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Effective Production Planning is essential in a manufacturing business and is the foundation on which the manufacturing organization operates. The manufacturing environment is one of constant change with conditions changing daily or hourly, customer emergencies, rush orders, machine breakdowns, quality problems, the list is endless. The only constant that can be counted on is "Murphy's Law", anything that can go wrong will. These changes don't happen once a week, they happen many times in the production planning cycle. There is no way that a manual system can possible keep up.

Production planning is a complex process that covers a wide range of activities that insures that material, capacity and human resources are available when needed. If I had to choose one definition for production planning I think Yogi Berra said it best "if you don't know where you are going, you might not get there", or more accurately, you probably won't get there. The only way to effectively know where you are going is to have a good process to generate a production plan or production scheduling document.

The production planning document typically starts with a sales forecast, or sales plan usually supplied by the marketing group. From the production planning document all other process's start. The production planning document can include material, labor, capacity, training and should include a backup plan should things go wrong. Each area of planning is dependent on the other and must be done in unison. It makes no sense to bring in material if production can't produce, or plan production if materials are not available. It requires a collaborative effort between different departments to effectively bring all aspects of the process together. 



The Production Planning Module includes both Material Requirements Planning (MRP) and Forecasting.  Production planning looks at actual demand, forecasted demand, and inventory requirements to generate manufacturing orders, suggested work orders and suggested purchase orders.  After approving the suggested orders, actual works order and/or purchase orders are generated.

Production Planning Overview

The following flowchart is an overview of the process for using the Production Planning module.


Production Planning

PLN enables the manufacturer to explode the firm work orders to generate material requirements for purchased items and subassembly items.  PLN processes data in sales orders, purchase orders, inventory control (on hand, reorder points, order multiples) and work orders in the system to generate suggested work orders (MORs) for subassemblies and suggested purchase orders (SPOs) for raw materials (purchased items).  The user can review this data on the screen or printed reports, then approve Manufacturing Orders and Suggested Purchase Orders quickly and easily to ensure that the proper inventory stock levels are maintained for subassemblies and purchased items.

PLN greatly reduces inventory planners time calculating requirements on a daily basis.  EM is powerful enough to generate production planning every day or multiple times a day if desired.  There is no more waiting for the weekend or running overnight processing is quick.  By knowing when inventory is required the manufacturer can reduce the amount of inventory necessary to stock on hand.  Thus saving much money in inventory carrying costs and saving on physical storage space.  These savings alone can pay for an entire manufacturing system within one year. 

PLN saves the purchasing department many hours per week in determining what to order, when to order, and how much lead time to allow.  Because it automatically generates purchase orders when approved, it saves time entering purchase orders.  This allows purchasing more time to find better suppliers and/or better pricing.

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The Macro Production Planning and Control Systems follow very simple and well established principles.

  •   To produce the Correct Product to meet demand at the required time

  •   To do so at the lowest Practical Cost

  •   To do so with the shortest practical lead times                                                                       

  •   To do so with the maximum degree of simplicity and flexibility

  •   To make the available resources as efficient as possible

The system is designed to allow a wide range of facilities and options.  These are not compulsory and the user need only use the facilities that he requires.


Main Objectives:

  • To ensure that the correct products are manufactured, at the lowest practical cost, to be available at the right time.

  • Resource Capacity Planning to enable the user to analyse the available capacity of men and machines against capacity required by the order situation or the actual production plan.

  • To assist in the translation of the over-all requirement into a production schedule.  

  • To provide facilities to plan the production schedule in detail and ensure that production resources are fully utilised without unnecessary under or over-utilisation.

  • Material Requirement Planning to enable the user to correctly schedule the ordering of raw  materials to meet the requirements of the production schedule.  

  • To achieve this the Macro system provides three main subsystems:

  • Product Net Requirement Planning

  • Production Planning including Materials Planning and Resource Planning.

  • Production Scheduling 


Product Requirement Planning
The first phase of Production Planning is deciding what products to manufacture.   
The basic planning reports to provide this information are:-  

Sales Forecast Sub-system.  This is an optional facility which allows the recording of Sales Forecasts by product or product group by period (week or month) for as many periods needed for the planning horizon.  This facility is used for companies who manufacture fully or partially to a sales or manufacturing plan.

Master Planning Facility  allows the user to load a production budget by product by period (week or month) for as far in the future as needed.  The Master Plan is basically a long term planning aid.  Materials planning and capacity planning can be carried out against the Master Plan.  

