You have customer orders piling up, raw materials arriving at different times, multiple machines with varying capacities, and workers with different skills. How do you decide what to make, when to make it, and on which machine? Welcome to production planning and scheduling—the brain of manufacturing operations.
For Indian manufacturers—whether you're running a job shop with 5 machines or a mid-sized factory with 50—efficient production planning directly impacts your delivery performance, machine utilization, and ultimately, profitability. Manual planning using whiteboards or Excel becomes a nightmare beyond 20-30 orders.
This comprehensive guide explains production planning, shop floor scheduling, and how modern ERP systems automate the entire process to help you deliver on time, every time.
What is Production Planning?
Production planning is the process of deciding what to produce, how much to produce, and when to produce it, ensuring you have the right materials, machines, and manpower available at the right time.
It answers these critical questions:
- Which orders should I prioritize this week?
- Do I have enough raw material for next week's production?
- Will Machine 3 have capacity for the urgent order?
- When should I start production to meet the delivery deadline?
- How many finished goods should I stock for forecasted demand?
Production Planning vs Production Scheduling
These terms are often used interchangeably, but they're different:
- Planning: High-level decision (What to make, How much, Overall timeline)
- Scheduling: Detailed execution (Which machine, Which operator, Exact start/end times)
Analogy: Planning = Deciding to drive from Rajkot to Mumbai. Scheduling = GPS route with exact turns, stops, and ETA.
Types of Production Planning
1. Make-to-Stock (MTS)
Produce based on demand forecast, keep finished goods ready in stock.
- Best for: Standard products, predictable demand
- Example: Water pumps, fans, switches
- Planning: Based on sales forecasts + safety stock
- Risk: Overproduction if forecast wrong
2. Make-to-Order (MTO)
Start production only after receiving confirmed customer order.
- Best for: Customized products
- Example: Custom furniture, machinery
- Planning: Based on order backlog
- Risk: Long lead times if raw material unavailable
3. Assemble-to-Order (ATO)
Keep sub-assemblies ready, final assembly after order confirmation.
- Best for: Configurable products
- Example: Computers, control panels
- Planning: Sub-assembly MTS + Final assembly MTO
- Benefit: Faster delivery than pure MTO
4. Engineer-to-Order (ETO)
Design, engineer, and manufacture per specific customer requirements.
- Best for: Unique, complex products
- Example: Special machinery, heavy equipment
- Planning: Project-based approach
- Challenge: High uncertainty in timelines
The Production Planning Process in ERP
End-to-End Planning Flow
Demand Forecasting
ERP analyzes historical sales data, seasonal trends, and current order backlog to predict demand. Example: Average 500 units/month for Product A, 20% spike in festival months.
Master Production Schedule (MPS)
Convert demand forecast into a production plan specifying what to produce, how much, and when. Example: Week 1: 150 units Product A, Week 2: 100 units Product B.
Material Requirements Planning (MRP)
ERP explodes BOM to calculate exact material needs. Checks inventory, generates purchase requisitions for shortages. Example: Need 300 kg steel, have 50 kg → purchase 250 kg.
Capacity Planning
Verify if machines and labor can handle the planned production. Example: Machining needs 80 hours, Machine X available 60 hours → identify bottleneck.
Shop Floor Scheduling
Assign specific orders to machines with exact start/end times considering priorities, due dates, and changeover times. Example: Machine 1: Order #001 (9 AM - 2 PM), Order #005 (2:30 PM - 6 PM).
Work Order Release
Generate work orders with all details: item, quantity, BOM, routing, due date. Release to shop floor for execution with material reservation.
Execution & Tracking
Real-time tracking of work order progress, material consumption, machine status. Update ERP as each operation completes. Flag delays immediately.
