5:31 PM
PRODUCTION / MATERIAL PLANNING PROCESS
Step by Step Practical Approach for Industry.
• Recognized as the most important process in the business.
• Stepping stone for MRP II / ERP
• Team based process comprising representatives from
• Marketing & Sales
• Domestic , international & institutional
• Procurement
• Materials Planning & Inventory
• Local, imports & NPS (Miscellaneous)
• Production
• Quality Control & Quality Assurance
• Encompasses an element of accountability and gives all concerned a view of the product availability.
Role of Marketing
• The process starts at the top
• Marketing & Sales – yearly forecast preferably also showing requirements by quarter & monthly.
• Supply Chain – Sourcing plan to back up the Marketing Plan.
• Recognizes the market dynamism
• Recognizes of and on opportunity sales.
• Supply Chain / Production plan on the basis of 6 month running forecast not the budget document.
• Marketing & Sales issue their six-month rolling forecast on the 25th day of each month (earlier if the 25th is a holiday / weekend).
• Six months = Current plus 5 months
Game Rules - Limitation
• Marketing & Sales confine the adjustments within the quarterly / yearly figures provided in the budget document.
• ( Clarification: Marketing & Sales should limit changes against the next 2 month’s forecast to an extent of 10% higher & lower as a matter of right. For any other changes they would need an agreement from Supply Chain which could be agreed based on material availably)
• The Purpose = meet customer demand
• Current should be termed as a L.V
• Month 1 & 2 as a firm forecast (adjustment as above)
• Month 3 onwards can reflect changes per budget etc
Over to Inventory Planning
o Upon receipt of forecast, the Production Manager (Packaging) will:
o Prepare a draft production plan for the current & next 5 months based on stock at hand, demand & inventory requirements. This would be agreed within Supply Chain / Production & QC
o Format is been provided and will form an integral part of this process.
§ This includes: Product & description, batch size, min stock level in weeks, quantity at hand, required production, demand and the closing stock
Production Planning Meeting
§ A meeting would be held on the designated working day each month to finalize the Production Plan – the Production Planning team member would attend this. The purpose of the meeting is to establish:
o Extent of achievement viz commitment both for Demand & Supply
o Issues impacting Supply / Demand in not achieving commitments
§ Visibility of product availability viz demands for the next 5 months
§ Roles and responsibilities of Production Planning Team members are clearly defined.
Roles
1. Chairperson:
• Ensure meeting is held each month per schedule
• Preparation & circulation of agreed plan on the 2nd working day each month
• Circulation of minutes of the meeting
• Ensuring participation of the designated or alternative representative
• Co opting any additional representatives for a specific purpose
• Coordination between the Supply & Demand functions to clearly establish availability status of various products.
• Demand accountability from various members for any short comings or delays impacting delivery of promised products.
• The Chairperson assumes full accountability for this process
2. Supply Chain (Inventory)
• Prepare and present draft Production Plan for the meeting
• Stock details of finished stock, raw materials & packaging material (cleared by QC)
• Status of imported materials, on order, under clearance and delivery dates.
• Stock details of finished stock, raw material & packaging material (under test)
• Details of local raw materials & packing material (on order)
• Details of short expiry finished stocks, raw materials and leftover packaging.
• Any specific issues in material planning or stores impacting availability of materials for production
3. Supply Chain & Imports
• Details of Imported raw & packaging materials on order & delivery dates – suggest LC status format be used for this purpose
• Delivery dates for imported materials.
• Delivery dates for local materials.
• Sourcing arrangement for New Products.
• Supplier related issues local / imports
• NPS – Production related materials
• Details of indents pending over 10 days
• Supplier Performance (later in the year)
4. Marketing (Domestic & International):
• Marketing requirements for 6 months rotating for exports & business groups (Regular & PS packs) – updated and circulated each month on the 25th day.
• Specific requirements of institutional business
• Product priority – by exception
• Product / quality issues if any
• Coordination / communication within Marketing to establish the availability status of various products demanded.
• Incorporating New Products in demand.
• Info sharing – product promotions etc.
5. Production (Also covers QC / QA & Engineering):
• Capacity
• Production Plan / by week & daily.
• Manning, shift * OT requirements.
• Quality issues
• Engineering issues
• Regulatory
• Short Expiry etc.
• Short, medium & long term capacity planning
Time Frame
• Marketing & Sales are required to close their sales each month on 25th working day.
• Production Planning Meeting should be held after the sales have been closed.
• The final Production Plan along with meeting minutes would be circulated on day 2 each month.
• This would start the Material Planning Process as follows…….
Material Planning Process
- The MRP is interlinked with the Production Planning Process and activities start from the point that an agreed plan has been circulated – normally day 2 each month. This covers all Production Materials i.e. Raw & Packaging – both local & imported.
- The Material & Inventory planner requires the following perimeters to work out the orders to be placed to meet shortages of the current month and place orders for the ensuing months.
§ Approved list of vendors – with commodity and share allocation
§ Lead times by material
§ Minimum inventory levels by materials
§ Order lot sizes and multiples their of
§ Stock in hand, on order & requirement
- Upon receiving the agreed Production Plan the Supply Chain (Inventory) would work out the material requirements – this would be done through establishing the material requirements, adjusting stock in hand, on order, in transit etc arriving at the net requirement for the quantities mentioned in the Production Plan.
- The Supply Chain (Inventory) would then prepare a summary (4 Copies) of materials required clearly identifying immediate requirements and those being ordered for next months production. The current document list of Materials required may be used for this purpose. While preparing the summary the criteria mentioned earlier under serial (2) would be adhered in principle. The summary should then be discussed with the Supply Head and approval obtained – Target day 5.
- The circulation of approved summary would be as follows:
§ Original – Supply Chain / Imports
§ Copy 2 – Production Manager
§ Copy 3 – Finance Dept
§ Copy 4 – Supply Chain Head
- The Supply Chain (Inventory) would start raising requisitions with reference to the Summary – mention Sr. No
- Supply Chain / Import to complete order placement latest by day 10.
- For Materials required outside the Summary requisition would require approval of the Supply Head.
Material Receipt / Documentation
- Materials for the next month should be available in the factory at least 2 days prior to the Production Planning Meeting held on the last working day each month.
- Supplier to send Delivery Challan (1+1) & Bill / Invoice along with item – This should clearly specify Purchase Order No.
- At the time to receipt Gate will prepare Inward Gate Pass (IGP) – Security will verify quantity, no of items etc and enter relevant details in their register.
§ Stores to check the item’s condition then to acknowledge receipt & give second copy to Supplier for their record.
§ Stores to prepare Goods Received Note (GRN – 3 copies for Accounts, Supply Chain & Stores) & Analytical Report (AR – 4 copies for Accounts, Procurement, Stores & QC). These documents are sent to QC and are a formal intimation to initiate the process of sampling & verification of goods.