Production planning process

Chapter 6: Conclusions and recommendations

In this research work it can easily be concluded that in the production planning process, there are two main objectives

• To satisfying customer demand
• To achievement of the lowest cost

The increase of inventory level may result in increase of customer demand although the holding costs are often at very high level the total and cost not estimated at minimum level. Focusing on the minimal cost as a result cause failing to supply the customer demand and its consequence is loss for the company.

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Production is the driving force to which most other functions reacts in any manufacturing activity. Particularly with inventories as it exists because of the needs of production.

Like all other manufacturing controls, is to contribute to the profits of the enterprise it is also ultimate objective of production planning and control. Customers are satisfied through the meeting of delivery schedules and it establishes inventory management and control.

The aims of production planning and control are to establish routes and schedules for work that will ensure the optimum utilization of materials, workers, and machines and to provide the means for ensuring the operation of the plant in accordance with these plans.

In production planning and control, the four basic phases of control easily identified.

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The plan for the processing of materials through the plant established through the functions of process planning, loading, and scheduling. The function of dispatching puts the plan into effect; that is, operations started in accordance with the plant. Actual performance compared to the planned performance and action taken when required corrective. In some cases, re-planning is necessary to ensure the effective utilization of the manufacturing facilities and personnel.

Process Planning (Routing) is the determination of where each operation on a component part, subassembly, or assembly is to be performed results in a route for the movement of a manufacturing lot through the factory. Prior determination of these routes is the job of the manufacturing engineering function.

Loading is once the route has been established, the work required can be loaded against the selected machine or workstation. The total time required to perform the operation is computed by multiplying the unit operation times given on the standard process sheet by the number of parts to be processed. This total time is then added to the work already planned for the workstation. This is the function of loading, and it results in a tabulated list or chart showing the planned utilization of the machines or workstations in the plant.

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Scheduling is the last of the planning functions. It determines when an operation is to be performed, or when work is to be completed; the difference lies in the detail of the scheduling procedure. In a centralized control situation – where all process planning, loading, and scheduling for the plant are done in a central office- the details of the schedule may specify the starting and finishing time for an operation. On the other hand, the central schedule may simply give a completion time for the work in a given department.

Combining Functions is itself a full process. While it is easy to define “where” as process planning, “how much work” as loading, and “when as scheduling, in actual operations these three functions are often combined and performed concurrently. How far in advance routes, loads, and schedules should be established always presents an interesting problem. Obviously, it is desirable that a minimum of changes be made after schedules are established. This objective can be approached if the amount of work scheduled for the factory or department is equal to or slightly greater than the manufacturing cycle. For optimum control, it should never be less than the manufacturing cycle.

Authorizing the start of an operation on the shop floor is the function of dispatching. This function may be centralized or decentralized. Again using our machine-shop example, the departmental dispatcher would authorize the start of each of the three machine operations – three dispatch actions based on the foreman’s routing and scheduling of the work through his department. This is de-centralized dispatching.

In the manufacturing activity of a plant is said to be “in control” when the actual performance is within the objectives of the planned performance. When jobs started and completed on schedule, there should be very little, if any, concern about the meeting of commitments. Optimum operation of the plant, however attained only if the original plan has been carefully prepared to utilize the manufacturing facilities fully and effectively.

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Corrective action is the keystone of any production planning and control activity. A plant in which all manufacturing activity runs on schedule in all probability not being scheduled to its optimum productive capacity. With an optimum schedule, manufacturing delays are the rule, not the exception.

Re-planning not a corrective action, it revises routes, loads, and schedules; a new plan is developed. In manufacturing, this is often required. Changes in market conditions, manufacturing methods, or many other factors affecting the plant will often indicate that a new manufacturing plan needed.

Factors affecting production planning and control affects the application of production planning and control to manufacturing are the same as the factors we have already discussed that affect inventory management and control.

The complexity of the product that is important, not what the product is, except as this may in turn relate to the market served. Production control procedures are much more complex and involve many more records in the manufacture of large steam turbine generator sets or locomotives to customer orders then in the production of large quantities of a standard product involving only a few component parts, such as electric blankets, steam irons, or similar small appliances.

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Type of manufacturing is probably the most influential factor in the control situation. For a large continuous manufacturing plant producing a standard product, we have already indicated that the routing was included in the planning of the plant layout.

