Production planning is the essential first step in developing a production strategy for your company. It helps you organize all of your manufacturing, logistics, and supply chain activities into a cohesive plan. Production planning serves many purposes. It provides marketing with visibility into manufacturing activities and sales forecasting, and it reduces operational costs by streamlining ordering processes, material flows, and manufacturing processes. With an increasing number of brands shifting to customer-first strategies, demand for fast responsiveness has skyrocketed. Companies are also inclined towards leaner processes that reduce waste and lead times. With this in mind, here are 5 tips to help you better architect your production plans.
Define your goals
The first step in production planning is to define your goals. When do you want to start production? What is the timeline for starting and stopping production? What are you expecting from the product? How much volume can you produce? These questions should be answered so that you can set achievable goals and objectives for yourself and your production plan.
Establish a baseline for your current operations
Another early step in planning production is to establish a baseline for your current operations. What are your current manufacturing, logistics, and supply chain processes? Where is your inventory? What are the lead times for materials? How much inventory do you have on hand? How much inventory do you need to have on hand? These questions help you assess where you stand now before you plan ahead. Establishing a baseline helps you identify any gaps that need to be addressed, such as new product development, which may require additional capital or time in research and development.
Develop a clear understanding of your supply chain network
One of the most important steps in planning your production strategy is to have a clear understanding of your supply chain network. This includes identifying the companies that you rely on for parts and materials, which can include vendors, distributors, and other 3rd parties. Next, determine how the business will receive its raw materials and supplies. For example, whether you are manufacturing with a TPM (total productive maintenance) model or have an inventory-driven supply chain, it’s important to plan for specific time windows for receiving deliveries from your suppliers. Similarly, if you use a just-in-time (JIT) model for manufacturing or have a demand-driven supply chain, then it’s important to know when raw materials should be ordered and what should be done when they arrive at your facility. Another key step is identifying where all of your finished goods will go. If you have an internal distribution capability through which you will ship your products, then make sure you have enough space available within their warehouses or distribution centers to store those goods until they are shipped. Alternatively, if your company has no significant distribution capability, then it’s essential that you identify where all of your finished goods will end up before designing your production strategy.
Incorporate digital technologies to optimize processes
Without digital technologies, production planning is hard to do. It’s difficult to imagine how the manufacturing industry can be effectively sustainable without their use. Digital technologies help you capture data and improve processes by eliminating waste in the supply chain. They support your sales forecasting activities by providing you with visibility into manufacturing activities both historically and in real time. Developing a production plan that utilizes digital technology is an effective way to optimize your company’s efforts. It will give you an advantage over your competitors in terms of efficient and effective operations.
Plan regular resets and updates
Production planning requires regular resets and updates. Nothing illustrates this more clearly than the recent disruptions created by the Covid pandemic. If supply chains are disrupted and production plans are disrupted, regardless of the source of the disruption, it’s vital to be able to react quickly. The first step is to establish a regular schedule for evaluation of both your production plans and your ordering process. Consider setting up a weekly or monthly meeting with your team members in order to discuss production plans and ask questions about how they might affect, or be affected by, the current situation.
Ensuring you direct attention to the five production plan considerations briefly discussed above, tailored to the realities of your supply chain, will elevate our plan’s accuracy, agility, and effectiveness.
—Shankar Narayan and Bryan Jensen, St. Onge Company