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Production Plan in Business Plan: A Comprehensive Guide to Success

Last Updated:  

July 5, 2024

In any business venture, a solid production plan is crucial for success. A production plan serves as a roadmap that outlines the steps, resources, and strategies required to manufacture products or deliver services efficiently. By carefully crafting a production plan within a business plan, entrepreneurs can ensure optimal utilisation of resources, timely delivery, cost efficiency, and customer satisfaction. In this article, we will delve into the intricacies of creating an effective production plan in a business plan , exploring its key components, strategies, and the importance of aligning it with overall business objectives .

Key Takeaways on Production Plans in Business Planning

• A production plan : a detailed outline that guides efficient product manufacturing or service delivery.
• Importance of a production plan : provides a roadmap for operations, optimises resource utilisation, and aligns with customer demand.
• Key components : demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance.
• Strategies : lean manufacturing, JIT inventory, automation and technology integration, supplier relationship management, and continuous improvement.
• Benefits of a well-executed production plan : improved efficiency, reduced costs, enhanced product quality, and increased profitability.

What is a Production Plan?

A production Seamless Searches plan is a detailed outline that specifies the processes, resources, timelines, and strategies required to convert raw materials into finished goods or deliver services. It serves as a blueprint for the entire production cycle, guiding decision-making and resource allocation. The production plan considers factors such as demand forecasting, capacity planning, inventory management, and quality assurance to ensure efficient operations and optimal customer satisfaction.

Why is a Production Plan Important in a Business Plan?

The inclusion of a production plan in a business plan is vital for several reasons. First and foremost, it provides a clear roadmap for business operations, helping entrepreneurs and managers make informed decisions related to production processes. A well-developed production plan ensures that resources are utilised efficiently, minimising wastage and optimising productivity. This is particularly important for any startup platform aiming to streamline its production processes and achieve sustainable growth.

Additionally, a production plan allows businesses to align their production capabilities with customer demand. By forecasting market trends and analysing customer needs, businesses can develop a production plan that caters to current and future demands, thus avoiding overstocking or understocking situations.

Furthermore, a production plan helps businesses enhance their competitive advantage. By implementing strategies such as lean manufacturing and invoice automation , companies can streamline their production processes, reduce costs, improve product quality, and ultimately outperform competitors.

Key Components of a Production Plan

To create an effective production plan, it is crucial to consider several key components. These components work together to ensure efficient operations and successful fulfilment of customer demands. Let's explore each component in detail.

Demand Forecasting

Demand forecasting is a critical aspect of production planning. By analysing historical data, market trends, and customer behaviour, businesses can predict future demand for their products or services. Accurate demand forecasting allows companies to optimise inventory levels, plan production capacity, and ensure timely delivery to customers.

One approach to demand forecasting is quantitative analysis, which involves analysing historical sales data to identify patterns and make predictions. Another approach is qualitative analysis, which incorporates market research, customer surveys, and expert opinions to gauge demand fluctuations. By combining both methods, businesses can develop a robust demand forecast, minimising the risk of underproduction or overproduction. Utilising a free notion template for demand forecasting can further streamline this process, allowing businesses to organise and analyse both quantitative and qualitative data efficiently in one centralised location.

Capacity Planning

Capacity planning involves determining the optimal production capacity required to meet projected demand. This includes assessing the production capabilities of existing resources, such as machinery, equipment, and labour, and identifying any gaps that need to be addressed. By conducting a thorough capacity analysis, businesses can ensure that their production capacity aligns with customer demand, avoiding bottlenecks or excess capacity.

An effective capacity plan takes into account factors such as production cycle times, labour availability, equipment maintenance, and production lead times. It helps businesses allocate resources efficiently, minimise production delays, and maintain a consistent level of output to meet customer expectations.

Inventory Management

Efficient inventory management is crucial for a successful production plan. It involves balancing the cost of holding inventory with the risk of stockouts. By maintaining optimal inventory levels, businesses can reduce carrying costs while ensuring that sufficient stock is available to fulfil customer orders.

Inventory management techniques, such as the Economic Order Quantity (EOQ) model and Just-in-Time (JIT) inventory system, help businesses strike the right balance between inventory investment and customer demand. These methods consider factors such as order frequency, lead time, and carrying costs to optimise inventory levels and minimise the risk of excess or insufficient stock.

Resource Allocation

Resource allocation plays a pivotal role in a production plan. It involves assigning available resources, such as labour, materials, and equipment, to specific production tasks or projects. Effective resource allocation ensures that resources are utilised optimally, avoiding underutilisation or over-utilisation.

To allocate resources efficiently, businesses must consider factors such as skill requirements, resource availability, project timelines, and cost constraints. By conducting a thorough resource analysis and implementing resource allocation strategies, businesses can streamline production processes, minimise bottlenecks, and maximise productivity.

Quality Assurance

Maintaining high-quality standards is essential for any production plan. Quality assurance involves implementing measures to monitor and control the quality of products or services throughout the production process. By adhering to quality standards and conducting regular inspections, businesses can minimise defects, ensure customer satisfaction, and build a positive brand reputation.

Quality assurance techniques, such as Total Quality Management (TQM) and Six Sigma , help businesses identify and rectify any quality-related issues. These methodologies involve continuous monitoring, process improvement, and employee training to enhance product quality and overall operational efficiency.

In addition to the core components of a production plan, it's also important for businesses to consider the broader aspects of their business strategy, including marketing and advertising. Understanding the costs and returns of different marketing approaches is crucial for comprehensive business planning . For instance, direct response advertising costs can vary significantly, but they offer the advantage of measurable responses from potential customers. This type of advertising can be a valuable strategy for businesses looking to directly engage with their target audience and track the effectiveness of their marketing efforts.

Strategies for Developing an Effective Production Plan

Developing an effective production plan requires implementing various strategies and best practices. By incorporating these strategies into the production planning process, businesses can optimise operations and drive success. Let's explore some key strategies in detail.

Lean Manufacturing

Lean manufacturing is a systematic Seamless Searches approach aimed at eliminating waste and improving efficiency in production processes. It emphasises the concept of continuous improvement and focuses on creating value for the customer while minimising non-value-added activities.

By adopting lean manufacturing principles, such as just-in-time production, standardised work processes, and visual management, businesses can streamline operations, reduce lead times, and eliminate unnecessary costs. Lean manufacturing not only improves productivity but also enhances product quality and customer satisfaction.

Just-in-Time (JIT) Inventory

Just-in-Time (JIT) inventory is a strategy that aims to minimise inventory levels by receiving goods or materials just when they are needed for production. This strategy eliminates the need for excess inventory storage, reducing carrying costs and the risk of obsolete inventory.

By implementing a JIT inventory system, businesses can optimise cash flow, reduce storage space requirements, and improve overall supply chain efficiency. However, it requires robust coordination with suppliers, accurate demand forecasting, and efficient logistics management to ensure timely delivery of materials.

Automation and Technology Integration

Automation and technology integration play a crucial role in modern production planning, as well as mobile app development . By leveraging technology, businesses can streamline processes, enhance productivity, and reduce human error. Automation can be implemented in various aspects of production, including material handling, assembly, testing, and quality control.

Continuous Improvement

Continuous improvement is a fundamental principle of effective production planning. It involves regularly evaluating production processes, identifying areas for improvement, and implementing changes to enhance efficiency and quality.

By fostering a culture of continuous improvement, businesses can drive innovation, optimise resource utilisation, and stay ahead of competitors. Techniques such as Kaizen, Six Sigma, and value stream mapping can help businesses identify inefficiencies, eliminate waste, and streamline production workflows.

Frequently Asked Questions (FAQs)

What is the role of a production plan in business planning.

A1: A production plan plays a crucial role in business planning by providing a roadmap for efficient production processes. It helps align production capabilities with customer demand, optimise resource utilisation, and ensure timely delivery of products or services.

How does a production plan affect overall business profitability?

A2: A well-developed production plan can significantly impact business profitability. By optimising production processes, reducing costs, and enhancing product quality, businesses can improve their profit margins and gain a competitive edge in the market.

What are the common challenges faced in production planning?

A3: Production planning can present various challenges, such as inaccurate demand forecasting, capacity constraints, supply chain disruptions, and quality control issues. Overcoming these challenges requires robust planning, effective communication, and the implementation of appropriate strategies and technologies.

What is the difference between short-term and long-term production planning?

A4: Short-term production planning focuses on immediate production requirements, such as daily or weekly schedules. Long-term production planning, on the other hand, involves strategic decisions related to capacity expansion, technology investments, and market expansion, spanning months or even years.

How can a production plan be adjusted to accommodate changes in demand?

A5: To accommodate changes in demand, businesses can adopt flexible production strategies such as agile manufacturing or dynamic scheduling. These approaches allow for quick adjustments to production levels, resource allocation, and inventory management based on fluctuating customer demand.

In conclusion, a well-crafted production plan is essential for business success. By incorporating a production plan into a comprehensive business plan, entrepreneurs can optimise resource utilisation, meet customer demands, enhance product quality, and drive profitability. Through effective demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance, businesses can streamline production processes and gain a competitive edge in the market.

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What is production planning and how to do it? A comprehensive guide.

Production planning is crucial for efficient production. Let’s explore all about it and see how to handle it in ERP software.

Production planning is vital to fulfil orders on time. If you don’t know your stock levels, workstation availability, or job schedules, you won’t be keeping your customers happy.

Whether you’re a new manufacturer oiling your machinery for the first time or a seasoned manufacturer shipping thousands of items, production planning is a must. Similar to how scrums and monthly plans run operations smoothly, production plans ensure optimal usage of resources.

In this blog, let’s understand the basic terms around production planning, see how it’s done, look at common pitfalls to be aware of, see the types of production planning, some topics around production planning, and finally an example of handling production planning in ERPs.

1. Production planning basics

1.1 what is production planning.

Production planning is the planning and allocation of raw materials, workers, and workstations to fulfill manufacturing orders on time. In a make to order environment, manufacturing orders or work orders themselves are created after receiving customer orders. A company that follows make to stock style of manufacturing will create work orders on a timely basis depending on demands. Production plans are usually set by the production managers who supervise the shop floor. A good production plan makes the best use of available resources to deliver orders on time.

1.2 Why should you do production planning

Handling a few production orders in spreadsheets works but for large manufacturing shops, the complexity increases a lot. Production planning helps to plan the procurement of raw materials based on the quantity of finished products to be manufactured. It also affects inventory, cash flow, sales, and distribution.

2. How to do production planning

2.1 five tips to improve production planning.

These tips to keep your production plan on track and improve its efficiency

2.1.1 Forecasting demand

Before production planning, the first action to take is forecasting demands for your products. While this may not be accurate to the last digit, getting rough estimates rolling is important to allocate resources. Forecasting can be done based on factors like historical order data and market trends/demands. Drawing out proper forecasts helps planning the type and quantity of materials to be produced and also the planning of raw material procurement.

2.1.2 Control inventory

Both, inventory shortage and inventory surplus are undesirable states. You can’t proceed with production when there’s a shortage and you waste space and money when there’s a surplus. Efficiently controlling inventory involves reordering when current inventory dips below a certain level, calculating the lead times to order items with long lead times earlier, and factoring in storage conditions. A well-controlled raw material inventory helps run a smooth production line and outputs finished goods inventory on time.

2.1.3 Plan for everything and everyone

Often, when making production plans, some machine or some person is unaccounted for. The problem here is that that machine may go down or the worker may be on leave, or worse, working on something else. Hence, plan for every machine, raw material, workstation, warehouse, and employee.

2.1.4 Monitor

Once the production plan is final and work orders are handed out, the manufacturing process begins. At this point, things may go wrong, machines pause, or items may get misplaced. Constantly monitoring the factory floor with supervisors or with IoT devices ensures that all the pieces are moving as planned.

2.1.5 Adapt

Despite your best planning, things go wrong on the factory floor. Anything can happen from suppliers making late deliveries to workers falling sick to machines failing. It’s important to be flexible and adapt to these changes quickly so that the planned quantities can be delivered on time. Ideally, you should also plan for any such risks beforehand.

2.2 KPIs for production planning

A few key performance indicators to track in production planning are:

• Production cost : This is essentially the monetary cost involved in producing the item. Costs include raw materials, electricity, fuel, worker salaries, rent, etc.
• Capacity utilization rate : It’s the percentage of actual manufacturing output against the total possible manufacturing output. If many machines and workers are sitting idle, your capacity utilization is low. Ideally, you want it high but never full.
• Projected versus actual hours : When planning, you may allocate a certain number of hours for completion of the production plan. But, it may take longer due to delays from workers or unexpected tasks. This KPI gives you a picture of how much time it was supposed to take and how much it did.
• Employee utilization (productivity) : You want workers to be working properly during the punch in and punch out. Nobody wants to be a machine by working to the dot but working 4 hours out of 8 is also not reasonable.
• Takt time : Takt time is a lean manufacturing concept. It is the time taken to produce a single unit of item.

3. Production planning pitfalls and avoiding them

First, let us understand the pitfalls or things that could go wrong during production planning. These occur in areas from idle inventory storage to active workers.

3.1 Stockouts

What is it?

It’s the shortage of raw materials that can happen after fulfilling large orders or due to negligence.

How to avoid it?

By checking inventory reports regularly or better yet, setting up automatic reordering.

How to do it?

By setting automatic reordering like this:

3.2 Assigning work to workstation on downtime

Assigning operations to a workstation that was supposed to be on downtime. This causes confusion and the work doesn’t get done because there’s no machine available.

Get a view of which workstations are on downtime and assign only to available machines. (version 13)

By analyzing the downtime of different machines and assigning work appropriately:

3.3 Bottlenecks

These are roadblocks in the production line that halt the processing of materials midway. For example, if items are waiting at the painting stations to get painted, the painting station is a bottleneck since it’s stopping the items from going ahead.

Bottlenecks can happen anywhere in the production line. Scan all the machines and even check if there are enough workers to carry out tasks. Through planning and ensuring the availability of machines and resources is a good way to avoid bottlenecks.

Setting up regular maintenance activities helps by keeping machines running. Eliminating bottlenecks in the production depends a lot on having sufficient machinery, manpower, and a regular supply of raw materials.

3.4 Insufficient worker training

Some specialized machines need trained workers for operation. Hiring rookies running specialized machines result in work not getting done.

Interview candidates for skills and experience in operating similar machinery. Even after interviews, thorough training should be done to ensure that the worker is ready to use the machines in production.

From the human resources module, first, test the employee’s skill proficiency. Then, set training events to enhance their skills. Updated employee skill maps help supervisors better allocate work to the right people and help the ones that are lagging.

4. Types of production planning

The different types of production planning are based on the manufacturing process followed in the factory. A single organization can deal with different types of manufacturing depending on the goods produced.

When items are manufactured in batches with unique batch numbers allotted to each batch. Production planning in batches helps run machinery in a well-planned manner as the next step is planned and the machines are allocated accordingly.

This type of production planning is common in job shops where custom material processing requirements are carried out. Each production plan will most likely be different from the last with the use of different materials, machinery, and operations on the materials.

In flow method, materials are processed smoothly from one machine to the next with very little human intervention. Any waiting time or bottlenecks are removed so that the materials ‘flow’ continuously till they become finished goods. Standardized work and quality control are essential to ensure consistent quality when producing items with the flow method.

5. Topics around production planning

5.1 production planning and control.

Production planning is about planning resources for delivering products and production control is about controlling the production system to achieve targets optimally. Production control has more to do with monitoring the production line and taking corrective action where things are not moving as planned.

‘Production planning and control’ is simply applying both these concepts to get an efficient production line.

Let’s understand the benefits of using both these methods together:

• Better organization for on-time delivery to customers
• Optimum resource utilization
• Less investment in inventory
• Avoid resource wastage
• Increased efficiency, hence reduced costs
• Improved quality by catching and reducing defects

Now let’s look at these topics individually to further distinguish between them.

5.1.1 Production planning

The steps involved in production planning are:

• Planning : This involves planning shop floor resources to deliver finished goods on time.
• Routing : The exact route/path or set of operations the materials go through is known as a routing. Finding optimum routes that reduce wastage and promote continuous flow is a part of production planning. Finding better routings is about using workstations, machines, and workers in different orders without affecting the product to deliver the items faster.
• Scheduling : The machines, activities, and workers are scheduled to do tasks that are a part of the production plan. Scheduling well helps in delivering the finished products on time.
• Loading : Loading here refers to overloading the production line to see how much it can handle. By loading each point, the last bits of efficiency can be squeezed to get the maximum value.

