Production planning is necessary for a profitable company. This will reduce the generated costs, both those related to the production process itself, as well as inventory and distribution. What characterizes enterprise planning and why is it so important?
The planning process is a necessary step in business management, especially if it is a production company. Today, personalization of the product has become very important, which is why companies need to be flexible and often modify plans to adapt to customer expectations and market requirements. What benefits can a company make with proper planning?
a) Effective use of production capacities
b) Decrease in inventory
c) Lower costs
d) Increase profits
e) Limiting delays in production
Planning is nothing but a projection of the future activities of a given company. Production planning defines what, how and when it should be produced in a transparent and understandable way to achieve the intended goals. Production plans are characterized by different time horizons, with mainly medium- and short-term plans, although it is also necessary to develop a more general, longer-term plan.
What plans can the production planning process divide?
a)Strategic plan – this is the most general plan, developed for a period of about 5 years by the top management of the company. It defines actions that the company should take to achieve its main goals, eg regarding the allocation of resources or other priorities. Strategic plans also determine the methods of conduct in the case of changing customer expectations or other changes in the environment. However, this type of planning is burdened with a high level of risk due to its long-term nature.
b)Tactical plan – is a slightly more detailed plan compared to the strategic plan. It is being developed for a period of about 1 year. Tactical plans must be strictly subordinated to strategic plans, because they define ways of implementing these general plans in life. Typically, tactical plans are determined not by the very top management but a slightly lower level of management. They contain information on how to accomplish specific tasks so that the strategic plan can be implemented. In the production planning process, tactical plans such as material and production resource plans, product quality control plans, maintenance plans and equipment reliability can be distinguished.
c)Operational plan – a relatively short period of time, usually a month. He is appointed by the lower and middle management staff. Operational plans can be divided into one-off and continuous. One-time plans are developed to organize activities that will not be repeated in the future. On the other hand, continuous plans, also known as permanent plans, concern regular repetitive activities. In the production planning process, one can distinguish such operational plans as: allocating production orders, determining the order of tasks or adjusting the inventory.
Production planning strategies
The production plan is designed to ensure a balance between the flow of demand and the stream of supply. Thanks to this, there is no situation in which there is too much product in the warehouse, which generates costs. There are also no circumstances in which the customer can not buy the product because it is not available for sale. In the case of production planning, it is therefore necessary to forecast, appropriate strategic and operational plans or work schedules for individual positions.
What production planning strategies do we distinguish?
a)Chase strategy – production is always equal to sales, planned changes in demand do not matter.
b)The strategy of leveling the load – a constant level of production is expected, and changes in demand are compensated by inventory
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