Production Planning and Control (PPC) is a process for planning and controlling the flow of material that enters, flows, and exits from a production system so that market demand can be met with the right amount, the right delivery time, and minimum production costs. Thus the work contained in PPC can be broadly divided into two interrelated things, namely Production Planning and Production Control.
Production Planning is carried out with the aim of determining the initial direction of actions that must be taken in the future, regarding what, how much, and when to do it. Because the plan is related to the future, the plan is prepared on the basis of estimates made based on past data using several assumptions. Therefore, planning will not always produce the results expected in the plan, so every plan made must be evaluated periodically by way of controlling.
The work of production control will be very dependent on the presence or absence of irregularities in the implementation of production compared to the production plan that has been made previously. If the deviations that occur are large enough, then adjustments should be taken to correct the deviations that occur. The results of the adjustments made will be used as a basis for preparing the next production plan.
Purpose and Purpose of Production Planning
Each production manager bears the responsibility for carrying out the company’s plans and goals. The general purpose of manufacturing companies is to produce successfully, economically, on time, in accordance with the promises given, and make a profit. One of the most important functions in supporting businesses to achieve the goals of manufacturing companies as mentioned above is Production Planning and Control.
If the goal or plan can be achieved, the company will achieve ideal conditions in the form of minimizing production costs, low selling prices and competing, and can control the broad market share.
In general, the aim of a company is to gain profits in addition to achieving business continuity and development. With these benefits the company will be able to pay management and employee compensation well in the context of an adequate level of compensation and timely payment, paying bills from third parties, for example payment of electricity rent, warehouse rent, taxes, raw materials, raw materials, and materials assisting from the supplier, maintaining the production equipment well so that it can run smoothly and economically, replacing machinery and other equipment which is the time to change, and expanding or expanding the company so that the company is truly advanced and developing.
Thus, it can be concluded that production planning and control is a management effort to plan the basis of the production process and material flow, so as to produce the products needed in time, at the lowest possible cost, and to organize and analyze the organization and coordination of materials, machines and equipment, human resources, and other necessary actions.In an effort to achieve company goals, management coordination is needed in the form of coordination from various parts or between activities of the company, so that good cooperation can be achieved between the purchasing, engineering, accounting, sales, etc., as a coordinated team to produce and sell the products effectively and efficiently.
It is known that the effort to coordinate all activities related to production activities is the responsibility of the production manager or plant manager. However, because of the breadth of production manager’s duties and responsibilities, a production manager can delegate his authority or authority to the head of the Production Planning and Control section with clear duties and authority duties.
The role of production planning and control is to coordinate the activities of the parts directly or indirectly in producing, planning, scheduling, and controlling production activities from the stages of raw materials, processes, to outputs produced so that the company can actually produce goods or services effectively and efficiently.
Production planning must have the following characteristics:
The production process is a very complex process. The process requires the involvement of various levels of labor, equipment, capital, and information skills that are usually carried out continuously over a very long period of time. The environment faced by the company, demand patterns, the availability of raw materials and supporting materials, business climate, government regulations, competition, etc., always show an uncertain pattern and will always change from time to time. Therefore a company may not be able to make a production plan that can be used forever. A new plan must be made if the conditions used as the basis for making an old plan have changed. Because the changes that will occur are difficult to predict beforehand, periodically, checks must be made whether the production plans that have been made are still valid. The usual approach is to make a production plan that covers a certain time period and will be updated if the time period has been reached.
