Planning and scheduling are similar concepts. However, there are slight differences between them.
The resources needed for production planning and scheduling are:
- Machinery, equipment.
The first four elements of the previous list are material assets.
The management is the brain that defines how to convert the raw materials into final products. It is the “software” of the company, in other words, the way of performing activities. We can add that two companies producing similar articles can have different ways of doing (or production processes).
Through management, the first four elements will be combined in the most efficient way to make finished goods.
Production planning involves the whole manufacturing process on a high level in order to produce finished goods. By planning it is possible to describe the whole map, which goes over all the resources to the final products.
The production planning balances the resources and the demand.
- Quantities to produce per family of products
- Desired inventory levels
- Resources to use per period
- Investments necessary to match capacity and volume demand
The time horizon is from 6 months to 3 years and involves the top management. The planning buckets, the smallest unit of time that is looked at, are by weeks or months.
Let’s see below in more detailed the required inputs for making a proper production plan:
- Bill of Materials: the broken down list of components and subcomponents that make the final product.
- The availability of items in stock: Sometimes it is necessary to activate purchasing; sometimes they are already on hand.
- Cost of resources, to produce items in compliance with quality needs.
- Lot sizes involving the frequency and the proper volume to have the right quantity on hand. It prevents the organization to fall down into stock-out or excess of stock.
- The manufacturing lead time, which means the time that production takes to convert the raw material into finished goods.
To give a simple example in the daily life, you can assume you are making a cake. You will need:
- The ingredients you combine to make a cake (the bill of materials or BOM)
- The ingredients you already have at home (Stock on hand)
- The ingredients you need to buy (Purchasing)
- How much will the preparation cost? (The cost of resources)
- How many kg of ingredients and when do you need them? (The frequency and lot sizes)
- How long will it take to produce the cake to fulfill all the guests? (The lead time)
The next step involves the internal combination of resources to produce the final items. Following the cake example would be the way of cooking it.
Production scheduling is more detailed oriented in comparison to the production planning. It is also the next step going from general to detail. The time horizon is shorter than the production plan and also it has a higher level of detail:
- It defines the production quantities of single finished products or SKUs, instead of product families.
- It defines who or which machine will produce every single SKUs.
- The time horizon is shorter and more detailed, between one month and one year, depending the industry and management type.
- The planning buckets could be as short as hours or minutes.
- It defines the inventory level of single finished products or SKUs, instead of product families
- It requires a higher review frequency of middle management and “touches” more the shop-floor
After production planning, the next step is to create a detailed production schedule.
The goal is to schedule every single operation a certain time in the calendar, assign the resources and workers, and plan all the detailed steps:
It is not a forecast, but it needs to see the future and to get the appropriate resources in time. It is a bridge between production planning and the actual production and it helps to get the necessary resources in a wise time manner.
- Identify and get the appropriate amount of workers.
- Identify and get the appropriate raw materials.
- Identify and assign appropriate machinery and equipment.
- Synchronize effectively all the resources to define priorities and reach customer needs.
As you will see, in both stages it is important to consider that resources are finite. The purpose is to combine the limiting resources to get the final products in the most effective way. The planning steps look at when something could be made in general, the scheduling step looks at how something will be made happen in detail.
Let’s say your organization sells a variety of chips to the market. The operational team will start preparing the production plan and, at this stage, they will define:
- The volume of chips they expect to sell within one year.
- The capacity of ovens, fryers, bag makers, etc. necessary to sustain the sales volumes every month.
- The infrastructure (layout, space, equipment, pallets, forklifts, tools) necessary to operate without bottlenecks.
- The number of workers and skills necessary to operate the machinery.
- The number of shifts available and needed during the year.
- The desired inventory levels of flour, oil, salt, additives, water, potatoes, corn, packaging and other raw material at the beginning and end of every month.
- The expected amount of tons and units necessary in the finished good warehouse at the beginning and end of every month to sustain the throughput.
Following the chips company example, the company will proceed to the next stage: production scheduling. At this stage, the following questions will be answered:
- Which machine will be running every shift, day and week?
- Who is going to operate each machine every shift, day and week?
- What is the necessary amount of ingredients, when they must arrive, when they must be ordered?
It is important to remark that both are necessary: production planning and production scheduling. Production planning is the natural first step and production scheduling goes next. Thanks to them it is possible to get an accurate production schedule and suitable production control. Finally, production activity will provide the actual volumes and results and will feed back to both processes.