PPIC or Production Planning & Inventory Control is crucial for any business, large or small. The process can be quite complex, yet when done right can reduce costs significantly while improving the productivity of the manufacturing process.
If you are a business in manufacturing, PPIC is a crucial aspect of your business, and you have to figure out it correctly. In this article, we share what PPIC is and what are its benefits.
Let’s dive in
What is PPIC or production planning and inventory control?
It is a process of planning the production of a company in advance for the manufacturing process and controlling the raw materials in the inventory needed for producing finished goods. Usually, every manufacturing company has a department of production planning and inventory control to handle the planning and controlling process.
The PPIC department works with sales, procurement and financing departments of the organization to ensure seamless workflow.
Following are some of the duties of the PPIC department of an organization;
- Planning production schedules to ensure a smooth manufacturing process
- Creating and handling manufacturing orders
- Forecasting inventory requirements
- Reviewing sales forecasts and customer demands to understand the product demands in the market
- Scheduling production batches based on raw material level in the inventory and the production time
- Planning the procurement process based on the customer demand forecasting
- Monitoring stores raw materials and in the raw materials in the inventory and items stored in the warehouse
- Monitoring receiving and delivering goods from the warehouse
- Planning production schedules to fulfil orders effectively taking planning time, routing and product quantities into account
- Managing machinery productivity and optimize machine productivity to avoid machine overuse or underuse
- Actively solve issues related to the production process effectively communicating with the marketing department and procurement department
- Analyzing and fulfilling capacity and requirements for resources in the production process.
- Monitoring stock levels in raw materials and finished products to ensure a smooth production process
- Providing inventory data to the accounting department.
Benefits of PPIC Production Planning and Inventory Control
Ensure right-size your investment in capital equipment.
When you have a proper production planning and inventory control process implemented in your organization, you will easily be able to identify the production capacity requirements your business has at the moment.
The system will help you identify the right amount of machinery and equipment, labour and suppliers you need to finish your production capacity.
Thus you will be able to plan your budgets required to fulfil your target production capacities without any delays or accuracy issues. It enables you to make confident decisions on investments in equipment while helping you reduce wastes assuring you the highest ROI.
Reduce your inventory costs
When done correct PPIC helps your organization cut down unnecessary costs in handling inventory. A good inventory control process will help you identify production capacity with high accuracy beforehand. The department will collaborate with the sales department and determine customer demand forecasts to plan the safety stocks and excessive work in progress inventories accurately.
Thus you will not have to panic even if you experience unexpected supply and demand in the market as you will have enough inventory to ensure a smooth workflow. Therefore, you will not have to spend money on immediate raw material orders which will cost way more than usual to get delivered from your supplier.
Reduce your labour costs
Another benefit of PPIC or production planning and inventory control is that it helps you reduce labour costs. With a good PPIC process, you will be able to find many ways to reduce labour costs.
From selecting the right raw materials, investing in the right technology, figuring out the best practices to optimize productivity in the manufacturing process, it will help maximize the labour force. Thus you could get done more with a lesser number of labours.
On the other hand, this will help you identify ways you could introduce automation to your manufacturing process, thus speeding up operations with the right machinery. And the benefit is improved productivity.
Improve your ROA (Return on Assets)
Helping you identify appropriate production capacity from machinery to suppliers, an effective PPIC process will always look for ways to improve your ROA. It will adapt the best industry practices that work for your business to help you optimize the usage of your machinery while ensuring you nothing is overworked from machines to the labour force. Thus you experience the optimum performance every time.
Customer Service Enhancement
With effective schedule planning for the production process, it ensures you on-time delivery of your orders every time. The result is a happier customer base and fewer complaints on delays. This will strengthen your relationship with your customers while improving your image as a brand.
Easy Inventory Control
When you have an excellent PPIC process implemented in your organization, you could easily plan and keep up with your inventory. It will let you know everything you have in your inventory and materials you are running low on etc. instantly. Thus you won’t have to struggle to have better control over your inventory ever again.
Thus the time and energy of your staff will be saves in a great deal which they can invest in another task.
Plant Morale Improvement
A good PPIC process will have everything under control with well-planned schedules, a well-monitored inventory and warehouse. It will maintain effective communication between departments and proper coordination among teams. Thus the workflow will improve significantly.
Labours won’t have to deal with rush orders as everything is pre-planned and well prepared to the tiniest detail.
Idle Time Reduction
When there is a lack of smooth flow in raw materials, you can’t help but kill time without doing anything. With proper planning in the production process and effective inventory control, you can avoid idle time in a great deal waiting for any raw materials.
If you are in the manufacturing business and looking for new ways to improve the production planning process, an effective PPIC process is a must-have. Contact Tigernix to identify how our ERP software helps the PPIC process.