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Production Planning 101: Making a Production Plan (Example Included)

As the creation of products and services has become more extensive and varied, the manufacturing industry has become more competitive. There are many things to keep an eye on such as material requirements planning, supply chain management and inventory control. Operations continue to become more complex, meaning manufacturing companies require more thorough production planning.

A production plan is the best way to guarantee you deliver high-quality products or services as efficiently as possible.

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Production Schedule Template

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What Is Production Planning?

Production planning is the process of deciding how a product or service will be manufactured before the manufacturing process begins. In other words, it’s how you plan to manage your supply chain, raw materials, employees and the physical space where the manufacturing process occurs.

Production planning is important for manufacturers as it affects other important aspects of their business such as:

Supply chain management
Production scheduling
Material requirements planning
Production lead time
Capacity planning

ProjectManager is project management software that helps manufacturers cover every aspect of production planning. Plan with Gantt charts, execute with kanban boards and manage resources along the way. No other software offers sophisticated project and resource management features in one intuitive package. Get started today for free.

Why Is Production Planning Important?

If a manufacturing operation wishes to expand, that evolution demands careful production planning and scheduling. Someone must take on the responsibility of managing resources and deciding how they’ll be allocated. This process is a big part of capacity planning —how much can be made in a certain period, with the available resources?

Without production planning, it’s easy to use too much of a resource for one product and not leave enough for another, or fail to schedule your resources properly, which results in delays that affect your overall production management process. It’s just as easy to let resources go to waste. These issues indicate a lack of efficiency in your production planning process.

Production planning is the best way to ensure resources are used appropriately, products and services are high-quality and nothing goes over budget . In most organizations, a production manager manages the production planning process.

What Does a Production Planner Do?

A production planner is a team leader who oversees the production planning process, which defines how an organization will approach major areas of production management such as production scheduling, resource capacity planning, production control and production budgeting to manufacture products.

To better understand what a production planner does and the importance of this role in any manufacturing organization, let’s dive into each step of the production planning process.

10 Steps of the Production Planning Process

The production planning process consists of an organization’s actions to make a production strategy that allows it to manufacture products most efficiently and profitably. Here are 10 key steps you should follow when planning your production process.

1. Use Production Forecasting Methods for Estimating Customer Demand

The first step of the production planning process is to forecast the customer demand for your product for a future period like a year or a quarter. To do so, manufacturers rely on quantitative and qualitative techniques such as Delphi method, historical analogy method, moving average method and the analysis of business data and sales forecasts.

This process is known as demand planning , which helps manufacturers be better prepared to meet the demand for their products and manufacture the right quantity so they can minimize production and operational costs.

2. Gauge Your Production Capacity

The term production capacity refers to the maximum quantity of product a manufacturing company can produce based on its available production resources such as raw materials, labor, equipment and machinery.

Once you better understand the customer demand for your product, you’ll need to gauge the total quantity of product that needs to be manufactured and then evaluate if your production capacity is sufficient.

3. Map Out the Shop Floor Layout

Now think about the steps of the production process itself. Outline the production tasks that must be executed to transform raw materials, parts and components into a final product and the physical route that those elements will follow to move across the shop floor. This will allow you to pick a production floor layout that minimizes the time and effort required from your employees.

4. Make a Production Budget to Find the Optimal Production Volume

The next challenge in the production planning process is determining the exact number of units to manufacture to keep up with customer demand and maintain your desired stock levels.

This requires a production budget , a document used to calculate the number of units that should be produced by a company to meet the customer demand for a period such as a month, quarter or even a year.

Creating a production budget involves assessing the current product inventory, the production capacity, sales forecasts and the ending inventory that should remain at the end of the period. Once you analyze these variables and use the production budgeting formula, you’ll know the required production level for a given time.

5. Choose a Production Costing Technique

Choose a costing method for your production process such as activity-based costing, process costing, job costing or simply standard costing. Each has its pros and cons depending on your organization’s particular characteristics.

6. Create a Production Schedule

Now it’s time to make a production schedule that allows your organization to create a stock inventory, deliver products to distribution channels, fulfill customer orders and meet the obligations of any manufacturing contracts the organization has in place for the production timeline you’re planning for.

7. Establish a Production Control System

Next, it’s important to establish standard operating procedures and key performance indicators and use a variety of production control tools to create a system that allows you to track the production process to ensure your products meet quality standards and are manufactured on time and under budget.

8. Set Production Reporting Guidelines

After you’ve decided what KPIs will be used to monitor the efficiency of your production process, you’ll need to determine what types of reports will be used to communicate these metrics with stakeholders and the frequency in which they’ll be produced.

