Production Planning Method
In any production environment, a threat of bottlenecks exists. A bottleneck occurs when the flow of work becomes so congested that there is no choice but to allow some of the work to sit idle. This creates a delay in production.
The goal of production planning is simply to maintain workflow, with minimal downtime, and few bottlenecks. Its main concerns are understanding the behavior of a process, finding bottlenecks, reducing work-in-process inventories, developing optimal scheduling, forming optimal forecasting methods, and polishing inventory control methods. It is used most commonly in manufacturing environments, but other industries may find their own applications for production planning techniques.
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Definition
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Production planning, or production scheduling, is a term assigned to the planning of production in all aspects, from workforce activities to product delivery. Production planning is almost exclusively seen in manufacturing environments, however many of the techniques employed in production planning are used by many service-oriented businesses. Understanding the behavior of a process, finding bottlenecks, reducing work-in-process inventories, developing optimal scheduling, forming optimal forecasting methods, and polishing inventory control methods are the main concerns of production planning.
Aspects of Production Planning
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Production is planned with either a long-term, medium-term or short-term view. Long-term views focus on the major decisions a company makes that influences capacity whereas short-term views focus more on using what a company currently has, more efficiently. Medium-term views focus more on adjustments, such as hiring, firing, layoffs, increasing inventory or expecting back-orders.
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Types
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Two main types of production planning exist: static and dynamic. Static planning carries an assumption that all steps in a process can be defined and will not change. In contrast, dynamic planning assumes that steps in the process will change so nothing is planned until the demand is received. Dynamic planning works very well in environments where there is a high degree of customization.
One example of a good type of business for static planning is a retail clothing manufacturer, while a floral shop would be a good example of an environment well-suited to dynamic planning.
Capacity Planning
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Capacity planning is focused on maximizing the capacity of a company in a way that allows it to be more efficient and, therefore, more profitable. At its most basic, capacity planning attempts to match the volume the company is able to produce to the demand in order to avoid downtime by preventing workflow congestion.
Aggregate Planning
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One popular method of capacity planning is aggregate planning. Aggregate planning basically ties facility planning in with scheduling decisions and it does so in a way that is quantitative, meaning it produces numbers to back up an operations plan. Plans generally either "chase" demand, adjusting its work force accordingly; or are "level' plans, meaning that labor is relatively constant with fluctuations in demand being met by inventories and back orders. Plans may also be "hybrid", meaning that they combine these two approaches.
Incremental Planning
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Forward incremental planning (FIP) is a dynamic planning method. FIP is implemented from the initial receipt of an order. The essential goal of FIP is to reduce lag time. While it can be quite effective, the primary limitation of FIP is that it assumes that no other action is in progress, i.e., no machines are tied up and the workforce was essentially idle until the order was received. This may seem like a huge limitation, and it is for some industries, but for companies that produce products with high levels of customization, FIP can be a powerful tool.
Backward incremental planning (BIP) is the other side of the FIP coin. BIP looks at the requirements from the due date backwards and organizes the process accordingly. A good example of this is a bakery. The cake must be fresh for its pick-up date, so the baker would look at the steps required to produce the cake and the estimated time required to bake and decorate it. BIP works well in cases where a deadline is more of a requested completion date and completing the order sooner produces no benefit.
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