Correct construction of the enterprise operational production planning system: successful cases
Posted: Wed Jan 29, 2025 10:11 am
The OP is considered the heart of all production processes. A company can easily exist for some time without major or production-financial planning, but it will not be able to do without the OP even a day. After all, every employee who comes to the shop in the morning needs a plan for the shift. And the better it is drawn up, the more fruitful the work of the entire plant will be.
According to statistics, up to 50% of orders brought in by the organization's commercial departments are not completed on time due to the poor quality of the products.
Therefore, for consumers of switzerland email list domestic goods, placing orders for them looks like playing roulette: most likely, it will be necessary to withdraw funds from circulation for a long time for prepayment and wait for delivery for a long time. Moreover, the average equipment load is most often less than 60%.
Now let's talk about how to properly build an OP system.
Restore the meaning of the production plan
In the 1990s and 2000s, many enterprises underwent reforms, and their owners brought in managers from the financial sector. As a result, production planning was reduced to the development of financial projects.
Almost at any plant, specialists know how to calculate profitability and cost price, financial control and budgeting are well-established, etc. The financial service represents power, and the law is the financial plan. The red line of the annual budget, financial KPIs runs through many management processes. Often, the planning department and the production plan do not have the proper status.
This is the reason why commercial divisions oppose production. Formally, they have the same financial criterion of efficiency - maximum profit and revenue, minimum cost. But local KPIs that determine the ways to achieve the goal can be different.
Commercial departments interact with clients that are on the market. Often these are small orders, small lots with different profitability and frequent shipments. In order not to rebuild equipment, production tries to fulfill orders in large series, and small ones are left for later by any means. As a rule, planners are only witnesses to the tug of war.
Example.
In a company manufacturing and selling car parts, the OP and its implementation provoked a confrontation between the commercial and production departments. To fix this, the planning department was transferred to the CEO's subordination. In addition, it was given arbitration functions: to establish and resolve disagreements between businessmen and producers, to find optimal solutions for both parties.
The KPIs of the foremen and the employees of the commercial department were synchronized. Of course, they did not become completely identical, but they included the parameter of fulfilling the OP, developed taking into account the conditions of shipment from the "commercials". Financial penalties for failure to fulfill the OP soon taught the parties to compromise.
Read also!
"Cost of customer acquisition: the meaning of the metric, methods of calculation"
Read more
The breakeven point of each type of product batch was determined in such a way as to avoid overloading production - with small series, with higher costs for customization compared to the profit from its execution. At the same time, "inconvenient" orders were taken into work immediately. Therefore, their execution deadlines were no longer missed.
This is how the production planning center was restored, and the tails (businessmen and manufacturers) stopped wagging the dog. Of course, this state of affairs had a very beneficial effect on financial indicators.
According to statistics, up to 50% of orders brought in by the organization's commercial departments are not completed on time due to the poor quality of the products.
Therefore, for consumers of switzerland email list domestic goods, placing orders for them looks like playing roulette: most likely, it will be necessary to withdraw funds from circulation for a long time for prepayment and wait for delivery for a long time. Moreover, the average equipment load is most often less than 60%.
Now let's talk about how to properly build an OP system.
Restore the meaning of the production plan
In the 1990s and 2000s, many enterprises underwent reforms, and their owners brought in managers from the financial sector. As a result, production planning was reduced to the development of financial projects.
Almost at any plant, specialists know how to calculate profitability and cost price, financial control and budgeting are well-established, etc. The financial service represents power, and the law is the financial plan. The red line of the annual budget, financial KPIs runs through many management processes. Often, the planning department and the production plan do not have the proper status.
This is the reason why commercial divisions oppose production. Formally, they have the same financial criterion of efficiency - maximum profit and revenue, minimum cost. But local KPIs that determine the ways to achieve the goal can be different.
Commercial departments interact with clients that are on the market. Often these are small orders, small lots with different profitability and frequent shipments. In order not to rebuild equipment, production tries to fulfill orders in large series, and small ones are left for later by any means. As a rule, planners are only witnesses to the tug of war.
Example.
In a company manufacturing and selling car parts, the OP and its implementation provoked a confrontation between the commercial and production departments. To fix this, the planning department was transferred to the CEO's subordination. In addition, it was given arbitration functions: to establish and resolve disagreements between businessmen and producers, to find optimal solutions for both parties.
The KPIs of the foremen and the employees of the commercial department were synchronized. Of course, they did not become completely identical, but they included the parameter of fulfilling the OP, developed taking into account the conditions of shipment from the "commercials". Financial penalties for failure to fulfill the OP soon taught the parties to compromise.
Read also!
"Cost of customer acquisition: the meaning of the metric, methods of calculation"
Read more
The breakeven point of each type of product batch was determined in such a way as to avoid overloading production - with small series, with higher costs for customization compared to the profit from its execution. At the same time, "inconvenient" orders were taken into work immediately. Therefore, their execution deadlines were no longer missed.
This is how the production planning center was restored, and the tails (businessmen and manufacturers) stopped wagging the dog. Of course, this state of affairs had a very beneficial effect on financial indicators.