5.1.2 Production control

The steps involved in production control are:

• Dispatching : After the production plan is ready it’s time to implement it by dispatching items in and out of the production line. Different operations and the corresponding workstations are managed to dispatch items to them. The time to complete each activity or ‘job’ is recorded.
• Followup : After issuing a plan, bottlenecks and other problems may arise. Follow-ups are done by supervisors to eliminate any bottlenecks and ensure that things are going according to plan.
• Inspection : Routine inspections are done during production to verify that the materials are being processed correctly. Note that this is different from quality inspections which are done after the product is finished.
• Correction : The results from other steps in production control are reviewed and corrections are made where necessary. This includes the routings, scheduling work, and even conversations with workers who are taking those long breaks.

5.2 Production planning and inventory control

An indispensable part of manufacturing is managing your inventory. Controlling inventory is an essential part of production planning. Proper inventory control involves ensuring an adequate supply of raw materials which results in the timely delivery of products. It also minimizes the overstocking of finished products. Maintaining both—proper inventory levels and accurate data—helps in good production planning.

5.3 Production planning vs production scheduling

Production planning is about planning the number of resources needed to finish multiple manufacturing orders. Production scheduling is about timing the activities, machines, and workers right to run the production process. The work and workloads are optimized in production scheduling. There are two ways production scheduling is performed:

• Forward scheduling : Say, if resources are available today, plan from today till the order due date.
• Backward scheduling : If the availability date of resources is not certain, plan from the due date backward to a number of days.

Production scheduling levels the inventory, labor, and helps in estimating delivery dates accurately.

6. Production planning in ERP software

A production plan can be created and managed easily by using ERP software. You’d need the items, bill of materials, routings, customer orders, and material requests ready before creating a production plan.

6.1 Creating the production plan

Once you have the prerequisite records ready, it’s time to create the production plan. Let’s follow through step by step.

If the items to produce have been requested via a customer order or material requisitions, they can be fetched into the production plan.

By clicking on ‘Get Sales Orders’, either multiple orders or multiple requests can be fetched here, like this:

If you have a ton of orders or requests, set filters to narrow down your search like this:

Now, by clicking on ‘Get Items for Work Order’, the items to be manufactured using the current production plan will be fetched. The quantities can be increased in case you want to account for SKUs. It’s a good idea to keep extra inventory for items that take a very long time to manufacture but have predictable, fast demands.

Now that you know what items to manufacture since the bill of materials has been fetched, it’s time to plan for the raw materials. Clicking on ‘Get Raw Materials for Production’ will fetch all the raw materials and sub-assemblies required for manufacturing. If the inventory levels are present in the warehouses, they’ll not be fetched here. Click on ‘Download Required Materials’ to download the raw material list as a spreadsheet, send it to others or print it.

Some options to note here are:

• Including non-stock items in case you want to account for some external items that you don’t store in your inventory but will be used in production.
• Some subassemblies may be subcontracted, you can choose to include or exclude them in your plan. The choice here depends on whether the subcontracting is for operations or assembly among other factors.
• Projected quantity will show the inventory levels that should be produced based on demands and requests. If you want to ignore this number and produce quantities that you see fit, go ahead and tick the ‘Ignore Existing Projected Quantity’ checkbox.
• Finally, you submit and start with the production plan. Then, from the production plan work orders can be created. One work order for each BOM will be created if you click on ‘Create > Work Order’.

In the work order, the quantity to be produced can be changed depending on whether you want to produce some quantities later. Work orders are used by shop floor supervisors.

From the work orders, job cards are created to record the operations on raw materials. The jobs/operations are done at different workstations/machines.

Once the ‘jobs’ are done on the materials and items are processed, the work order is complete.

Now, depending on the quantity of items produced, the following details can be seen in the last section of the production plan:

6.2 Scheduling the plan

Creating a production plan is one part of the planning process, the other is scheduling different resources to the production plan. Factors like machine downtime, workstation capacity, and availability of raw materials are taken into consideration when scheduling.

In ERPNext, capacity planning is enabled by default. If you go to the calendar from the work order list, you can see the workstations for which materials are transferred and work has started (orange), neither materials are transferred nor work has started (red), and the ones that have been completed (green).

6.3 Role of project management in production planning

In larger organizations with multiple orders or when you get a large project from a client to produce hundreds of different items, project management comes handy. By using a project in ERPNext, you can create multiple work orders against it to track them all from one place.

That's it. Production planning is done easily with the right tools. By allocating resources carefully, planning for inventory, and avoiding mistakes, you can deliver you orders on time.

First, we introduced what a production plan is and discussed its importance. Then, we talked about the important things to note before creating a production plan and talked about the common mistakes to avoid when planning. Further, we talked about the types of production plans and the role of software in production planning.

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Prasad Ramesh

Marketing at Frappe.

Thank you very much for your informative info on production planning as I really need to use as guidance for my job as production planner

We are extremely impressed with this article because it contains a lot of great information. We, at MGH Distributors, are a part of the Import and distribution business. Our food products include Candies, cakes, cooking oil, beverages, jelly products, cookies and many more. The FMCG range brings to you world-class razors, blades, bar soaps. Visit our website to know more

Thank you for this very good overview on production in ERPNext.

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Production Planning 101: Making a Production Plan (Example Included)

As the creation of products and services has become more extensive and varied, the manufacturing industry has become more competitive. There are many things to keep an eye on such as material requirements planning, supply chain management and inventory control. Operations continue to become more complex, meaning manufacturing companies require more thorough production planning.

A production plan is the best way to guarantee you deliver high-quality products or services as efficiently as possible.

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What Is Production Planning?

Production planning is the process of deciding how a product or service will be manufactured before the manufacturing process begins. In other words, it’s how you plan to manage your supply chain, raw materials, employees and the physical space where the manufacturing process occurs.

Production planning is important for manufacturers as it affects other important aspects of their business such as:

• Supply chain management
• Production scheduling
• Material requirements planning
• Production lead time
• Capacity planning

ProjectManager is project management software that helps manufacturers cover every aspect of production planning. Plan with Gantt charts, execute with kanban boards and manage resources along the way. No other software offers sophisticated project and resource management features in one intuitive package. Get started today for free.

Why Is Production Planning Important?

If a manufacturing operation wishes to expand, that evolution demands careful production planning and scheduling. Someone must take on the responsibility of managing resources and deciding how they’ll be allocated. This process is a big part of capacity planning —how much can be made in a certain period, with the available resources?

Without production planning, it’s easy to use too much of a resource for one product and not leave enough for another, or fail to schedule your resources properly, which results in delays that affect your overall production management process. It’s just as easy to let resources go to waste. These issues indicate a lack of efficiency in your production planning process.

Production planning is the best way to ensure resources are used appropriately, products and services are high-quality and nothing goes over budget . In most organizations, a production manager manages the production planning process.

What Does a Production Planner Do?

A production planner is a team leader who oversees the production planning process, which defines how an organization will approach major areas of production management such as production scheduling, resource capacity planning, production control and production budgeting to manufacture products.

To better understand what a production planner does and the importance of this role in any manufacturing organization, let’s dive into each step of the production planning process.

10 Steps of the Production Planning Process

The production planning process consists of an organization’s actions to make a production strategy that allows it to manufacture products most efficiently and profitably. Here are 10 key steps you should follow when planning your production process.

1. Use Production Forecasting Methods for Estimating Customer Demand

The first step of the production planning process is to forecast the customer demand for your product for a future period like a year or a quarter. To do so, manufacturers rely on quantitative and qualitative techniques such as Delphi method, historical analogy method, moving average method and the analysis of business data and sales forecasts.

This process is known as demand planning , which helps manufacturers be better prepared to meet the demand for their products and manufacture the right quantity so they can minimize production and operational costs.

2. Gauge Your Production Capacity

The term production capacity refers to the maximum quantity of product a manufacturing company can produce based on its available production resources such as raw materials, labor, equipment and machinery.

Once you better understand the customer demand for your product, you’ll need to gauge the total quantity of product that needs to be manufactured and then evaluate if your production capacity is sufficient.

3. Map Out the Shop Floor Layout

Now think about the steps of the production process itself. Outline the production tasks that must be executed to transform raw materials, parts and components into a final product and the physical route that those elements will follow to move across the shop floor. This will allow you to pick a production floor layout that minimizes the time and effort required from your employees.

4. Make a Production Budget to Find the Optimal Production Volume

The next challenge in the production planning process is determining the exact number of units to manufacture to keep up with customer demand and maintain your desired stock levels.

This requires a production budget , a document used to calculate the number of units that should be produced by a company to meet the customer demand for a period such as a month, quarter or even a year.

Creating a production budget involves assessing the current product inventory, the production capacity, sales forecasts and the ending inventory that should remain at the end of the period. Once you analyze these variables and use the production budgeting formula, you’ll know the required production level for a given time.

5. Choose a Production Costing Technique

Choose a costing method for your production process such as activity-based costing, process costing, job costing or simply standard costing. Each has its pros and cons depending on your organization’s particular characteristics.

6. Create a Production Schedule

Now it’s time to make a production schedule that allows your organization to create a stock inventory, deliver products to distribution channels, fulfill customer orders and meet the obligations of any manufacturing contracts the organization has in place for the production timeline you’re planning for.

7. Establish a Production Control System

Next, it’s important to establish standard operating procedures and key performance indicators and use a variety of production control tools to create a system that allows you to track the production process to ensure your products meet quality standards and are manufactured on time and under budget.

8. Set Production Reporting Guidelines

After you’ve decided what KPIs will be used to monitor the efficiency of your production process, you’ll need to determine what types of reports will be used to communicate these metrics with stakeholders and the frequency in which they’ll be produced.

The documentation from each of these production planning stages, such as the production budget and production schedule are gathered in a larger document called the production plan.

What Is a Production Plan?

A production plan is a document that describes how production processes will be executed, and it’s the outcome of the production planning process. It describes the human resources, raw materials and equipment needed and the production schedule that will be followed.

The person responsible for production planning must also be very familiar with the operation’s inner workings, project resources and the products/services they produce. This usually entails collaborating with people on the floor, in the field or in different departments to create products and deliver services.

Production Plan Example

The best way to illustrate this process is through an example. When you set out to create a production plan, make sure to follow these steps to make it as robust as possible.

Sales Forecast

Making a sales forecast greatly helps you decide which product planning method is best for your operation given your production capacity. You’ll need to use diverse sales forecasting techniques to better understand what will be the future demand for your product. From here, you can estimate which resources are required and how they’ll be used in the manufacturing process to begin the production capacity planning process.

Inventory Management Plan

Accessing inventory is about more than simply taking stock: you should make an inventory management plan for your production inventory and work-in-progress inventory so that you don’t experience shortages that might halt production or let things go to waste. For this step, focus on the inventory control and inventory management techniques you can use to handle inventory in the most efficient way possible.

Production Budget

Most manufacturers use the production budgeting formula below to make a production budget that indicates the ideal production volume based on a starting inventory, sales forecasts, production capacity and expected ending inventory levels.

Required Production = Sales Forecast Expected Units + Desired Ending Inventory – Beginning Inventory

Resource Plan

A successful production plan requires you to be familiar with the resource planning details of the manufacturing process, which is why you’ll need to make a resource plan that outlines what resources such as labor, raw materials, equipment and any other capital assets are available for production and when they’re scheduled to be utilized.

Production Cost Estimate

Once you’ve determined what the required level of production is and the resources that will be needed, you’ll need to estimate the cost of production . It’s important to ensure the production process will be profitable before creating a production schedule.

Production Schedule

As stated above, a production schedule is key to making sure your manufacturing team delivers products on time, but also guides efforts in other areas such as supply chain management and logistics management.

Production Control Plan

A production control plan should describe all the metrics, procedures, guidelines and tools that will be utilized to monitor how the results compare to the production schedule and resource management projections. This is something that should continually take place and be documented during the production process.

Types of Production Planning

Every operation is unique, and the same production plan isn’t right for everyone. To get the most from project planning, you decide which method is best for your manufacturing process. Here’s a quick intro to the different types of production planning.

The job method is often used when manufacturing a single product, for which a unique production plan is created. This production planning method is generally used in smaller-scale productions, but it can also be applied to larger manufacturing facilities. The job method is especially advantageous when a production order requires specific customizations.

Batch Production Method

Batch production consists of manufacturing goods in groups, instead of being produced individually or through continuous production . This method is useful when manufacturing products on a large scale.

Flow Method

The flow method is a demand-based manufacturing model that minimizes the production lead time by speeding up the production line. The manufacturing process starts based on work orders, and once it starts, it doesn’t stop until all finished goods are produced. This is called continuous production and it’s achieved by using machinery and little intervention to minimize waiting time.

Process Method

The process method is more or less what most people picture when they think about production—an assembly line . With the process method, there will generally be different types of machinery that complete separate tasks to put together the finished goods.

Mass Production Method

The mass production method primarily focuses on creating a continuous flow of identical products. It’s similar to the flow method, but at a much bigger scale, which cuts production costs. When uniformity is just as critical as efficiency, use “standardized processes” to guarantee all products look the same.

Production Planning Best Practices

No matter what product or service is being manufactured, there are many tried-and-true best practices to increase your operational efficiency . When creating a production plan, keep these two in mind.

Make Accurate Forecasts

When you don’t properly estimate the demand for your product or service, it’s impossible to create a detailed production plan. Demand planning is never static. Consider buying trends from previous years, changes in demographics, changes in resource availability and many other factors. These demand planning forecasts are the foundation of skillful production planning.

Know Your Capacity

Capacity planning means knowing the maximum capacity your operation can manage—the absolute most of a product or service it can offer during a period of time. This is the only way to anticipate how much of each resource you need to create X amount of products.

When you don’t know the production capacity, your production planning is like taking a shot in the dark.

Common Production Planning Mistakes

Stay vigilant of common missteps as you go through the production planning process. Here are three mistakes often made during production planning. Luckily, they can be prevented.

Not Expecting the Unexpected

This means having risk management strategies in place if things go awry. The goal is to never have to employ them, of course, but it’s better to have them and not need them. Production planning is incomplete if it doesn’t anticipate risks, issues and changes. When you plan for them, you’re ready to problem-solve if and when they happen.

Getting Stuck Behind the Desk

You should work with intelligent production planning tools, but that doesn’t mean you should only rely on enterprise resource planning software for production planning and not oversee resources and manufacturing operations in person. When production planning is only done from behind a screen, the result won’t be as informed as it could be. The best production planning is active and collaborative.

Neglecting Equipment

To get the most from your equipment, you need to take care of it. This means tracking usage and keeping up with regular maintenance. This looks different depending on the industry and product or service, but the principle is the same: continually take care of your equipment before it becomes a problem that slows down production.

Use ProjectManager for Production Planning and Scheduling

As the nature of manufacturing goods and services changes, you need modern tools to plan production and make schedules. ProjectManager is award-winning project management software that offers all the tools you need for excellent production planning and scheduling. With it, you can plan projects, create schedules, manage resources and track changes with one tool.

Plan With Gantt Charts

Manage your product manufacturing across a timeline with our Gantt chart view. With it, you can view your resources to help you track your cost of production to ensure you’re never overspending. You can then link any dependent tasks to avoid bottlenecks in your manufacturing.

Get a Bird’s-Eye View

To keep your production plan on track, you need a high-level view to pinpoint setbacks before or as they occur. Our real-time dashboard collects data and converts it into colorful graphs and charts that give you at-a-glance analytics.

Easily Measure and Report Your Progress

Any operation will have stakeholders who want to be kept in the loop. ProjectManager’s project status reports make it easy to share key data points. They can be generated in a single click, making it simple to generate them before important meetings.

Related Production Planning Content

The production planning process involves many different activities such as estimating the quantity of goods to be produced, the resources needed, the production schedule and much more. That’s why we’ve created dozens of blogs, guides and templates on production management topics. Here are some of them.

• Production vs. Manufacturing
• How to Make a Production Flow Chart for Manufacturing
• Best Production Scheduling Software Rankings
• How to Create a Master Production Schedule (MPS)

Manage every detail of your operation with ProjectManager’s powerful online project management tools. Our suite of tools is trusted by tens of thousands of teams, from NASA to Volvo, to aid them in the planning, scheduling, tracking and reporting on the progress and performance of their production plans. Our software lets you get out from behind your desk and make adjustments on the go. Try it for yourself for free for 30 days!

