Production planning - Why it's more complex than you think!
Do you plan your day? Or do you leave it to chance?
Every day you make countless decisions that require well thought-out planning. But what exactly does planning mean? And why is production planning one of the most challenging disciplines in companies? In this article, you will find out why structured planning is essential and how companies deal with unexpected challenges.
What does planning mean?
We encounter planning everywhere – be it in a private or professional context. Without a structured approach, processes would be chaotic and set goals would remain out of reach.
Basically, planning describes the mental anticipation of future processes in order to ensure efficient implementation (Wöhe, 2013). It helps to make optimal use of resources, save time and minimize unforeseen disruptions. Every planning process comprises several core aspects:
- Objectives: What should be achieved? Without a clear definition of objectives, any planning remains disoriented.
- Allocation of resources: What resources are available? These include time, money, materials and personnel.
- Sequencing: What is the most efficient sequence? Structured processes prevent bottlenecks and delays.
- Risk assessment: What disruptions can occur and how can we react to them? Realistic planning takes alternatives and emergency strategies into account.
Planning in everyday life – a practical example
Imagine a typical morning:
- 07:00 am: Get up
- 07:15 am: Morning toilet
- 07:30 am: Breakfast and first coffee
- 07:40 am: Drive to work
- 08:00 am: Arrive at the office
- 08:15 am: First appointment
As long as everything runs smoothly, this plan works without a hitch. But what happens if the car doesn’t start? Possible alternatives could be:
- You call a cab and postpone your appointment.
- You use public transport and arrive slightly late.
- You work from home, if this is possible.
This shows that planning not only means structure, but also flexibility. Because without room for adjustment, even the best plan loses value.
What is production planning?
Planning in production is much more complex than in other areas. Companies have to take a variety of factors into account in order to ensure efficient, economical and responsive production. While delays often remain manageable on a day-to-day basis, errors in production planning can have serious consequences: financial losses, downtime or missed delivery deadlines. Precise coordination and forward-looking planning are therefore essential.
Objectives of production planning
The aim of production planning is to design the production process in such a way that business and customer-oriented requirements are optimally fulfilled. Planning is based on the following core objectives:
- High capacity utilization: The most efficient use of machines and personnel reduces idle costs and improves productivity.
- Minimization of capital commitment: Optimized production planning keeps inventories and tied-up capital as low as possible in order to increase the company’s liquidity.
- Low procurement costs: Forward-looking material planning allows you to take advantage of favorable purchasing conditions and avoid unnecessary ordering processes.
- Maximum adherence to delivery dates and readiness to deliver: Customer orders must be fulfilled reliably in order to ensure competitiveness and avoid contractual penalties
These objectives are often in conflict with each other. For example, high stock levels lead to better delivery capability, but increase the amount of capital tied up. Balanced production planning must therefore carefully weigh up these competing objectives.
Central tasks of production planning
Production planning has the task of coordinating all processes in production so that resources are used optimally and customer requirements are reliably met. In doing so, it must take into account numerous dependencies and conflicting objectives – from capacity bottlenecks and material availability to unexpected disruptions. To ensure a smooth production process, production planning comprises several coordinated sub-areas:
- Production program planning: Which products should be manufactured when and in what quantities? This determines how the production program is coordinated with strategic corporate planning.
- Capacity and material requirements planning: Are sufficient machines, labor and materials available? Bottlenecks in one of these areas can delay the entire production process.
- Scheduling and sequence planning: Which production steps need to be carried out in which order in order to minimize waiting times and ensure optimal machine utilization?
- Order release: Production orders are transferred to production in such a way that neither overloads nor inefficient idle times occur.
- Production control and monitoring: Progress must be continuously monitored during ongoing production. Unforeseen disruptions – such as machine breakdowns or material bottlenecks – require quick adjustments.
The theory of well-planned production sounds simple, but practice shows that unexpected influences can occur at any time. A production plan must therefore not only be efficient, but also flexible and robust. We have already clarified here whether efficiency or robustness is more important in an optimal production plan. Modern ERP and PPS systems enable continuous monitoring of processes and help to identify bottlenecks at an early stage (Kellner et al., 2020).
