Академический Документы
Профессиональный Документы
Культура Документы
Production planning components with time horizon and Unit of Measure is given below for better
understanding. The explanation is given below the diagram.
Medium term Aggregate Planning - Marketing does the monthly Rolling Forecast at SKU and
Distribution centre level, for one year. One should note that one year is rolling period and not
calendar year. For example if marketing is forecast during July09, one year period means July09
to June10 which is called rolling forecast. The SKUs of Pepsi and Miranda are 100ml bottle, 200 ml
can, Pet bottle size of 500ml, 1 liter and 2 liters. Let us assume they are having 6 distribution
centre. Sales & Marketing and customers are concerned about pack wise product. But production
department aggregate the quantity /Net demand (refer blog on Demand Planning DRP) of all sizes
pertaining to particular product ( Pepsi and Miranda separately) at country (India) level and arrive
total quantity required to manufacture that particular product on monthly basis. If the monthly
production rate is less than expected demand rate then the company will go for overtime, hiring
more temporary workers etc. Due to unavoidable circumstances if the company is not able to
increase the production capacity then the current production rate will be treated as expected
demand rate. This process is termed as Aggregate Planning. During recent global spread of Swine
Flu epidemic, most of the pharma company still not able to match production rate of tamiflu (drug)
to the expected demand rate.
Short Term Planning (MPS & MRP) - Once the Aggregate planning quantity at Product family and
country level is decided for a month then this quantity is disaggregated in to SKU and Distribution
level as the plant need to produce products as per selling units. Now the production unit can sent
the entire demand quantity in single lot to distribution centre. But the logistics team require the
part quantities against the demand to be dispatched to distribution centers on different date in
order to utilize the warehouse space and manpower efficiently. Hence the part quantity and
schedule receipt date at distribution centre will be worked out and agreed upon by demand and
supply planners. This process is called Master Production Schedule (MPS).
Now the Production unit is having the quantity to be produced and date of production as per
distribution center requirement from MPS. But the product Pepsi drink require certain ingredients
(raw materials) at certain quantity. The Pepsi company will be having BOM (refer my earlier blog)
for each SKU. BOM will contain all raw materials and packing items the quantity required to
produce one unit. According to BOM details the raw materials quantity are calculated and then
purchase orders are placed to the suppliers based on lead time. Lead time is the time taken by the
supplier to produce and deliver the raw materials to the Pepsi plant against the order date. This
explosion from finished goods to the raw materials is called Material Requirement Plan (MRP).
Very Short Term Plan - Day to day production activities are monitored and the output are
compared against the plan for better control.
For example perfume manufacturing plant importing their raw materials from abroad with lead
time 4 months. The production lead time i.e., raw material conversion to finished product at plant
takes one month. Consider, September being the current month and forecast quantity for
September has already been decided and Purchase order already been placed in April itself. By
placing order to the supplier by 15th April the plant will receive the stocks on 15th July due to 4
months lead time. However the finished goods will be produced by 15th August due to 1 month
production lead time . The plant require few days to transport the finished goods to distribution
centers located at various places . Through this planning process the plant can ensure that finished
goods are connected to the distribution centre as per the Sales and Marketing requirements. Now
one can understand how complex the production planning.
The above explanation is sufficient to understand the production planning concept.
We so far discuss about the manufacturing unit. This rise the question how the service industry
planning their operation ? Given below diagram compare the components of production planning in
respect of manufacturing and service industry.
In the next few sessions, we will touch upon production control and focus our attention to Capacity
Planning, Aggregate Planning, Master Production Schedule, Material Requirement Planning with
practical examples.