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A Guide to Production Planning & Scheduling for Small Manufacturers

This ultimate guide to the art of production planning and scheduling will show you everything you need to know to implement into your small manufacturing business.

As a small manufacturing company, it’s extremely common to face challenges regarding production planning and scheduling.

Coordinating all the raw materials, equipment, and staff that create your products, and then - on top of it all - also ensuring timely delivery to customers can be a daunting and almost impossible task.

Implementing efficient production planning and scheduling for your small business can save time and money, reduce wastage and errors, increase productivity and profits, and improve customer satisfaction.

In this guide, we will explore production planning and scheduling best practices for small manufacturers.

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What is production planning?

Production planning is the process of creating a detailed roadmap for producing goods or services. It involves determining what needs to be produced, when it needs to be produced, and how it will be produced.

This includes identifying raw materials needed, estimating production time and costs, and coordinating all resources involved in the production process.

Effective production planning helps manufacturers stay on top of their operations by ensuring that production is aligned with customer demand, inventory levels are optimized, and resources are utilized efficiently.

Free Download: Production planning template for Excel and Numbers

What is production scheduling?

Production Scheduling involves creating a timetable for production activities based on the production plan (known as a Master Production Schedule or MPS).

It includes assigning tasks to specific machines or employees and setting start and end times for each task.

A well-defined schedule helps manufacturers meet deadlines, track progress, and make adjustments as needed to avoid delays and bottlenecks.

Now that we better understand the concepts behind production scheduling and planning, let’s take a look at how best to implement them in a small manufacturing company via several best practices.

Make to order production planning vs. batch production planning

There are slightly different considerations when production planning for make-to-order situations.

This type of planning involves producing goods based on specific customer orders rather than forecasting future demand. Make-to-order production requires a flexible and customizable approach to ensure that customer’s needs are met efficiently. Software solutions are typically the best approach to take as orders can be imported from multiple sales channels and matched to manufacture records.

Read more: Make to Order Production Planning: Making It Work for your Small Business

Production Planning & Scheduling Best Practices

Analyze demand and capacity.

The first step in production planning and scheduling is to analyze demand and capacity. This includes forecasting demand, evaluating available resources, determining lead time, and identifying constraints.

A demand forecast helps you to estimate the production volumes needed to fulfill customer orders. Evaluating available resources such as raw materials, equipment, and personnel helps you to confirm your ability to meet customer demands.

Determining lead times is essential to ensure that you meet customer requirements within the promised delivery time. Identifying constraints such as time, cost, and resource availability can help you to identify areas where operational improvements are needed.

Set your production planning metrics / KPIs

Production planning metrics or key performance indicators (KPIs) are essential for monitoring and improving production processes.

These can differ based on your particular business structure and market, so it’s wise to take some time to consider the KPIs that will represent your production process.

Some common metrics used in production planning include on-time delivery, cycle time, lead time, and inventory turnover rate.

Read more 10 Production Planning Metrics and KPIs You Need To Know

Create a production schedule

Once you have analyzed demand and capacity, you are ready to create a production schedule. As we discussed earlier, a production schedule details the sequence of activities, resources required, and timelines for each operation involved in producing a product.

It is important to consider lead times, available resources, machine time, and personnel availability when creating a production schedule.

You should also consider the critical path, which is the longest sequence of dependent activities that must be completed within a given timeframe to meet customer demands.

How to create a production schedule

• Identify all operations involved in producing the product - this includes creating a bill of materials for the product , and also any documentation on how to produce the product (i.e. SOPs or guides )
• Determine the sequence of operations based on any dependencies and constraints - this involves mapping out any sub-assemblies you have in your production process and ensuring that these sub-steps are completed in a timely manner to ensure the final product can be delivered.
• Estimate the time required for each operation, taking into account setup times, processing times, and downtime. Analysing manufacturing logs and averaging the labor time can be a good way of generating this information.
• Allocate resources such as team members and equipment to each operation based on availability and capability. Create or use a system that can assign team members to specific manufactures to see them through to either sub-assembly or finished production completion.
• Create a timeline for each manufacture, taking into account lead times and any potential bottlenecks
• Continuously monitor and update the production schedule as needed, based on changes in demand or resources.

Create ownership of your production schedule

While it can feel great to have a series of well designed production plans and schedules done and dusted, assigning a dedicated person or team to own the production schedule is crucial in ensuring its success. This person should have good communication skills, be detail-oriented, and able to prioritize tasks effectively.

Their responsibilities may include coordinating with different departments, tracking progress against plans, and addressing issues that may arise during production. This role is usually called a Production Planning Manager ,however can also be referred to as a Production Manager, Operations Manager or Warehouse Manager.

In smaller manufacturing situations this role may be performed by a responsible member of the shop floor or (in the very early days) the founder of the business.

Communicate and collaborate

Effective communication and collaboration between different departments is essential for successful production planning and scheduling. This includes regular meetings to discuss priorities, progress updates, and addressing any issues or bottlenecks that may arise during production.

Having open communication channels can help ensure that everyone is on the same page and working towards the same goals.

Collaboration also extends to involving employees in the production planning process, as they often have valuable insights and suggestions for improving processes.

Create a realistic schedule

When creating a production schedule, it’s essential to be realistic.

Avoid overloading your production schedule and setting unrealistic deadlines for tasks, as it can lower team morale due to the production team’s inability to meet or deliver these objectives.

An accurate understanding of your capacity, lead times, and constraints will help you create a feasible schedule that can be consistently met.

Implementing Production Planning and Scheduling Software

Small manufacturers often rely on manual methods or simple spreadsheets for production planning and scheduling when getting started. However, as the business grows, managing production using these methods may become more challenging, so it’s wise to investigate a software solution as early as possible.

A production planning and scheduling software (PPS) solution helps small manufacturers to streamline their production planning and scheduling processes. A PPS automates repetitive tasks such as data collection, demand forecasting, production scheduling, and inventory management.

It enables real-time monitoring, alerts, and updates of your production progress, inventory levels, and resource utilization.

Using a PPS can help small businesses to reduce time, errors, and costs associated with manual processes and increase efficiency, accuracy, and profitability.

Read more: Production Planning Tools You Need for your Maker Business ->

A PPS can be either a standalone product or, in most cases, a suite of tools available in either an MRP or ERP product .

Investing in a production planning tool can help streamline your processes and provide visibility into your operations. There are many affordable options available that cater specifically to small businesses.

Craftybase is a cost-effective small business production planning tool tailored toward small-scale manufacturers and offers a full suite of reports and data to set KPIs and monitor their progress. Try us for free today!

Monitor and review progress

Monitoring and reviewing progress are essential to ensure that your production planning and scheduling processes are on track. Real-time monitoring using software like the ones we discussed above enables you to detect and address issues before they become major problems.

Regular reviews also allow you to identify areas for improvement, measure performance, and adjust your plans as needed.

Why is production planning important?

Production planning is crucial for small manufacturers to meet customer demands, optimize resources, reduce costs, and improve efficiency and quality. It enables businesses to balance supply with demand by creating realistic schedules that can be consistently met.

Small manufacturers who invest in production planning tools or software can gain a competitive advantage by streamlining their processes and improving overall performance.

By implementing lean principles and utilizing production planning best practices, small manufacturers can achieve their goals and grow their businesses successfully.

What is MPS in Production Planning?

MPS stands for “Master Production Schedule” and is a key component of production planning. It details the specific quantities and schedule for each product to be manufactured, taking into account factors such as lead times, available resources, and customer demand. The MPS serves as a guideline for creating the production schedule and helps manufacturers prioritize production tasks to meet customer requirements effectively.

Production planning and scheduling is a critical activity for small manufacturers who want to be competitive, profitable, and customer-centric.

By analyzing demand and capacity, creating a production schedule, using production planning and scheduling software, implementing lean manufacturing principles, and monitoring progress, small manufacturers can optimize their resources, reduce errors, and improve efficiency.

Remember that production planning and scheduling is an ongoing process that requires continuous improvement and adaptation to changing customer demands and market conditions. With the right approach and tools, small manufacturers can excel in production planning and scheduling and achieve their business objectives.

Nicole Pascoe Written by Nicole Pascoe Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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Production Planning: How To Make a Production Plan

Production planning is the process by which manufacturers ensure they have enough raw materials, labor, and factory capacity to meet demand for a product.

Imagine three friends, all avid cyclists, who decide to start a business making bicycles. They have conducted market research and expect the US bicycle market to increase in size during the next several years. They’re considering setting up a manufacturing business, not just a makeshift workshop in the back of a bike store. To do this, they need to start production planning—an essential component of the manufacturing process.

What is production planning?

Production planning is part of a manufacturing strategy that details how much capital, labor, raw materials, and manufacturing space a company needs to make enough goods to meet customer demand. The production planning process also helps a business see where problems might occur, determine how to solve them, and keep producing on schedule for delivery to buyers.

Production planning organizes all aspects of manufacturing while improving communication and cooperation among employees, suppliers, and contractors. It also helps with the efficient allocation of resources, reducing costs, and managing the supply chain .

Production planning vs. production scheduling

Production planning and production scheduling are both steps in the production process, but they are different. Production planning determines what and how much a company produces, while scheduling, a part of the planning process, determines when and by whom various production tasks are completed.

Production planning methods

Batch method, flow or mass-production method, process method.

The various types of production processes depend on product type and scale. Some are intermittent processes, with periods when a company produces nothing, while others are continuous, where production is rarely or never interrupted. Some of the most common production planning methods include:

The job method, also known as the project method or shop method, is usually for making a single product with unique features. Smaller examples of job-method production are made-to-order furniture, custom-tailored clothing, and one-of-a-kind jewelry pieces. On the larger side, this could be a custom home or yacht.

Job production is typically a labor-intensiveproduction process, and each unit is different. It’s the opposite of mass production, where companies make large quantities of uniform products through automated processes at lower cost. Also unlike mass production, there are commonly no economies of scale, because each job and each product is different rather than the same.

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Batch production is the manufacturing of identical goods in groups. Examples of batch production include baked goods, basic clothing such as t-shirts and socks, and print publications such as newspapers and books.

The batch production planning process focuses on determining the right amount of output, avoiding overproduction or underproduction. A sock manufacturer, for instance, doesn’t want to produce 1,000 pairs when there’s demand for only 500.

For some businesses, batch production can increase efficiency. The sock maker might set the machinery to produce 500 pairs of black socks, then quickly switch to a batch of 500 gray pairs, and switch again to 500 dark blue pairs, knowing those are the three most popular sock colors. A batch manufacturer wants to minimize changeover time between batches because delays and bottlenecks between product runs can become costly.

Flow production, also called mass production, is a manufacturing process for standardized goods defined by the continuous movement, or flow, along a factory assembly line. This is generally an automated process with minimal human intervention, which makes it quick and cost-effective compared with job or batch production. An automotive plant is a good example; car or truck assembly flows through various steps on the production line toward completion. Processed foods, such as canned soup or even bread, are another example.

Setting up this type of production process requires a significant capital investment, generally limiting its use to larger companies.

The two main principles of flow production are extensive automation and division of labor—each employee has a specific task in the production process. This differs from batch or job production, where employees may handle multiple tasks.

The process method is similar to the flow method—both use continuous production. A key difference is that process production typically uses raw materials to turn out bulk goods or commodity goods, such as liquids and gasses, rather than discrete products such as individual cars or cans of food. Refined oil products and chemicals are examples of process products.

Careful planning for process manufacturing is essential because of the potential for overproduction or underproduction.

How to make a production plan

• Forecast demand
• Make a budget
• Create a production sequence
• Set a production schedule
• Control and evaluation

The production planning process involves developing a comprehensive overview of your business. Here are the key steps in putting together a production plan:

1. Forecast demand

Start by estimating production requirements based on predicted customer demand. Historical sales data can help with demand forecasting , but you’ll also need to consider other factors that can affect demand, such as recent market trends and how economic conditions affect your customer base. Market research can help you predict whether demand for your product is changing, and this can influence your production plans.

Production planning software for demand forecasting can help guide your decisions about matching production and demand. The software also typically tracks inventory, which can influence your planning for producing new goods.

2. Make a budget

Budgeting helps to identify the cost of resources needed to produce your desired output. This includes materials, facilities, and workers. Your current production capacity—the maximum you could reasonably produce with available staff, materials, and facilities—will inform your production plan.

3. Create a production sequence

Mapping out the production process and the steps required to produce your goods includes buying any necessary equipment and tools—or outside services. Depending on the type of production, some steps in the process may be done simultaneously, some must be done one at a time, and others may be outsourced.

Production planners can also use the production sequencing phase to prepare for contingencies such as equipment breakdowns, staff shortages, or supply interruptions.

4. Set a production schedule

Production scheduling is where you assign tasks to your various employees or teams, communicate the production plan to everyone involved, and set timelines for each stage of production.

Create a detailed production schedule that spells out how the company will execute the plan, including the resources and timing for each step. Production schedules keep manufacturing on pace and help a company avoid common production planning mistakes, such as overproducing or underproducing.

5. Control and evaluation

Once production starts, you’ll need to track performance and continually compare it to targets described in the production plan. Key performance indicators (KPIs) are the most relevant measures to track. In the case of a manufacturer, they can include the rate of production, such as the number of cars assembled per day and downtime, or the amount of time when nothing is being produced.

Carefully monitoring the production process can help you detect any issues and correct them quickly. It may also help you see ways to improve the manufacturing process after production starts, letting you build in some wiggle room for equipment breakdowns, supply-chain disruptions, or product defects.

Production planning FAQ

What are production planning kpis.

Production planning key performance indicators (KPIs) help manufacturers track their processes by comparing them to goals or targets. Production KPIs include production rate, rejection rate of faulty products, and downtime, when production is halted for reasons such as broken machinery.

What is an example of production planning?

An example of production planning might be a bicycle manufacturing business. The company forecasts demand for bicycles, budgets for average production costs, arranges for materials and labor, and proceeds with plans to build a certain number of bicycles per month. After it begins making bicycles, it compares the results against the goals in the production plan and makes adjustments as needed.

What do production planners do?

Production planners organize a manufacturer’s main activity—turning out products. Production planning is a complex process, requiring constant communication with the other divisions of the business such as sales, finance, and human resources. A planner tries to set achievable production goals, while allowing some room for contingencies such as equipment breakdowns, supply-chain snags, or a lack of workers.

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Production Planning - A Complete Guide

According to Gartner, the global manufacturing operations management (MOM) market size is expected to reach $6.8 billion by 2023. Further on, research by KPMG suggests that 73% of manufacturers are using artificial intelligence (AI) to improve production planning.

This is supported by the results of a survey conducted by McKinsey, according to which 78% of manufacturers are using advanced analytics to improve production planning. Lastly, according to a survey by PWC, 87% of manufacturers are using cloud-based solutions to improve production planning.

While these statistics have highlighted the importance of production planning, it has also highlighted its most recent trend of adopting cloud-based software to assist them in it.

Production planning is the act of developing a guide for the design and production of a given product or service, thereby making your production process as efficient as possible.

It thus makes complete sense that the adoption of software that will automate your key business processes will only help you reach your objective faster and more efficiently.

The main purpose of production planning is to optimize your manufacturing process, consequently reducing your manufacturing costs and maximizing your net revenue and return on investment .

Additionally, production planning helps in creating a process that takes care of customer-dependent processes like timely delivery, as well as customer-independent processes like production cycle time.

Thus, for the overall productivity and profitability of your business, it is important for you to have a complete understanding of production planning. This article will help you with that by covering the following topics:

What is Production Planning?

Difference between production planning vs. production scheduling, why is production planning important, 5 types of production planning, 5 steps to make a production plan, 3 common production planning mistakes, which production planning kpis must you track, what are the 3 most common production planning tools, how can deskera help you with production planning, key takeaways, related articles.

Production planning is the process of deciding how a product or service will be manufactured before the manufacturing process begins. Thus, it is about how you plan to manage your supply chain , raw materials and components, employees, and the physical space where your manufacturing processes take place.

It is thus an important process for manufacturers like you as it affects other important aspects of your business like:

• Supply chain management
• Production scheduling
• Material requirements planning
• Production lead time
• Resource capacity planning

Considering that production planning will also spell out everything surrounding your production targets, it will also map out all the operational steps involved and their dependencies in reaching them.

The primary goal of production planning is to design the most efficient way to make and deliver your company’s products at the desired level of quality. In fact, a well-designed production plan will help your company in increasing its output and save money by developing a smoother workflow and reducing waste.