Though no production control function eliminated, the least control that results in effective operation of the factory is the best control. It must remember that production planning and control systems should be tools of management. The objective is not an elaborate and detailed system of controls and records, but rather, the optimum operation of the plant for maximum profits.

Production planning and control systems emphasis on the control of work-in-process, the system will in effect tie together all previous records and forms developed in all planning for the manufacture of the product.

Value to production planning and control is that it will indicate future trends in demand for manufactured product. Work shift policies, plans for an increase or decrease in manufacturing activity, or possible plant expansions may often based upon the market forecasts, in turn affect the planning of the production planning, and control group.

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Blueprints and bills of materials used by production planning and control when they become a component part of the packaged instructions issued to the shop through the control office. One good planning procedure is to accumulate all necessary data for a shop order in a single package the standard process sheet, the blueprint, the bill of material (if an assembly operation is involved), the route sheet, and possibly the schedule for the production of the order.

The shop order, the standard process sheet, and the route sheet are often one piece of paper- usually called the shop order or the manufacturing order.

Load charts are prepared to show the productive capacity that has been “sold” and at the same time the available productive capacity. These charts may be prepared for each workstation or machine in the plant, or they may be for groups of machines or departments.

Job tickets authorize the performance of individual operations in the manufacturing process.

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There is no single pattern for the organization of the production planning and control activity. In many small plants, the routing, loading, and scheduling functions may well be included in the duties of the operating line; the shop manager, superintended, and supervisors. However, it is difficult to combine day-to-day work with adequate planning, and as a result it is often more feasible to break away the production planning and control functions and assign them to qualified specialists. These groups should organize as staff sections normally reporting to the top manufacturing executive.

Centralized PPC depends upon the design of the production planning and control system. In a completely centralized setup, determination of shipping promises, analysis of sales, stock, and shop orders, preparation of routes, load charts, and schedule charts, and dispatching of work to the shop complete with job tickets and all other necessary paper would be accomplished by a central production planning and control unit. In addition, as work is completed, a careful analysis of the actual performance would make, and if corrective action were required, this group would initiate it.

In decentralized PPC the plan must develop into a detailed plan on the shop floor. Some companies are now endeavouring to make each supervisor a manager of his own departmental operation. In these cases, the supervisor furnished with a complete staff for the production planning and control of the activities in the department.

Planning Phase indicates some details of the duties involved in the production-planning phase. Working from the basic data mentioned earlier, the personnel in this part of the activity routes and load and schedule charts.

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In Control Phase completed job ticket, or its equivalent, is the key to this phase of the production planning and control system. It means of reporting from the shop floor that indicates that a job is completed or if daily job tickets turned in, the daily progress of a job can be determined.

Good relationships with other functions all the other functions in the enterprise are essential to effective production planning and control. Full cooperation with the marketing group is necessary, particularly in view of the importance of market conditions and the goodwill of customers. Both product engineering and process engineering must keep production planning and control informed as to their plans to avoid the manufacture of goods either to incorrect specifications or by an improper method.

The cost of the control system in relation to the value of goods shipped is another possibility.

Again, however, this may not be sound: if markets slump, a bad ratio will develop. Many good production planning and control systems have discontinued because of “high costs” under these conditions- and have never revived after business picket up.

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In a study of benefits and costs of computerized production planning and control systems,

Schroeder et al. list the following performance criteria by which production planning and control systems might judge:

1. Inventory turnover
3. Delivery lead-time
5. Percent of time meeting delivery promises
7. Percent of orders requiring “splits” because of unavailable material.
9. Number of expeditors
11. Average unit cost.

The research topic is Production Planning and Control (PPC) with special emphases on Performance Measurement (PM). Proper planning in all areas for any industry like Site Selection, Building, Machinery, Transportation, Availability of Materials, Procurement of Materials, Production, Quality Control, Yield, Efficacy, Performance are the basic entities for survival and growth. The central axes of all such activities, we capable of concluding that Production Planning & Control and Performance Measurement is the central axes for all such planning processes.

Bird eye view of industrial units in under developed countries shows a picture of less efficiency and yield. They have machinery for production, cheap labour, and availability of cheap raw materials. However, no good yield and efficiency attained. This is only because there is no proper consideration on Production Planning & Control and Performance Measurement if they focus on,

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• Site Selection
• Building
• Machinery
• Transportation
• Availability of Materials
• Procurement of Materials
• Production
• Quality Control
• Yield
• Efficacy
• Performance of both machine and working force

This research work analyzed the various factors, which are crucial for designing the production planning and control check, listed out the factors influencing the choice of production process. It also explained the design of production system and manufacturing process establishes the basic reasons and causes those effects of PPC and PM in industrial sector. It described the benefits, which a small entrepreneur can reap by having properly designed production planning, and control system. More over it established the relationship between PPC and PM.

