The Effect of Materials Planning on Day-to-Day Operations
According to Henry Ford, ‘If you always do what you always did, you’ll always get what you always got.’
Do you want to improve your manufacturing output?
Naturally, you want to be prepared to meet the demand for your products. And, you want to minimise your costs while maximising the quality of your goods. Perhaps it’s time to take a look at how you plan your production.
Materials planning improves your manufacturing productivity. And it gives you an added competitive edge in your market. That is – when it’s done properly.
You don’t want to overlook this crucial element of the production process.
Calculating and Predicting
Materials planning is a critical aspect of inventory control. It involves predicting what stock you will need and obtaining it in the right quantities.
As you know, carrying too little stock means that you’ll underproduce. Your customers will have no choice but to look elsewhere for the goods they need. Conversely, running with an excess will cost you more as you’ll have to pay for storage or, even worse, you end up losing money through the wastage of surplus stock.
Manufacturing software can transform your day-to-day operations. It makes your materials planning that much more efficient. Production is influenced by materials planning in a variety of ways. It goes without saying, the more effective your planning, the better your production operations will run.
The point of inventory management systems is to get your stock levels right. This is so that you always carry the right amount of raw materials to meet current production demands. Planning your materials is an exact science, and it’s possible to get your sums dead-on.
Some of the advantages of requirements planning software include the following:
- You can set up a Bill of Materials as needed
- Manufacturing costs are calculated accurately
- Manufacturing resource planning is more efficient
- You can optimise your production plan
- It helps with introducing serial and batch numbers
- You can develop your own production reports
What Is Effective Materials Planning?
Materials Requirement Planning (MRP) is an example of the type of software used to manage the supply of resources and materials.
What are the major steps in MRP production planning?
- Stock and materials on hand (developing a production master plan)
- Inventory – identifying shortages and availability of products
- Correctly timing stock production or purchase in the right quantities (Bill of Materials)
Your inventory involves raw materials as well as finished or unfinished goods. Inventory is often referred to as independent or dependent demand.
Independent demand is a finished product such as a toilet paper roll. Dependent demand refers to incomplete assemblies, components or parts. In our example, this includes cardboard inner tubes, 2-ply, and plastic packaging material.
Requirements planning systems ultimately help you set up schedules for production and purchasing. As you know, it’s important to get timing and quantities just right.
Basically, MRP helps you balance company resources with the demands it needs to meet. It simplifies the decision-making process. So it’s much easier to calculate what raw materials you need to buy. As well as how much stock you need and when.
MRP1 and MRP2
Materials Requirement Planning (MRP) should not be confused with Manufacturing Resource Planning. These are sometimes distinguished as MRP1 and MRP2 respectively. The MRP2 encompasses all resources pertaining to the materials. It goes further than the MRP1 because it deals with the manufacturing resources of the whole company.
Material Requirements Planning involves managing materials. You use it to set up purchasing and production schedules.
Manufacturing Resource Planning is similar. But, it includes all aspects involving the capacity of your factory. It provides a more comprehensive overall manufacturing plan.
The effectiveness of MRP1 and MRP2 depends on the quality of data you provide. These planning systems will only work if you maintain strict accuracy. So, keep all your details (especially the Bill of Materials) up-to-date.
Production Planning is an extension of MRP. It’s an expanded feature of requirements planning software. It uses more complex algorithms to account for production constraints and to prioritise jobs. This software component ensures there are enough raw materials to have production completed on time.
Material Requirements Planning Software
MRP software focuses on the process of creating a product. This process involves identifying and purchasing raw materials. It also includes determining resources and planning production materials.
The initial set-up of manufacturing software takes some investment of time and money. But it’s worth it.
Organising your operations with materials planning pays for itself. It’s a much more streamlined approach to your manufacturing process and supply chain management. However, you need to invest in a package that suits your business. And, knowing how to use it often involves some training.
Implementing a new system needs to integrate throughout the company. It needs to be understood by everyone because the information input needs to be standardised for it to work properly.
Why Is Materials Planning Important?
You can’t underestimate the importance of materials planning in your manufacturing process. Think about your inventory management systems. These, along with materials planning, have far-reaching implications. Better management and planning systems will improve the day-to-day running of your business.
Here are four examples:
1. Better Quality and Service
If you run out of stock and have to rush to make up an order, you increase the risk of mistakes in the manufacturing process.
Producing sub-standard goods can be avoided with effective material planning. Moreover, sometimes the raw materials you need aren’t available at a moment’s notice. So, if you run out, you’re forced to choose between using a cheaper alternative or waiting for the correct materials.
You don’t want a situation where you’re forced to sacrifice either quality or manufacturing lead time. Neither case is a win for your brand.
2. Efficiently Using Raw Materials
Meeting demand is crucial in the manufacturing industry. Optimising your stock or raw materials includes maintaining correct inventory levels.
Efficient materials planning should result in the constant availability of stock. In other words, the stock should always be ready for production teams to process incoming orders. And, whenever it’s needed during a manufacturing run.
3. Optimising Manpower
Planning material requirements effectively means production can be completed on time. This means your employees don’t have to stop working when stock runs out. And they don’t have to rush or face overwhelming deadlines to make up for lost time.
Short-timing your employees is never ideal. Nor is having unproductive workers waiting for material to be restocked.
4. Moving Stock
Materials planning also involves stock movements within the company. During production, raw materials and stock are moved around the factory. They’re also processed by different departments. Some materials may even be shared between different production teams.
It takes good organisation to get the resources to the teams that need them in the correct timeframes.
If you want to get more than what you’ve always got, then maybe it’s time to shake things up a bit. Taking a look at your fundamental operating systems is a good place to start.
It doesn’t matter whether you manufacture toilet paper or high-end confectionery. Materials planning can improve the overall profitability of your day-to-day operations. The better your planning, the better your productivity.
Maybe you already have a working production system in place. You can always learn more about its functionality – even good systems can be improved upon.
If you don’t have any manufacturing software, it’s never too late to give your business an upgrade!
For expert advice on the best manufacturing software package for your business, get in touch with Omni Accounts.