fusion point research Marketing Research Reports

Marketing to Production Planning Leaders in Manufacturing

Understanding Their Role

The ability of manufacturing companies to successfully plan and schedule is an essential skill, and strongly correlates with profitability and the ability to meet customer expectations.1 Manufacturing requires an extensive amount of planning, because even seemingly simple items, like shoes as an example, require a wide variety of materials to be available at the time of production. Leather, rubber, plastics, synthetics, dyes, adhesives, cardboard for packaging all must be ready or production will cease. This complexity is magnified by all of the different product types, colors and sizes the facility might need to produce at any given time. Manufacturing mangers use several layers of planning to ensure everything runs smoothly. Production planning (also called a strategic work or operation planning2) focuses on the longer-term timeframe, 6 to 18 months before time of production. Planners receive input from the company’s overall business plan, modified based on the latest forecasts for customer demand and inventory levels, and then determine how many units will need to be produced in 6 to 18 months. Using this production plan, managers will begin to prepare any major changes needed in facility output, workforce size, raw material orders, inventory levels or number of machines needed to meet the required production levels. Production plans are generally reviewed monthly, and usually focus on a high-level production rate (total number of cars, toothbrushes, TV’s, etc.), and not on the various product configurations, sizes or colors needed.3

 

Customer demand for most products fluctuates month-to-month, so production plans might show an organization needs to increase capacity, and hire and train workers, open new production lines, run more shifts or outsource more components. Alternatively, production plans could indicate the company has too high of a production rate, and needs to reduce the workforce, stop overtime, close lines, etc. Making these types of changes is expensive, disruptive and hurts employee morale. To avoid this problem, planners sometimes choose a “level production plan” that over-produces in some months and under-produces in other months to smooth out these fluctuations and allow facilities to produce a steady, consistent stream of products in a more stable environment. Level production plans require the company to hold more inventory, though, which can be expensive due to warehousing costs and the risk goods in storage might become obsolete. Manufacturers with production levels that can be varied with little trouble or that have products too expensive to store in inventory might choose a “chase production plan” where they do not attempt to smooth out changes in production rates and simply make the number of products demanded every month.4

 

“The ability of manufacturing companies to successfully plan and schedule is an essential skill, and strongly correlates with profitability and the ability to meet customer expectations.”

1 Phanden, Rakesh Kumar, Ajai Jain, and Rajiv Verma. “An Approach for Integration of Process Planning and Scheduling.” International Journal of Computer Integrated Manufacturing 26, no. 4 (2013): 284 – 302. EBSCOhost(85924496).

2 Bakliwal, V. K. Production and Operations Management . 1st. ed. Chapter 2. MARK PUBLISHERS, C-390, Ist Floor, Amrapali Circle, Vaishali Nagar, Jaipur-302021, Ph.: 9413678649, E-mail: markpublishers@ymail.com: MARK PUBLISHERS, 2011.

3 Professionals, Council of Supply Chain Management, and Nada Sanders. THE DEFINITIVE GUIDE TO MANUFACTURING AND SERVICE OPERATIONS . Edited by Jeanne Glasser Levine. 1st ed. Pearson Education LTD., 2013.

4 Ibid.

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Copyright © 2016 Fusion Point Research, Inc.

Manufacturing managers use production planning to gauge the long/intermediate-term resources they will need to meet required production levels. Production plans might direct the organization to increase or decrease its product rate, driving changes in many areas such as workforce size, number of shifts, overtime or machine utilization.