Laying the Foundation of The Planning Process
So you want to know about planning. MRP, MRP-II, S&OP, Forecasting etc etc. Many people jump straight into those methodologies and start to apply them in a live environment.
But the best planners will first strive to set a foundation by understanding the business. Any college will teach you the fundamentals of planning such as MRP and Capacity Management. YouTube will even do that. Real planning expertise comes from not only knowing the theory but also knowing how that theory works in YOUR company. The planning department should be the hub around which the factory operates. The planners should have a cross department knowledge and should be trusted to have all the information they need to execute the plan.
So what are the five pillars that make up the foundation of the production planning process:
1. Where are we now? What is the current status
The key foundation of any planning process is information: Inventory levels, Customer Orders, Purchase Orders, Leadtimes, Capacity, Yield, MOQ, Lot Sizing, Safety Stock levels etc. Everything that you need to know about the current business situation in order to make the decisions needed to develop the production plan.
2. Where are we going: What objectives are we expected to achieve.
The obvious one is meet all the customer orders on time and in full. But there will be others and sometimes there will be changing objectives depending on corporate requirements. In summary: you are expected to deliver The Right Quantity of the Right Product in the Right Place at the Right Time for the Right Cost. As a planner you need to know what each of those mean.
3. How are we going to get there? What is the production process?
A planning department is the hub around which the factory runs. The planners must know how the factory works. What machines are used in what sequence and by who. What are the optimum run rates. What is the maximum run rate for a machine (you don’t want to run at 100% but maybe you have for a short period). Is there any planned maintenance or downtime coming up.
4. How will we know when we get there? What metrics determine success?
Success should be easy to measure. But success in one department may not mean success for the company. Running one component all week with no changeovers may mean the output in the factory is high but probably has done no favors to customer service where they are selling many other products. Ideally a company should have a balanced scorecard.that makes sure everyone is pulling in the same direction. Planning should have agreed targets for metrics like, On time delivery, Changes to plan, Stockouts, Expedites, etc. And there should be a daily metric review process to make sure we are on track to achieve our objectives. Finding out that you missed the weekly targets a week later is too late.
5. Execute: Deliver the Plan
Once all that background information is in place and understood the Production Plan can be prepared with confidence. At this point planners will be expected to fully understand the planning tools they use and what processes underpin those. MRP, MRP-II, Capacity Management, S&OP, Forecasting,, Procurement, Inventory Management. All these need to be understood by the planners but all these run smoother if the earlier steps are correct. Problems in these will be easier to identify if planners understand steps 1-4.
Problems in the planning process can usually be rootcaused to the phrase “Garbage In Garbage Out”. The process runs on information. The better the information in the better the plan out.