PRODUCTION PLANNING & CONTROL

Production Planning• Production planning / Operations planning involves

the organization of an overall manufacturing/ operating system to produce a product.

• Various activities involved in production planning are:– Designing the product– Determining the equipment and capacity requirements– Designing the layout of physical facilities and materials

handling system– Determining the sequence operations and the nature of

operations to be performed along with time requirements – And specifying certain production quantity and quality

levels

Objective of PP

• Is to provide a physical system together with a set of operating guidelines for efficient conversion of raw materials, human skills and other inputs into finished goods.

Factors determining PP procedures• Volume of production• Nature of production processes• Nature of operations– Manufacturing to order which may or may not be

repeated at regular intervals– Manufacturing for stock and sell (mass

production) Eg: automobiles, watches, computers– Manufacturing for stock and sell (under

continuous process manufacturing) Eg: food products, soap, synthetic yarn

Production Planning System

• There are two inter related sub systems in the production planning:– Product planning system– Process planning system

Production Control• The function of production control :– Provide for the production f parts, assemblies and

products of required quality and quantity at the required time.

– Co-ordinate, monitor and feedback to manufacturing management, the results of the production activities, analyzing and interpreting their significance and taking corrective action if necessary.

– Provide for optimum utilization of all resources.– Achieve the broad objective of low cost

production and reliable customer service.

Benefits of production control

• Improvement in profits through:– Maintenance of a balanced inventory of materials,

parts, work in process and finished goods– Balanced and stabilized production– Maximum utilization of equipment, tooling,

manpower, and manufacturing and storage space– Reduction in indirect costs– Reduction in set up costs– Reduction in scrap and rework costs– Reduction in inventory costs

Cont’d

• Competitive advantage:– Reliable delivery to the customers– Shortened delivery schedule to the customers– Lower production costs and greater pricing

flexibility– Orderly planning and marketing of new or

improved products

Elements of Production Control• Control of planning

– Latest forecast data from sales, BOM data from product engg., routing information from process engg.

• Control of materials– Control of inventory, issue of materials to shop floor, movement of

materials • Control of tooling

– Availability, issue from tool crib• Control of manufacturing capacity

– Availability of machines, labour capacity, realistic prodn. schedules• Control f activities

– Release of orders and information at assigned times• Control of quantity• Control of material handling• Control of due dates• Control of information

– Report showing deviations from plan, so that corrective action can be taken.

Procedural elements of Production control system

• Means of setting the system in motion such as production orders

• Methods to determine lead time for production• Methods to control and monitor production operations

including means to – Determine what and where work is to be done– Determine when work is to be done– Issue orders to production shops and ensure that work is

completed• Techniques for measuring and recording data on machine

utilization, scrap and indirect labour that that can serve as a basis for manufacturing action leading to utilization of facilities and low cost operations

• An information system for display, recording and retrieval as well as processing and flow of data

Production Planning & Control

• Consists of planning production in a manufacturing organisation before actual production activities start and exercising control activities to ensure that the planned production is realized in terms of quantity, quality, delivery schedule and the cost of production

Objectives of PPC• To deliver quality goods in required quantities to the

customer in the required delivery schedule- to achieve maximum customer satisfaction and minimum possible cost

• To ensure maximum utilization of all resources• To ensure production of quality products• To minimise the product throgh-put time or production

cycle time• To maintain optimum inventory levels• To maintain flexibility in manufacturing operations• To co-ordinate between labour and machines and various

supporting departments

Cont’d• To plan for plant capacities for future requirements• To remove bottlenecks at all stages of production and

to solve problems related to production• To ensure effective cost reduction and cost control• To prepare production schedules and ensure that

promised delivery dates are met• To produce effective results for least total cost• To establish routes and schedules for work that will

ensure optimum utilisation of materials, labour and machines and to provide for ensuring the operations of the plant in accordance with these plans

• The ultimate objective is to contribute to the profit of the organisation

Role of PP in Operations Management• Product design• Job design & process design• Equipment selection and replacement• Labour skills training programmes• Input material selection including raw

materials and sub contracting• Plant selection and layout• Implementing & controlling the schedule• Operating the production system

In addition, the control systems to be considered are

• Inventory control policies• Production schedule control policies• Productivity and cost control policies• Constructing control systems, implementing

and operating control systems• Modifying policies and designs

Scope of PPC• Materials– Planning for procurement of raw materials, components

and spare parts. (Purchasing, storage, inventory control, standardisation, value analysis and inspection are the other activities associated with materials)

• Methods– Best method of processing from alternatives, best

sequence of operations ( process plans) and planning for tooling, jigs etc.

• Machines & Equipments– Facilities planning, allocation & utilisation of plant and

equipments• Manpower– Planning for manpower having appropriate skills

Techniques of Production Planning & Control

• Routing• Scheduling

• Dispatching• Follow up

Routing• Is the determination of path or route on which

manufacturing operations will travel, establishing the sequence of operations to be followed in manufacturing a particular component.

• Routing is an activity of PP which determines, what work will be done on a part or a product and where and how it will be done.

