Manufacturing companies know production planning is crucial for success. Unfortunately, its a difficult aspect of a business to manage because there’s so much that can go wrong. Winning manufacturing companies succeed because they understand their supply chain management systems and take steps to minimize the impact of the inevitable supply chain glitches that occur.
Production Planning Pitfalls
Production planning would be easy if every element fell into place. Unfortunately, this is rarely the case as these examples demonstrate:
- Changes in sales demand: Some items sell better than expected, others don’t
- Production line downtime: Equipment breakdowns causing production delay
- Supply
chain interruptions: Late or short delivery of parts
- Quality issues: Incorrect and defective parts
Managing the Chaos
The true test of production planning is the degree to which it manages the chaos caused when things go wrong. The key to successful planning lies in how these issues are dealt with and depends on the systems in use and the caliber of employees and suppliers. Here are eight tips for effective production planning.
Model Your Production Capacity
Fully understand your organization’s production capabilities, including those elements that are outsourced. The capacity, throughput and capability of each element needs to be understood and incorporated in the production planning model.
Have Accurate Sales Forecasts
The sales team must develop realistic sales forecasts. While it’s unreasonable to expect perfection, these forecasts, together with production capacity, determine the basis of a manufacturing plan that should be dynamically updated as markets change.
Have a Flexible Production Plan
Plan production according to capacity and sales forecasts on your production lines and facilities best suited for efficient production. Your production plans should have several horizons covering long-term, medium-term and short-term requirements. Planning systems should have the flexibility to accommodate changes while taking supply line and other constraints into account
Manage Your Bill of Materials
The bill of materials (BOM) is an often-overlooked element of successful production, and it’s essential it reflects the latest iteration of your product, such as recent engineering changes.
Keep on Top of Raw Material Sourcing
Supply chain management is complex because some items have long lead times while others are off the shelf. Various techniques are used to ensure regular supply to production lines, including holding stock of long-lead-time items, just-in-time delivery and in-house component manufacture.
Use Dynamic Production Planning Systems
Production planning systems that are dynamic, accurate and responsive are best. In most instances, spreadsheet planning systems don’t cut it. Neither do cumbersome MRP systems that are reliant on periodic batch updates. Ideally, planning systems should update in real time and be easily interrogated. Fully integrated planning systems are ideal because changes in sales forecasts are immediately reflected in production demand and raw materials procurement.
Employ Analytics
Organizational performance metrics need to be available to executives and employees directly involved in procurement, manufacture, distribution and sales. Descriptive and diagnostic analytics help you understand past performance. Forward-looking tools such as predictive analytics reveal future trends. Make these tools widely accessible with easy-to-access, user-defined dashboards.
Use Scenario Planning
Production planning is dynamic and fast moving. When facing uncertainty, you need accurate information to determine the best way forward and to make informed decisions. Prescriptive analytics is an excellent tool for modeling businesses dynamically using data to analyze multiple scenarios and highlight the best choices in terms of business objectives.
Production planning is complex with many conflicting issues. Having access to the right information is key to making the best decisions. In a competitive climate, those that make the best strategic decisions are the ones that succeed. Forward-looking analytics such as predictive and prescriptive analytics help leaders identify trends and implement plans to maximize their opportunities and grow their businesses.
