What is the difference between production planning and scheduling?

Summary

This script distinguishes between production planning and scheduling, highlighting their roles in manufacturing. Planning is a high-level overview that balances resources and demand over a 6-month to 3-year horizon, focusing on quantities, inventory, and investments. Scheduling, on the other hand, is more detailed, concentrating on the production of individual items or SKUs within a shorter time frame, often up to a year. It involves assigning specific tasks to workers and machines, synchronizing resources, and ensuring timely delivery to meet customer needs. Both processes are crucial for efficient production and are closely linked, with planning setting the stage for detailed scheduling.

Takeaways

• 🔍 Production planning and scheduling are closely related but distinct processes in manufacturing.
• 🏭 Production planning is a strategic, high-level process that involves balancing resources and demand over a longer time horizon (6 months to 3 years).
• 📈 Planning requires inputs like Bill of Materials, stock availability, resource costs, lot sizes, and manufacturing lead times.
• 🛠️ Scheduling is more detailed and operational, focusing on the short-term (1 month to 1 year) and assigning specific tasks to resources.
• ⏱️ The time buckets for planning are weeks or months, while scheduling can be as detailed as hours or minutes.
• 👨‍💼 Top management is typically involved in planning, whereas scheduling involves middle management and shop-floor execution.
• 🔄 Both planning and scheduling are iterative processes that inform and are informed by actual production outcomes.
• 📊 The goal of scheduling is to create a detailed calendar of operations, assigning resources and workers to meet customer needs.
• 📋 Production planning and scheduling are essential for efficient resource utilization and meeting production targets.
• 🔗 The two processes are complementary, with planning setting the stage for scheduling, which in turn enables effective production control.

Q & A

What is the primary difference between production planning and scheduling?

Production planning involves the whole manufacturing process on a high level to produce finished goods, balancing resources and demand, while production scheduling is more detailed, defining the production quantities of single finished products or SKUs, assigning specific resources and workers, and planning detailed steps.

What resources are typically needed for both production planning and scheduling?

The resources needed include Material, People, Machinery and equipment, Energy, and Management. Management is considered the 'software' of the company, defining how to convert raw materials into final products efficiently.

How does production planning balance resources and demand?

Production planning balances resources and demand by determining quantities to produce per family of products, desired inventory levels, resources to use per period, and investments necessary to match capacity and volume with demand.

What is the time horizon for production planning?

The time horizon for production planning is typically from 6 months to 3 years, involving top management and looking at planning buckets by weeks or months.

Can you provide an example to illustrate the concept of a Bill of Materials (BOM)?

A Bill of Materials is a broken-down list of components and subcomponents needed to make the final product. For instance, in baking a cake, the BOM would include all the ingredients required, such as flour, sugar, eggs, etc.

How does production scheduling differ in terms of time horizon and detail compared to planning?

Production scheduling has a shorter time horizon, typically between one month and one year, and a higher level of detail. It focuses on defining the production quantities of individual finished products or SKUs, assigning specific resources and workers, and planning all detailed steps.

What are the planning buckets in production scheduling?

In production scheduling, planning buckets can be as short as hours or minutes, allowing for a more granular control over the production process and resource allocation.

Why is it important to consider the availability of items in stock when planning production?

Considering the availability of items in stock is crucial for activating purchasing when necessary or utilizing existing stock, which helps in managing inventory levels and preventing stock-outs or excess inventory.

How does production scheduling help in bridging the gap between planning and actual production?

Production scheduling acts as a bridge by scheduling every single operation at a specific time, assigning resources and workers, and planning detailed steps. It ensures that necessary resources are available at the right time, thus facilitating smooth production.

What is the role of management in the production planning and scheduling process?

Management plays a pivotal role by defining how to combine the first four elements (material, people, machinery, and energy) efficiently. It is responsible for the strategic direction and execution of activities, ensuring that the production process is aligned with company goals.

How does production planning and scheduling contribute to efficient resource utilization?