Why is production planning so complex?
Production planning is much more than just defining processes and deadlines. It is a highly dynamic task that is complicated by numerous factors. A small mistake – be it an incorrect order of materials, an unplanned machine breakdown or an uneven distribution of work – can have far-reaching consequences. But why is production planning so complex? Five key reasons make planning a challenge (Kellner et al., 2020):
1. multitude of planning objects
Countless elements have to be taken into account in every planning decision: Raw materials, semi-finished and finished products, machine capacities, personnel deployment and transportation routes. In modern production environments, especially in variant production, there can be thousands of individual parts at different stages of production. Every decision affects the entire system and can have an impact on downstream processes.
2. complex interdependencies between planning decisions
Production decisions cannot be viewed in isolation. For example, the selected production program not only influences the capacity utilization of the machines, but also the level of inventory and the batch size decisions of other components. Any change at one point can have far-reaching effects on other areas – often across several production stages.
3. the need to constantly coordinate capacity supply and demand
Production planning must continuously check whether the available capacities are sufficient to meet the planned demand. An incorrect distribution of the workload can lead to bottlenecks or underutilized machines. It becomes particularly critical when demand changes at short notice or new priorities have to be set.
4. uncertainty of the planning data
Production planners often work with assumptions that may prove to be incorrect over time. Market-related uncertainties such as fluctuating customer orders or delivery bottlenecks influence the entire production process. Within the company, staff absences, machine downtime or inaccurate lead time forecasts can pose additional challenges. As many production decisions have long-term effects, inaccurate data can cause significant deviations from the plan.
5 Limited calculability of optimal production plans
Even with modern IT systems, it is hardly possible to determine the “perfect” production plan mathematically. The multitude of possible options – from the aggregated production plan to the machine allocation plan – makes complete mathematical optimization impossible. Instead, approximation methods or heuristic approaches are often used, which provide practicable but not necessarily optimal solutions.
Practical example: Metal processing – challenges of a complex production chain
Imagine a company that manufactures high-quality machine components. Each end product consists of dozens, sometimes hundreds of individual parts that have to be manufactured, processed and assembled in various production stages. There are machines that can only produce special parts, while others are used universally for several product series. This is where the complexity of planning becomes apparent:
- Minimize throughput times: To ensure that all components are ready for assembly at the right time, production times must be precisely coordinated. Delays in partial production affect the entire production process.
- Consider employee qualifications: Certain production steps require specialized skilled workers. Shift planning must ensure that there are always enough qualified employees available.
- Ensure material availability: Raw materials and semi-finished products must be procured in good time and made available at the appropriate production stations. A shortage of a single material can delay the entire process.
- Optimize machine utilization: Some machines can be used universally, others are only suitable for certain components. Efficient planning must prevent bottlenecks on a highly specialized machine from delaying the entire production process while other machines are underutilized.
An unexpected machine breakdown or a late delivery of materials can throw the entire production plan into disarray. Without intelligent, dynamic production planning, there is a risk of delays, rising costs and dissatisfaction among customers and employees. Modern planning systems use AI-supported algorithms to detect disruptions and make adjustments in real time so that a smooth process can be guaranteed despite unforeseen events.
Conclusion: Planning as a success factor
Whether in everyday life or in production – well thought-out, robust and efficient planning is the key to success. While personal planning can often be adapted flexibly, companies have to take numerous dependencies into account when planning production. The right planning determines adherence to deadlines, cost efficiency and ultimately the competitiveness of a company.
By using intelligent systems, planning processes can be optimized and unexpected events can be better managed. Because one thing is certain: no plan remains unchanged forever – neither in everyday life nor in production.
How do you come up with the niche of production planning? You can find the answer in this article.
Sources: Günter Wöhe (2013, S. 140) Einführung in die Allgemeine Betriebswirtschaftslehre
Kellner, F., Lienland, B., Lukesch, M. (2020). Produktionsplanung und -steuerung (PPS). In: Produktionswirtschaft . Springer Gabler, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-61446-4_3