As is evident, production planning is a broad discipline that involves much more than a focus on manufacturing process efficiency.

In fact, production planning activities include demand forecasting as well so that you will be able to determine the right mix of products to meet customer needs. Additionally, it will also help you in choosing the optimal approach to building those products.

Also, production planning will assess the resources needed to meet production goals and lay out in detail all the operations in the production process.

Lastly, production plans must include the flexibility to make operational adjustments when problems occur- such as staffing shortages, supply chain problems, and machine breakdowns.

Production Planning: Production planning is the process of determining the number of goods and services that an organization will produce in a given period of time.

It involves making decisions on the number of resources, such as raw materials, labor, and capital, that will be required to meet the desired production output.

It also involves the selection of production processes, the determination of production schedules, and the coordination of activities within the production process.

Production Scheduling: Production scheduling is the process of organizing and planning the sequence of production operations and activities in order to ensure that the desired output is achieved within the specified time frame.

It involves the allocation of resources, the determination of task sequences, and the creation of production schedules.

It also involves the coordination of activities within the production process in order to ensure that the desired output is achieved in the most efficient manner possible.

Therefore, while production planning provides an overview of what your company plans to do, production scheduling creates a more detailed view of exactly how your company will do it.

This means that the production schedule will describe when each step of your production plan will occur and consequently by using which resources and how.

Considering that a well-constructed production plan will help you boost your revenue, net profits , financial KPIs , operational metrics , and even customer satisfaction, production planning is vital for your business and its success.

In fact, a poorly designed production plan can cause production problems and even carries with it the risk of sinking your company.

Some of the specific benefits of production planning are:

Your production plan will provide you with a framework that will help you understand your resources and the production steps that you will need to undertake to meet your customers’ needs.

Additionally, it will also help you understand the potential problems that may occur during production and how you can mitigate them. This will help you improve your cash flow and the health of your financial statements . It will also help you improve customer retention .

One of the other benefits of production planning is that it will help you reduce bottlenecks and help minimize costs. This will thus keep your net working capital stronger and prepared for other uses that will lead to the growth and development of your business.

Additionally, production planning will also help you ensure that your products are of high quality and that your expenses do not exceed the budget.

Lastly, it will also help ensure that your resources are used efficiently and that wastage is avoided. In fact, production planning will also help in reducing manufacturing lead times through efficient planning and processes.

Customer Satisfaction

With production planning, you will be able to ensure that your company is able to make and deliver products to customers on time. This will lead to strong customer loyalty , as well as a positive brand image that will encourage returning customers as well as increased sales referrals .

Depending on the production method that your company uses, as well as on other factors like product type, order size, and equipment capabilities, the design of your product plan will be decided. The five types of production planning that are used most frequently are:

Batch Production Planning

This type of production planning refers to when you need to manufacture identical items in groups or in a continuous process rather than one at a time.

Batch production often leads to increased efficiency for several businesses. This leads to increased gross profits , reduction in the cost of goods manufactured , and better customer satisfaction.

For example, a clothing manufacturer making goods for the summer might first set up its cutting and sewing machines to make 500 red t-shirts, then switch to navy fabric and thread to make 400 tank tops.

A good production plan for batch processing is one that looks out for potential bottlenecks or delays when switching between batches. This will help you avoid additional expenses and maximize your profitability as well as productivity.

Job - or Project-Based Planning

Used most often by small and medium-sized businesses, here, the focus is on the creation of a single item by one person or team. Typically, job or project-based planning is used when there is a specificity of each client’s requirements, thereby making it difficult to make the products in bulk.

Several construction businesses and makers of custom jewelry and dresses adopt this production planning method to get the job done.

Flow Production Planning

Flow production is also known as continuous production, and here, the standardized items are mass-produced continuously on an assembly line. This method is most often used by large manufacturers who want to create a constant stream of finished goods.

In flow production planning, it is important that each item moves seamlessly from one step along the assembly line to the next. This will help avail the benefits of adopting flow production, which reduces costs and delays, especially when there is a steady demand for your products.

Based on the steady demand for your products and adoption of flow production, it will become easy for you to determine your needs for materials, equipment, and labor at each stage along the assembly line. This will help you streamline your production and avoid delays.

For example, companies in the automotive industry and makers of canned food and drinks use this method.

Process Production Planning

This is a method wherein there will generally be different types of machinery that are completing separate tasks to put together the finished goods.

Mass Production Planning

While this method is similar to flow production planning because it is primarily focused on creating a continuous flow of identical products, this happens at a much bigger scale. This means that by implementing this method, you would be able to cut your production costs through economies of scale.

This method will be the aptest for you when the uniformity of your products is as important as the efficiency of your production process.

Production planning is a complex and dynamic process that starts with forecasting and includes process design and monitoring. The five typical production planning steps are:

Forecast Product Demand

The first step to production planning is to estimate how much of each product you will need to produce over a given period of time.

Your historical data will be able to help you with forecasting, however, during demand planning , and consequently production planning, you will also need to take other demand-affecting factors like market trends and the economic situation of your buyer personas into consideration.

Implementing a demand planning software like Deskera MRP, which will also be able to help you with production planning, will help you make more informed decisions. This, in turn, will lead to increased profits, productivity, and more satisfied customers.

Map Out Production Steps and Options

In this step of production planning, you will be determining the resources, steps, and processes that you will need to produce the required output in a given time period. Here, you can also examine different options available for achieving your production goals, like considering outsource manufacturing .

One of the added benefits of production mapping is that it will help you identify which steps are interdependent and which can be performed simultaneously.

For example, you want to produce 1,000 children’s bicycles. Manufacturing the bicycle frames consists of a series of steps that must happen in sequence - like cutting metal tubes, welding, and painting, etc. However, there are other activities that can happen simultaneously, like assembling the wheels.

Lastly, this step will also help you determine if you have all the necessary resources and the right equipment. It will also help you identify what you will need to do if your machine breaks down. In fact, production mapping will also help you determine whether your suppliers are meeting your demand on time or not.

Thus, production mapping will assist you in inventory management , keeping a check on your inventory costs , and shop floor scheduling . It will also help you improve the ratio of your operating income to operating expenses .

Choose a Plan and Schedule Production

After comparing the cost, the time required, and the risks for each option, in this step, you would select a production plan to implement. Sharing the selected plan as an executive summary with all the necessary stakeholders will help you ensure a smoother production process, as they will all be aware of what is going to be needed and when.

Then, you will create a detailed production schedule that will lay out in detail how your company will execute the plan, including the resources and timing for each step. In fact, this will set the basis for the master production schedule while shortening your order fulfillment cycle time.

Monitor and Control

Once you have completed the above steps, your production will start. This means that you will now need to track performance and continuously compare it against the target described in the production plan.

The benefit of doing this is that it will help you ensure that you are adhering to the plan as well as the schedule. Additionally, it will also help you detect any issues as soon as they pop up, letting you address them quickly, thereby mitigating the losses they might have caused.

Adjust Accordingly

It is going to be inevitable for your production to be affected by events that you cannot plan for or predict. Some of those events include supply chain lags, client specifications, equipment failures, and worker illness.

Additionally, after seeing your production plan in action, you might have even identified ways to improve it and make it more profitable.

Thus, it is crucial that you keep your production plans flexible enough to allow for adjustments when needed. This will help you improve their efficiency and profitability by huge measures.

One of the best ways to avoid or mitigate problems once production has started is by being aware of the potential pitfalls ahead of time. The three most common production planning mistakes are:

Not Anticipating Hiccups Along the Way

It is very likely that the plans will go awry in any complex production process. It is thus important that your production planning includes risk management strategies. This should also include backup plans that your company can rely on in case any problem arises. If you fail to do so, you might face serious problems.

For example, if a machine breaks on the line and you have not kept aside a budget for repairs and overtime of the workforce, then this issue will lead to financial strain on your company’s resources.

Keeping Your Distance

While implementing production management software will lead to you getting real-time visibility into your company’s production status, you should make sure that this information is supported by in-person visits to the production line.

These visits will give you valuable insights into how production is working in practice. These insights might prove useful in changing your production planning to make it more profitable and productive.

If you or your employees continue to only sit behind the desk, then you will be missing out on these valuable insights, which will even improve your several relevant key performance indicators .

Failing to Maintain Equipment

It is crucial that you regularly maintain your company’s equipment because this is what is making your production happen. Thus, you must have a strategy in place to track the usage, as well as a budget to pay for the regular preventive maintenance that will ensure that they keep running smoothly.

KPIs or key performance indicators are those important metrics that will help your company track the health of its production processes.

By monitoring KPIs and comparing them to target values defined in your production plans, you would be able to assess whether your production is on track or not.

Additionally, you would also be able to identify problems that might need addressing.

Some of the typical production planning KPIs that you must track are:

This is one of the key efficiency metrics that will track the percentage of time that production is not occurring during the scheduled operating hours. Some of the reasons why this is happening are:

• Machine breakdowns
• Tool adjustments

While some of the downtimes might be essential, like, for example, downtime for machine maintenance, generally, the lesser the downtime, the better it is.

This is also known as the changeover time and is the amount of time it takes to switch between jobs. Setup time affects overall productivity because, during these periods, production is halted.

Thus, it is important that production schedules take into consideration how much time and effort it takes to reconfigure production for each job. This includes but is not limited to the following:

• Changes to the equipment
• Changes to the raw materials
• Changes to the workforce

In order to increase your efficiency, it is important that you design your production schedules such that they minimize changeover time.

Production Rate

In a manufacturing environment, this is typically measured as the number of units produced during a specific period. The advantage of comparing the actual production rate for each process with its planned rate will help you identify your strengths as well as weaknesses. It will also help you to address your problems.

Overall Equipment Effectiveness (OEE)

This is the measure of the overall manufacturing productivity that accounts for quality, performance, and availability. The formula for OEE is:

OEE = Quality x Performance x Availability

Typically, quality is measured as the percentage of parts that meet the quality standards. Performance is how fast a process is running compared to its maximum speed, which is expressed as a percentage. Availability is the percentage of uptime during a company’s scheduled operating hours.

Thus, you can increase your OEE by lowering downtime, reducing waste, and maintaining a high production rate.

Rejection Rate

This is the percentage or number of products that have failed to pass quality checks. Depending on the nature of the product and the problem, it may be possible to salvage some of the rejected items by reworking them. However, there may be others that need to be scrapped.

On-Time Orders

Production delays can be costly in terms of reputation as well as money. This is because if you are able to generate products on schedule, then there would be fewer chances of you needing to use costly expedited shipping or other emergency measures to meet deadlines.

Additionally, delivering orders on time will keep your customers happy, which means that they are more likely to continue doing business with your company while also helping in your company’s positive brand awareness .

To build their production plans and track their progress, businesses tend to rely on a variety of tools. These tools range from visualization tools to sophisticated software that automates several of the involved steps. The three most common production planning tools are:

Gantt Charts

A Gantt chart is a detailed visual timeline of all the tasks scheduled for a particular job. This chart is an integral part of manufacturing and several other industries.

Considering that production planning involves coordinating and scheduling several tasks of your business, Gantt charts will visually represent when each task will take place and how long it will last.

However, manually creating and updating Gantt charts to reflect your complex, ever-changing production schedules is not only time-consuming but also an error-prone job.

Spreadsheets

While small companies start tracking their simple production plans using spreadsheets, for most companies, the inherent complexity of production planning quickly outstrips the capabilities of spreadsheets.

Production Planning Software

Production planning involves a wide range of activities, including but not limited to forecasting, tracking inventory, supply chain management, and scheduling jobs. This requires information from across your company and beyond.

Additionally, production planning information is integral to business operations and is used by other groups within the company, including finance.

Taking all of this into account, using MRP software like Deskera, which includes production planning software, and also provides a single solution for managing the entire business, is the best choice you can make for your company.

As a manufacturer or retailer, it is crucial that you stay on top of your manufacturing processes and resource management.

You must manage production cycles, resource allocations, safety stock, reorder points, and much more to achieve this.

Deskera MRP is the one tool that lets you do all of the above. With Deskera, you can:

• Track raw materials and finished goods inventory
• Manage production plans and routings
• Maintain bill of materials
• Optimize resource allocations
• Generate detailed reports
• Create custom dashboards

And a lot more.

It is also possible to export information and data on Deskera MRP from other systems. Additionally, Deskera MRP will give you analytics and insights to help you make better decisions.

So go ahead and book a demo for Deskera MRP today!

Production planning is the process of deciding how a product or service will be manufactured before the manufacturing process begins. Thus, it is about how you plan to manage your raw materials and components, supply chain, employees, and the physical space where your manufacturing processes take place.

The key benefits of production planning are:

• Customer satisfaction

The five main types of production plans are:

• Batch production planning
• Job or project-based planning
• Flow production planning
• Process production planning
• Mass production planning

The five steps of making your production plan are:

• Forecast product demand
• Map out production steps and options
• Choose a plan and schedule production
• Monitor and control
• Adjust accordingly

The three most common production planning mistakes are:

• Not anticipating hiccups along the way
• Keeping your distance
• Failing to maintain equipment

The key production planning KPIs that you must track are:

• Production rate
• Overall equipment effectiveness (OEE)
• Rejection rate
• On-time orders

Implementing software like Deskera MRP will ease production planning for you while also ensuring its efficiency and, therefore, productivity and profitability.

What is Material Requirements Planning (MRP)?

What is Manufacturing: The Ultimate Guide of 2024

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What is Production Planning? Process & Strategies

• Oliver Munro
• 9 months ago

• October 24, 2023

Efficiency in manufacturing comes from having the right preparation and the most cost-effective processes in your arsenal. The first step in achieving these aims is called production planning.

Production planning is where you map out how your business will operate – the resources, strategies, equipment, and labour required to hit your production goals. Stay tuned as we explore this topic and uncover how you can get the most out of your production planning process.

In this production planning guide

What is production planning.

Production planning is the process of developing a strategy for the production of a company’s products and services. It describes how goods will be manufactured, the expected demand for those goods, and any production requirements such as materials or labour.

In most cases, the production planning process will outline the company’s production goals and how they’ll track success, as well as include a schedule for ensuring products are made in time to meet the forecasted demand.

A production plan should consider all aspects of operating a manufacturing business .

Common elements found in a production plan include:

• Production targets
• Manufacturing processes
• Workforce and equipment requirements
• Goals and KPIs
• Production schedules
• Market analysis
• Demand forecasting
• Quantities of materials required

Production planning allows manufacturers to optimise processes and reduce lead times before production begins, or before making any major investments. It also lowers the risks of overproduction and stockouts, greatly increasing the likelihood that production jobs will be finished on time and to the standard customers expect.

What is a production plan?

A production plan is the deliverable which comes out the other end of the production planning process. This document describes in detail every step of the production process investigated and outlined during the planning phase.

Think of your production plan as an instruction manual for manufacturing your products – it tells you what to do and what you’ll need to do it.

Production planning vs production scheduling

Production planning and production scheduling deal with different stages of the manufacturing process. Where production planning provides a top-level overview of how you intend to produce the goods and services customers need, production scheduling is where you get into the weeds of how a product will be made – for example, the exact production times and labour allocation required.

At the end of the production planning process, you will have a detailed plan for achieving your production goals. Production scheduling is the act of putting that plan into action.

The production scheduling process notes down specific times, dates, and deadlines, checks for conflicts and interdependencies, and sets production into motion. It can be a more complex process to manage, particularly when it involves multiple products.

Advantages of production planning

Effective production planning helps companies minimise the cost of manufacturing products while improving customer satisfaction and company profitability . When you have a tight production plan based on accurate forecasting and data analysis, your business will be in a better financial position.

The main benefits of production planning include:

• Business-wide visibility: A production plan lays out all the manufacturing processes and required materials, including what you need to procure and what’s already available. This bird’s eye view of your resources paints a complete picture of your company’s financial health and current production capacity.
• More efficient processes: Production planning highlights inefficiencies, bottlenecks, and causes for concern in your existing manufacturing systems – before production begins. This enables you to tighten up or rethink your approach in advance, so you don’t waste money or effort on slow processes.
• Lower production costs: When your production plan is based on accurate forecasting and careful assessment of your production needs, there will be many opportunities to reduce your expenditure through more efficient processes and smarter purchasing decisions.
• Reduced waste: Optimising processes and inventory means gaining a more accurate understanding of your requirements. When you can identify the wasteful activities and excessive resources slowing you down – and how to eliminate them – your business will operate more productively and be more cost-effective.
• Improved customer satisfaction: Proper production planning helps to reduce manufacturing lead times so customers can receive orders sooner. It also helps prevent missed sales caused by stockouts, as you’re more likely to have the resources and inventory available to meet demand.

