Planning. Why is it important
Planning is not easy. If it were then there would be half the amount of warehouses, no shortages to customers and far less garbage. Supply Chains, even simple ones don’t happen automatically. There must be some plan that tells the company what to make.
Planning is difficult to explain to your family and friends. You say that you “tell the factory what to make” and they respond “But surely the customer does that”. The problem it isn’t just your friends and family who say that. Often it is your coworkers and even senior management.
Sales get the credit and planning get the blame.
And yet the planning function is worth doing because it is essential to both optimizing the business AND mitigating risks. The production planning function provides a detailed short term plan on what the business must produce that day/week/month and a longer term plan on how the business will reach its goals. It will also look ahead and anticipate risks to the business (e.g. inventory outages, capacity constraints etc).
Production planning ensures all required resources (materials, facilities/equipment, employees etc) are available in sufficient quantity when needed to meet production requirements of the business. There are tools and processes (MRP, MRP-II, S&OP etc) that will help but these require skilled planners to get the most out of them.
In my experience the planning department is the key department in the factory. It is important that they have visibility of everything that is going on so they can build that into their plan. Information and data is the key resource in any supply chain. With the right information and the right data you can truly optimise the company. Without the information you are going to be in a world of pain.
Good production planning helps maximize profits by running the operation in the most effective way possible. It also makes sure customer needs (quantity, time, etc) are being met.
- Efficient production planing will help a business
- Optimize the use of facilities, equipment and employees.
- Reduce the costs associated with holding buffer inventory.
- Eliminate wasted time by improving the flow through the process.
- Improve customer service.
If you want more information on planning or want help to improve your planning processes contact PlanPotential.