Order System Reports.  The Customer Order System records all orders received for future delivery.  The order system provides many different types of order analysis including time based delivery requirement analysis  


Current Work in Progress
Stock Requirement and Availability Report.
.  The Macro system basis much of its product requirement planning facilities on the concept of stock and availability ie. what stock is available, and when it is available.  This takes into account the stock on hand, stock becoming available at a later date and the current and future demand on that stock. The stock and availability is the key report which identifies, by time period, the stock that is required and the stock that will be available, with stock shortfalls by period, cumulative and in total.  Requirements are obtained from the Sales Forecast and/or the Customer Order Book.  Availability is determined from the Stock on Hand, the Purchase Orders Outstanding, Production Plan and Work in Progress.  This report has the ability to explode a product to an unlimited number of levels and to carry out independent stock and availability  calculations at each level.  i.e.. it operates at the component level as well as the product level.  The result of this process is available on a report or as an on-line inquiry.

Materials Requirement Planning The objective of the Material Requirements Planning is to ensure that the Materials required to complete the planned production are available, and if they have to be ordered, that they should be ordered in good time, and received before they are needed.  Materials Requirement Planning Reporting is the next level of breakdown of the Production Plan. 
Reports are available at several levels:-  

  • M.R.P. based on orders received but not dispatched (or on the Production Master Plan). This report is produced well before production start to check materials on hand, and on  order, to requirements based on the required production level.  This is normally a long term planning report.  

  • MRP based on the Stock and Availability Report

  • M.R.P. based on the actual production plan.  The source of the quantities, and product to be produced is by production period.  It is normally printed as soon as a detailed production plan is loaded for a particular period.  The  M.R.P. report has the same explosion and multi-level facilities as the Stock Requirement and Availability Report.  i.e.  Explosion to an unlimited number of levels and full Stock and Availability planning at  each level.

  • All Material Requirements Reports follow the same basic principles.  The product requirement is determined from one of several optional sources. (Stock Requirement and Availability Shortfall, Production Plan, Master Production Plan, Sales Forecast, Order Book etc.)  The system uses the Bill of Materials, which describes the exact make-up of each product to determine the unit material requirements.  Stock on hand is obtained from the Raw Materials Stock Master data base.  Stock on order is obtained from the Purchase Order data base .  The M.R.P. reports are time based and show shortfalls and availability/net shortfall to as many levels of explosion as required.  All shortfalls are shown in two periods, the period required, and the period in which ordering is required to ensure on time delivery.


Resource Capacity Planning is similar to Materials Requirement Planning, except that the resources that are analysed are capacity related. 

These can be:-

  • Machines or Processes or Cost Centers.  Machines can be recorded individually or by machine group.  Any other production facility can be defined as a production cost centre.  

  • Labour may be recorded in as many categories as required.  

The capacity information (number of installed units, capacity hours per production period resource efficiency rating and availability) is stored on the relevant record in the Resource Master File.  This enables the system to calculate the total availability of each resource.

The Bill of Materials/Standard Costing System contains details of the resources required to manufacture each product.  The combination of the Production Plan quantities and the resource requirement ex the Bill of Materials enables the system to calculate the total requirement of each resource.  
Planning Reports are all time period based.  Resource planning can also be expanded  to an unlimited number of levels.
Planning Reports are available from:-

  • Stock and Availability Data Base

  • The Production Master Plan

  • Production Job Master File

  • The Master Scheduling Master File  


Master Scheduling System  An optional Master Scheduling System will allow the user to carry out Capacity Planning on a closed loop finite capacity basis.  The plan may be modified and replanned as often as required until an acceptable plan is created.  This may then be copied to the Production Job Master File to become the actual plan.
This facility creates the actual job schedule, job by job, on a practical basis and provides finite capacity planning i.e. once a resource is fully loaded for a period later jobs are planned to commence at a later date when the resource is available for use.   The system provides for final product manufacture and sub-assembly. i.e. the time relationship between component manufacture and the final product is supported.

The system contains a model of the companies production resources and a full factory calendar for the period being planned.   This model is used to create a model of the capacity available (fully time based).  The Production Jobs, or Stock and Availability reporting is used, with the Bill of Materials, or the Production Routing, to create a model of the capacity required (also time based).
The scheduling system matches requirement to availability on a finite basis (ie. a resource cannot be overloaded - over use of capacity moves the process to a later time period, so that the effect of over utilisation is late delivery)

Information that may be modified for each trial schedule is as follows:-

  • Production Quantities

  • Production Units or Machines to be used in the manufacturing process  

  • Production Planning level i.e. The level of detail to which the current trial plan must be calculated

  • Job Priorities

  • Job Planned Start Dates  

  • Efficiency of machines or processes

  • Available Capacity                                                                  

  • Utilisation time of processes




  Production Planning:

Production planning enables the planner to create feasible production plans across the different production locations (also with subcontractors) to fulfill customer demand in time and meet customer expectations. For the long- and medium-term time horizon, rough-cut planning is based on time buckets and determines requirements of resources (machines, humans, and production resource tools) and materials. Solvers, real-time data, and high supply chain visibility (KPIs, alerts) support the planner's decision-making process.