In summary, production planning equals improved productivity and cost savings; productivity equals happier customers and faster production; and cost savings result in more revenue and higher margins.

While smaller firms with simple production requirements may be able to survive for a while without any formal production planning in place, it’s an essential process for any business producing a variety of products or dealing with complex manufacturing requirements.

Next, let’s look at the different types of production planning that exist.

5 types of production planning

There are five common types of production planning methods manufacturers may find useful. Here’s a quick recap of what they are and who they’re effective for.

1. Batch production planning

Batch production refers to the production of many similar items all at once – as opposed to producing items individually or one by one. Batch production planning is how you prepare for this method of manufacturing. It involves determining how to maximise resources without causing overproduction or excessive downtime.

In batch production, assembly is generally completed in steps. Items go through the first step of the production process and are then queued for the next stage of the process. This method is known as batch and queue. When performing batch production planning, it’s helpful to identify specific bottlenecks that occur between batches – or when items are in the queue stage.

2. Job production planning   

Job-based production planning, also known as shop or project-based production planning, refers to the production of items one item at a time, either by a single craftsperson or a team.

Often used by smaller or medium-sized manufacturers, job shop production planning is beneficial in circumstances where it’s difficult to bulk-produce a line of products, such as custom furniture.

Job production planning should focus on ensuring there is capacity for customer-requested customisations in the production plan. This may mean purchasing or preparing extra resources, which can be dangerous for more complex jobs, so accurate forecasting is especially important.

3. Flow production planning

Flow production refers to the continuous production of similar and consistently in-demand goods. Flow production planning generally focuses on the assembly line, where the standardisation of goods and equipment can allow for a highly efficient (and constant) flow of production to take place.

The flow production method aims to minimise the amount of finished goods and work-in-process inventory . Correct planning and preparation improve efficiencies and reduce costs right along the supply chain, making it a beneficial practice for you as well as your suppliers and B2B customers.

4. Mass production planning

Mass production planning is the process of prepping to manufacture a large number of identical items in a short time. Because items subject to mass production typically follow the same production process, factory automation and assembly line optimisation are key areas to focus on.

When you’re creating a plan for mass production, it’s helpful to look for ways to reduce changeover time and increase total production output. The benefits of doing so will have a compounding effect wherein a single optimisation, applied to a large quantity of items, results in a massive time or cost saving.

5. Process manufacturing planning

Process manufacturing, or process production, refers to the manufacturing of items that require predetermined formulas or recipes to produce. Unlike discrete manufacturing, process manufacturing deals with goods that are not typically measured in discrete units such as liquids or gases.

Planning for process manufacturing is crucial because of long changeover periods and a high risk of botched production due to errors. This method can also result in a lot of waste, so it’s especially important to try to minimise the number of resources consumed in production.

• Related: The Ultimate Manufacturing Guide for Production Firms

Production planning process explained

The elements of a perfect production plan are exclusive to each business. In other words, what works for another business may not work for you.

Keeping that in mind, there are some distinct steps in the production planning process that almost every manufacturer ought to follow. Here’s a breakdown of what a typical production planning process might look like.

1. Forecast demand

The first step in the production planning process is to determine your upcoming production requirements based on predicted demand for products.

Demand forecasting involves leveraging historical sales data and analytics to estimate future sales.

This information can be used to set your production goals and can be extrapolated to break inventory and labour requirements for an entire period. Additionally, market research can help you predict whether demand is going to change based on external factors such as product popularity and seasonality.

To ensure accurate demand forecasting, many firms rely on inventory optimisation software to automate the number-crunching and data collection processes.

2. Determine inventory needs and production capacity

Once you have an idea of what products you’ll need to manufacture and their quantities, the next step is to figure out how that translates into materials, resources, and labour.

First, you’ll want to determine the quantities of raw materials and components needed to match the requirements of your forecasted demand levels for each product. It’s also important to note down the machinery and staffing needed to turn those materials into finished goods.

How you manage inventory impacts the efficiency with which you can operate on any given day. Effective inventory management results in less waste and wider profit margins. It also ensures you’re making the best use of your storage facilities.

Your organisation’s current production capacity will tell you if you’re ready to tackle the upcoming period’s schedule – or let you know whether you need to consider hiring more staff, renting or buying more equipment, or outsourcing work to third parties.

3. Map out production steps

After confirming how much resources and production time will be needed, it’s time to map out the processes and steps required to produce your goods. This includes identifying any equipment, tools, and service providers you may need.

Once you’ve mapped out your production steps, you’ll be able to work out which processes can be done simultaneously, which are dependent on each other, and which ones need to be outsourced. It’s also a chance to prepare contingencies in case of equipment failure or other issues.

All this feeds into the foundation of the next step in the process: creating your production schedule .

4. Production scheduling

The production scheduling phase is where you assign tasks to your various workstations, communicate the plan to relevant stakeholders, and plot timelines for each stage of production.

This can be a complex effort, which is why accurate data is vital for the earlier planning stages.

Your production schedule should include how, when, and where items will pass through the various stages of manufacturing – and who is responsible for ensuring they do so successfully.

• Learn more about Access’ advanced production planning and scheduling software, Orchestrate

5. Production control and continuous improvement

Once production has begun, monitor your progress and look for further opportunities to improve or optimise specific processes.

Tracking your performance against your goals and deadlines offers two distinct benefits: It allows you to act quickly to resolve unforeseen challenges, and it tells you how accurate or effective your production planning method was this time around.

As you collect production data, use it to make continuous improvements to the way things are run. Rather than look at your production plan as a one-and-done project, think of it as the beginning of a cycle of constant optimisation.

How to schedule a production plan

Production scheduling is a process involving turning your production plan into an actionable timeline with all the necessary details laid out for the involved parties to access.

To schedule a production plan, you’ll need to go through these four phases:

• Routing: Figure out each step in the journey your raw materials take from the supply chain to the final product. Is it the most economical process or can it be improved?
• Scheduling & Communication: Take your plan and the steps written out in the prior phase and attach dates and timelines to them. Then communicate those expectations to key stakeholders.
• Dispatch & Execution: Dispatching is the giving of orders to personnel and assigning people to their tasks. Execution is the delivery of those actionable tasks.
• Maintenance: This refers to any on-the-fly adjustments of a production schedule necessary to eliminate bottlenecks once production has begun. It involves monitoring and optimising each aspect of your production plan.

Remember the importance of clear communication when it comes to scheduling a production plan. The more time you spend on getting everybody up to speed in the beginning, the less time you’ll have to spend repeating instructions or fixing mistakes later.

Production planning strategies

Let’s take a quick look at some of the strategies you can use to optimise your production planning process. Keep in mind your specific business needs and only use the information that’s relevant to you.

1. Make-to-stock strategy

Make-to-stock refers to producing items to stock them on your shelves until customers buy them.

It’s a particularly useful method in any industry where customers may wish to view an item before purchasing it, such as a car or a musical instrument.

This production planning strategy can increase inventory holding costs and therefore requires accurate demand forecasting. Consider using specialised software to ensure better predictions.

2. Make-to-order strategy

Make-to-order refers to the production of goods only when a customer has placed their order.

Businesses that manufacture unique items or offer a high degree of customisation can benefit from this strategy because it ensures that production always matches demand.

This method typically has slower lead times, but also lower holding costs.

3. Assemble-to-order strategy

Assemble-to-order (or make-to-assemble) is a common production planning strategy among companies which produce perishable goods, as it involves holding all the raw materials you might need but only assembling the product when a customer order comes in. Cake manufacturers, for example, would use an assemble-to-order production plan.

This method results in similar holding costs to make-to-stock strategies, but it can help reduce the chance of wastage and obsolescence; you’re not at risk of producing products customers won’t buy.

4. Chase strategy

A chase strategy refers to the idea of chasing demand with production. In this way, it is also known as a demand-driven production planning strategy.

Following the chase strategy, goods are only made when there is demand for them and production increases or diminishes as demand changes. Companies producing seasonal goods can benefit from applying a chase strategy.

Generally, production planning with this method assumes there will be no leftover stock after the demand wave has died down.

5. Level production

The opposite of a chase strategy is level production, whereby production is constant throughout the year and units are produced equally regardless of the time of year or customer demand.

This production planning strategy is common among manufacturers with cyclical product demand. Snowboard manufacturers, for example, know that demand falls in summer and picks up again before winter.

Inventory holding costs can be quite high in level production. Materials are still stocked to full capacity even when demand is low, but it levels out again during the busy season.

Production factory layout plan: Tips for optimising

Good factory layout planning is key to optimal production and is something you should be considering during the production planning process as it’s your best opportunity to make changes before production begins.

Here are some quick tips for optimising your production factory layout plan:

• Leave room for growth: It’s expensive and disruptive to redesign your factory layout while production is underway. If possible, leave room for flexibility in case of unforeseen changes in production volume or equipment.
• Keep similar manufacturing processes near each other: Keep similar or compatible workstations in close proximity to one another to allow goods to move more efficiently from one stage of production to the next. For example, if drilling follows cutting then see if your drilling machine will slot in beside your drop saw.
• Plan for waste: Where is your waste output going to go? You might require floor space for different types of waste, such as waste which must be thrown out and waste which can be recycled.
• Collaborate with staff: Factory floor planning is best achieved in collaboration with the people who walk that floor every day. Ask your staff where they think the layout could be optimised and what equipment or access might facilitate smoother production.

Finally, don’t forget to consider the cost of making changes to your factory layout.

You may need to close the entire assembly line for a day (or more) to install new equipment, install a mezzanine, or reorganise aisles. In addition to the cost of new equipment, consider how much you’ll lose if manufacturing must be paused.

Production planning KPIs and metrics

When you move from the planning phase into the execution of your manufacturing processes, you’ll need a way to objectively monitor progress.

That’s where these common production planning KPIs can help:

• Production rate: the number of units you’re producing per hour or day.
• Capacity rate: how close your equipment and workforce get to full capacity.
• Downtime: how much of your manufacturing time is unproductive.
• On-time delivery rate: the number of orders delivered on schedule, at the quality expected.
• Rejection rate: the number of products which fail quality control checks.
• Cost per unit: what it costs your business to produce one single unit.

For a longer list of production planning and management metrics, including formulas and definitions, check out our complete guide to manufacturing KPIs .

Article by Oliver Munro in collaboration with our team of specialists. Oliver's background is in inventory management and content marketing. He's visited over 50 countries, lived aboard a circus ship, and once completed a Sudoku in under 3 minutes (allegedly).

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Production Planning: How to Create The Ideal Production Plan

Quick summary.

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Supply chains have grown more complex over time. There’s no end to all of the different challenges that warehouse managers face from manufacturing in-house and maintaining multiple locations.

Production planning is one beneficial way of getting ahead of the rush and having a good understanding of your supply chain management and strength.

Waiting for a rush of orders to disrupt your warehouse flow should never be an option. Use these production planning tips to improve your warehouse planning.

How Does Production Planning Work?

Production planning is the process of efficiently coordinating resources, activities, and processes in manufacturing to meet customer demand. It begins with demand forecasting and aligns production with sales plans through sales and operations planning (S&OP). The plan considers resource availability, schedules production tasks, manages inventory, and incorporates quality control measures.  Capacity planning ensures production aligns with manufacturing capabilities, while risk management addresses potential disruptions. Continuous monitoring allows for real-time adjustments, and the process fosters continuous improvement. Production planning aims to optimize production efficiency, cost-effectiveness, and customer satisfaction, making it a vital aspect of supply chain management.

Benefits of Good Production Planning

There are a few key benefits that come with good production planning.

• Improved customer service : When you can accurately forecast production needs, you can better meet customer demand and avoid stockouts.
• Increased production efficiency : A well-planned master production schedule prevents bottlenecks and allows for a smooth workflow through the warehouse.
• Reduced production costs : A good production planner will optimize the production process, reducing waste and ensuring that resources are used in the most efficient way possible.

Key Methods of Productions Planning

One of the most important production planning tips is to communicate your production plan to all parties involved.

Your production planning team should work closely with purchasing, operations, quality contro l, and sales teams to create an effective production schedule.

Ongoing communication about changes or disruptions within the supply chain is critical for production planning.

Specific to manufacturing a single product, the job method production planning is a production-oriented plan that uses routings to define the sequence of operations and tasks required to manufacture a product.

The job method production plan starts with the finished goods and works backward, defining each operation and task needed to produce the final product.

This type of production planning is common in batch and repetitive manufacturing environments with single products and smaller warehouses.

Batch Production Method

Batch production refers to individual products produced in batches or groups specific to a single product. In this type of production, products are made to order and typically in varying quantities.

Operations within a batch production environment will generally have some common characteristics:

• The same product is produced over and over again
• Operations are usually done sequentially
• There is often a lot of setup time required between each batch

Flow Method

This method is based on the continuous production of large quantities of one or more products. Flow production refers to the continual production flow and uses assembly lines, conveyors, and other automation tools. Systems are closely monitored using an OEE calculator and similar tools to ensure operations run efficiently.

Flow production typically requires less setup time than batch production methods because there is no need for multiple setups between different production runs.

Process Method

The production planning process is closely aligned with the production scheduling of jobs. Production planners determine which steps come after, how they should be processed, and the production rate.

Production planners work to determine when each step will be processed and how many staff are needed for each step in production scheduling.

This method is common in businesses with a high mix of products and frequent changes to the production schedule.

Mass Production Method

A production planning approach that uses standard routings to produce products in large quantities is known as mass production.

This type of production planning is common in businesses with low product variety and high demand.

In mass production, the goal is to produce as many product units as possible while maintaining quality standards.

How to Choose the Best Production Plan

Most obviously, the type of product you’re producing and the most appropriate production process will impact the production planning method you choose.

Here are some factors to consider as you determine what production plan is best for you.

The Level of Demand

One key question to ask yourself when choosing the right production plan is whether or not your products experience a high volume of orders. Flow production may be the best option to maintain production levels if products are constantly in demand.

The Number of SKUs That Will be Produced

The more unique products you produce, the less likely job or batch production planning will be effective. In these cases, process or mass production methods are better suited for producing large quantities of products.

How Many Steps to Production Are There?

Another important factor to consider when choosing a production plan is whether or not there are multiple production steps required for each product. If so, you’ll want to know if the production processes can be performed simultaneously or sequentially. The decision on how to produce your SKUs will depend heavily on this information.

The Level of Variability in the Production Process

If production processes are highly variable, it can be difficult to use batch production planning. In this case, flow production is often a more effective option because it allows for greater flexibility and faster changes to production schedules.

The Skill Level of Your Workforce

If your workforce has limited production skills or production is performed by untrained workers, your planning will be different than if you’re working with a skilled labor force. Many companies find that process production planning is a good option because it allows for better control of production lines and minimizes the need for highly skilled labor to perform complex steps.

Steps to Creating Your Production Plan

Now that you have a better understanding of the different production planning methods and how you’ll choose the right method for you, it’s time to create your own production plan.

The following steps will help you develop a production plan that meets the specific needs of your business.

1) Gather Estimates and Forecasts of Product Demands

The first step in production planning is to gather data on estimated product demand. This information can come from sales forecasts, customer surveys, or other market research sources.

Once you have an idea of the level of demand for your products, you can begin to plan production around these estimates.

2) Assess Current Inventory Levels

Inventory data is also essential for production planning. You need to know what inventory levels are currently available and how much stock you’ll need to produce your estimated product demand.

This information will help you determine the production schedule and identify any potential bottlenecks in production.

It’s important to note that not all products can be produced in large quantities. If you have products only produced in small batches, production planning will need to take this into account.

3) Plan and Determine Needed Resources

The next production planning step is determining production capacity, overall production costs, and the required resources. This includes equipment, raw materials, and labor. Once you have an idea of what’s needed, you can develop a production plan.

Many factors will impact production capacity, including the number of products being produced and the level of demand.

4) Monitor Production Levels and Plan Release Dates

Monitoring production levels and planning release dates is the next step in your process. This will ensure production is on track and running smoothly. You should also set goals and track key performance metrics (KPIs) for production, such as the number of products to be completed per day or week.

These production planning steps can help your business run more efficiently and ensure products are delivered to customers on time.

