How to Plan Materials in Manufacturing?
We define Materials Management as organizing the entire lifecycle of materials: from procurement to storage, movement, stocking and use in production. In this respect, materials management is an important function within supply chain management.
By materials we mean production inputs such as raw materials and components used in manufacturing processes. Generally, once a product is completed it falls outside the scope of materials planning.
Materials Planning is the process of determining in advance when, in what quantity and at what quality the materials required in production will be needed.
Material Planning covers raw material and component needs before production,
Production Planning covers processes for semi-finished and finished products,
Logistics & Distribution Planning covers storage and shipment of products.
Although materials and production planning are defined as distinct tasks, they are activities with reciprocal information flow and must be executed in an integrated manner.
Changes on the demand side affect production plans and therefore materials plans. Changes in material availability affect material plans and therefore, production plans and service performance.
Uninterrupted production depends on procuring the right materials at the right time and in the right quantities. Wrong decisions in materials planning can lead to production stoppages, delivery delays or excessive inventory costs.
For these reasons modern businesses do not run materials and production planning independently; these processes must be managed in an integrated way.
Strong coordination between materials and production planning provides a competitive advantage, especially in sectors with high demand variability or long/variable lead times.
image:
Freepik,
Freepik License
What are Production and Materials Planning Activities?
Based on demand plans (orders + forecasts), the traditional approach to prepare production and materials plans is generally as follows:
To learn more on developing demand plans, click here.
1. Production Planning
Also called as Master Production Scheduling (MPS).
Time and quantity planning is done by products. For products in the demand plan, it is decided which product will be produced, in which period and in what quantity.
When preparing this plan, inputs such as forecasts, customer orders and stock positions are considered along with production constraints like lot sizes.
To learn more about production planning, click here.
2. Rough-Cut Capacity Planning
Rough-Cut Capacity Planning (RCCP) evaluates the feasibility of production plans by analyzing alignment with critical resource capacities.
At this stage, production plans and current capacity data are used to determine when and to what extent critical or bottleneck resources (machines, labor, etc.) will be used.
3. Material Requirements Planning
Material Requirements Planning (MRP) is the planning activity that ensures required materials in the production process are produced or procured in the right quantities at the right times.
This stage uses production plans, open orders and Bill of Materials (BOM) information to determine which materials are needed, when and in what quantities.
4. Capacity Requirements Planning
Capacity Requirements Planning (CRP) aims to ensure that required capacity is available in time and used effectively according to material requirements plans.
At this stage, production plans and existing capacity data are used to evaluate the periodic workloads of all relevant resources.
What are Innovative Approaches in Production and Materials Planning?
Advances in information technologies help make better decisions in production and materials planning. Operations Research (OR) techniques are particularly effective in solving complex planning problems.
Decision support mechanisms such as optimization and simulation can be integrated into planning processes to speed up and improve decision making.
Organizations should first identify their needs in production and materials planning and design/configure their process flows. Afterwards, evaluating and implementing tools and software that facilitate planning can be done more effectively.
To learn more on optimization techniques, click here.
Is Just-in-Time (JIT) Applicable to Production and Materials Planning?
Kanban systems, the foundation of Just-in-Time (JIT) manufacturing, are used in materials planning to implement pull-based production and procurement. The core idea is to trigger material replenishments and transfers according to actual demand or the consumption rate on the production line.
Kanbans —whether physical containers or digital signals— trigger replenishment orders when materials or semi-finished products are consumed. This allows continuous monitoring of inventory levels and timely fulfillment of material needs.
In practice, inventory levels are not continuously monitored; orders or production are triggered when a signal appears.
Whether Kanban or other JIT practices are suitable for a given materials planning situation is a decision manufacturers should analyze carefully. Benefits should be weighed against organization's dynamics, constraints and capabilities.
What does Optimum Planlama Offer for Materials Planning?
Optimum Planlama provides hands-on trainings and consulting services to help design/configure materials and production planning processes, as well as determine required tools and software.
We recommend in-house workshops for teams of manufacturers with multiple sites or complex supply/production processes.
Our materials and production planning services and related offerings are listed below.
To arrange an in-house training for your organization or to join a public session, request our proposal.