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 for two major questions, viz.,
- What work should be done?
- How much time will be taken to perform the work?
So, production planning decides 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
The need, main functions or objectives of production planning are as follows:
- Effective utilization of resources.
- Steady flow of production.
- Estimate the resources.
- Ensures optimum inventory.
- Co-ordinates activities of departments.
- Minimize wastage of raw materials.
- Improves the labour productivity.
- Helps to capture the market.
- Provides a better work environment.
- Facilitates quality improvement.
- Results in consumer satisfaction.
- Reduces the production costs.
Now let's discuss each objective of production planning one by one.
1. 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.
2. 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.
3. Estimate the 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.
4. Ensures 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.
5. Co-ordinates activities of departments
Production planning helps to co-ordinate the activities of different departments. For e.g. the marketing department co-ordinates with production department to sell the goods. This results in profit to the organization.
6. 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 a minimum rejects. So proper production planning and control results in minimum wastage.
7. Improves the labour productivity
Production planning improves the labour productivity. Here, there is maximum utilization of manpower. Training is provided to the workers. The profits are shared with the workers in form of increased wages and other incentives. Workers are motivated to perform their best. This results in improved labour efficiency.
8. Helps 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.
9. Provides a better work environment
Production planning provides a better work environment to the workers. Workers get improved working conditions, proper working hours, leave and holidays, increased wages and other incentives. This is because the company is working very efficiently.
10. Facilitates 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.
11. Results in consumer satisfaction
Production planning helps to give a regular supply of goods and services to the consumers at far prices. It results in consumer satisfaction.
12. Reduces the production costs
Production planning makes optimum utilization of resources, and it minimizes wastage. It also maintains optimum size of inventories. All this reduces the production costs.