The documentation from each of these production planning stages, such as the production budget and production schedule are gathered in a larger document called the production plan.

What Is a Production Plan?

A production plan is a document that describes how production processes will be executed, and it’s the outcome of the production planning process. It describes the human resources, raw materials and equipment needed and the production schedule that will be followed.

The person responsible for production planning must also be very familiar with the operation’s inner workings, project resources and the products/services they produce. This usually entails collaborating with people on the floor, in the field or in different departments to create products and deliver services.

Production Plan Example

The best way to illustrate this process is through an example. When you set out to create a production plan, make sure to follow these steps to make it as robust as possible.

Sales Forecast

Making a sales forecast greatly helps you decide which product planning method is best for your operation given your production capacity. You’ll need to use diverse sales forecasting techniques to better understand what will be the future demand for your product. From here, you can estimate which resources are required and how they’ll be used in the manufacturing process to begin the production capacity planning process.

Inventory Management Plan

Accessing inventory is about more than simply taking stock: you should make an inventory management plan for your production inventory and work-in-progress inventory so that you don’t experience shortages that might halt production or let things go to waste. For this step, focus on the inventory control and inventory management techniques you can use to handle inventory in the most efficient way possible.

Production Budget

Most manufacturers use the production budgeting formula below to make a production budget that indicates the ideal production volume based on a starting inventory, sales forecasts, production capacity and expected ending inventory levels.

Required Production = Sales Forecast Expected Units + Desired Ending Inventory – Beginning Inventory

Resource Plan

A successful production plan requires you to be familiar with the resource planning details of the manufacturing process, which is why you’ll need to make a resource plan that outlines what resources such as labor, raw materials, equipment and any other capital assets are available for production and when they’re scheduled to be utilized.

Production Cost Estimate

Once you’ve determined what the required level of production is and the resources that will be needed, you’ll need to estimate the cost of production . It’s important to ensure the production process will be profitable before creating a production schedule.

Production Schedule

As stated above, a production schedule is key to making sure your manufacturing team delivers products on time, but also guides efforts in other areas such as supply chain management and logistics management.

Production Control Plan

A production control plan should describe all the metrics, procedures, guidelines and tools that will be utilized to monitor how the results compare to the production schedule and resource management projections. This is something that should continually take place and be documented during the production process.

Types of Production Planning

Every operation is unique, and the same production plan isn’t right for everyone. To get the most from project planning, you decide which method is best for your manufacturing process. Here’s a quick intro to the different types of production planning.

The job method is often used when manufacturing a single product, for which a unique production plan is created. This production planning method is generally used in smaller-scale productions, but it can also be applied to larger manufacturing facilities. The job method is especially advantageous when a production order requires specific customizations.

Batch Production Method

Batch production consists of manufacturing goods in groups, instead of being produced individually or through continuous production . This method is useful when manufacturing products on a large scale.

Flow Method

The flow method is a demand-based manufacturing model that minimizes the production lead time by speeding up the production line. The manufacturing process starts based on work orders, and once it starts, it doesn’t stop until all finished goods are produced. This is called continuous production and it’s achieved by using machinery and little intervention to minimize waiting time.

Process Method

The process method is more or less what most people picture when they think about production—an assembly line . With the process method, there will generally be different types of machinery that complete separate tasks to put together the finished goods.

Mass Production Method

The mass production method primarily focuses on creating a continuous flow of identical products. It’s similar to the flow method, but at a much bigger scale, which cuts production costs. When uniformity is just as critical as efficiency, use “standardized processes” to guarantee all products look the same.

Screenshot of the 2024 manufacturing ebook by ProjectManager

Production Planning Best Practices

No matter what product or service is being manufactured, there are many tried-and-true best practices to increase your operational efficiency . When creating a production plan, keep these two in mind.

Make Accurate Forecasts

When you don’t properly estimate the demand for your product or service, it’s impossible to create a detailed production plan. Demand planning is never static. Consider buying trends from previous years, changes in demographics, changes in resource availability and many other factors. These demand planning forecasts are the foundation of skillful production planning.

Know Your Capacity

Capacity planning means knowing the maximum capacity your operation can manage—the absolute most of a product or service it can offer during a period of time. This is the only way to anticipate how much of each resource you need to create X amount of products.

When you don’t know the production capacity, your production planning is like taking a shot in the dark.

Common Production Planning Mistakes

Stay vigilant of common missteps as you go through the production planning process. Here are three mistakes often made during production planning. Luckily, they can be prevented.

