PRODUCTION PLANNING & CONTROL What is Production Planning?

Planning and control are the two important components of the management process. Planning involves the consideration of all input variables to achieve defined output goals. Control involves the corrective actions taken when the actual output varies from the desired one by bringing the actual output in line with the planned output. Production planning consists of the evaluation and determination of production-inputs such as labor, machinery and equipment, materials, and utilities to achieve the desired goals. Stages of Planning Process: (i) Defining objectives and setting priorities to attain these. (ii) (a) Study of external environment to the planned system (b) Study of internal environment to the planned system (iii) Determining realizable targets (preferably quantified)

(iv) Gearing the inputs to achieve these targets Production planning is an integral part of the corporate planning process. The production plan has feedback links upwards, modifying the targets when necessary. In the entire dynamic corporate endeavor, production operation is a dynamic and important strategic link. ( Refer the following figure)
1. What is/are the purpose/s for the existence of organization? What are the priorities in these purposes?

2.

What are the internal strengths and weaknesses

What are the present and future opportunities? What are the threats to the organization?

3.

Set realizable, quantifiable targets with respect to time

4.

Plan for the marketing of products and/or services Go to no.3

5.

Consideration of the constraints in the plan: No Is the plan realizable? Yes

6.

Plan production operations: facilities, manpower, and materials

7.

Constraints in the plan: Is the plan realizable? Yes

No

8.

Financial plan

9.

Constraints in the plan: Is the plan realizable?

Yes

No

Go to no.3

10.

Implementation of plan

Corporate Planning Process Importance of Time-Horizon: Plans have a time dimension and to the extent the time-span is limited, the scope of functional plans also remains limited with less interaction from other functional plans. The longer the plan-span of the plan, the more integrative, organizationwide the plan has to be. The wider time-horizon plans cover a wider organizational perspective. That is why the corporate planning process is synonymous with Long Range Planning.

As the time- horizon of the production plan widens, the flexibility available to change the variables and allow modifications when found necessary increases. The planning problems for different time-horizon are different and the solution are also different. Dovetailing of Plans One important fact is that the short, medium and long-range plans have to dovetail into one another. Shorter-range plans are always made within the framework of the long-range plans. Production planning as it is generally understood, is really the intermediate-range and short-range plan. The production planning is said to follow from the marketing plan. The production plan is the translation of the market demands into production orders. The market demands have to be matched with the production capacities.

Market demands

Match the two optimally

Production capacities

Production Planning The key word in the above figure is optimally. Market demands are either known or are forecasted, but we do know them, and the production capacities are also known. But how these two are matched will generate different cost structures and utility (e.g. time) structures. Optimization of the cost or other utilities is the concern of production planning. Need for Detailed Plans The production strategy arrived at by the company will be the gross level plan, which needs to be further translated into a detailed plan for individual products. The detailed plan must fit into the gross-level plan. Once the targets for production are fixed, the weekly or daily

schedules can be derived keeping in mind technological and other constraints. Production planning on a short-term basis is often termed as Production Scheduling. At a gross-level, one must balance the gross demand into gross level availability of resources in machine-hours or man-hours. At the detailed level, one needs to balance the requirements of individual products with the availability of individual machines/equipments and labor of different skill categories. What is Production Control? Production control is the updating and revising procedure where, according to the requirements of implementation, the labor assignments, the machine assignments, the job priorities, the line speeds, the production routes, etc. may be revised. It is basically a correcting mechanism which goes on throughout the implementation process of the already drawn up production plan and schedule.

In order to continually monitor the progress of implementation, many control techniques such as Gantt Charts, Line of Balance, PERT/CPM etc. may be used. Essentially, these are bar-charts, with the latter two showing some sequence relationship. In order to control the production schedule as efficiently as possible, a procedure called Short Interval Scheduling is used in many Western countries. This is scheduling production to a micro level, thereby exercising tight control over the minute deviation from the already drawn-up production schedule. Integrative of Nature Production Plans PPC is an effort to optimize the process of conversion of raw materials into finished products required in the market. Since various activities are involved in the conversion of raw materials into finished goods, PPC is and has to be an integrated function if the corporation has to derive maximum benefit out of planning.

The procurement of raw materials, the quality control and inspection of raw materials, the inventory levels of in-process and finished goods, the production costs, the labor available, the machinery and equipment that is available, the warehousing capacity available etc. all have their influence on the planning of production operations which convert the procured raw materials into finished goods. All the functions have inter-links; and the more such inter-links are considered in the planning process, the better will be the planning process. (refer the figure in the next slide) Centralization and Decentralization Although theoretically PPC is an integrated function, in many organizational set-ups, for various special organizational needs, and also because in certain organizations certain functions play a more important role than others in terms of profit contribution to the company,

Engineering and maintenance planning Manpower planning Marketing planning

Production planning

Quality planning

Financial and investment

Distributions planning

Materials and procurement planning

PPC and Related Functions

the PPC unit may have a limited function, with other functions distributed to other departments such as materials management, manufacturing, etc. At higher levels or longer-horizons, plans have to be integrative. At lower levels or shorter time horizons, benefits may be derived by the decentralization of the planning process. The organization of the totality of the PPC function, therefore, will vary in different organizations depending upon the different external and internal climates in which organizations have to function. However, this fact neither refutes the necessity of congruency when formulating various functional goals, nor does it deny the integrative nature of the production planning process.