Why is production planning and control important in operations and production management?

In large manufacturing operations, production planning and control are vital to maintaining the highest levels of product quality. The production planning process is the act of developing a plan for guiding products or services through all the stages of their lifecycle.

Production planning and control is a management system that plans how and when a product should be produced or a service provided over time so that it meets customer demand while making the business profits.

Let’s inspect the production planning and control meaning further. 

2. Need Of Production Planning And Control

3. Steps For Successful Production Planning

4. Production Planning Approaches 

5. Production Planning And Control Example

Production Planning And Control Meaning

The production planning and control meaning is a broad one that encompasses plans for the production of all kinds of products or services. 

Here’s a simple production planning and control example: A factory produces handbags. The management plans the production of a number of bags based on demand forecasts for each design seasonally. Using the right material and resources, such as leather for each item, the bags are made in the factory. Then these are dispatched to the customer and other retailers. That entire cycle is made possible by production planning and control.

The need of production planning and control is easy to understand if we examine its key objectives: 

• Inventory, supply chain issues and on-time product delivery all hinge on a closely calibrated production schedule  
• Properly managed production and inventory helps meet demand while maximizing profits  
• A smooth production process guarantees customer satisfaction by making possible the best quality in a timely manner

Having clarified the production control and design meaning, let’s look at some use cases. 

Need Of Production Planning And Control

Within an organization, there are several functions that have a need of production planning and control. Here are a few: 

1. Decision Making 

   Production planning aids in decision-making. When we understand current demands and trends, it helps management decide what new products or services are needed. This data in turn informs the product design, marketing and delivery. 

2. Production Levels

   By planning every stage of the production process, managers will know how much stock they’ll need. Keeping enough stock on hand to fulfill demand, but not so much that it becomes expensive to store, is a key part of production planning and control. While product shortfalls can spell disaster for a brand, surplus can lead to expensive damage and waste.

3. Resource Management

   A production plan accounts for direct materials, semi-finished goods, finished goods and work-in-process inventory. Production planning and control can analyze how much of each is required per month as well as if the quantity suffices for meeting demand.

4. Cost Elements

   Production cost elements are all the factors that go into making a product. These include labor, materials, equipment, facilities costs and energy costs. There’s also a cost associated with the disruption of production due to acquiring raw materials, equipment problems and setting up temporary storage capacity. 

5. Cost Of Operations

   Not only are the costs of all the inputs considered, but production planners also have to weigh these against factors such as revenue, sale price and break-even point. Production planning is all about optimizing costs and increasing profits. 

6. Order Fulfillment

   Only with careful planning through the entire cycle can a business ensure its orders are shipped in time. Managing inventory and shipping schedules are a crucial part of this planning. If shipments are backed up, warehouses can grow overcrowded and this is an expensive problem to solve. Similarly, delays in delivery can cause a poor customer experience.

Unless we plan every part of the production process in advance, it’s impossible to deliver on time. Production planning is thus a core part of running a successful enterprise.

Steps For Successful Production Planning

The need of production planning and control is to provide a schedule for businesses to follow to ensure all elements required for production work together. Production planning and control can be set up as a series of steps: 

1. Routing 

   Routing answers the questions of how much of a product will be made. What are the inputs that will be needed to ensure success? It’s concerned with the path that all components and elements take during the entire production process. If a part is needed, should it be made or sourced? What’s the bill of materials that will be needed for its manufacture? What’s the design? What are the product tolerances? The details will depend on what’s being made and the mode of manufacture/product creation.

2. Scheduling

   Once the core plan is in place, it’s on to the how. Scheduling is when the order of the steps for the work to be completed is decided. The work and workloads are part of this stage of production planning and control. It’ll also determine when in the year to build up inventory in anticipation of increased demand for products or services. Deadlines are put in place here, too.

3. Dispatching

   In most production planning and control examples, this is where the actual work gets done. The production process is underway, the systems are monitored and records are kept of production and how the equipment is being utilized.

4. Follow-Up

   This is where the process of production is evaluated. Were there problems in the production process? Were there any bottlenecks that need to be addressed? These will then determine if any changes need to be made in the routing, scheduling, or dispatching stages.

The more accurate and tight the schedule, the less the waste and the more the profits.

Production Planning Approaches

There are two dominant approaches to production planning: control-oriented and optimization-oriented. The first attempts to control the variables in the production system, while the second attempts to maximize output. Depending on the needs of the organization, they can engineer the processes to suit their needs. Here is how different sectors approach the production planning and control meaning:

1. In Manufacturing

   Production planning and control is a very effective tool in a manufacturing operation. It helps understand the production process better and how an organization can get more out of every stage. One critical aspect of production management is that it helps avoid overproduction that can lead to waste and also guards against poor quality output. Through effective production planning, manufacturers can minimize wastage, improve the accuracy of their service and enhance customer satisfaction.

2. In Service

   Production planning can also apply to services. The product isn’t physical, but a service too has to be delivered in a time-bound way with a fixed roster of inputs. For instance, a call center that deals with both inbound and outbound calls can use production planning to optimize its workflows so it can effectively serve its customers. It can optimize the use of its office space, human resources, data, server space and more.

Though its use may be wider and more common in the manufacturing sector, a production plan can help in service industries too.

Production Planning And Control Example

Here are some production planning and control examples: 

1. A fast-moving consumer goods major uses production planning and control models in its supply chain to help in deciding what product or service is needed in which region based on historic data. When they met with unprecedented demand for packaged, ready-to-eat foods during the Covid-19 pandemic, they found themselves unprepared. By quickly revising the production plan, they could respond in the following quarter in this production planning and control example
2. A large consumer electronics brand had a target of increasing sales of videos, gadgets, and other electronic devices. The managers had some concerns about whether they could meet the demand if the sales teams delivered. When they looked closely at existing and upcoming inventory, it was clear they might run out of stock by the end of the year. Production planning and control were amended to reflect the enhanced needs
3. A printing firm was planning to expand its business. Its production planning and control system needed predictions of the amount of paper, ink, labels, envelopes, and other supplies needed. The sales manager estimated sales would increase by 40 percent on an annual basis. Production planners then planned how much to produce or buy for each month during that period. When it was clear paper shortages would not end soon, the organization raised its prices 

Production planning and control systems are often calibrated to generate predictions. It analyzes actual data from history or rate of change information to make predictions for future events. This can help management make informed decisions. 

Understanding the production planning and control meaning is one of the first steps to creating an efficient workplace. Learning from production planning and control example and the theory will help professional progress. 

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What is importance of production planning and control?

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