PPIC production planning inventory control

1. Production Planning
and Control: Theories
and Best Practices
HENDRO WICAKSONO

2. Contents
I. World’s Defense Industry
II. Why Production Planning and
Control?
III. Production Planning and
Control Tasks and Techniques
IV. Implementation Ecosystems:
Innovation and Digital
Ecosystem

3. I.
World’s Defense
Industry
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4. Largest arms exporters
Rank 2016-
2021 Supplier
2016-
2021
1 United States 62367
2 Russia 32130
3 France 16565
4 China 8708
5 Germany 8660
6 United Kingdom 5386
7 Italy 4803
8 Israel 4789
9 South Korea 4313
10 Spain 3869
11 Netherlands 3027
12 Turkey 1489
13 Ukraine 1457
14 Sweden 1333
15 Switzerland 1174
16 Australia 961
17 Canada 746
18 UAE 671
19 Belarus 597
20 South Africa 534
21 Brazil 519
22 Norway 494
23 Czechia 390
24 India 348
25 Portugal 291
26 Jordan 227
27 Indonesia 222
28 Finland 180
29 Belgium 177
30 Serbia 128
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
(SIPRI 2021)

5. Largest arms importers
Rank 2016-2021 Recipient 2016-2021
1 India 18393
2 Saudi Arabia 17906
3 Egypt 9472
4 Australia 8320
5 China 7698
6 Qatar 7098
7 South Korea 6702
8 Algeria 6402
9 Pakistan 4908
10 UAE 4734
11 Japan 3921
12 United States 3686
13 United Kingdom 3656
14 Iraq 3453
15 Israel 3196
16 Viet Nam 2730
17 Indonesia 2696
18 Singapore 2511
19 Italy 2405
20 Turkey 2368
21 Norway 2340
22 Netherlands 1903
23 Thailand 1871
24 Bangladesh 1825
25 Oman 1653
26 Morocco 1638
27 Afghanistan 1454
28 Philippines 1405
29 Canada 1398
30 Kuwait 1381
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
(SIPRI 2021)

6. Top export destinations of German defense
industry
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
(Statista 2021)

7. Top exporters
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Ra
nk
Country Value (Billion
USD)
1 China 106.2 (16.4%)
2 United
States
56.4 (8.7%)
3 Germany 44.6 (6.9%)
4 Ireland 38 (5.9%)
5 Belgium 34 (5.2%)
Ra
nk
Country Value (Billion
USD)
1 Germany 139.1 (19.6%)
2 Japan 85.6 (.12%)
3 United
States
54.7 (7.7%)
4 South
Korea
44.3 (6.2%)
5 Mexico 30.9 (5.6%)
Top Machine Tool Exporters Top Chemical Exporters 2021 Top Car Exporters 2021
(World's Top Exports 2022)

8. Top 100 world companies in defense industry
(SIPRI 2021)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

9. II.
Why Production
Planning and Control?
This Photo by Unknown Author is licensed under CC BY-SA-NC
This Photo by Unknown Author is licensed under CC BY-SA-NC

10. The triangle of production objectives
Costs
Quality
Time
Low production costs
High product quality
short lead times in the production and order processing
[Himpel 2004]
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

11. What make production very complex?
Market demands
• Short product lifecycle
• Fluctuating variation
Coordination
• Production in multiple location
• Synchronous delivery
• Just in Time
• Globalization
Restrictions
• Environment friendliness
• Resource efficiency
• Regulations
Variety
• Product variation
• Alternative production process
• New materials
Quality
• Security
• Tolerance
• Maintenance costs
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

12. What is production planning and control (PPC)?
Methods and tools to plan, schedule, and
control activities within the transformation of
inputs into outputs (products and/or services).
customer view
manufacturer
view
item production facilities
labor
customer
order volume
time limit
product
item
process
• volume
• time limit
capacity
unit
[H.-H. Wiendahl]
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

13. Planning vs. control
✓ What to produce? The outputs
✓ How much? The quantity/volume
✓ When? Time frame
✓ Where? Location, machine
✓ Who? Human resource
✓ How? Materials, tools
✓ How best to produce
it?
Execute against plan
✓ What are the
challenges/problems
in execution?
Priorities, constraints,
conflicts, errors
✓ What is the state? Monitoring, tracking
Production control
Production planning
Image: agidens
Image: SAP
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

14. What could happen if there is no production
planning and control?
Low productivity
Mismanagement
Delayed production
and delivery
Unorganized
working
Time and resource
wastage
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