5) Make Adjustments to Improve Production for the Future

Finally, production planning should include an evaluation of production processes and assessing how production was managed during the process.

This information can be used to make production methods or equipment changes for future product runs. This helps you avoid issues that occurred in previous production runs, saving time and money down the road.

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From employee tracking to inventory control and stocking, you’ll get all the help you need to ensure that your business runs smoothly and your team keeps fulfilling production orders at a record pace.

Choose Extensiv Warehouse Manager for your inventory management needs , and you’ll get a team of experts to guide you and get your new inventory management system up and running.

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Product planning faqs.

An Enterprise Resource Planning (ERP) system plays a significant role in production planning and scheduling by providing a comprehensive and integrated platform to manage various aspects of manufacturing operations. An ERP system streamlines production planning by integrating various aspects of the manufacturing process, providing visibility, and enabling efficient utilization of available resources. It leads to improved production efficiency, reduced lead times, on-time delivery, and enhanced production control.

A product plan typically includes several key components that help guide the development, launch, and life cycle of a product. These components are interconnected and provide a clear roadmap to reach production goals. A typical production management plan includes components such as material requirements, real-time market analysis, product vision and strategy, product roadmap, features and prioritization, resource allocation, marketing and launch plans, etc.

Demand planning and production planning are closely interconnected in the supply chain and manufacturing process. Demand planning is the process of forecasting customer demand for a product, while production planning is the process of determining how to meet that demand efficiently. Demand forecasting is a critical input to production planning, as it provides valuable insights into customer demand, which allows production planners to optimize resources, streamline production schedules, and meet customer orders efficiently. By aligning production with demand, organizations can reduce costs, improve stakeholder and customer satisfaction, and enhance overall supply chain profitability.

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Production planning & scheduling, production planning vs. scheduling: understanding the key differences.

In manufacturing, production planning and scheduling are two essential concepts that play a critical role in achieving operational efficiency, reducing costs, and meeting customer demands. While these terms are often used interchangeably, they represent two distinct stages of the manufacturing process. In this post, we'll take a closer look at the key differences between production planning and scheduling, and how they work together to optimize manufacturing operations.

Help, the schedule does not run as planned

What is Production Planning?

Production planning is the process of creating a comprehensive roadmap that guides the manufacturing process from start to finish, from the procurement of raw materials to the delivery of finished products. It involves determining what products to make, how much to produce, and when to produce them. Key elements of production planning include capacity planning, Material Requirements Planning (MRP) and resource allocation.

👉 Capacity planning involves forecasting the demand for products and services and ensuring that the necessary resources, including machinery, labor, and equipment, are available to meet that demand.

👉 Material Requirements Planning (MRP) involves determining the necessary raw materials and components needed to fulfill a specific production plan and ensuring that they are available in the right quantities and at the right time. It relies on data such as bill of materials, inventory levels and lead times to calculate the material requirements.

👉 Resource planning involves assigning resources to specific tasks and activities based on their availability and suitability.

What is Production Scheduling?

Production scheduling, on the other hand, is the process of creating a detailed execution plan to ensure the efficient use of resources and timely delivery of products. It involves managing and coordinating resources such as equipment, materials, and labor to meet production goals.

👉 Sequencing is a critical component of production scheduling, which involves determining the order of production operations to optimize the manufacturing process, given dependencies and changeover constraints.

👉 Resource allocation is another important aspect of production scheduling. This involves determining which resources are required to complete a production job and assigning them accordingly. Resource allocation helps to ensure that production runs smoothly and that resources are used effectively.

👉 Prioritization is also a key element of production scheduling. It involves deciding which jobs or tasks to prioritize based on factors such as customer demand, order size, and production deadlines. Prioritization helps to ensure that critical tasks are completed first and that production is optimized to meet business goals.

👉 Monitoring is the final component of production scheduling. It involves tracking the progress of the production process and adjusting as needed. For example, if a particular task is taking longer than expected, adjustments can be made to the production schedule to ensure that deadlines are still met. Monitoring helps to ensure that production runs smoothly and that any issues are addressed promptly.

Key Differences between Production Planning & Scheduling?

While production planning and scheduling are interrelated, they represent two distinct stages of the manufacturing process. The main differences between the two include their scope, time horizon, and level of detail. Production planning is a more strategic process that focuses on long-term goals, while scheduling is a more tactical process that focuses on short-term execution to meet the goals set by production planning.

To illustrate the difference between production planning and scheduling, let's consider the example of a dairy factory that produces cheese and butter.

In this scenario, production planning would involve determining the quantities of milk and other raw materials needed to meet the demand for cheese and butter over a specific period, such as a week or a month. The production planner would need to consider factors such as the availability of milk from suppliers, the processing capacity of the factory and the market demand for cheese and butter. They would use this information to create a production plan that outlines realistic quantities of each product group to be produced, the processing steps required, and the timeline for each stage of production.

On the other hand, production scheduling would involve determining the exact sequence and timing of each production step required to turn the raw materials into finished cheese and butter products on a more granular level, such as a day or a week. For example, the scheduler would need to determine when to pasteurize the milk, when to add the cultures and enzymes, when to cut the curd, and when to package and label the finished products. They would need to consider factors such as the availability of processing equipment and personnel, the optimal processing temperature and humidity, and the desired product quality and consistency. The scheduler would use this information to create a detailed production schedule that outlines the specific times and durations of each processing step.

The Role of Supply Chain Planning Software.

Planning in Excel has been the standard for a long time. Nowadays supply chain planning software is an indispensable tool that can help manufacturers to optimize their production planning and scheduling processes. Some of the key features of supply chain planning software include demand planning, capacity planning, materials requirement planning and inventory management next to production planning & scheduling. Some tools also provide real-time information on the status of work orders, materials availability, and machine utilization.

It's important to note that not all manufacturing planning software tools are created equal. Some software tools, like Kinaxis , 09 solutions or SAP , focus on a broad range of supply chain functions, but usually come with a large implementation cost. Other tools like Garvis (demand planning) or Checkmate (production planning & scheduling) are more light-weighted to set up, yet highly effective to deal with specific planning functions.

Let's wrap up.

Production planning and scheduling are two critical components of manufacturing operations that require a clear understanding of their unique roles and differences. Effective production planning can help manufacturers to set the stage for success in the long run, while production scheduling can help to ensure that operations run smoothly and efficiently on the short term. By leveraging the power of supply chain planning software, manufacturers can optimize their operations and achieve better results.

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Production Planning vs Demand Planning: Key Differences Explained

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Production Planning vs Production Control: What Should You Focus On

April 16, 2024 by Bob Scarborough

The distinction is important to look at how your team matches up to the system functional blocks and to help think through all of the required business processes that are required for Semi Operations.

Production Planning , using the SemiOps planning module, analyzes supply and demand to recommend a production plan. The production plan supports recommendations for production orders to suppliers and for backlog commit dates. It supports reporting and thinking about how the company will meet production objectives and deliver products to customers. It is understanding both available supply and future supply, understanding demand and what needs to be done and when. This is the point where production control picks up.

Production Control is about executing the plan. It is the process of managing the day-to-day moves and transactions with suppliers. Suppliers have procurement processes and may require build instructions, likely using a quote from the supplier you have previously negotiated. Once production starts the suppliers will update you on the status of delivery, will ask you to acknowledge completion of production steps, and support moves to continue the production process. Reporting of ‘what is’ rather than ‘what could be’ is core to Production Control.

Planning is looking ahead and saying what should be, whereas production control is the processes of ordering, receiving, acknowledging the transaction flow with suppliers. The Operational leadership and strategists think more on the planning part and not on the execution. In order to make things work you really need to have the execution part done well too. Both planning and production control are equally important for success.

To get a high-level overview of how production planning works in Tensoft SemiOps, read this blog post . For more information on Tensoft SemiOps and its features, click here or contact us !

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Production Planning Vs. Master Scheduling

Production Planning

Production Planning and Master Scheduling are sometimes combined depending on the company and their available resources but they have very distinct and differing responsibilities. The main difference is that production planning works with MRP planned orders & MPS firm planned orders outside of the cumulative lead-time window while master schedulers work with converting the MRP planned orders into MPS firm planned orders and ultimately into work orders once they come into the execution window or inside the cumulative lead-time.

You can see the problem as any changes made by the master scheduler within the cumulative lead-time window can impact execution activities and create knee-jerk throughout the supply chain. Production planning is critical because you want the plan to be synced to demand, balanced across correct work centers and materially supported as it enters into the scheduling phase of the planning horizon.

Production planning is the process of modeling the available capacity in order to effectively balance workloads across the organization while keeping in sync with the changing demand picture. Capacity modeling is basically a mathematical analysis of how many units can be manufactured over a set time period utilizing a specific work-center(s) or resource(s). Usually these calculations are presented in time buckets such as Average Daily Rates (ADR) or how many units, on average can be made per day.

Averages are used because the complexity of each product manufactured on a given resource usually varies. So for example, product ‘A’ might have an ADR of 600 while product ‘B’ might have an ADR of 400 yet they both are manufactured on the same resource. So if half the day is spent on product ‘A’ and the other half day is spent on product ‘B’ then the total production on that resource for the day is 500 units. Rough cut capacity planning tools understand this complexity so that when you are scenario planning, based on the mix of products you load into the MPS, it optimizes the capacity utilization accordingly.

Some organizations only ‘firm up’ production plans inside the cumulative lead-time window and allow planned orders to ‘float’ beyond that window based on demand signals received. Other organizations might choose to firm up further into the future and even the entire year. There are pro’s & con’s to both approaches depending on the agility of your supply chain and the structure of your planning team.

Production planning is based on the demand signals received from the annual constrained forecast that are translated into supply or replenishment signals based on available inventory, lead-time and capacity. Additionally, these replenishment signals can change based on inventory adjustments, new or cancelled sales orders, shorted or missed production quantities, changes to system settings and a variety of other reasons.

Members of the production planning team work closely and collaboratively with the Master Schedulers to balance workloads across multiple work-center groups and manufacturing plants to ensure all resources are optimally loaded into the MPS module. They then work between Supply Chain, Procurement and Demand Management to ensure correct signals are being transmitted back into the MRP and are responsible for effectively communicating gaps between demand and supply as it relates to manufacturing and procurement capabilities.

This is achieved by monitoring ‘exception’ reports generated by the MRP system. Exception reports can be generated anytime and will ‘flag’ firm purchase orders, firm MPS planned orders and live work orders for production that need to be rescheduled or cancelled. Planned orders will automatically change with demand signals but firm MPS planned orders, firm purchase orders and live work orders for production will not automatically change which is why the exception reports are critical for identifying the changes that need to be made.

Many times, the production planners are organized into functional areas based on plant locations, work-centers, products manufactured and/or business segments. They are usually responsible for balancing demand & capacities and communicating with Master Schedulers, plant supervisors & managers, new product development teams, purchasing, distribution and demand managers to resolve any issues effecting the planning, timing and execution of production for their respective areas.

Production planners monitor and adjust planning loads beyond the planning time fence (cumulative lead-time) where changes can be made without disrupting actual work being conducted. They serve as the gatekeepers to ensure upstream & downstream activities are not disrupted due to changes made to the production loads that would otherwise interrupt execution activities. Production planners are also responsible for setting and adjusting planning parameters that effect how the MRP calculates things such as lot sizes for production, run frequencies, planning time fences, planning horizons and determinations of make-to-order versus make-to-stock.

During the annual budgeting process they are responsible for loading and balancing the annual production plan that is used to drive the overall supply plan that enables the organization to determine their ability to execute or constrain the unconstrained forecast for the company. This process drives visibility to the need for capital expenditures that may need to be made in order to fulfill the company’s revenue plan. They are responsible for modeling the production plan and ensuring that it stays in sync with the overall expectations of the revenue plan of the company.

This is one of the pro’s to firming up the MPS for the entire year is the ability to freeze production requirements and see less disruption every day from changes to planned orders. It provides a more stable picture for FP&A, purchasing & manufacturing and allows for more precise scenario planning to take place especially during the annual budgeting process.

Typically there is a need to calculate manpower, equipment utilization, cost of goods sold, projected inventory levels and departmental budgets and this becomes much easier with a frozen plan that is driven into the live environment of your companies ERP system. The con is that even some of the tier 1 ERP systems out there have very little in the way of tools to help you manage a planning horizon of the entire year. Their tools are usually designed for near term use such as current month or at most 3 months out. If you attempt to run reports for the entire year you may get 3,000 pages of useless data.

This becomes a pro in the case of letting planned orders float since they automatically adjust as signals change outside the cumulative lead-time window thus, less exception errors to react to. To compensate, many ERP software providers have extended their offerings by adding capacity planning modules like SNP offered by SAP. SNP is the acronym for Supply Network Planning which is basically an add-on feature used for planning your supply resources.

In many cases the Production Planner is left to his/her own devices and need to develop their own tools for managing this process off-line. Applications like Microsoft Excel, Microsoft Access and SQL Server are often used due to their compatibility with many of these ERP systems providing the ability to transfer data thru uploads and downloads. Many software development companies have taken notice of the need for effective tools that allow for this kind of scenario planning and visibility.

In the past decade there have been a large number of products developed with this exact thing in mind and there has been a vast effort to sync up with business intelligence reporting tools leading to the revelation of big data.

- Master Production Scheduling

Master schedulers monitor and adjust MPS planning loads within the planning time fence (cumulative lead-time) where any changes made have the potential to disrupt actual work being conducted. They serve as the front-line gatekeepers to ensure upstream & downstream activities are not disrupted due to changes made to the production schedule that would otherwise interrupt scheduled execution activities.

They are required to communicate with production planners, plant supervisors & managers, new product development teams, purchasing, distribution and demand managers to resolve any issues effecting the planning, timing and execution of scheduled production for their respective areas. They typically have the responsibility to ensure they have the materials, manpower and resources to meet the production schedule without disruption or delay.

Master schedulers are the ones who convert the firm planned orders into work orders for distribution to manufacturing floor for execution. They are required to monitor work order execution and report on schedule adherence and shop floor execution. They need to work closely with purchasing, receiving, material flow and shop floor personnel to ensure all scheduled work orders can be completed without disruption. They are required to collaborate with internal resources such as purchasing, product development, engineering and sales for the phase-in of new products and phase-out of discontinued products.

Master Schedulers also work with maintenance teams to incorporate the appropriate amount of scheduled down-time for any required equipment preventative maintenance. In many organizations they are the connection between the front offices and the production floor acting as a liaison to ensure plans are effectively communicated and carried out.

- Planning Horizons

The planning horizon is the amount of time an organization will look into the future when preparing a strategic plan. In manufacturing, a planning horizon is a future time period during which departments that support production will plan production work and determine material requirements. Typically this is one full (usually rolling) business year.

With the on-set of Sales & Operations Planning this can be extended two or more years however the planning is usually at an aggregated level versus a detailed level. Planning horizons are usually segmented into time-frames in which certain activities occur. Most common are the planning, scheduling and execution time frames. The execution window is the number of days/weeks which you have live work orders scheduled and issued to the production floor. In the below example we are representing that as one week.

The scheduling window is typically your established cumulative lead-time window less the execution window. In the below example we are representing that as four weeks. The planning window is all of the days/weeks outside of the cumulative lead-time window. In the below example we are representing that as weeks 6 thru 52.

Time Fences

There are several types of time fences depending on the organization and ERP package in use. The two main ones are the demand time fence and planning time fence. The Demand time fence is the point in time inside of which the forecast is no longer included in the total demand and projected available inventory calculations. Inside this demand time fence period only customer orders are considered. Beyond this demand time fence period and depending on the forecast consumption technique chosen it could be that total demand is a combination of actual orders and unconsumed forecasts or just forecast.

With the entrance of ATP & global ATP on the scene, there are now additional methods to prevent customer orders from being placed when manufacturing capability isn’t sufficient. These orders would then have to be dated into the future where adequate resources are available. Then there is the planning time fence which does not allow automatic changes to occur inside this time period during MRP regen. This is the amount of time, from the current day, where very few or no changes can be made to the master schedule without a full evaluation and collaboration from executive decision makers within your organization. Those changes would then show up on an exception message with a signal to expedite.

This allows time to investigate the feasibility of making the change and if further approval is required based on company/department policy. The reason for this fence is because if the master schedule is changed inside this time period, for any reason, this can be expensive to the company as additional production can cause delays/shortages in shipments to customers, disrupt the availability of raw materials to support production needs and basically amplify a knee-jerk reaction throughout the entire supply chain.