Not Expecting the Unexpected

This means having risk management strategies in place if things go awry. The goal is to never have to employ them, of course, but it’s better to have them and not need them. Production planning is incomplete if it doesn’t anticipate risks, issues and changes. When you plan for them, you’re ready to problem-solve if and when they happen.

Getting Stuck Behind the Desk

You should work with intelligent production planning tools, but that doesn’t mean you should only rely on enterprise resource planning software for production planning and not oversee resources and manufacturing operations in person. When production planning is only done from behind a screen, the result won’t be as informed as it could be. The best production planning is active and collaborative.

Neglecting Equipment

To get the most from your equipment, you need to take care of it. This means tracking usage and keeping up with regular maintenance. This looks different depending on the industry and product or service, but the principle is the same: continually take care of your equipment before it becomes a problem that slows down production.

Use ProjectManager for Production Planning and Scheduling

As the nature of manufacturing goods and services changes, you need modern tools to plan production and make schedules. ProjectManager is award-winning project management software that offers all the tools you need for excellent production planning and scheduling. With it, you can plan projects, create schedules, manage resources and track changes with one tool.

Plan With Gantt Charts

Manage your product manufacturing across a timeline with our Gantt chart view. With it, you can view your resources to help you track your cost of production to ensure you’re never overspending. You can then link any dependent tasks to avoid bottlenecks in your manufacturing.

Production plan on a Gantt chart in ProjectManager

Get a Bird’s-Eye View

To keep your production plan on track, you need a high-level view to pinpoint setbacks before or as they occur. Our real-time dashboard collects data and converts it into colorful graphs and charts that give you at-a-glance analytics.

Tracking a production plan on a dashboard in ProjectManager

Easily Measure and Report Your Progress

Any operation will have stakeholders who want to be kept in the loop. ProjectManager’s project status reports make it easy to share key data points. They can be generated in a single click, making it simple to generate them before important meetings.

Deliver your projects on time and on budget

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Production Planning Template for Excel (Free Download)

In order to be successful, there are many best practices that production facilities need to consider when putting their schedules and plans together. Perhaps most significantly, everyone involved needs to clearly understand every part of the production process, from the small details to the big picture — otherwise, you risk missing key items that could slow down or even halt production.

Having a production plan is a great way to put your production and manufacturing processes on track right from the start, as it helps you prepare for what needs to be done. A production planning template even takes you one step further by providing an outline for your planning process, making it easier to form a cohesive and successful production plan.

What Is Production Planning?

A production plan is a guide that outlines every step involved in the production of a good. With production planning, the production process is more organized and efficient, and there is less of a risk of missing an important step that stops or slows down production. These plans help optimize the manufacturing process, which makes the design, production, and delivery of goods much easier to plan out.

A production plan includes steps for each part of your manufacturing process. This might include what the products are, the type and quantity of materials needed to produce them, the production schedule, and the delivery schedule. It could also include a schedule that shows who is responsible for each part of the process.

Most production plans include details about which machines are needed during the process, how many pieces of equipment are involved, and what quality assurance steps need to be taken before the product is ready for final delivery.

Why Is Production Planning Important?

Like most processes, planning plays an integral part of the production process. When you have a solid plan in place from the beginning, you have clear targets and a firm idea of what needs to happen in order to meet your goals. This reduces the chances of bottlenecks, which can lead to slowdowns that impede your productivity.

The ultimate goal of production planning is to create a more streamlined production process that lends itself to greater efficiency. More efficient processes lead to overall improvement in metrics and key performance indicators (KPIs). Tracking metrics and KPIs via digital tools and dashboards gives you at-a-glance insights into whether or not you are meeting production goals — which can let you know if your production plan needs to be tweaked.

Production planning also helps manufacturing businesses be better at resource management and capacity planning. Rather than having an overabundance of raw materials (or not enough) for production, you can plan out exactly what you need and avoid supply chain hold ups or unnecessary expenses. This gives you greater control over your inventory management and improves your lead times as well.

Another benefit of production planning is the internal alignment it creates. A clear production plan can be shared across your organization, from machine operators to upper management, which keeps everyone on the same page regarding production. When everyone is working from the same plan, you can more easily avoid internal conflict and confusion surrounding production, while also creating a more streamlined workflow across teams with fewer bottlenecks.

Breakout: What Is the Difference Between a Production Schedule and a Production Plan ?

Often, there is confusion around the terms “production schedule” and “production plan.” Both deal with the organization and high-level strategies around production, and while there are similarities, the two terms mean different things. A production schedule has clearly defined and assigned roles for each step of the manufacturing process, along with the timeline for when those tasks need to be accomplished.

