A well-executed Manufacturing Planning and Control (MPC) system can deliver competitive advantage and often differentiates leading manufacturers from the rest. The more the system is automated, the more it enables informed decisions that in turn speed response times. Each stage of the system has a purpose and varies by the level of details that are considered in it as well as by the planning horizon in attempting to answer three questions:
- How much needs to be produced and when?
- What is the available capacity?
- How can differences between priorities and capacity be resolved?
Let’s look at each stage in a little more detail:
Stage 1: Strategic Business Plan
The strategic business plan is a statement of strategic and forward-looking company goals and objectives and focuses on profitability, productivity, customer lead times, and other key areas
Stage 2: Sales and Operations Plan (S&OP)
S&OP is a cross-functional, coordinated plan that involves sales, marketing, product development, operations, and senior management. Actual demand is repeatedly compared with the sales plan. Market potential is assessed and future demand is forecasted. The updated marketing plan is communicated with manufacturing, engineering, and finance.
During this process, decisions related to trade-offs between volume and product mix are made so that demand and supply are in balance. S&OP feeds into the Master Production Schedule.
Stage 3: Master Production Schedule (MPS)
MPS is a purchasing production and production plan at an individual end product level, by time period. The planning horizon depends on the production and purchasing lead
Stage 4: Material Requirements Planning (MRP)
Stage 5: Purchasing and Production Activity Control (PAC)
Purchasing is responsible for establishing and controlling the flow of raw materials into the factory. The level of detail is high since it involved individual components, work centers, and orders—including reviewing plans and revising them as needed daily. PAC manages
- Assigning priority to orders for each shop.
- Maintaining work in process (WIP) information.
- Conveying shop order status.
- Providing actual output data.
- Providing quantity by location, by work center, and by shop order for accounting.
- Measuring the efficiency, utilization, and productivity of workforce and machines.
A Manufacturing Execution System (MES) is a subset of PAC capabilities. The output of a well-managed PAC is a manufactured product with full visibility and high quality across the supply chain.
At each level of an MPC system, it’s important to look at performance measures for more-informed decisions, proactive course correction, and plan modification. This level of manufacturing intelligence can help your company observe, learn, and adapt throughout the process.
Learn more by downloading the white paper: Why Supply Chain Visibility is the Future for Manufacturers.
Arnold, Tony. Chapman, Stephen. Clive, Lloyd. Introduction to Materials Management 7th Edition. Prentice Hall. January 20, 2011.
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