Material Requirements Planning (MRP) Explained
MRP is the heart of production planning in ERP. It automatically calculates:
What MRP Does:
Input 1: Master Production Schedule (What you plan to make)
Input 2: Bill of Materials (What each product needs)
Input 3: Current Inventory Levels (What you already have)
Input 4: Purchase/Production Lead Times (How long to get materials)
Output: Detailed plan showing:
- Exact material quantities needed
- When to order each material (considering lead time)
- When to start production of sub-assemblies
- Suggested purchase orders and work orders
🎯 MRP Example
Scenario: You need to deliver 50 ceiling fans on March 15
BOM per fan: 1 motor assembly, 3 blades, 1 down rod, 1 regulator, packaging
Motor assembly (sub-assembly): Takes 3 days to make, needs 1 rotor, 1 stator, 2 bearings
Lead times: Rotor: 7 days, Stator: 5 days, Blades: 10 days
MRP Calculation:
- Delivery: March 15 → Start fan assembly: March 12 (3 days buffer)
- Need motor assembly by March 12 → Start motor assembly: March 9 (3 days production)
- Need rotor by March 9 → Order rotor by: March 2 (7 days lead time)
- Need blades by March 12 → Order blades by: March 2 (10 days lead time)
Result: ERP tells you "Order rotor and blades by March 2 latest, or you'll miss March 15 delivery"
Capacity Planning: Can You Actually Produce It?
Having materials doesn't guarantee you can produce. You need capacity—machines, labor, and time.
Types of Capacity Planning:
1. Rough-Cut Capacity Planning (RCCP)
Quick check at MPS level: Can critical resources handle the planned volume?
- Example: Planned production needs 200 machine hours/week, we have 180 hours → Overload!
2. Detailed Capacity Requirements Planning (CRP)
Detailed check at work order level considering all operations and work centers.
- Identifies exact bottlenecks: "Welding station overloaded on Tuesday and Wednesday"
How ERP Handles Capacity Constraints:
- Option 1: Reschedule (shift non-urgent orders to next week)
- Option 2: Overtime (add extra shifts at bottleneck work centers)
- Option 3: Outsource (send overflow to job work vendor)
- Option 4: Reject/Delay (negotiate later delivery with customer)
Shop Floor Scheduling Methods
1. Forward Scheduling
Start from material available date, schedule forward to calculate completion date.
Use when: Make-to-stock, no specific delivery deadline
Example: Material arrives March 1 → Start production March 1 → Complete March 10
2. Backward Scheduling
Start from required delivery date, schedule backward to calculate start date.
Use when: Make-to-order with firm delivery commitment
Example: Delivery due March 15 → Need to start production March 5 (10 days lead time)
3. Finite Capacity Scheduling
Considers actual machine/labor availability, never schedules beyond capacity.
Benefit: Realistic schedules, but may push delivery dates
4. Infinite Capacity Scheduling
Assumes unlimited capacity, schedules based purely on requirements.
Benefit: Shows ideal timeline, highlights where you need more capacity
Production Planning Without ERP: The Pain
Manual production planning in Excel/whiteboards breaks down beyond a certain scale:
- No Visibility: Can't quickly see what's scheduled, what's available, what's delayed
- Material Surprises: Production starts → discover material shortage → emergency purchases at premium
- Capacity Guesswork: Overload Machine 1, underutilize Machine 3—inefficient resource allocation
- Delayed Updates: Customer postpones order → manual changes across multiple sheets
- No "What-If": Can't quickly simulate: "What if this order comes in tomorrow?"