The production plan, on the other hand, determines what needs to be produced and how much of it needs to be completed in each run. Another way to think about the two is that the production plan outlines the “what” — the steps and materials needed to produce a good — while the production schedule outlines the “who” and “when” — who is responsible for each step of the process and when they need to have them done.

What Are the 3 Stages of Production Planning?

There are three major stages of production planning that an organization needs to follow. If you complete the stages out of order or leave one out entirely, your production plan could end up being incomplete. This can lead to missed steps and bottlenecks that cause issues throughout the entire production process. Next, we’ll take a look at each phase in greater detail.

Planning Phase

The planning phase addresses the end goals of your production process and helps you determine what type of schedule and plan is best suited to help you achieve your goals. This could include steps like:

Product development
Sales forecasting
Aggregate planning
Raw material planning

Action Phase

The action phase of the production plan outlines the different steps that need to be taken in order to create the product that your plan is for. This phase addresses all of the steps of production, from the initial job order to the final delivery and everything in between. Those specific steps might include:

Process routing
Material planning
Tool planning
Machine loading

Control Phase

The final stage of the production planning process is the control phase. This phase helps ensure that all the other steps in the planning and action phases are measured and reported correctly, which ensures that end goals are being met. This also includes any measures needed to fix errors in the plan and addresses any mistakes that might come up during the production process. The main steps in this phase are:

Progress reporting
Metric tracking
Corrective action planning

What Are the Benefits of a Production Plan?

A production plan provides many different benefits that organizations across the globe can benefit from. It provides clear benchmarks for measuring key elements of the production process and ensures that the entire organization is clear about what the production process is. When manufacturers utilize a production plan, they can avoid confusion, waste, and delays. This helps provide a better customer experience and makes sure that manufacturers deliver on the promises they make to suppliers and purchasers. Other benefits include:

Resource management
Supply chain planning
Internal project alignment
Goal and milestone tracking
Increased clarity
Singular database for tracking and minimizing backlogs
Team-wide visibility into production
Streamlined workflows

While production planning offers many different benefits, many manufacturers may still shy away from the idea because the process of creating the plan is too overwhelming to think about. Luckily, Anvyl’s production planning template alleviates the pressure of building a plan from scratch, which can get your organization on the right track much sooner.

Download Anvyl’s Production Planning Template

How Do You Create a Production Plan in Excel?

Many production plans are built using spreadsheet software like Microsoft Excel or Google Sheets. You can use these programs to create Gantt charts, which clearly lay out the different elements of the production process in a visual format. This helps with project management and tracking everything from customer orders to the bill of material that is required for each product. These are simplistic charts that any member of your team can follow.

A production plan includes details like:

Company information
Customer information
Current order status
Production or product numbers
Product variations
Starting inventory
Current inventory
Manufacturing dates
Operator or management notes

Each organization functions differently, so no two production plans will be the same. There will be some level of customization required, even if the plan comes from a standardized template.

An Excel template can work as a jumping-off point, allowing your business to build around your own goals and needs without starting from scratch. Keep in mind that a template should be flexible enough to allow for personalization while also being rigid enough that you don’t miss vital steps. The Anvyl production planning template was built with this mentality: to help manufacturers improve their processes and create a better production planning experience with a unique, customizable approach.

Try Anvyl’s Free Production Planning Template

At Anvyl, we understand that there are a lot of considerations to keep in mind as you work on creating your production plan. This is why we provide a planning template that you can use to optimize your production planning, project management, and capacity planning — all while reducing bottlenecks and avoiding production shutdowns.

The Anvyl production planning template was created to make the entire process of production planning easier for you and your team. Rather than creating a production plan from scratch, you can get started faster by using our template. The legwork is already done for you — all you need to do is customize the Excel spreadsheet to fit your business.

Get your free download of our production planning template and get started today .

Take Control of Your Production Process With Anvyl

Having control over your production process ensures that you are optimized for success and efficiency. When you don’t have a production plan, it’s hard to see whether or not you’re hitting your benchmarks — which makes it even harder to hit your goals.

When you have a well-constructed production plan organized in a versatile Excel template, you can build a strong production process that can withstand challenges and produce the results that your organization desires.

Investing in a platform that helps you streamline your processes is a great way to benefit your business. With resources like Anvyl, you can create a centralized database and manage your supplier relations with ease. Our team has been helping manufacturers manage their production planning for many years — try a product demo to learn more about what Anvyl can do for your organization.