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Planning Component Guide
Planning Component Guide
Systems for efficient and cost-effective
manufacturing sequencing
The planning function ensures customer requirements are being met in a cost-effective way. Planning is the communication system that links sales and operations to optimise manufacturing performance and achieve budgetary targets. Adherence to the plan will align throughput with customer demands.
Benefits Calculator
Planning skills and plan adherence affects operational and financial performance. Improving the planning process offers significant business benefits. Our default percentage of 5% for Planning is based on our experience and taking into consideration the following:
  • Overcapacity will allow the customer to receive excellent delivery performance, whilst operational productivity and gross margin performance declines.
  • Under capacity leads to poor delivery performance and dissatisfied customers, whilst operational productivity decreases as a result of having to react in order to fulfil short-term customer priorities.
  • Unbudgeted sub-contract support.
  • Increased transport costs caused by missed deliveries.
  • Lost revenue.
  • Stock movement.
Planning Sub-Components
To improve planning, our assessment enables the senior management team to set aspirational goals and determine the current status of the process. The Planning component contains 6 sub-components which, when examined in detail, reveal the current condition of Planning within the business and the benefits of achieving your aspirational goals. The Planning component of the assessment helps you achieve performance through best practice. The result is a detailed action plan which will improve all aspects of Planning in the business. Here are the 6 sub-components of Planning:
1. Demand Management
How demand is managed and controlled.
Demand management is a planning methodology used to forecast, plan for and manage the demand for products and services. It ensures that the resources are available to meet both customer and business requirements. Understanding the immediate and medium to long-term demand forecast reduces the investment in working capital (stock). Sales, Inventory and Operations Planning (SIOP) is a collaborative process derived from the strategic plan. It helps manage replenishment and profitability strategies thereby creating a plan for achieving future forecasted demand. Rough cut capacity planning also uses SIOP to set production targets and inventory levels.
2. Capacity Management
How capacity is managed and controlled.
Capacity is the maximum output that a business can produce in a given period with the available resources. Capacity management is the adjustment of the capacity of a resource (equipment, machine, or system) to meet planned demand and may be adjusted by working overtime or redeploying the labour. It impacts directly on business costs and in satisfying the customer:
• Overcapacity has an impact on productivity and labour costs.
• Undercapacity has an impact on income generation, lead-times, delivery, sub-contract costs and overtime.
Performance is optimised when capacity and demand are in balance. Capacity should be flexible to cope with fluctuation in demand and monitored to ensure utilisation is achieved. The capacity plan is derived from the long-term demand forecast in the business plan.
3. Inventory Control
How inventory is managed and controlled.
Inventory control is the process of ensuring that appropriate amounts of stock are maintained by a business so as to be able to meet customer demand without delay, whilst keeping the costs associated with holding stock to a minimum. Inventory is maintained at a minimum without impacting upon operational performance. Inventory is a working capital investment which needs to be approved, monitored for accuracy and adjusted to maintain availability and avoid obsolescence.
4. Planning
How the plan achieves customer delivery and the budgetary requirements of the business.
Production planning is the process of aligning demand with manufacturing capacity to create production and procurement schedules for finished products and component materials. Demand can be smoothed to optimise available capacity and flexed via inventory and overtime to cater for demand fluctuation. The plan is derived from the collaborative Sales Inventory and Operations Planning (SIOP) process which requires sales to accurately forecast demand and operations to maintain capacity to achieve it.
5. Total Productive Maintenance (TPM)
How the maintenance systems prevent equipment failure.
The availability of key equipment is essential to the planning process. Downtime due to breakdowns, defects, short stops, slow running and accidents result in unplanned changes. TPM is a system for maintaining and improving the integrity, lifespan and productivity of production equipment to prevent downtime. It emphasises proactive and preventative methods to maximise the equipment availability.
6. Supplier Development
How the supply chain is managed and controlled.
This is the process of working with key suppliers on a one-to-one basis to improve their performance in quality, cost and delivery. Suppliers’ capacity, flexibility and constraints should be understood and performance monitored to ensure appropriate capacity is available within required lead-times to meet demand. The supplier development plan supports the long-term demand forecast in the business plan.