In production planning, there are three types of planning based on the time period covered by the plan, namely:
- Long-term Production Planning
- Medium-term Production Planning
- Short-term Production Planning
Making a production plan cannot be done only once and is used forever. Production planning must be done in stages and in stages. That is, production planning will be stratified from high level production planning to low level production planning, where production planning at the lower level is an elaboration of higher level production planning. Based on the grouping of production planning on a term basis, it can be explained in more depth as follows:
The selection of the right type of production design for a company depends on several factors, namely external factors in the form of market share achieved, economic structure, and others as well as internal factors in the form of management ideas in facing future challenges, the availability of experts and their implementers, and others. What needs to be considered in choosing the type of production planning is how long the production planning is prepared. In relation to the planning time horizon, production planning can be divided into long-term production planning, medium-term production planning, and short-term production planning. Each type of production planning will be different in the type of information that becomes the input, the range of limitations possessed,
- Long-term Production Planning
Long-term production planning usually sees 5 years or more going forward. The shortest period of time is determined by how long it takes to change the available capacity. This includes the time needed to complete the design of the building and the new construction equipment, its installation, and other things until the new facility is ready for operation.
Long-term production planning is made with great attention to forecasting general economic and population conditions, political and social situations, technological changes, and competitor behavior, where all of these factors will be evaluated for their impact on company activities. Long-term production planning is related to the effects that may arise in the future that affect system goals and the actions needed to deal with these changes. è Example – with new product development, better services, new process technologies, and new locations.
- Medium-term Production Planning (Aggregate Planning)
Aggregate planning has a planning horizon generally between 1 to 18 months, and is developed based on a predetermined framework for long-term production planning. Aggregate planning is based on forecasting annual demand from monthly months and available productive resources, such as the number of labor, inventory levels, production costs, number of suppliers and subcontractors, assuming relatively fixed production capacity.
- Short-term Production Planning
Short-term production planning has a planning horizon of less than 1 month, with a form of planning in the form of a production schedule. The purpose of the production schedule is to balance the actual demand stated with the number of orders received with available resources, including the number of departments, available shift time, number of operators, inventory levels, and available equipment, according to the limits set forth in the plan aggregate.
Production planning will involve many factors, such as raw materials, machinery and equipment, labor, and time. All of these factors must be in accordance with the planned needs in achieving certain production targets based on estimates. Each factor is not planned individually according to the limitations that exist in each of the factors owned by the company, but made with reference to an integrated plan for production. The production plan must also be related to other plans that directly influence the production plan, such as maintenance, workforce plans, material procurement plans, and so on.
The integration is not only horizontally, but also vertically. This means that the short term plan must refer to the medium term plan and the medium term plan must be integrated with the long term plan, and vice versa.
Production planning is prepared for a certain period which is the validity period of the plan. After the expiration date, a new plan must be made for the next time period again. The new plan must be made based on the results of an evaluation of the previous plan. What has been done and what hasn’t been done, what has been produced and how the results compare with the targets that have been set. Thus, the new plan is a continuation of the plans made previously.
During production, the realization of the production plan will always be monitored to find out if there is a deviation from the planned plan. To find out whether there is a deviation, the production plan must specify a value that must be measured, so that it can be used as a basis for determining whether there is a deviation. These values can be in the form of production targets that can be expressed in units of product units, kilograms, dozen and others. If the realization does not meet the production target later, then it can easily be measured how much the deviation is, so the results can be used as consideration for compiling the next plan.
Production plans that are made must be adjusted to the conditions in the company, so that the targets set are realistic values to be achieved with the conditions owned by the company at the time the plan was made. If the production plan is made too grandiose without taking into account existing conditions in the company, then the plan made will not be useful because the specified production targets are certainly not achievable. In addition, deviations in implementation will not be known because the implementation will never be exactly according to plan. By making realistic plans, it will be able to motivate implementers to try to achieve what has been prepared in the plan.
Production planning must be based on accurate information about internal and external conditions so that the figures raised in the production target can be accounted for. An error in estimating the value of production parameters will have fatal consequences for the production plan prepared. Likewise, the calculation carried out in determining the value of the production variable based on the value of the production parameter must be carried out as thoroughly as possible, so that the same error will not occur.
Although the production plan must be made as realistic as possible, this does not mean that the production plan must set targets that can easily be achieved. A good production plan must set targets that can be achieved with serious effort.