• “It is a selection of path or route over which every piece is to travel in being transformed from raw material into finished product”– Kimball

• Benefits of routing:– Efficient use of available resources– Reduction in manufacturing costs– improvement in output ( both quality & quantity)– Providing a basis for scheduling and loading

Steps in routing• Analyse the product, its components or parts and

determine the processes involved for each of the component to manufacture the same in a most economical way and to decide what is to be procured to reduce the cost

• Decide the type of materials required, its quality and quantity for the manufacture of individual components.

• Determine the number of manufacturing operations and their sequences as indicated in the route sheet

• Work out the total process time of each of the operations based on the timings provided by the production planning estimation department and work out the type and number of machines necessary to produce the product. This is called the ‘load statement’

Cont’d

• Decide on the normal scrap allowance, allowance for rejections to be provided during manufacturing

• Design the forms necessary for the production department like Job Cards, Inspection cards, Routing sheets etc.– The person who attends on routing function

should be fully aware of all operations, machines, materials, etc in a plant.

Scheduling• Scheduling involves developing and assigning

specific dates for start and completion of the necessary tasks or operation in a production shop floor.

• Thus it is concerned with the time part of planning and decides when the work will be performed on a given part or product.

• It is the arrangement of different operations involved in manufacturing, to fix priorities ( including time, date for commencement and completion of operation)

Activities in scheduling

• Allocation of quantity of each of the component to be produced

• Indication of the quality required• Allocation of time against each operation

Dispatching

• It is the initial action of production control.• It consists of :– Issuance of orders for taking up the production work

according to the priority given in the schedule by the planning section, and

– Assignment of work to the concerned operators at their machines or work places

Dispatching thus determines, by whom and where the work will be done.

Dispatching

• Dispatching is a sequencing of tasks that are waiting to be worked on at a work centre and releasing them to be performed at a particular time by a specific machine.– James B. Dilworth

• Main activities of dispatch can be listed as:• Assignment of work to machines and work

places• Issuance of orders and production forms

necessary to the performance of the work• Authority to move work from one operation

or work place to the next.

Follow up

• Follow up (Expediting) is meant to examine whether work is going as per the plan. If variation is found, it is eliminated or adjusted as quickly as possible. A group of people called progress chasers will take up this task.

Main functions of Follow up• It serves to unify the production activities and assists in co-

ordination between the different departments and sections.• It is responsible for reporting of production data correctly to

the management• It carries out investigation of variances from the

predetermined time schedules or the delays caused during production

• It suggests corrective steps after the trouble has occurred to avoid repetition of the problems

• It serves as a reliable medium for the management to obtain information about the working of various sections and acting as a ‘watch –dog’ on their performance.

Problems

• Non availability of material or late arrival of materials, tools or men.

• High absenteeism• Associated depts. may not assist due to their own commitments

or behind schedule activities• Customer requirements change abruptly• ‘Act of God’ or strikes• Errors in drawing• Power failures• Machine breakdown

Limitations of PPC• PPC function is based on certain assumptions or

forecasts of customer’s demand, plant capacity, availability of materials, power etc. if these assumptions go wrong, PPC becomes ineffective.

• Employees may resist changes in production levels, if they are rigid.

• It is time consuming when it is necessary to carry out routing and scheduling for large and complex products consisting of a large no. of parts.

• It becomes difficult when environmental factors change very rapidly such as technology, customer’s taste, govt. policy, power supply breakdowns, break in supply of raw materials.

Measuring effectiveness of PPC• There are four areas in which effectiveness can

be measured:– Delivery: this can be measured by the percentage of

deliveries on time.– Inventory levels: the value of average inventory held,

value of obsolete inventory, value of non moving and surplus inventories and the inventory turnover ratios.

– Production/ Operations management: comparison of planned and actual production indicates the performance of PPC function. No. of overtime hours worked, machine utilization ratio are also indicators of effectiveness.

– The expenditure incurred for carrying out various functions of PPC dept. vis-a vis the production value.

Make or Buy decision

• When to Make:– Lower cost because the firm does not have to pay

for the vendor’s cost– Assurance of availability – Better control on quality– Availability of appropriate manufacturing

expertise.– Desire to preserve trade secrets– Savings on transportation costs

• When to Buy:– When the parts can be bought from the vendors

at lower cost, higher quality and faster delivery times than would be possible if the firm made them in-house.

– When the firm uses only a few numbers of a particular item and special equipments are needed to produce it in-house.

– When the vendors hold a patent on the required item

– When the opportunity costs of producing are much higher than that of buying

Visual controls

• A simple graph• Control chart ( Gantt chart)• PERT• CPM• Control Boards

• The expected time, te = to+4tm+tp 6

Capacity planning

• Capacity of a plant is expressed as the rate of output (in terms of units produced per period of time)

• ie. Hour, shift, day, week, month, year etc.

Measures of capacity

• Automobile - no. of automobiles• Steel factory - tonnes produced• Chemicals - litres• Textile mill - square metres of cloth• Hotel - no. of rooms• Hospital - no. of beds• Bank - No. of accounts