Advanced Planning solution is complementary to ERP solution like SAP or Oracle. It pulls required data from ERP like BOM, Routing, Inventory and WIP and does the planning. The output of the result is sent back to ERP for execution.

Though ERP claims it has a planning module, the solution it offers is often not feasible to execute as it considers capacity to be infinite. Even if it is feasible, it is way off from the optimal solution. The main and critical difference is that it does planning sequentially – first it resolves material problem and then the user has to manually resolve capacity problem. During its MRP run, it takes into account only material constraints and does not consider capacity constraints. It takes a fixed lead time approach and considers capacity to be infinite. This can create issue as lead time can never be fixed. Lead time will vary depending on the demand pattern, holidays, resource downtime, alternate resource or alternate routing. Capacity is checked only after the material has arrived.

MRP vs Advanced Planning Solutions (APS)

The objective of any supply chain initiative should be to come up with one single plan which integrates all these three departments with one common view. If there is any problem in one department like delay from supplier, the plan should change automatically so that capacity plan for this item is pushed to a later date and effect of this to final customer order should reach the marketing department.

Planvisage’ s Planning Solution helps in –

Optimized sourcing decision on when to order and in what to quantity.
Generate consolidated procurement order based on demand and production plan.
Vendor fair share rule so that multiple suppliers are maintained for same item.
Production drives what needs to be procured and not in other way.
Know the demand and production plan in advance for raw material planning of long lead time item.
Get expedite / de-expedite / cancel suggestion on day-to-day basis so that action on procurement can be taken

Raw material could be procured from multiple suppliers. The lead time for procuring the item could vary based on supplier. Depending on the availability of raw material and demand requirement, production is initiated which goes through sequence of operations in the shop floor. The output from production is the end item which is dispatched to the customer. The three main departments which are involved in the supply chain process are procurement, production and marketing.

Material Planning

Planvisage’ s Capacity Planning solution features includes –

Automatically shifts to alternate resource when primary resource not available.
Automatically shifts to alternate routing when primary routing not available.
Consideration of machine break-down time, planned maintenance schedule, holidays and overtime.
Respects constraints like setup time, wait time, queue time and yield.
Different types of resource can be modelled like batch, pooled, aggregate, subcontract or labour.
Consideration of additional resource like tools or fixtures.
Operation wise utilization percentage.

Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. A discrepancy between the capacity of an organization and the demands of its customers results in inefficiency, either in under-utilized resources or unfulfilled customer demand. The goal of capacity planning is to minimize this discrepancy. Demand for an organization's capacity varies based on changes in production output, such as increasing or decreasing the production quantity of an existing product, or producing new products. Better utilization of existing capacity can be accomplished through improvements in overall equipment effectiveness (OEE). Capacity can be increased through introducing new techniques, equipment and materials, increasing the number of workers or machines, increasing the number of shifts, or acquiring additional production facilities.