What is Production Planning? Meaning
Production planning means to fix the production goals and to estimate the resources which are required to achieve these goals. It prepares a detailed plan for achieving the production goals economically, efficiently and in time. It forecasts each step in the production process. It forecasts the problems, which may arise in the production process. It tries to remove these problems. It also tries to remove the causes of wastage.
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Production planning provides answers to two major questions, viz.,
- What work should be done?
- How much time will be taken to perform the work?
So, production planning determines the ways and means of production. It shows the direction. It is based on sales forecasting. It is a pre-requisite of production control.
Definition of Production Planning
According to Ray Wild, production planning is defined as follows:
“Production Planning is concerned with the determination, acquisition and arrangement of all facilities necessary for future operations.”
Objectives of Production Planning
Following are the twelve main objectives of production planning:
- Effective utilization of resources : Production planning results in effective utilization of resources, plant capacity and equipments. This results in low-cost and high returns for the organization.
- Steady flow of production : Production planning ensures a regular and steady flow of production. Here, all the machines are put to maximum use. This results in a regular production, which helps to give a routine supply to customers.
- Estimate resources : Production planning helps to estimate the resources like men, materials, etc. The estimate is made based on sales forecast. So production is planned to meet sales requirements.
- Ensure optimum inventory : Production planning ensures optimum inventory. It prevents over-stocking and under-stocking. Necessary stocks are maintained. Stock of raw material is maintained at a proper level in order to meet the production demands. Stock of finished goods is also maintained to meet regular demands from customers.
- Coordinate activities of departments : Production planning helps to coordinate the activities of different departments. For e.g. The marketing department coordinates with the production department to sell the goods. This results in profit to the organization.
- Minimize wastage of raw materials : Production planning minimizes wastage of raw materials. It ensures proper inventory of raw materials and materials handling. This helps to minimize wastages of raw material. It also ensures production of quality goods. This results in minimum number of rejects. So proper production planning and control results in minimum wastage.
- Improve the labor productivity : Production planning improves the labor productivity. Here, there is maximum utilization of manpower. Training is provided to the workers. The profits are shared with the workers in the form of increased wages and other incentives. Workers are motivated to perform to their best. This overall result in an improved labor efficiency.
- Help to capture the market : Production planning helps to give delivery of goods to customers in time. This is because of regular flow of quality production. So the company can face competition effectively, and it can capture the market.
- Provide a better work environment : Production planning provides a better work environment for the workers. Workers get improved working conditions, proper working hours, leave and holidays, increased wages and other incentives. This is possible because the company is working very efficiently.
- Facilitate quality improvement : Production planning facilitates quality improvement because the production is checked regularly. Quality consciousness is developed among the employees through training, suggestion schemes, quality circles, etc.
- Result in consumer satisfaction : Production planning helps to give a regular supply of goods and services to the consumers at fair prices. It results in consumer satisfaction.
- Reduce the production costs : Production planning makes optimum utilization of resources, and it minimizes wastage of raw materials. It also maintains optimum size of inventories. All this contributes to reduce the production costs.