- Firefighting Mode: Constantly handling emergencies because nothing was planned proactively
How ERP Transforms Production Planning
Manual vs ERP Production Planning
| Aspect | Manual/Excel | ERP Automation |
|---|---|---|
| MRP Calculation | 4-8 hours manual work, frequent errors | 2 minutes, 100% accurate |
| Schedule Updates | Manually edit sheets, cascading changes | One click re-schedules everything |
| Capacity Visibility | Rough estimates, no real-time data | Real-time load charts per work center |
| Material Planning | Check inventory manually, miss shortages | Auto-generate purchase suggestions |
| What-If Analysis | Time-consuming, limited scenarios | Simulate multiple scenarios instantly |
| Delivery Promises | Guess based on gut feel, often wrong | ATP (Available to Promise) check instantly |
| Shop Floor Tracking | Paper-based, delayed updates | Real-time progress, digital work orders |
Real-World Impact: Case Study
Company: Auto parts manufacturer, Pune (Annual turnover: ₹35 crore)
Products: 120+ SKUs of machined components for automotive OEMs
Operations: CNC machines, lathes, grinding, heat treatment—multiple operations per part
Before ERP Planning:
- Excel-based planning, updated weekly (often became outdated by Tuesday)
- Production manager spent 10-12 hours weekly on planning
- Frequent material shortages causing production delays (8-10 instances/month)
- Machine utilization: 65% (uneven loading, some overloaded, some idle)
- On-time delivery: 73%
- Average lead time: 18 days
- Customer complaints: 12-15/month about delays
After ERP Production Planning (ApicalERP):
- Automated MRP run daily (takes 5 minutes)
- Production manager focuses on execution, not planning (saves 10 hours/week)
- Material shortages reduced to 1-2/month (proactive planning)
- Machine utilization: 82% (balanced scheduling)
- On-time delivery: 94%
- Average lead time: 12 days (33% reduction)
- Customer complaints: 2-3/month
Impact:
- 💰 Revenue Impact: Accepted 15% more orders (confident in delivery capability)
- ⏱️ Time Saved: 40 hours/month on planning activities
- 📈 Capacity Improvement: +17% machine utilization (₹8 lakh incremental revenue/month)
- 😊 Customer Satisfaction: Major OEM upgraded them to preferred supplier status
- 📉 WIP Reduction: 25% less work-in-progress inventory (₹12 lakh freed up)
Best Practices for Production Planning
1. Accurate Master Data
- Keep BOMs updated with actual quantities and scrap percentages
- Maintain realistic operation times (not theoretical, but actual average)
- Update lead times based on vendor/production performance
2. Regular MRP Runs
- Run MRP daily or twice-weekly (not just monthly)
- Review suggestions before blindly accepting
- Exception-based management: focus on critical shortages/delays
3. Realistic Safety Stock
- Set safety stock for critical components (unreliable suppliers, long lead times)
- Don't set safety stock blindly on everything (ties up working capital)
- Review and adjust quarterly based on actual consumption patterns
4. Capacity Buffers
- Don't schedule machines at 100% capacity (leaves no room for breakdowns/rush orders)
- Plan for 80-85% capacity utilization
- Identify bottleneck work centers and maintain higher buffer there
5. Freeze Zones
- Near-term production (1-2 weeks) should be frozen—no changes unless emergency
- Medium-term (3-4 weeks) can be adjusted with approval
- Far-term (beyond month) is flexible
6. Track Actuals vs Plan
- Measure schedule adherence: how often do we complete as planned?
- Analyze variances: why did this order take 8 hours instead of planned 6?
- Use learnings to improve future planning accuracy
Conclusion
Production planning is the difference between chaos and control in manufacturing. Excel and whiteboards work when you're small, but as you grow—more products, more orders, more complexity—manual planning becomes the bottleneck.
ERP doesn't just automate planning; it makes you proactive instead of reactive. You stop firefighting daily crises and start optimizing for efficiency and profitability.
Key benefits recap:
- ✅ Automated material planning (no more surprise shortages)
- ✅ Optimized machine loading (higher utilization, lower costs)
- ✅ Confident delivery promises (accurate ATP checks)
- ✅ Better customer satisfaction (on-time delivery)
- ✅ Reduced working capital (less excess inventory and WIP)
If you're still planning production manually and struggling with on-time delivery, machine utilization, or material availability—ERP production planning will transform your operations.
🎯 Key Takeaway
Production planning isn't about making perfect plans—it's about making good decisions quickly and adapting to reality. ERP gives you the tools to plan intelligently, execute efficiently, and deliver consistently. That's what separates thriving manufacturers from struggling ones.