Precise objectives of production planning and control are to launch routes and plan for work that will make sure the optimum spending of materials, workers, and machines and to provide the means for ensuring the operation of the plant in harmony with these plans.

The factors that influence the application of production planning and control to manufacturing are the same as the factors that affect inventory management and control.

As for as the performance measurement concerned in an organisation there is a mechanism to manage and control the performance, measurement called performance measurement system (PMS). The organisations that use PMS as the basis for its operations and development, the health of the organisation depends on the effectiveness of the production management system.

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Performance is a complex task that spans the whole organisation for process of reviewing. Involving the appropriate persons to spend sufficient time to review the production management system is a costly exercise. Nevertheless, it is very important to the continuous adjustment of the business and its performance orientation in today’s markets. A good production management system, review process, seeks the correct balance between the organisation benefits and the efforts required.

The performance measurement system for any industry in under developed countries requires developing and reviewing at a number of different levels as the situation changes.

• The performance measurement system should include an effective mechanism for reviewing and revising targets and standards.
• The performance measurement system should include a process for developing individual measures as performance and circumstances change.
• The performance measurement system should include a process for periodically reviewing and revising the complete set of measures in use. This should do to coincide with changes in either the competitive environment or strategic direction.
• The performance measurement system should used to challenge the strategic assumptions.

It also found out that the process team is usually responsible for review the results and report to the process owner. The review deals mostly with operational indicators. Although the results of the reviews reported to the process owner, in order to solve possible problems or improve processes, the framework highly encourages the collaboration between different process owners. At this level, the process owner can amend operational indicators, ensuring their alignment to strategic indicators. Any changes, even minor, will change the system (impact on the PM system design) and subsequently the implementation procedure in terms of data collection, IT considerations (if any), reporting and so on (impact on implementation).

This approach,

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• Define the frequency, format, and responsibility. The frequency of review, format in which data are gathered and person(s) who is/are responsible for this identified
• Monitor and control the process. Once the required data gathered, it monitored in a way showing whether the process is under control and moving towards the targets set for the indicators. If any adjustments are required, the approaches defined in the next steps will be helpful.
• In this approach, one needs to diagnose the most critical aspects of the problem and to determine the root causes of the problem.
• Once the root causes of the problems identified, remedies should be proposed and implemented. Following that, it must ensure that the solutions are effective and similar problems will not create.

There are number of tools and techniques for monitoring, controlling, investigating and problem solving. These can include,

• Effect diagram and cause
• Run chart
• Scatter diagram
• Flow chart
• Pareto chart
• Histogram
• Control chart

There are seven management tools identified during research work which can help in PMS

• Affinity diagram
• Interrelationship digraph
• Tree diagram
• Prioritisation grid
• Matrix diagram
• Process decision program chart
• Activity network diagram

In today’s rapidly evolving and changing marketplace, flexibility considered essential to the competitiveness of any organisation. To this end, it is important that a company possesses the ability to change its strategic orientation as times dictate. Therefore, the periodic review of its strategic indicators is crucial. This review will evaluate the overall performance of the organisation at the strategic level. One of the main inputs to this review process is information from the operational indicators level. This information is essential, if adjustments needed to the strategic indicator level, since it can provide the platform for performing statistical and other relevant analyses.

The main considerations for it are:

• In achieving its strategic objectives effectiveness of the organisation
• The validity of any hypotheses regarding organisational performance developed during the design stages of the performance measurement system;
• The validity of possible relationship amongst performance indicators

The Executive Team will be in charge for this kind of review. As mentioned before, the impact of any changes in measures should consider in the PMS design and implementation accordingly. Due to the presence of the Executive Team, any elements of the generic PMS design approach can alter. However, for most organisations changing the direction so frequently seems to be unlikely. Changing the organisational direction can be fundamental changes that may require re-design of the system. Therefore, if the organisation is doing well, only some amendments in measures and processes might be required.