15. General terms of planning
horizon
frequency
planning unit
closing date
duration
object
period of time for which the planning is valid
number of planning executions per unit of time with constant
planning horizon
fractions of time in which the horizon is split
the day from which on the planning is valid
span of time which is necessary to create a plan
subject of the planning
beginning of
planning
closing date
planning horizon
planning frequency
duration of
planning
time
[Nyhuis]
planning
unit
long term
medium term
short term

16. II.
Production Planning
and Control Task and
Techniques
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17. Production planning and control hierarchy
Demand Forecasting
Capacity planning Workforce planning
Aggregate planning
WIP/ quota setting
Order management
Sequencing & scheduling
Shop floor control
Production tracking
[Hopp & Spearman]
Strategic
Tactical
Control
Material requirement planning

18. Demand Forecasting
Objectives
Inputs
Marketing and sales information, e.g. external factor (interest rates, average income, policies),
historical demands
Outputs
Future demands, e.g. quantity
▪ To estimate the types and quantities of future demand of production
▪ Prerequisite for every planning process since planning requires basis of known or assumed quantities.
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

19. Demand forecasting
Forecasting
techniques
Historically oriented
techniques
Future oriented
techniques
quantitative
techniques
qualitative
techniques
quantitative
techniques
qualitative
techniques
Examples:
▪ Time series analysis
▪ Regression
▪ Deep learning
▪ Causal
▪ manual forecasting
(“eyeballing”)
▪ extrapolation from
known demand
▪ Delphi method
▪ Surveys among
customers and/or
industry experts
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

20. Demand
Forecasting
Framework
Find historical
data
Start
Historical data exist?
Find a similar
product
Similar product
exists?
Historical analogy
yes
Other qualitative methods
(market research, delphi,
consensus)
no
no
Plot data/ find
pattern
Seasonal pattern?
Holt Winters
yes
yes
Moving average
Simple
exponential
smooting
Double
exponential
smooting
Trend exists?
no
no
yes
Calculation and
comparison of
forecast errors
Finish
Time series?
Regression
SARIMA
yes
no
yes
ARIMA
GAM/Prophet
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Methods for multiple settings:
▪ Deep learning, e.g. LSTM
▪ Causal machine learning

21. Capacity planning
Objectives
Inputs
Outputs
Demand forecast
The needs of equipment and facilities, decision to add/change/reduce the capacity
To ensure that the production has adequate capacity including
machines, factory floor space, power supplies, air/water/chemical supplies,
spare parts, etc.
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

22. Capacity planning
100% utilization
Cycle
time
Traditional Modern
100% utilization
Cycle
time
Production
feasible
Production
infeasible
Yes or No feasibility
There is no point where
production is infeasible
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

23. Capacity planning
Resource types
▪ Products/materials
▪ Workforce
▪ Tools, e.g. machines, transportation, etc.
[OptimoRoute 2021]
Measure
Analyze
Formulate
Strategies
▪ Lag strategy: based on true demand, not projected. Risk: delivery
delay
▪ Lead strategy: based on demand forecast. Risk: waste resource
▪ Match strategy: based on both true and forecasted demand, adding
capacity incrementally
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

24. Match strategy
Demand forecast
Capacity level
(infrequent expansion)
Large chunk
Small chunk
Volume
Time
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

25. • Decision tree: to choose the best decision to modify the capacity in long term, e.g. extend factory vs.
move factory vs. offshoring, etc.
• Utilization and cycle time: to measure the performance of a production facility, e.g. factory,
production line, production islands.
• Machine learning: capacity fulfillment prediction based on demand forecasts and resource utilization
data.
Capacity planning methods and tools
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

26. Workforce planning
Outputs
Inputs
Demand forecast, capacity plan
Objectives
To determine what labor is required to support a (long-term) production plan
Labor plan, e.g. standard labor hours, extra labor hours
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

27. Aggregate planning
Objectives
Inputs
Demand forecast, capacity plan economic parameters (material costs, wages, subcontract costs)
To specify the optimal combination of production rate, workforce level, inventory on hand,
subcontracting, etc.
Outputs
Aggregate plan: production units, inventory units, sales units
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

28. Aggregate and workforce planning
Aggregate and Workforce
Planning Method
Cut and Try:
Calculate all different scenarios
Mathematical Approach, e.g.
(Mixed Integer) Linear Programming,
Reinforcement Learning
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

29. Demand management
Objectives
Inputs
Customer demands
To filter and adjust customer orders into a form that produces a manageable master production schedule
Outputs
Master production schedule
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

30. Material requirement planning
Objectives
Outputs
Inputs
Aggregate plan, master production schedule, bill of materials, inventory record
To breakdown the aggregate production plan into number of parts, components, and materials
needed to produce a product (what, when, by whom, how many/much).
Material plan: time and quantity to produce or/and to purchase
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