Both production planning and scheduling contribute to efficient resource utilization by ensuring that limiting resources are combined in the most effective way to produce final products. Planning determines when to make products, while scheduling focuses on how to make them happen in detail.

Outlines

00:00

🔍 Understanding the Distinction Between Production Planning and Scheduling

This paragraph elucidates the subtle yet significant differences between production planning and scheduling. It emphasizes that while both concepts are integral to the manufacturing process, they serve distinct purposes. Production planning is depicted as a high-level overview that encompasses the entire manufacturing process, focusing on aligning resources with demand over a medium to long-term period, typically ranging from six months to three years. It involves top management and considers factors such as Bill of Materials, stock availability, cost of resources, lot sizes, and manufacturing lead times. The paragraph uses the analogy of baking a cake to illustrate these planning elements, highlighting the importance of management as the 'software' that orchestrates the conversion of raw materials into finished goods. On the other hand, production scheduling is portrayed as a more detailed and immediate step that follows planning. It concentrates on the short-term, with a time horizon that can extend from one month to one year, and involves middle management and shop-floor operations. Scheduling assigns specific tasks to machines and workers, determines inventory levels for individual products, and synchronizes resources to meet precise customer needs.

05:03

📈 The Sequential Process of Planning and Scheduling in Production

The second paragraph delves into the sequential nature of production planning and scheduling, using a chips manufacturing company as a case study. It underscores the necessity of both processes for effective production control and accurate scheduling. The planning phase involves forecasting sales volumes, assessing the capacity of ovens and other equipment, considering infrastructure requirements, determining the workforce and their skills, planning shifts, and setting inventory levels for raw materials and finished goods. The scheduling phase, which is the subsequent step, addresses the operational details such as which machines will operate, who will operate them, and the precise timing and quantities of ingredient requirements. The paragraph concludes by emphasizing the interdependence of planning and scheduling, and how they collectively contribute to the actual production output, which in turn provides feedback to refine these processes.

Keywords

💡Production Planning

Production planning is a strategic process that involves the high-level overview of the manufacturing process to produce finished goods. It encompasses the allocation of resources, such as materials, people, machinery, and energy, to meet the demand for products. In the script, production planning is described as balancing resources and demand, setting quantities to produce, and determining investments necessary to match capacity with volume. It operates on a time horizon of 6 months to 3 years and involves top management, focusing on the broader view of the production process.

💡Production Scheduling

Production scheduling is a more detailed and tactical aspect of production management that follows production planning. It focuses on the specific timing and assignment of resources to produce individual finished products or SKUs. The script mentions that scheduling defines who or which machine will produce each SKU, with a shorter time horizon, typically between one month and one year. It requires a higher review frequency and is more closely tied to the shop floor operations, ensuring that every operation is scheduled at a specific time and resources are appropriately assigned.

💡Resources

Resources in the context of the script refer to the inputs necessary for production, including material, people, machinery, equipment, and energy. These are the tangible assets and utilities required to convert raw materials into final products. The script emphasizes that management is also a critical resource, acting as the 'software' of the company that orchestrates how the first four elements are combined efficiently.

💡Bill of Materials (BOM)

The Bill of Materials is a detailed list of all the components, subcomponents, and raw materials needed to manufacture a final product. In the script, it is used to illustrate the necessity of knowing exactly what ingredients are required to make a product, such as the ingredients needed to bake a cake. It is a fundamental part of both production planning and scheduling as it dictates the需求量 and types of materials to be managed.

💡Inventory Levels

Inventory levels refer to the quantities of raw materials, work-in-progress goods, and finished goods that a company holds at any given time. The script discusses the importance of setting desired inventory levels to prevent stock-outs or excess stock. This is crucial for maintaining a balance between having enough materials to meet production needs and avoiding overstock, which can lead to increased costs.