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During the research work, it concluded that the review of the strategic indicators might have a diverse impact on the PMS. In the executive team meeting (the same team that defines the strategic indicators) if it becomes obvious that the organisation fails to move effectively towards its strategic objectives then the causes should be analysed and might include:

• Under-performance at a lower level
• Strategic objectives are not communicated effectively
• Strategic objectives have not been defined properly
• Validity/Relevance of the objectives

It is obvious that depending on the issue identified the course of action should be different for each individual case. The supports tools that may be used include the previously mentioned tools plus more specifically the following:

• Trend analysis tools ?Control Charts
• Relationship analysis Tools ?Correlation analysis, Multivariate analysis, Cause and effect diagrams, Pareto charts
• Checking the consistency of the PMS communication ?Departmental reports and input

Overall Review tends to be in an annual basis, in which the following considerations taken into account,

• The validity of the mission and vision statements
• Whether the company’s strategic objective still support the mission and vision of the organisation

There are number of support tools used for the overall review of the PMS which are larger scale review tools that affect the overall organisational direction and orientation. To this end they can be categorised as internal tools, i.e. tools that compare the organisational performance to a set standard of practise, and external tools, i.e. tools that concentrate on comparing the organisational performance to competitors and good or best-practice organisations.

RECOMMENDATIONS

• Ever in production planning process consider two main objectives
• To satisfying customer demand
• To achievement of the lowest cost
• Process planning (Routing) must be required for production planning and control
• Loading the work required against the selected machine or workstation
• Scheduling for the inventry for planning functions
• Combining functions in a full process
• Dispatching i-e. authorizing the start of an operation on the shop floor should be timely
• Reporting or follow – up for all processes, production and performanceses
• Corrective actions for production planning and control highly recmended
• Re-planning factors for all sercomstances
• Issues which can affecting production planning and control
• Type of Product
• Type of Manufacturing
• Production Planning and Control Procedures followed
• Production Planning and Control Systems followed
• Market forecast always checked before starting production
• Sales order should specify that what has coustomer has purchased
• Stock order should specify that what has left over in stock
• Shop order should specify that what is pipe line for manufacturing
• Standard process sheet generated
• Engineering specifications considered and maintained
• Route sheet always followed
• Load Charts formulated
• Job Tickets assighned
• In an organization there should be no single pattern for the organization of the production planning and control activity
• Centralized Production Planning and Control for certain processes
• Decentralized Production Planning and Control according to situation and requirments
• Good relationships with other functions in an organization
• Measurement of effectiveness vision, mission and planning regularly
• Site Selection should be made in accordance with availability of raw materials, work force and transportation
• Building made according to requirements and forecosted upon 10 years future requirmants
• Machinery should be up dated
• Transportation of materials and products through quick services
• Availability of Materials always regularly checked
• Procurement of Materials in accordance with order
• Production planning and control should be practical
• Quality Control is your basic task
• Yield should be checked regularly
• Efficacy of mashines and human maintained
• Performance of both machine and working force monitered

RECOMMENDATIONS

• The performance measurement system should include an effective mechanism for reviewing and revising targets and standards.
• The performance measurement system should include a process for developing individual measures as performance and circumstances change.
• The performance measurement system should include a process for periodically reviewing and revising the complete set of measures in use. This should do to coincide with changes in either the competitive environment or strategic direction.
• The performance measurement system should used to challenge the strategic assumptions.

There are number of tools and techniques for monitoring, controlling, investigating and problem solving and they be considered,

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• Effect diagram and cause
• Run chart
• Scatter diagram
• Flow chart
• Pareto chart
• Histogram
• Control chart

There are seven management tools identified during research work, which can help in PMS, and used by organizations / institutions for performance measurement.

• Affinity diagram
• Interrelationship digraph
• Tree diagram
• Prioritisation grid
• Matrix diagram
• Process decision program chart
• Activity network diagram

In the executive team meeting if an fails to move effectively towards its strategic objectives then the causes should be analysed and might include:

• Under-performance at a lower level
• Strategic objectives are not communicated effectively
• Strategic objectives have not been defined properly
• Validity/Relevance of the objectives

The supports tools for the course of action should also include,

• Trend analysis tools ?Control Charts
• Relationship analysis Tools ?Correlation analysis, Multivariate analysis, Cause and effect diagrams, Pareto charts
• Checking the consistency of the PMS communication ?Departmental reports and input
• Always check the validity of the mission and vision statements and the company’s strategic objective still support the mission and vision of the organisation.