31. Material requirement planning
Forecasts
of demand
from
customers
Orders
from
customers
Engineering
design
changes
Inventory
transactions
Aggregate
production
plan
Master
productions
chedule
Material
planning
(MRP)
Inventory
records file
Bill-of-
materials
file
Capacity
of
resources
MRP Explosion Method
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

32. Example of Bill of Materials for MRP
1
2
3
Offroad
Military
Bike (A)
Wheel (D)(1)
Frame (C) (1)
Wheel D (2)
Onroad
Military
Bike(B)
Frame (C) (1)
Wheel (D) (2)

33. Example of MRP Explosion

34. Sequencing and Scheduling
Objectives
Inputs
Master production schedule
To translate the master production schedule (MPS) into a work schedule that will be implemented
in near term, e.g. next week, day, or shift.
Outputs
Work schedule
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

35. Sequencing and scheduling
Source: podsmart
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

36. Shop floor control
Objectives
Inputs
Working schedule
To control the real-time flow of material in accordance with the working schedule
Outputs
Work in Progress
Image: Glassdoor
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

37. Why shop
floor control?
growing discrepancies
between the original plan and
the current situation:
frequently rescheduling
cycles
queues in front of the
work centres:
• high process
inventory
• express orders
increase of throughput times
and higher lead time
deviation:
bad schedule reliability
deficient capacity
synchronisation:
bottlenecks
fluctuating orders on
hand
short term changes (e.g.
customer desired date)
high market
dynamics
short delivery
times
customer-specific
production
growing
variety of
products
(Scherer)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

38. Tools for shop control
Daily dispatch list
Status and exception
reports
Rework reports
Output/Input control
report
Performance
summary reports
Scrap reports
Anticipated delay
report
Shortage list
Tools for shop
control
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

39. Daily dispatch list
Status and exception report
Input/output control report
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

40. Production tracking
Outputs
Inputs
Work schedule, production log, WIP
Objectives
To measure actual progress against the work schedule.
Progress status.
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

41. Production tracking
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

42. IV.
Implementation
Ecosystems
IV. A. Innovation Ecosystem
IV. B. Digital Ecosystem
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This Photo by Unknown Author is licensed under CC BY

43. IV.A.
Innovation
Ecosystems
European Collaborative Innovation Supported
by European Defense Fund (EDF)
This Photo by Unknown Author is licensed under CC BY-ND
This Photo by Unknown Author is licensed under CC BY-ND

44. • Collaborative R&D by including disruptive technologies: close technological gap
• Public-private partnership investments
• Synergies between civil, defence, and space research: reduce fragmentation of defence industry and
industrial landscape
• Integration of SMEs to defence industrial ecosystems
• Synergies between demand and supply sides
Innovation goals
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

45. Collaboration approach to defence capabilities
building
(Arbault & Gartier 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

46. EDF: Support to entire innovation funnel
(The EDF 2021)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

47. European Defense Fund Implementation
Governance
(Arbault & Gartier 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

48. Work Programme
(Arbault & Gartier 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

49. How to encourage private sector in the
technology development?
(Arbault & Gartier 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

50. IV.B.
Digital Ecosystem
Gaia-X: Data Infrastructure for Digital
Ecosystem
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51. Open, transparent and secure digital ecosystem, where data and services can be made available,
collated and shared in an environment of trust.
Actors: companies, research institutions, associations, administrations, and politics
What is Gaia-X?
Gaia-X Organization Pillars
Association Hubs Community
Develops policy and rules, technical
and regulatory frameworks
Central contact points for interested parties:
think tank and grass root supporters
Everyone contributing to the
establishment of a federated data
infrastructure.
(Gaia-X 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

52. Gaia-X core elements
Federation Service
Standards
Data Spaces
Business Services
Minimum technical requirements necessary to set
up and operate a cloud-based self-sovereign data
infrastructure ecosystem.
(Gaia-X 2022)
Enables for the portability, interoperability, and
connectivity of infrastructure, applications, data and
the service delivery
Relationships in data sharing and storage
Common rules for collaborations within and across
sectors to minimize challenges and risks, create new
services and opportunities for innovation and scaling
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

53. Federation Services
(Gaia-X 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

54. • Interoperability between data
• Opportunities to user-friendly services
• Exchangability among different service providers in a sovereign data market
• Collaboration and data exchanges in cloud-edge environments
Standards
What do standards enable?
• Regulatory standards
• Industry specific standards
• Technical standards
Types of standards
(Gaia-X 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES

55. Gaia-X data spaces
(Gaia-X 2022)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES