ERP Functions: Planning 1

After ending week with colors of holi lets begin with next Part of our journey in ERP functions. We started with Sales/Marketing and received Purchase Order from the Customer. The next step is Planning the production to to meet the Delivery date of the customer. 

Functionality of Planning is to plan the resources for the production based on the requirement of sales. Before continuing on details about Planning lets now look into the requirement of Production. Basically 3 M's contributes to production of a company

1. Man: From low level laborers to high level executives all are required for a company to run. Some man power directly involved in manufacturing in shop floor, some in managing them. Over all Manpower is main strength of any industry.

 
2. Machine: Machines are those which can do the work in more faster, simpler and accurate way which man is intended to do. Each machine is designed for certain type of works. Utilization of Machines  for getting efficient out out is depends on the skill of Man Power.

 
3. Material: Materials are those which are converted to form products using machines by man power. The main material which is getting converted is called raw material. There will be materials which are consumed in to order form the product from the raw material and those are called as consumables.

In all industries these are the inputs which can generate out puts in terms of Products or Services. Planning means planning all these 3M's efficiently and effectively to meet the goals of despatch schedule.

Secondly there are two types of production scenarios.

1. Make to Order: The production quantity will be purely based on the quantity in the orders received from the customer. Customer has specific requirement regarding design and specification of the product, hence based on the customer requirement only production will be made. Extra quantity is not produced.

2. Make to Stock: The production quantity may not be dependent on the customer orders. The company will be having standard products which are required by many customers. Based on certain assumptions and forecast, production of products is made and kept in stock. Whenever orders are received from the customers the finished products in the stock is despatched.

Depending on type of industries different systems are allowed. Generally combined scenarios is also followed if the company has large range of standard and customer specific products.

Now coming back to the flow of ERP. Last blog ended in accepting Purchase order from the customer along with committing delivery of products as per delivery schedule mentioned. The information about customer requirement and delivery schedule will be received by Planning department.

There will be various customer orders hence multiple type of products and different delivery schedules. The delivery schedules are the deadlines for a company to be achieved. These delivery schedules are then listed in the order of dates and divided month wise. Before to beginning of the month the delivery schedule for the month is divided week wise then day wise. This serves as master document for planning the production for the month. 

Further we shall look into details of planning using the master document. Will be back on next Monday with explanation on MRP (Material Requirement Planning) and Capacity Planning. Keep watching the space