Thoughtful production planning is an easy and cost-effective way to optimize your operational efficiency. But you need the right data in place to generate accurate forecasts and manage your inventory. Production planning and inventory control are closely linked in the manufacturing environment.
Production planning enables you to fill customer orders, and inventory control puts the raw materials, components, and final products in place. When your production plan is driven by data and real-time insights, you’re only ordering and manufacturing what you need. You’re not paying fees for storing the excess or wasting unsold inventory, and you’re less likely to experience costly stockouts.
Production Planning vs. Inventory Control: Understanding the Difference
While production planning and inventory control are closely linked, they are not the same. The production planning process involves allocating your resources to produce enough inventory to meet client needs. You set schedules, order raw materials, and schedule your machines.
Inventory control in manufacturing involves tracking raw materials, work in progress, and final products. It helps prevent downtime and eliminate wasted materials.
Inventory control and production planning work together to inform:
- Safety Stock: A set amount of extra raw materials or final inventory on hand to prevent stockouts during high-demand periods.
- Reorder Points: A pre-determined inventory level at which you reorder stock to make sure it arrives before you run out.
Material requirements planning (MRP) serves as the bridge between high-level production planning and the inventory management activities you do daily. MRP platforms analyze production schedules, inventory management systems, and customer relationship management and order tracking data to assess what resources you need and when you need them.
What Happens When Planning and Inventory Teams Operate in Silos?
Siloed inventory management means that your production planning and inventory control teams are each operating with their own data. Your team is either working with disconnected software platforms, still relying on manual processes, or both. Silos happen when teams work independently without communicating.
In manufacturing, these silos can increase your operating costs. You end up carrying excess inventory or running out of popular items. You miss your scheduled delivery dates. Your production team gets overloaded with work in progress and slows down.
At best, you end up paying to rush raw materials and components or you pay carrying costs for extra inventory. At worst, you damage customer relationships and drive away business. As you integrate PPIC, track common inventory management KPIs to see how you are improving.
How Real-Time Visibility Improves Production Scheduling
Your production planning and inventory control teams can make better decisions with real-time data. Inventory management for small businesses often stalls, particularly when you don’t have real-time visibility. This information guides demand forecasting and enables you to balance your resources effectively. Real-time data can also help you keep your production team running effectively during a supply chain disruption.
With accurate inventory data, your production team can trust their schedules. You’re not piling rush orders on them or running out of raw materials and components that delay their work.
Another of the many benefits of production planning and inventory control is historical data. Instead of assembling fragmented data and making educated guesses, you can access past order history, production schedules, and inventory levels to plan for seasonal fluctuations. You can prepare your time and resources for higher volume.
A production plan made with accurate inventory data eliminates bottlenecks. You’re not waiting on a missing component to finish a batch, for example. Tracking inventory across facilities with RFID tags enables your production team to track down what they need when they need it.
Digital inventory control and production planning solutions automatically capture data, eliminating manual lag time and human error. When your production team uses raw materials, the system automatically updates inventory levels and reorders when you reach a restock point. If these systems integrate with client management software, your sales team always has the correct inventory data on hand to set customer expectations.
Closing the Visibility Gap With Connected Manufacturing Data
RFID and IoT sensors track a product’s location across the manufacturing process. These sensors also offer real-time shipping data. You know where your products, pallets, and cases are and where they’re going. Analyzing real operational data connects high-level assumptions to your operational reality.
For example, an electronics manufacturer facing a semiconductor supply shortage needs to manage production carefully based on the chips available. If the manufacturer plans to make 1,000 smartphones per day but only has 900 chips on hand, production stalls. They can’t deliver to their retailers on time, and the retailer’s customers end up waiting for their phones. When your customers are fielding angry calls from their customers, they may pass the ire up to you.
Integrated production planning and inventory control management introduce checks and balances to prevent this. You might automatically reorder chips when you reach 1,200 in stock based on your supplier’s turnaround time. You can also look compare supplier delivery times and order more safety stock if your suppliers have slowed with the shortage.
Production control solutions offer end-to-end visibility into your manufacturing process to identify opportunities for improvement. These solutions also improve your production planning and inventory control processes because you’re using real insights rather than fragmented information.
Build More Reliable Production Operations
You can see the potential benefits of production planning inventory control solutions to your business. Optimize your production team with realistic schedules based on accurate demand planning based on real-time visibility. Relying on disconnected software or manual processes increases bottlenecks and other operational inefficiencies.
Surgere’s production control solutions offer insights into your manufacturing from beginning to end. Our solution goes beyond location tracking. You understand how you receive raw materials and components and how you transform them into the final product. Identify points of delay and plan your production schedules to remove these choke points.
Tool tracking enables your production team to track down the machines they need without wandering the floor. Warehouse management speeds up order fulfillment.
Schedule a demo today to learn how we can inform your PPIC.