💡Lead Time

Lead time in the script is defined as the time it takes to convert raw materials into finished goods. It is a critical factor in production planning and scheduling as it affects the timing of when products need to be started to meet delivery deadlines. The script uses the example of baking a cake to explain that lead time is the period from when you start gathering ingredients to when the cake is ready to be served.

💡Capacity

Capacity in the script relates to the production capabilities of a company, including the number of units that can be produced within a given time frame using the available resources. It is important for production planning as it helps determine the necessary infrastructure, such as ovens, fryers, and bag makers, to sustain sales volumes without bottlenecks.

💡SKUs (Stock Keeping Units)

SKUs are unique identifiers for each distinct product a company offers. In the context of the script, production scheduling focuses on defining the production quantities for individual SKUs, rather than product families. This level of detail is crucial for ensuring that specific products are manufactured according to demand and that resources are allocated efficiently to produce each SKU.

💡Management

Management, as described in the script, is the 'brain' of the company, responsible for defining how to convert raw materials into final products. It is the strategic guidance and decision-making that dictates the company's 'software,' or the way activities are performed. Effective management is key to combining the first four resources—material, people, machinery, and energy—in the most efficient manner.

💡Purchasing

Purchasing in the script refers to the process of acquiring the necessary materials and components that are not already on hand. It is a part of the production planning process where the availability of items in stock is assessed, and decisions are made on what needs to be bought to fulfill production needs. The script uses the example of needing to buy certain ingredients for baking a cake if they are not already available at home.

💡Cost of Resources

The cost of resources in the script pertains to the expenses associated with acquiring and using the necessary materials, labor, and machinery to produce goods. It is an important consideration in production planning as it impacts the overall cost of production and must be managed to ensure compliance with quality needs without incurring excessive costs. The script mentions that the cost of resources is a factor in determining how much it will cost to prepare a product, like the ingredients for a cake.

Highlights

Production planning and scheduling are similar but have distinct differences.

Production planning involves the entire manufacturing process on a high level.

Planning balances resources and demand, with a time horizon from 6 months to 3 years.

Key inputs for production planning include Bill of Materials, stock availability, and manufacturing lead time.

Production scheduling is more detailed and focuses on short-term production quantities and assignments.

Scheduling defines who or which machine will produce each SKU and has a shorter time horizon.

Production planning is the first step, followed by scheduling for detailed execution.

Management is crucial in combining the first four elements (material, people, machinery, energy) efficiently.

The planning process involves top management and considers the desired inventory levels and necessary investments.

Production scheduling requires frequent review by middle management and is closely tied to the shop-floor.

Both planning and scheduling are necessary for accurate production schedules and control.

The purpose of both planning and scheduling is to combine finite resources effectively to produce final products.

Production planning looks at when something could be made, while scheduling looks at how it will be made in detail.

An example of planning includes determining the volume of chips to sell and the necessary infrastructure.

Scheduling, in the chips company example, involves deciding which machine runs and who operates them.

Production activity provides actual volumes and results, feeding back into both planning and scheduling processes.

Transcripts

What is the difference between production planning  

and scheduling? The difference between  production planning and production scheduling.  

They have similar concepts, however, there are  slight differences between them. Planning and  

scheduling are similar concepts. However, there  are slight differences between them. The resources  

needed for production planning and scheduling  are: Material; People; Machinery, equipment;  

Energy; Management. The first four elements of the  previous list are material assets. The management  

is the brain that defines how to convert the  raw materials into final products. It is the  

“software” of the company, in other words, the  way of performing activities. We can add that  

two companies producing similar articles can  have different ways of doing (or production  

processes). Through management, the first four  elements will be combined in the most efficient  

way to make finished goods. Production planning  involves the whole manufacturing process on a  

high level in order to produce finished goods. By  planning it is possible to describe the whole map,  

which goes over all the resources to the final  products. The production planning balances the  

resources and the demand. Quantities to produce  per family of products; Desired inventory levels;  

Resources to use per period; Investments  necessary to match capacity and volume; demand.  