This is one of the main complaints from manufacturing operations is the need to stabilize the manufacturing loads and flow product into and out of their facility without interruption. The combination of a good demand management process, a balanced production plan, well trained master schedulers, a statistically calculated safety stock and properly established buffers/Kanbans can make this a reality.

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The Main Differences Between Planning and Scheduling

5/24/21 12:00 AM

By PlanetTogether

Production planning and scheduling tend to seem overwhelmingly similar. However, there are some differences that set these two concepts apart. The main difference between planning and scheduling is that planning determines what and how much needs to be done while scheduling defines who and when the operations will be performed. 

Although they are different processes, they come together within operation and production scheduling. As one depends on the other, it is important to ensure that the planning component is played out accurately to create an efficient production schedule. Closing the gap in terms of discrepancies between the two processes will ensure efficient results for the company as a whole. Planning and scheduling are essential for manufacturers that are seeking to have a thorough production plan and utilize their resources to the fullest extent.

The Main Differences Within Planning and Scheduling 

There are various reasons as to why planning and scheduling differ, which the following concepts are listed below: 

• Planning - Planning pertains to the process of creating a plan of which materials and resources will be required to fulfill incoming and forecasted demand. This step is crucial to ensure that you have enough materials and resource capacity available to produce your orders on time. This component pertains to the ‘what’ and ‘how’ of any project: what exactly needs to be achieved and how it will be accomplished. 
• Scheduling - Scheduling pertains to establishing the timing of the use of specific resources of that organization. In production, scheduling involves developing schedules for workers, equipment, and materials. It reflects on the ‘when’ of a project, by assigning the appropriate resources to get the production plan completed within a period of time. Creating optimized production schedules ensures that your facility is able to reduce costs, increase productivity, and deliver goods to customers on time. 

In order to create accurate and realistic production plans that allow manufacturers to react quickly to changes, it is important to have a production plan that is aligned with the resource and material scheduling process. Having any discrepancy or divergence between the planning and scheduling process creates inefficiencies that can be costly for your business. The bigger the divergence, the larger the cost. 

This is where an Advanced Planning and Scheduling (APS) like PlanetTogether will benefit manufacturers. With concurrent planning and scheduling, manufacturers ensure that all scheduling constraints are taken into consideration when creating the production schedule which leads to smoother operations and increased customer satisfaction. 

Our production plant is faster and more efficient, which keeps our facility in better spirits and running smoothly. GREGORY VAN LEIRSBURG, PRODUCTION SCHEDULER, STANDARD PROCESS SUPPLEMENTS  

Concurrent Planning and Scheduling

An Advanced Planning and Scheduling System quickly and automatically creates a concurrent production plan and schedule that takes into consideration all of the constraints, sequencing preferences, and management priorities you have. 

Being able to plan and schedule together will allow for better coordination across departments. This can help reduce waste as all departments will have visibility in the number of items that are available and are being produced. 

PlanetTogether’s Advanced Planning and Scheduling system allows you to have extended visibility between your scheduling, production, and procurement departments to keep demand and supply aligned to improve customer service and meet your delivery dates. It will also allow you to reduce your material costs while minimizing schedule disruptions. 

Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With PlanetTogether APS you can:

• Create optimized schedules that balance production efficiency and delivery performance
• Maximize throughput on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to resource capacity
• Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo !

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Business plan versus sales plan: which is more important.

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However, modern businesses can be a bit shaky. The day-to-day of business ownership can feel as though an earthquake is constantly testing these key pillars. If you could only choose one pillar to hold your business together as the others fell away, you would likely need to rely on sales. Without it, revenue would stagnate. This is why building out a business model that is heavily sales-centric isn’t that wild of an idea: so much so that I might actually advise some startups to skip the step of developing a business plan altogether or replace it with something a bit more agile.

Developing A Sales Plan, Not A Business Plan, For A Lean Business

The first step to starting a business is to create a business plan. Right? Well, if you’re running a lean business, you may be able to save time with just a sales plan.

Think about it. A truly effective sales plan is robust and includes enough information to ensure steady business growth. For businesses that don’t require investors or strategic partnerships, a business plan may be less of a necessity. So, rather than focusing your efforts on your company profile, you can place more attention on your sales performance.

A great example is how a sales team might view prospecting as "scary." Data from a 2015 Hubspot study showed that reps struggle with prospecting more than other parts of the sales process. Developing a sales plan with a well-thought-out prospecting strategy can help lessen the struggle and speed up the sales process.

In those crucial first years of business ownership, many companies fail. Maybe the failure is due in part to a lack of initial research, but it is 100% due to a lack of sufficient revenue. So, while it’s imperative not to overlook any aspect of business ownership, you’re likely undervaluing your sales plan by just making it one piece of your business plan. In my experience as a founder and CEO, I've found that you can help keep the lights on by placing a greater emphasis on your sales plan -- even if you run into other operational snafus.

What To Know Before You Build Your Sales Plan

It’s important to understand that in order for a business to successfully flourish in any industry, you generally need to do a great deal of structuring, planning and self-correcting.

• Know your brand.  At the core of any business are its "actions" -- they make up its brand. Your brand should be instinctual by the time you even have your first customer interaction. You should reflect your brand from both an internal and external lens for every who, what, why and how of your business. Your actions won’t feel as unique and authentic if only your internal team gets to feel them. Likewise, you may not come off as genuine if you don’t operate internally in the same way you present yourself to customers. A brand is the heart of every customer engagement, and therefore, it’s the heart of every sales plan.

• Know your industry.  What are your customers going to expect from you? What have they seen enough of already? You don’t want to be the black sheep of the industry, yet you can’t afford to blend in as a newcomer. With the right amount of upfront research, you can find that right balance of industry expectations and what makes you unique.

• Know your products.  From every practical application to every whimsical extra feature, every member of your team should be deeply intimate with the ins and outs of your products. No detail is too small when you’re trying to develop sales collateral, marketing strategies and elevator pitches.

Key Elements Of A Comprehensive Sales Plan

Whether you have a business plan or not, developing your sales plan is not the time to cut corners. As you’re putting together your sales plan, heavily consider these key elements:

• Define your market.  How big is your market, and what slice are you trying to cut out for yourself? What events or innovations are defining or redefining your industry?

• Define your territory.  Beyond any geographical location, your territory encompasses your position within your market, your digital presence and your ideal client. Understand where you are now within your industry, but constantly search for opportunities to get to where you want to be.

• Define your sales channels.  Where does your audience spend their time? What channels make sense for your industry, product and brand identity? You don’t want to waste your resources marketing in the wrong channels, but you certainly don’t want to miss out on key opportunities to engage.

• Fill in the gaps.  No business starts off at its ideal finish line. In order to achieve continual growth for your business, you’ll likely need some assistance from industry experts. Whether you’re hiring a new employee or collaborating with a contractor, consider the gaps between you and your ideal annual revenue and the smartest ways to fill those gaps.

If you’re looking to start a new business venture, don’t let an underdeveloped sales plan be your downfall. Consider the ways you can take traditional business planning and amplify your new startup with a sales-centric strategy.

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Business Plan vs. Strategic Plan: Understanding Differences

By T. Leigh Buehler   |  07/05/2024

In a competitive business environment, strategic planning stands as a foundation for success. For students studying business or entrepreneurial programs, understanding the principles and practices of a strategic plan is essential.

Understanding strategic planning equips future business leaders with the ability to distribute resources efficiently, manage potential risks, and sustain competitive advantages. Knowing how to conduct strategic planning equips students with the knowledge and skills needed to successfully navigate the complexities of running a business.

However, many potential entrepreneurs and future business leaders struggle with understanding the difference between business plans and strategic plans. These are two basic, but fundamentally different, documents that play a pivotal role in guiding an organization toward its goals.

While both documents share the common objective of charting a course for success, they serve two distinct purposes that cater to different stages of a company's lifecycle. Understanding the differences between these two plans is critical for budding entrepreneurs and business-minded individuals alike.

So, let's dive in and unravel the intricacies of the business plan versus the strategic plan.

The Business Plan: Laying the Foundation

Some of you may already have great ideas for a new business venture. You may be eager to turn your vision into reality.

But where do you begin? Enter the business plan – think of it as the blueprint for your business.

It details the nuts and bolts of your operation. You will use it to outline your product or service, to define your target market, and to begin crafting a marketing strategy. The business plan covers it all.

A business plan explains several critical aspects of a business. It serves as a roadmap for the business's development and operations. It helps to guide entrepreneurs through the initial stages of launching a business. It not only articulates the main mission and objectives, but it should delve into details like financial projections, operational logistics, and competitive analysis.

Understanding and addressing stakeholders' needs and expectations is important in a business plan. Stakeholders are individuals or groups that have an interest in the success and performance of a business. They can influence or be affected by the business's operations, objectives, and outcomes.

Let’s use an example to explore what a business plan focus should be. Say you're passionate about sustainability and want to start an eco-friendly fashion brand targeting environmentally-conscious consumers.

Your business plan would outline your brand's:

• Unique selling proposition (USP)
• Production processes using sustainable materials
• Pricing strategy
• Distribution channels
• Sales forecasts

Additionally, it would assess competitors in the market, identify potential risks, and propose all mitigation strategies.

An Example of a Business Plan

(It should be noted that the numbers and research below are hypothetical. They are used only as examples for this sample business plan. The numbers and research included are not statistically accurate.)

Executive Summary

XYZ Company is an innovative eco-friendly fashion brand committed to sustainability and ethical production. Our mission is to offer stylish, high-quality clothing made from organic and recycled materials while minimizing our carbon footprint. By integrating eco-friendly practices at every stage of production while emphasizing transparency, we aim to become a leading name in sustainable fashion.

Business Description

XYZ Company will produce a range of clothing items, including casual wear, office attire, and accessories, all designed with sustainability in mind. Our products will be available through an e-commerce platform only. The business will be headquartered in Austin, Texas.

Market Analysis

The sustainable fashion market is growing rapidly as consumers become more aware of environmental issues and the impact of fast fashion. According to a report by Environmental Research, the global sustainable fashion market size was valued at $6.45 billion in 2019 and is expected to grow at a compound annual growth rate of 9% between 2023 to 2027. Our target market includes environmentally conscious consumers aged 18-45, with a focus on urban areas where sustainable living is more prevalent.

Product Lines

• Casual wear: T-shirts, jeans, hoodies, and dresses made from organic cotton and recycled materials.
• Office attire: Eco-friendly suits, blouses, and trousers tailored from sustainable materials like hemp and bamboo.
• Accessories: Bags, hats, and scarves crafted from upcycled fabrics and natural dyes.

Marketing and Sales Strategy

• Brand identity: Position XYZ Company as a stylish, high-quality, and eco-friendly alternative to traditional fashion brands.
• Digital marketing: Utilize social media platforms, influencer partnerships, and content marketing to reach our target audience.
• E-commerce platform: Develop a user-friendly online store with detailed information about our sustainable practices and materials.

Operations Plan

• Supply chain: Source materials from certified organic farms and recycled fabric suppliers. Ensure all partners adhere to fair labor practices.
• Manufacturing: Partner with factories that use renewable energy and have low-waste production processes. Implement lean manufacturing principles to reduce waste.
• Distribution: Use eco-friendly packaging and carbon-neutral shipping options.

Financial Resources

• Startup costs: Initial funding requirements include $400,000 for product development, marketing, website development, and initial inventory.
• Revenue streams: Primary revenue from online sales and additional revenue from branded accessories.
• Projected sales: Expect to reach $1 million in sales by the end of the first year, with a growth rate of 12% annually.

Management Team

• Founder and CEO: Jane Doe, with over 10 years of experience in fashion design and a passion for sustainability.
• COO: John Smith, an expert in sustainable supply chain management.
• Marketing Director: Emily Green, a digital marketing strategist with a background in eco-friendly brands.
• Head of Design: Alice Brown, a seasoned designer with a focus on sustainable materials and innovative design.

Social Responsibility and Impact

XYZ Company is committed to transparency, fair labor practices, and giving back to the community. We will donate a percentage of our profits to environmental charities and participate in community initiatives to promote sustainable living.

XYZ Company aims to revolutionize the fashion industry by proving that style and sustainability can go hand in hand. By focusing on eco-friendly practices and ethical production, we plan to attract a loyal customer base that values quality and environmental responsibility. Join us in making fashion a force for good!

Strategic Planning Process: Navigating the Course

Keeping your hypothetical company in mind, let’s now fast-forward a few years. Your eco-friendly fashion brand has gained traction, and you're eyeing expansion opportunities. Now you will dig into strategic planning and focus on developing your strategic plan.

Unlike the business plan, which focuses on the tactical aspects of day-to-day operations, the strategic plan serves as a broader perspective on long-term objectives, organizational direction, and future growth. It’s a strategic roadmap of sorts.

Strategic planning guides your business through ever-changing markets and competitive dynamics. It involves setting key goals, defining strategic initiatives, and allocating resources to achieve sustainable growth and a competitive advantage. Through strategic planning, business leaders learn to identify potential risks and challenges that the business might face.

Using our eco-friendly fashion brand as an example again, let's say you've successfully established a loyal customer base and now aim to expand into new markets.

Your strategic plan would entail these key elements:

• Conducting market research to identify viable expansion opportunities
• Assessing the regulatory environment
• Devising entry strategies
• Allocating resources accordingly
• ·Outline strategies for brand positioning, product diversification, and scalability

Example of a Strategic Plan

(It should be noted that the numbers and research below are hypothetical. They are used only as examples for this sample strategic plan. The numbers and research included are not statistically accurate.)

Vision Statement

To become the leading global brand for stylish, sustainable, and ethically produced fashion that will inspire a shift towards eco-conscious consumerism and responsible business practices.

Mission Statement

XYZ Company is dedicated to creating high-quality, eco-friendly clothing and accessories. We strive to minimize our environmental impact and promote fair labor practices throughout our supply chain. By educating our consumers and setting industry standards, we aim to lead the charge in sustainable fashion.

Core Values

• Sustainability: Commitment to environmentally friendly practices in every aspect of our business.
• Transparency: Open communication about our sourcing, production, and business operations.
• Ethical practices: Ensuring fair labor conditions and respecting human rights.
• Innovation: Continuously improving our products and processes to reduce our ecological footprint.
• Community engagement: Supporting environmental and social causes that align with our values.

Strategic Goals and Objectives

Goal 1: Establish a Strong Brand Identity

Objective 1.1: Develop a cohesive brand message that emphasizes sustainability, quality, and style.

Action Steps:

• Create a brand style guide and messaging framework.
• Design a logo and visual elements that reflect our eco-friendly values.
• Develop a content strategy for social media, blog, and other marketing channels. 

Objective 1.2: Increase brand awareness and recognition.

• Launch targeted marketing campaigns on social media platforms.
• Partner with eco-conscious influencers and bloggers.
• Attend and sponsor sustainable fashion events and trade shows.

Goal 2: Expand Product Line and Market Reach

Objective 2.1: Diversify our product offerings.

• Conduct market research to identify customer needs and trends.
• Develop new products using sustainable materials and innovative designs.
• Introduce seasonal collections to keep the product line fresh and appealing.

Objective 2.2: Reach a wider audience.

• Optimize our e-commerce platform for a global market.
• Implement a multilingual website and marketing materials.

Goal 3: Enhance Operational Efficiency and Sustainability

Objective 3.1: Optimize our supply chain for sustainability.

• Source materials from certified organic and recycled suppliers.
• Work with manufacturing partners who use renewable energy and adhere to low-waste practices.
• Regularly audit suppliers to ensure compliance with ethical and environmental standards.

Objective 3.2: Reduce our carbon footprint.

• Implement carbon-neutral shipping options.
• Use eco-friendly packaging materials.
• Invest in carbon offset programs and renewable energy initiatives.

Goal 4: Foster Customer Loyalty and Engagement

Objective 4.1: Build a community of loyal customers.

• Launch a rewards program that offers discounts and exclusive products to repeat customers.
• Create an online community where customers can share their sustainable fashion journey.
• Host events and workshops on sustainable living and fashion.
• Objective 4.2: Educate customers about sustainability.
• Provide transparent information about our materials and production processes.
• Share educational content on our website and social media channels.
• Collaborate with environmental organizations to promote awareness.

Goal 5: Ensure Financial Stability and Growth

Objective 5.1: Achieve profitability within the first two years.

• Develop a detailed financial plan with projected revenues, expenses, and cash flow.
• Secure funding through investors, grants, or loans.
• Monitor financial performance regularly and adjust strategies as needed.

