- The document discusses production planning and introduces key concepts like MRP, MRPII, and ERP systems. It explains that production planning prepares production plans using these systems to integrate materials planning, finance, and other functions. - Key aspects of production planning covered include bill of materials, machine/labor productivity, demand from orders/forecasts, available stock, lead times, safety stocks, and minimum order quantities from suppliers. - The full course on the Business Sense website provides more details on applying these concepts in detailed production planning.

1. The Essentials
- Production Planning -
HASH MANAGEMENT SERVICES LLP
CHENNAI
PH: 91766 13965

2. Overview
 ‘The Essentials’ series from Business Sense is an initiative to empower the students(freshers) and
professionals in performing more efficiently and effectively in the organization
 This document is a part of the “Certified Manufacturing Professional” course offered by Business Sense
 This course is aimed at bridging the gap between the institutions and the industry by providing the
fundamentals of manufacturing management which are not offered by any of our
institutions/curriculum
 This course would immensely benefit students and professionals who are joining manufacturing
organizations
 For more details, please visit www.businessense.in
 At Business Sense, we help clients through consulting engagements focusing on improving their
Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and Supply
Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
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3. Contents
 Section 1 – Introduction to Planning Processes
 Section 2 – Terminology
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4. Introduction to Production Planning
 Production Planning function is responsible for preparing the Plan for
the production
 Normally the planning is done through Manufacturing Requirements
Planning (MRP) or Manufacturing Resource Planning (MRP2)
 Enterprise Resource Planning (ERP) is the automated & integrated
version of MRP2 – Nowadays a lot of ERP packages are in use widely,
across industries
 For our easy understanding, the focus would remain on the MRP
systems
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5. Materials Requirement Planning (MRP)
 Material requirements planning (MRP) is a production planning and
inventory control system used to manage manufacturing processes.
 Evolved in1960’s
 An MRP system is intended to simultaneously meet three objectives:
 Ensure materials are available for production and products are available for delivery to
customers
 Maintain the lowest possible material and product levels in store
 Plan manufacturing activities, delivery schedules and purchasing activities
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6. Manufacturing Resource Planning (MRP2)
 MRP2 had evolved from MRP in the 80’s
 It encompasses the same methodology but includes integrated
materials planning, finance and human relations.
 It has a simulation capability to answer "what-if" questions
 Usage of Software is ideal for MRP2, since it is complex to build it
manually
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7. Enterprise Resource Planning (ERP)
 Integrated functions aids in better planning and
execution
ERP
 Both MRP and MRPII are still widely used, now
independently and as modules of more
comprehensive ERP systems MRP 2
1980’s
 Automatically calculates the materials
purchasing, production planning and delivery
MRP
schedules
1960’s
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8. Contents
 Section 1 – Introduction to Planning Processes
 Section 2 – Terminology
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9. Terminology
 The following are the various factors that should be considered while
planning for the production using an MRP system
Supply Company Demand
Bill of
Materials
Machine / Labor
Productivity
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10. Demand Side - Customer Order
 A confirmed order from the Customer specifying the following:
 Order No
 Product Required
 Quantity
 Delivery schedule
 Price
 Sample approval / Design / Technical drawings – depending on the industry
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11. Demand Side - Forecasted Demand
 For items which are manufactured based on the sales forecast, the
following items are required for planning:
 Product Required
 Quantity
 Region-wise / other break-up ( depending on the company)
 Shipment date
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12. Company Side – Bill of Materials
 Bill of Materials (BoM) is the list of all items
required to manufacture a product
Bill of Materials (BoM) for X
 It includes all raw materials, consumables, 1. Copper rod – 5 m
2. Steel rod – 10 m
3. Plastic Case – type A – 2 nos
packing materials with clear consumption 4. Plastic Case – type B – 1 no
5. Welding rod – 2 no
details to manufacture 1 product 6. ‘OK’ Sticker – 1no
7. Barcode label – 1no
8. Packing box – 1 no
 This must be created for each and every 9. Carton box – 1/6 no ( 6 items in 1 box)
finished product the company is delivering to
the customers
 An example for a BoM is demonstrated here
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13. Company Side – Machine / Labor
Productivity
 What is the time taken for manufacturing – manufacturing lead time
 Lead time of all manufacturing processes
 Machine run time + idle time + transportation + documentation etc (refer 7
wastes – explained in the production module)
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14. Supply Side – Stock in Hand
 This is the stock for the items present in hand
 Finished goods
 Raw materials
 For e.g. For a customer order of 500 items of ‘X’ product, if we have 100
nos of ‘X’ in stores, we can plan only for the remaining 400 nos
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15. Supply Side – Lead time, Safety stock &
Minimum Order Quantity
 This has been clearly explained in the Purchase and Stores modules
 Lead time(LT) – is the time an item takes to reach the factory gate from the time of raising a Purchase
Order (PO)
 Safety Stock (SS) – is the stock quantity/no of days of stock that should be planned to compensate for
any uncertainty in the delivery
 Minimum Order Quantity (MOQ) – There is a minimum order size and batch size for most of the
items. for. E.g. the supplier of welding rods might accept the order only a minimum of 500 rods are
ordered and the multiples will be in 100
 Minimum order is 500 nos. After that multiples of 100 ( an order of 575 nos will not be accepted;
either 600 nos or 500 nos should be ordered)
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16. Supply Side – Pending Order Status
 This refers to the pending Purchase Orders that are yet to be fulfilled by
the suppliers/ vendors
 One has to take this also in to account while planning for the materials
Detailed Production Planning and Step-by-Step examples are explained in the “Certified
Manufacturing Professional” course. To access login to www.businessense.in
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17. End of Free Content
 Please visit our website www.businessense.in to access the full course – “Certified Manufacturing
Professional”
 Our website also contains list of ready-to-use templates and report formats containing Charts and
pivot tables.
 Templates and report formats are available for Purchase, Stores, Production, Quality, Maintenance and
HR functions
 These templates come in excel /word and can be downloaded and used right away
 At Business Sense, we help clients through consulting engagements focusing on improving
their Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and
other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and
Supply Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
Copyright of Hash Management Services LLP www.businessense.in