The time horizon is from 6 months to 3 years and  involves the top management. The planning buckets,  

the smallest unit of time that is looked at,  are by weeks or months. Let’s see below in more  

detailed the required inputs for making a proper  production plan: Bill of Materials: the broken  

down list of components and subcomponents that  make the final product. The availability of items  

in stock: Sometimes it is necessary to activate  purchasing; sometimes they are already on hand.  

Cost of resources, to produce items in  compliance with quality needs. Lot sizes  

involving the frequency and the proper volume  to have the right quantity on hand. It prevents  

the organization to fall down into stock-out or  excess of stock. The manufacturing lead time,  

which means the time that production takes to  convert the raw material into finished goods. To  

give a simple example in the daily life, you can  assume you are making a cake. You will need: The  

ingredients you combine to make a cake (the bill  of materials or BOM); The ingredients you already  

have at home (Stock on hand); The ingredients  you need to buy (Purchasing); How much will the  

preparation cost? (The cost of resources); How  many kg of ingredients and when do you need them?  

(The frequency and lot sizes); How long will  it take to produce the cake to fulfill all the  

guests? (The lead time). The next step involves  the internal combination of resources to produce  

the final items. Following the cake example would  be the way of cooking it. Production scheduling  

is more detailed oriented in comparison to the  production planning. It is also the next step  

going from general to detail. The time horizon is  shorter than the production plan and also it has a  

higher level of detail: It defines the production  quantities of single finished products or SKUs,  

instead of product families. It defines who or  which machine will produce every single SKUs.  

The time horizon is shorter and more detailed,  between one month and one year, depending the  

industry and management type. The planning buckets  could be as short as hours or minutes. It defines  

the inventory level of single finished products or  SKUs, instead of product families. It requires a  

higher review frequency of middle management and  “touches” more the shop-floor. After production  

planning, the next step is to create a detailed  production schedule. The goal is to schedule every  

single operation a certain time in the calendar,  assign the resources and workers, and plan all  

the detailed steps: It is not a forecast, but it  needs to see the future and to get the appropriate  

resources in time. It is a bridge between  production planning and the actual production  

and it helps to get the necessary resources  in a wise time manner. Identify and get the  

appropriate amount of workers. Identify and get  the appropriate raw materials. Identify and assign  

appropriate machinery and equipment. Synchronize  effectively all the resources to define priorities  

and reach customer needs. As you will see, in both  stages it is important to consider that resources  

are finite. The purpose is to combine the limiting  resources to get the final products in the most  

effective way. The planning steps look at when  something could be made in general, the scheduling  

step looks at how something will be made happen  in detail. Let’s say your organization sells a  

variety of chips to the market. The operational  team will start preparing the production plan and,  

at this stage, they will define: The volume  of chips they expect to sell within one year. 

The capacity of ovens, fryers, bag makers,  etc. necessary to sustain the sales volumes  

every month. The infrastructure (layout, space,  equipment, pallets, forklifts, tools) necessary to  

operate without bottlenecks. The number of workers  and skills necessary to operate the machinery. The  

number of shifts available and needed during the  year. The desired inventory levels of flour, oil,  

salt, additives, water, potatoes, corn, packaging  and other raw material at the beginning and end of  

every month. The expected amount of tons and units  necessary in the finished good warehouse at the  

beginning and end of every month to sustain the  throughput. Following the chips company example,  

the company will proceed to the next stage:  production scheduling. At this stage,  

the following questions will be answered: Which  machine will be running every shift, day and week?  

Who is going to operate each machine every shift,  day and week? What is the necessary amount of  

ingredients, when they must arrive, when they  must be ordered? It is important to remark that  

both are necessary: production planning and  production scheduling. Production planning is  

the natural first step and production scheduling  goes next. Thanks to them it is possible to get an  

accurate production schedule and suitable  production control. Finally, production  

activity will provide the actual volumes and  results and will feed back to both processes.