Indian SMEs face the constant challenge of creating a balance between sales and production. While underproducing can harm customer satisfaction, overproducing brings in losses. You need to understand aggregate planning vs master production schedule to serve your business purposes and gain efficiency in your production operations.
We will talk about the meaning of aggregate planning and master production schedules in this blog post. We will understand their purpose, time frame, features, and role in the manufacturing industry.
What Is Aggregate Planning?
Aggregate planning is a method that describes the daily activities of a business and aligns them with its long-term goals. Aggregate production planning in manufacturing involves creating a production plan for the upcoming 3-18 months, including business operations, sales forecast, inventory levels, and production.
Aggregate production planning helps you use required business resources for best results, without excessive costs.
Purpose Of Aggregate Planning
The purpose of aggregate planning is to create a balance between the changing demands of the market with the production capacity of your business. Since the plan is for a medium-time frame, you can make adjustments as per requirement, market, team, and competition. You get the benefit of making the best out of minimum costs by planning resource allocation.
Types Of Aggregate Planning Strategies
Aggregate planning offers multiple approaches to deal with changing market demands. Here is a list of types of aggregate planning strategies.
1. Level Strategy: This method focuses on working with steady production levels. The workflow gets stable, and the working capacity is met during the planning period. A level strategy is ideal for a stable market. However, you may face high storage costs and overstocking during low-demand times.
2. Chase Strategy: This strategy creates a plan so that your production levels meet the changing demands of the market. You can reduce your stock costs with to-the-point inventory management. Because if the demands fluctuate regularly, you will have to make frequent changes in the staffing and production schedules.
3. Mixed Strategy: You get a chance to combine the features of level and chase strategy with this method. The mixed strategy allows you to maintain a stable production rate and use effective planning strategies to meet changing demands. You need to develop a responsive and careful plan for this aggregate planning type.
Aggregate Planning In Manufacturing And Production
Using Aggregate planning in manufacturing, you can work on estimating customer demands, available raw materials, and resources, and develop a strategy that will work for your business.
1. Higher Efficiency: Accurate data helps you make better decisions and plans for your business. You can use real-time insights for better resource allocation. You can form a communication connection between departments and make sure that everyone is on the same page.
2. Reduced Costs: You can use inventory management to control your stock levels and save yourself from the risk of overstocking. Production modules can help you keep track of manufacturing and testing, reducing redo and lost sales costs.
3. Satisfied Customers: If you can make sure that you have the products when your customers want them, you are making your customers happy. Use historical customer data and invoices.
What Is A Master Production Schedule?
We will understand the meaning of master production schedule in this section before moving towards aggregate planning vs master production schedule. A master production schedule (MPS) is a detailed version of an aggregate plan.
This schedule is created for a time period of 3 to 12 months and works on the specific details of a product or product type. MPS production planning includes the exact quantity, cost, production time, and other elements of a product. Your team gets a clear pathway for manufacturing and development, making sure of on-time customer deliveries.
Purpose Of Master Production Schedule
The purpose of master production schedule is to align the day-to-day activities of a business with aggregate planning. MPS in manufacturing helps by developing a master production schedule. This reduces the confusion for your team and provides them with the exact details of what the product requires.
You can identify where your cash flow stops, what problems your production unit faces, and how you can make your customers happy with it.
Function Of Master Production Schedule
The master production schedule brings in multiple advantages with its various functions. We will discuss these features in this section.
1. Communication Gap: One function of master production schedule is to inform all the business departments about the current information. You can connect sales, purchasing, planning, and inventory, and make sure that they all are working towards customer order fulfillment with an MSP.
2. Resource Allocation: Another function of MSP is to make sure of the rightful allocation of resources. You can understand specific production needs according to the market and allocate raw materials, labor, and machinery per the developed plan.
3. Inventory Control: Understanding the market helps you identify how your production should proceed and what customers want. You can decide manufacturing timelines and avoid stockouts with efficient inventory control.
Master Production Schedule Process
The master production schedule process includes multiple stages.
1. Create an aggregate production plan. Include bills of materials, inventory data, and best production time for your business.
2. Understand aggregate planning vs master production schedule. Identify what products to include in the master production schedule and determine the planning time frame for included products and product families.
3. Understand the market demand with current data, historical records, sales trends, and other initiatives.
4. Create a production plan based on the previous step and take business capacity, downtime, and other factors into consideration.
5. Review your MPS and check if aggregate planning and master production scheduling align. Review your MPS regularly and update it when needed.
Master Production Schedule Example
We will talk about the electronic devices manufacturing industry in this section and take it as our master production schedule example to understand further. Imagine a business produces two devices, a fitness tracker and a Bluetooth speaker. These products are developed over 2 months.
- The aggregate production plan would tell you about the demand for the product in the market and raw materials, bills, and other data. Inventory data can show you available raw materials and stocks.
- MPS helps by identifying lead times for raw material procurement and production, forecasting demand and production amounts. This creates a roadmap for inventory management and production schedules to meet market demands in quality and quantity. You can use a master production schedule software to send quotations to buyers and sellers. You can know about their preferences by connecting with them and keeping records.
Key Differences Between Aggregate Planning And Master Production Schedule
We will now understand aggregate planning vs master production schedule. Businesses may get confused between these two concepts and create one but not the other.
| Aspect | Aggregate Planning | Master Production Scheduling (MPS) |
|---|---|---|
| Goal | Focuses on overall production strategy | Focuses on manufacturing details of a specific product |
| Target | Balance production capacity with market demands | Create a roadmap for production, ensuring quality and on-time delivery |
| Flexibility | Adapts easily to changing market conditions | Is detailed and frequent changes can disturb production flow |
Integrating Aggregate Planning And Master Production Schedule
Aggregate planning can help you create the overall production strategy of your business. It considers labor management, business capabilities, inventory management, and market demand to create a plan of action. Master Production Scheduling uses the aggregate plan as a base and generates a detailed roadmap that your business can follow for the upcoming months.
Your teams will understand the exact quantities for production, number of stocks to buy, delivery process, and responsiveness with the MPS to proceed.
Achieving Effective Business Management and Profits with TranZact
Effective production management is a result of a combination of aggregate planning vs master production schedule. TranZact can help you with complete production planning. You can also control inventory with TranZact's inventory module and get real-time insights on manufacturing with the production module. This helps you take control of your manufacturing business with ease.
FAQs
1. What is aggregate production planning?
Aggregate production planning is a process for creating high-level production plans for a business. It takes 3 to 18 months to develop. This method works on improving the production capacity of a business so that it can deal with changing market demands without excess costs.
2. What is a master production schedule?
A master production schedule describes specific product requirements for every product or service. Master production planning takes 3 to 12 months and includes bills of materials and the best time of production as well.
3. What are the three types of aggregate planning?
The three types of aggregate planning are level strategy, chase strategy, and mixed strategy, combining both to maintain steady production with flexibility for rising demand.
4. What's the difference between master scheduling and production planning?
Master scheduling creates a detailed production plan for each product, focusing on costs, production rates, and timelines, and takes less time than production planning. Production planning covers a broader scope, including capacity planning and material requirement planning, and takes longer.
5. What's the difference between production planning and aggregate planning?
Production planning has more details when compared to aggregate planning. Production planning tells how production will proceed in a business. Aggregate planning tells about the overall production method. It includes balancing resource allocation and working with changing market demands.
