What is Production Planning? 5 Steps For Optimized Workflow

What Is Production Planning October 29, 2020

Chloe Henderson

Writer

Every market experiences fluctuating customer demand, making it challenging for companies to optimize their systems for order fulfillment.

However, by utilizing production planning techniques, manufacturers can anticipate upcoming demand trends to ready their production lines. With an accurate production plan, companies can improve operational efficiency, revenue, and customer satisfaction.

What is Production Planning?

Production planning is the phase of manufacturing that ensures a company has sufficient raw materials, labor, and resources to complete order fulfillment within a specified timeframe. It outlines exactly-

What processes need to run.

How many employees are required.

Where to source materials.

When the order must be fulfilled.

In other words, a production plan establishes a workflow and usage guide for manufacturers to maintain operational efficiency and smooth workflow. It also minimizes production costs while avoiding supply chain disruptions. Therefore, adequate production planning can improve a company's profitability and overall financial health.

A production schedule holds rigid agreements to ensure clients get their ordered units when promised. This requires excellent resource and time management to avoid breaking contracts.

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Typical production plans outline the manufacturing process step-by-step to standardize the procedure so that employees can repeat the method for similar tasks. This promotes process consistency, so each batch is of the same quality as the next. By mastering consistent yields, businesses do not have to invest as much time into quality control.

It also ensures that the company understands exactly what resources are at their disposal. This way, if a manufacturer receives a large order, they can tell immediately if they have the means to accept the request.

Without proper production planning, manufacturers could enter into an agreement only to find that they do not have the necessary materials or labor to complete the order. This can lead to dissatisfied customers as well as possible legal repercussions.

5 Steps For Optimized Workflow

By following a detailed production plan, manufacturers can optimize their workflow to reduce operation time. However, this requires management to align their production planning with other departments, such as finance and marketing, to coordinate processes.

To start, management can breakdown production planning into five steps-

1. Predict the Demand for a Product Line

Managers need to estimate the demand for particular products to determine how many units the company must procure during a specific timeframe. Aside from orders that have already been approved, businesses must project how many additional orders they will receive.

Different organizations use different methods to forecast demand. The traditional technique to predict demand is using historical business data, such as previous orders, to define trends.

However, utilizing this method manually requires heavy human intervention to consider internal and external factors that can alter the pattern. For example, fluctuating market trends, a slowing economy, and new campaigns can all directly affect customer demand.

Therefore, companies should consider using forecasting software, which automatically aggregates information from internal systems, as well as outside sources.

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2. Discover the Production Options

Next, management needs to determine the different production options available to fulfill the forecasted demand.

To do this, businesses should map out the production process from start to finish using a flow chart. This outline will illustrate all necessary tasks, whether they are performed independently or simultaneously, as well as any sequential processes. This enables managers to pinpoint bottlenecks and improve workflow.

Then, managers must determine the resources required for each task, from the number of employees to raw materials. Organizations may need to contact vendors to handle purchase orders, pricing, and logistics. It is essential for manufacturers to maintain low inventory quantities to minimize stock costs, such as handling fees.

Therefore, management should consider implementing an inventory control system to optimize stock levels and monitor workflow.

3. Determine the Best Option

Once each option has been outlined, management must make the final decision of which production route to take. The final option should enable the company to meet the projected demand and maximize their operational capacity.

The plan needs to be shared with all departments involved in the production processes, from human resources to finance. Once all of the departments are in agreement, the plan can be set and launched.

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4. Monitor the Plan

Even after the plan is in motion, management needs to monitor their program to ensure everything is working as expected.

Utilizing a management system such as warehouse and forecasting software makes it easier to track progress by detecting issues and measuring performance. This enables companies to correct problems immediately, avoiding unnoticed errors snowballing into larger issues.

5. Adjust Solutions

Businesses need to be prepared to adjust their plans if unexpected difficulties occur. Many factors may suddenly change, such as customer demand and operational efficiency, requiring the production plan to have some level of flexibility.