Objective 5.2: Expand revenue streams.

• Introduce a subscription box service featuring exclusive products.
• Develop a line of branded merchandise and accessories.

 Implementation Timeline

• Year 1: Establish brand identity, launch initial product line, build e-commerce platform, and start marketing campaigns.
• Year 2: Expand product offerings, optimize supply chain, increase brand awareness, and achieve initial profitability.
• Year 3: Enter international markets, enhance operational efficiency, grow customer loyalty programs, and achieve financial growth.

Key Performance Indicators (KPIs)

• Brand awareness: Social media engagement, website traffic, and brand recognition surveys
• Product sales: Monthly and annual sales figures, average order value, and customer retention rates
• Sustainability metrics: Percentage of sustainable materials used, carbon footprint reduction, and waste reduction
• Customer satisfaction: Net Promoter Score (NPS), customer reviews, and feedback surveys
• Financial performance: Revenue growth, profit margins, and cash flow stability

By adhering to our strategic plan, XYZ Company aims to set new standards in the fashion industry for sustainability and ethical practices. With a clear vision and actionable goals, we are poised to make a significant impact on both the market and the environment. Together, let's weave a greener future in fashion!

Business Plan vs. Strategic Plan: Key Differences

While both the business plan and the strategic plan are essential tools for business success, they differ in scope, timeframe, and focus:

The business plan focuses on the operational aspects of launching and running a business. The strategic plan addresses broader organizational goals and market positioning.

The business plan usually covers the short to medium term - one to three years – whereas the strategic plan takes a longer-term perspective, spanning three to five years or more.

The business plan emphasizes day-to-day activities. These activities may include marketing tactics, sales targets, and financial projections. The strategic plan prioritizes high-level strategic initiatives, competitive positioning, and long-term sustainability.

Understanding the Nuances between a Business Plan vs. a Strategic Plan Is Critical

While the business plan lays the groundwork for a new venture, the strategic plan answers future queries proactively and plots the course for sustained growth and competitiveness. Understanding the nuances between these two plans can help aspiring entrepreneurs and business leaders to navigate the complex environment of business ownership and the organization's direction with confidence and clarity.

Whether you're launching a startup and hiring your own team, expanding an existing business, or pursuing entrepreneurial endeavors solo, crafting both a robust business plan and a strategic plan is vital. Together, these documents serve as tools for driving business innovation, seizing opportunities, achieving the company's goals, creating a sustainable competitive advantage, and ultimately realizing your vision of success.

Entrepreneurship Degrees at AMU

For adult learners who are interested in learning entrepreneurship skills in order to start their own businesses, American Military University (AMU) offers two degrees:

• An online bachelor’s degree in entrepreneurship
• An online master’s degree in entrepreneurship

Courses in these programs cover topics such as idea generation, business plan foundations, money management for entrepreneurs, innovative marketing, strategic growth, small business customer service, venture capital and business plan development. These courses are taught by experienced faculty members with in-depth knowledge of these topics. For more information, visit our program page .

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Planning for ranch risk exposure related to forage and livestock production.

At its most foundational form, ranching is the business of harvesting sunlight energy with plants that are then utilized by animals to produce products that benefit people for a profit.

While the business model of ranching is fundamentally simple, there are a multitude of production risks involved with growing forage, harvesting it with livestock and then delivering products to the customer. Delivery of products can either be to the next segment of the supply chain, or directly to the consumer.

Operations are diverse in terms of the resources they have and their risk exposure. To recognize threats to an operation it is important to first identify, in writing, goals for the production system and the critical components to system success. Knowing the keys to success helps identify potential threats.  The following are steps that can be taken to develop and execute a risk management plan for a grazing based, livestock production system.

• Identify the risks
• Assess the risks
• Address the risks
• Monitor and report on the risks

Ranching is fundamentally dependent on growing and harvesting forage with livestock. Therefore, environmental conditions that significantly reduce forage production and availability are a major threat. For most ranchers, drought is the primary risk factor that can dramatically impact forage production, but wildfire, hail, blizzards, flooding, grasshoppers, extreme temperatures, soil nutrient availability, brush encroachment, noxious weeds etc. all can impact forage growth and accessibility.  A written plan for addressing circumstances like drought that provides contingency options and triggers for action, can help producers make timely decisions. The https://drought.unl.edu/ranchplan/ website has several producer drought management plans that can be a helpful place to start when developing a plan for the operation.

The thought of putting a production risk management plan in writing can seem daunting and unnecessary to many as the thought often is, “I have that all in my head. Besides, whenever I plan, it must change anyways, so what is the point of planning?” The point of planning is to have a documented thought process to prepare for risk exposure when a person isn’t in the middle of a stressful event. A written plan will give greater confidence to act when the event occurs.  Getting perspectives from multiple people both in and outside of the operation when developing a risk management plan will help to strengthen it. While plans will have to adjust and change, the act of documented planning will increase effectiveness in responding to realized threats in the decision-making process.  

Operations deal with production risks on the ranch daily and often don’t even realize that historic events and experiences are influencing the way that they are doing business now. Past production risk incidents such as droughts, blizzards, reproductive failure, disease outbreaks, poisonous plants, input shortages, etcetera are still shaping decision making today.  Often past exposure to risk events subconsciously impact day to day operations even though the blow of the risk was actually experienced by a prior generation.  Providing a brief explanation of past experiences when developing a plan to address risk exposures can be helpful in communicating the “why” behind a strategy when developing a plan.

The process of discussing, developing and writing a production risk management plan is just as valuable as having the finished plan itself. The procedure of writing the plan down forces thinking and discussion that likely otherwise would not happen. Having a documented risk management plan gives everyone involved in the the operation a framework for discussion on risk exposure and is a reference document.  A written contingency plan can prove invaluable if the “decision maker” is no longer able to communicate their thoughts on how a risk should be addressed or if they are no longer part of the operation.

Ranchers deal with risk exposure every day and often don’t even identify it as such. Prioritizing time to develop a plan for addressing perils associated with production systems can help producers identify risks as well as contingencies to successfully navigate the seemingly increasing levels of hazards impacting them and the businesses that they operate.

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Project 2025’s Plan to Eliminate Public Schools Has Already Started

P roject 2025, the policy agenda for Former President Trump’s potential first year back in the White House published by the far right conservative think tank the Heritage Foundation, has been making waves recently. Some of the many destructive proposals within the agenda include the elimination of the U.S. Department of Education —along with federal education funding and any civil rights protections—and the diversion of public money to private school voucher programs instead.

Make no mistake: The goal is to end public education. But dismantling our public schools isn’t just the plan if Trump is reelected—it is already happening.

We are on the brink of a new wave of public school closures , another step in the decades-long project to divest and dismantle the institution of public school. Disguised as “school choice,” federal, state, local, and private actors have prioritized paying for  private and charter schools, hoarding educational resources for the haves and depleting resources for the have-nots.

The policies that Project 2025 plans to prioritize—government payments to families sending their children to private school and creation of new charter schools that are run like businesses—have expanded in the last few years, starving public school districts that serve all students of already insufficient resources. In the 2023-24 school year, at least 70 school districts, including in San Antonio, Texas , Jackson, Mississippi , and Wichita, Kansas , announced permanent closures of public schools, impacting millions of students. These districts are resorting to the harmful, discriminatory, and ineffective so-called ‘solution’ of closing schools in Black and Latine communities, stripping those communities of their local public schools.

Read More: Everything Biden and Trump Have Said About the Controversial Project 2025

Here’s how it works: Concerned about shrinking enrollments and budget crises, district leaders conclude that they must close schools, often without any evidence or analysis that it would save money—and, indeed, it hasn’t been shown to save money unless coupled with mass layoffs. They hire consultants who come up with “utilization” rates and then recommend closing schools with the lowest rates to “rightsize” the district—their euphemism for their misguided belief that school facility usage should be guided by arbitrary numbers instead of meeting communities where they are.

The problem is that “utilization”—a school’s enrollment over its supposed capacity—is stacked against schools that have experienced historic underfunding and disinvestment in facilities repairs, curricula, extracurricular opportunities, and staff. These same schools disproportionately serve Black and Latine students, English Learner students, students with disabilities, and students living in poverty.

Closing schools is demonstrably harmful—and has real-life impact. Research on the mass urban school closures from 2012 to 2014 overwhelmingly found that academic outcomes suffered , particularly for low-performing students. A May 2024 study from Brown University linked the experience of a school closure to “decreases in post-secondary education attainment, employment, and earnings at ages 25–27.” Additionally, closures force families to travel farther to get to schools that are not in their communities, making it harder to form relationships with staff, join extracurriculars, or get involved in parent organizations.

These communities are also often the first to lose access to the benefits of neighborhood public schools, which act as essential gathering places for social services and community resources like adult education, polling locations, a place to hold community meetings, and access to democratic community control through school board elections.

There are more equitable and educationally sound approaches than the lazy, unjust, self-sabotaging—and all too common—approach of spending money on consultants to tell districts what they have already decided to do: close the schools they value least, relying on metrics that target symptoms of their systemic neglect, and playing into the conservative agenda to make public schools obsolete.

Districts have better options to address budget woes. They can start a community-driven process to reshape the budget, wherein multiple stakeholders—rather than a selected few—play an active role in setting district budget priorities. Districts can also employ community-led assessments of how they use buildings, allowing school communities, particularly those historically marginalized, to request the resources, support, and spaces they need.

At the very least, districts should integrate equity requirements into school closure proposals, for instance, by incorporating community-based equity audits into decision-making. States can also follow California’s lead by requiring and robustly enforcing equity safeguards for any decisions to close schools.

Young people and their communities deserve better than districts repeatedly making the same mistakes. District leaders must stop listening to expensive consultants and closing much-loved and needed schools, and instead, must listen to the communities they serve and focus on solutions that put students first. Local, state and federal governments must fully and equitably fund public schools—schools obligated to take and educate everyone—and stop diverting money to a system of charter and private schools where students and families are forced to compete for a limited pool of high quality resources for a select few.

Project 2025 is not an inevitability—it is a call to action for anyone who cares about public education in this country. Our public school system requires more resources to create better school environments for everyone. We need investment in our public schools—not closures.

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We put Elon Musk's dream to colonize Mars up against Jeff Bezos' vision of living in space — and one is more realistic

The commercial space industry has boomed in recent years, with companies like SpaceX and Blue Origin leading the pack.

Their respective founders, Elon Musk and Jeff Bezos , essentially share the same dream: to expand humanity's reach and build human settlements beyond Earth.

But they each have different ideas of how to get us there.

Musk has his sights on Mars , saying he wants to establish a permanent, self-sustaining human colony of one million people on the red planet by 2050. SpaceX is helping him toward that goal.

Meanwhile, Bezos wants to build enormous space stations that would allow a trillion humans to live throughout the solar system . Though he's said he won't see them built in his lifetime, Bezos founded Blue Origin for the purpose of making his vision come to life.

Both billionaires' aspirations come with major technical, scientific, and ethical hurdles. But according to experts in architecture, astrobiology, artificial gravity, and reproductive health, one vision is more realistic.

Construction

Establishing habitats where humans can not only live, but thrive, is the biggest challenge in both billionaires' visions.

If you ask independent architect Anthony Longman which world is more feasible to build, Bezos' space stations are the way to go in the long-run because you can make them Earth-like more easily than an entire planet.

Musk's long-term vision is to terraform Mars by giving it a thicker atmosphere with breathable oxygen and a protective magnetic field to shield from harmful space radiation, so that one day humans could live on and explore Mars's surface like on Earth.

Longman thinks transforming an entire planet is too challenging, which is why he says colonizing Mars is "not a good idea." Bezos' space stations could be built to resemble Earth more easily — no massive terraforming necessary.

The scale Bezos envisions for these space stations, however, is unlike anything ever built. They would resemble a '70s concept called O'Neill colonies — enormous cylinders measuring 20 miles long and four miles wide that could hold a million people.

Longman has his own concept for space habitats designed to house just 8,000 people. While he thinks that building a massive station like what Bezos imagines is more realistic, it's too big to be feasible near-term.

"I'm not saying they won't be built, but I think it will probably be some hundreds of years before we're able to build anything at that scale," Longman said.

With that said, Bezos is still the winner of this round.

Score: Bezos 1, Musk 0.

Food and agriculture

Aside from shelter, having enough food is crucial. But growing food off-world is challenging since crops have evolved in Earth's conditions.

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Scientists have already grown a few crops on the International Space Station , including tomatoes and lettuce. But scaling up production to feed millions requires more research, astrobiologist Rebeca Gonçalves told BI.

"We need to develop these very safe, closed-loop, self-sufficient agricultural systems," Gonçalves said. She thinks this will be easier on Mars than in space.

That's because a planet already has a surface where humans can grow food, she said. In space, you'd have to build farms from scratch, and likely need to venture out to mine water and minerals from asteroids . Mars, on the other hand, has soil and water ice on its surface.

The challenge on Mars will be developing an agricultural system that can sustain crops in Martian conditions.

Researchers have already made progress toward that goal, successfully growing food in lunar regolith, and Gonçalves is working to develop a closed-loop, self-sustaining agricultural system for Martian colonies.

"If I had to pick a billionaire's vision of the future, I would definitely go with Elon Musk's Martian colony," Gonçalves told BI.

Score: Bezos 1, Musk 1.

Artificial gravity

The human body has evolved to exist in Earth gravity and doesn't adapt too well to low or zero gravity. Researchers have found that spending weeks to months in space can lead to muscle and bone loss, vision problems, and even kidney stones.

That means a space or Mars colony would need artificial gravity to keep residents healthy. Mars has some built-in gravity already — about 38% of what we experience on Earth. But a space station would need to start from scratch.

That's why Rachael Seidler thinks Musk's Martian cities are a better bet than Bezos' space stations. Reaching Earth-like gravity on Mars might be easier since it's already over a third of the way there.

"Artificial gravity is thought to be very difficult to implement in space," Seidler, a professor of applied physiology and kinesiology at the University of Florida who studies astronauts, told BI.

Bezos' enormous 20-mile-long stations would rotate to simulate Earth's gravity. But getting that sort of goliath up and running is too far-fetched for Seidler.

Scientists are already looking into building artificial gravity on places like Mars.

So, Musk wins this round.

Score: Bezos 1, Musk 2.

Human reproduction

If we're going to establish a longstanding colony off world, reproduction will be necessary.

A Russian experiment in 2007 showed us that giving birth and conceiving in space is at least possible after a cockroach named Hope birthed 33 baby roaches and one of those roaches later conceived during the mission.

However, cockroaches aren't humans, and a lot of questions remain around how space radiation and low gravity would affect a developing fetus since we've never sent a pregnant person to space, and likely won't for a long time given the potential risks.

Even here on Earth in fully-equipped hospitals, giving birth can be dangerous.

So, both Musk's Martian colony and Bezos' space stations would have to be equipped with healthcare systems identical to those on Earth, if not better, said Adam Watkins, a professor of reproductive biology at the University of Nottingham.

It's not clear to Watkins whether space stations or Mars cities would be a better place for giving birth — they may both come with equal risk. But Watkins thinks it's likely that Musk would achieve off-world human reproduction before Bezos since Musk is already working on establishing his space colony before the end of this century.

"I think establishment of human colonies on Mars is more likely to occur before we have significant human colonies established on large structures in space," he said later in an email to BI.

Score: Bezos 1, Musk 3.

The winner is: Musk's Martian Colony

The majority of experts BI spoke with agreed that Musk's Martian colony is more feasible than Bezos' enormous space stations.

But neither of these billionaires are anywhere close to making these dreams a reality. It will take decades — if not centuries — of innovation to build the technology that would allow humans to live safely beyond Earth.

Should we instead focus on caring for our home planet ? Is it worth the billions of dollars we'll spend to get there? Will humans really want to leave Earth? The experts BI spoke with raised all these questions and more.

But if you ask Musk and Bezos, colonizing space is humanity's destiny. Through SpaceX and Blue Origin , they're laying the groundwork for our great expansion.

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More Gas Cars and Trucks, Fewer E.V.s as Automakers Change Plans

Ford, General Motors and other automakers are slowing investments in electric vehicles and doubling down on more profitable gasoline cars and trucks.

By Neal E. Boudette

For much of the last five years, automakers have been spending billions of dollars in a frantic race to develop electric vehicles and build factories to produce them, with expectations that consumers would flock to these new models.

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