To fully utilize this functionality, the following products should be evaluated
  Detailed Scheduling:

Detailed scheduling delivers optimized order sequences that can be released for production. Solvers simultaneously take into account constraints and costs to schedule the optimized order sequence. Dynamic alerts and order pegging structures improve visibility. Due to the seamless integration with the execution and inventory management system, material shortages or critical resource situations can be detected immediately and the schedules can be manually or automatically adjusted accordingly.

Detailed Scheduling fulfills requirements from the process and discrete industries (task-based and job scheduling for configurable and non-configurable products in an MTS and/or MTO environment; block planning, campaign planning, push production for process industries).

The SAP APO Optimization Extension Workbench (APX) provides a new means of making optimization strategies more flexible. The primary purpose of the workbench is to extend the standard planning tools in SAP APO to include user-specific optimization components. These individual optimizers are launched directly from SAP APO. Together with the standard optimizers and heuristics, they form one planning system. This system provides the right degree of flexibility to be adapted to the precise needs of the user.

In addition to the functional integration of the external optimizer in the standard SAP APO component environment, the optimizer is to be incorporated closely so that it can freely use the SAP APO data stock (from the liveCache and the database server). The optimization results can then be returned to the SAP APO dataset.

To fully utilize this functionality, the following products should be evaluated
  Multilevel Supply & Demand Matching:

Capable-To-Match planning uses constraint-based heuristics to conduct multi-site checks of production capacities and transportation capabilities based on predefined supply categories and demand priorities. The aim of the CTM planning run is to propose a feasible solution for fulfilling demands.

The CTM planning run is powered by the CTM engine, which matches the prioritized demands to the available supplies in two phases. First, it builds the CTM application model based on the master data that you have entered. It then matches supply to demand on a first come, first serve basis, taking production capacities and transportation capabilities into account.

To fully utilize this functionality, the following products should be evaluated
  Materials Requirements Planning:

Materials Requirements Planning (MRP) is part of the production planning process and generates replenishment schedules for all manufactured components, intermediates, purchased parts, and raw materials. MRP sets due dates for production orders and purchase requisitions through lead-time scheduling, depending on buffers, operation times, lot-sizing rules, etc.. The planning run is supported by optimization tools when resource situations can be taken into account simultaneously.

To fully utilize this functionality, the following products should be evaluated





The production and planning module provides for accurate and efficient maintenance of product Bill of Materials BOM and process formulations (routing), thus achieving strict formula/recipe accuracy and accurate production costing data.

One important aspect of this module is the capabilities of product actual cost based on direct cost, and comparison to the product standard cost.
The production module provides a highly accurate product structure definition the same way the product is actually produced. This accuracy helps to monitor the issued materials needed for production and the actual number of hours used for production and finally the production costs. The multi-level BOM data is also utilized to generate Materials Requirement Plans MRP through exploding the Master Production Schedule MPS demands. Both MPS and MRP are generated at anytime according to business needs and  take all open orders into requirements netting calculation to generate a production plan and a purchasing plan.

The planning system allows changes to the plan according to customer needs or forecast changes as well as demand fluctuations due to marketing promotions or seasonality factors. The MRP can be generated anytime to reflect changes of order data, inventory status, or inventory policies thus ensuring that sufficient quantities of materials arrive on time at the plant to meet customer due dates.

    • Definition of final product and sub-assembly bills of materials (BOM)
    • Definition of product routings, operations and work centres
    • Entry of sales forecast for sales items as production planning input
    • Shop orders linked to inventory transactions (Multiple and single issue)
    • Standard and actual costing of products (Material and labor)
    • Automatic calculation of product standard cost
    • Entry of actual materials and hours per operation to calculate product actual cost
    • User defined shop calendars for each work center
    • Support of product lot control and automatic material allocation to shop orders
    • Support of product lot tracing from product up-to vendor shipment
    • Generation and editing of Master Production Schedule (MPS) for final products
    • Generation and editing of Materials Requirement Plan (MRP) for raw materials
    • Posting of shop floor transactions to general ledger module
    • Multiple inquiries of open orders, materials shortages, planning and work center capacity
    • Production and planning reports and master files listing