A production (or manufacturing) planning and control (MPC) system is concerned with planning and controlling all aspects of manufacturing, including materials, scheduling machines and people, and coordinating suppliers and customers. An effective MPC system is critical to the success of any company. An MPC system’s design is not a one-off undertaking; it should be adaptive to respond to changes in the competitive arena, customer requirements, strategy, supply chain and other possible problems (Vollmann )
There are 5 levels in the manufacturing planning and control (MPC) system:
– Strategic business plan,
– Production plan (sales and operations plan),
– Master production schedule,
– Materiel requirements plan,
– Purchasing and production activity control.
Each level varies in purpose, time span and level of detail. Since each level is for different time span and purposes, each differs in the following:
– Purpose of the plan,
– Planning horizon: the time span from now to some time in future for which plan is created,
– Level of detail: the detail about products require for the plan,
– Planning cycle: the frequency with which the plan is reviewed.
At each level, 3 questions must be answered:
– What are the priorities: how much of what is to be produced and when?
– What is the available capacity: what resources do we have?
– How can differences between priorities and capacity be resolved?
Strategic Business Plan (SBP)
The strategic business plan is a statement of the major goals and objectives the company expects to achieve over the next 2 to 10 years or more. It is a statement of the broad direction and show the kind of business the firm wants to do in the future.
The development of the SBP is the responsibility of senior management. Each department produces its own plans to achieve the objectives set by the SBP. These plan will be coordinated with one another and with the SBP. The level of detail is not high. It is concerned with general market and production requirements (total market for major product groups) and not sales of individual items.
Strategic business plans are usually reviewed every six months to 1 year.
Production Plan (PP)
Given the objectives set by SBP, production management is concerned with the following:
– The quantities of each product group that must be produced in each period;
– The desired inventory levels;
– The resources of equipment, labor, and material needed in each period;
– The availability of the resources needed.
The level of detail is not high. The production plan will show major product groups or families.
Production planners must devise a plan to satisfy market demand within the resources available to the company. For effective planning, there must be a balance between priority and capacity.
Along with the market and financial plans, the PP is concerned with implementing the strategic business plan. The planning horizon is usually 6 to 18 months and is reviewed each month or quarter.
The Master Production Schedule (MPS)
The master production schedule is a plan for the production of individual end items. It breaks down the PP to show, for each period, the quantity of each end item to be made. Inputs to the MPS are PP, the forecast for individual end items, sales orders, inventories and existing capacity.
The level of detail is higher. The MPS is developed for individual end items.
The planning horizon usually extends from 3 to 18 months but depends on the purchasing and manufacturing lead times . Usually the plans are
reviewed and changed weekly or monthly.
Material Requirements Planning (MRP)
The material requirements planning is a plan for the production and purchase of the components used in making the items in the MPS. It shows the quantities needed and when manufacturing intends to make or use them.
The level of detail is high. The MRP establishes when the components and parts are needed to make each end item.
The planning horizon is at least as long as the combined purchase and manufacturing lead times. It usually extends from 3 to 18 months.
Purchasing and Production Activity Control (PAC)
Purchasing and production activity control use the MRP to decide the purchase or manufacture of specific items. Purchasing and PAC represent the implementation and control phase of MPC system. Purchasing is responsible for establishing and controlling the flow of raw materials into the factory. PAC is responsible for planning and controlling the flow of work through the factory.
The planning horizon is very short, from a day to a month. The level of detail is high since it is concerned with individual components, workstations and orders. Plans are reviewed and revised daily.
At each level in the MPC system, the priority plan must be tested against the available resources and capacity of the manufacturing system. If the capacity cannot be made available when needed, then the plans must be changed. There can be no valid, workable PP unless this is done.
Over several years, machinery, equipment and plants can be added to or taken away from manufacturing. However, in the time spans involved from PP to PAC, these kind of changes cannot be made. Some changes, such as changing the number of shifts, working overtime, subcontracting the work, can be accomplished in these time spans.
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